<PAGE>
As filed with the Securities and Exchange Commission on , 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware 6712 41-0449260
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or ----------------
organization)
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
(800) 411-4932
(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
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
(415) 396-6019
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPIES to:
<TABLE>
<S> <C> <C>
Adam D. Chinn, Esq. Robert J. Kaukol Robert Routh, Esq.
Wachtell, Lipton, Rosen & Katz Wells Fargo & Company Cline, Williams, Wright,
51 West 52nd Street 1050 17th Street Johnson & Oldfather
New York, New York 10019 Suite 120 1900 U.S. Bank Building
(212) 403-1000 Denver, CO 80265 233 South 13th Street
(303) 899-5802 Lincoln, NE 68508-2095
(402) 474-6900
</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>
Proposed Proposed
Title of Each Class of Maximum Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share(2) Offering Price Fee(3)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$1 2/3 per share (and
associated Preferred
Stock Purchase
Rights)............... 16,000,000 $27.8353 $445,365,545.25 $117,576.50
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(1) Based upon an estimate of the maximum number of shares of Class A and Class
B common stock (collectively, the "First Commerce common stock") of First
Commerce Bancshares, Inc. ("First Commerce") which will be exchanged for a
maximum of shares of common stock (the "Wells Fargo common stock") of Wells
Fargo & Company ("Wells Fargo") pursuant to the merger described herein.
(2) Calculated in accordance with Rule 457(f)(1) under the Securities Act based
on the aggregate market value on April 17, 2000 of the shares of First
Commerce common stock expected to be canceled in connection with the merger
and computed by dividing (i) the product of (A) the average of the bid and
asked prices of First Commerce common stock as reported on the NASDAQ on
April 17, 2000 ($33.3750) and (B) 13,344,286, representing the maximum
number of shares of First Commerce common stock expected to be canceled in
connection with the merger, by (ii) 16,000,000, representing the estimated
maximum number of shares of Wells Fargo common stock expected to be issued
in connection with the merger.
(3) The registration fee of $117,576.50 was calculated pursuant to Rule
457(f) under the Securities Act, as follows: .000264 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, or until this Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FIRST COMMERCE BANCSHARES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
June [9], 2000
To the Shareholders of First Commerce Bancshares, Inc.:
A special meeting of shareholders of First Commerce Bancshares, Inc. ("First
Commerce") will be held on [Friday], June [9], 2000, at 2:00 p.m., Lincoln,
Nebraska time, on the 11th floor of the NBC Center, 1248 O Street, Lincoln,
Nebraska. The purposes of the meeting are to:
1. Vote on a proposal to approve the Amended and Restated Agreement and
Plan of Reorganization, entered into as of the 1st day of February,
2000, and amended and restated as of April 14, 2000, but effective as of
February 1, 2000, by and among First Commerce, Wells Fargo & Company
("Wells Fargo"), First National Bank and Trust Co. of Kearney, The
Overland National Bank of Grand Island, Western Nebraska National Bank
and The First National Bank of West Point; and a related Agreement and
Plan of Merger, dated as of , 2000, by and between First Commerce
and Wells FCBI Merger Co., a wholly-owned subsidiary of Wells Fargo,
included as Exhibit A-1 to the Agreement and Plan of Merger
(collectively, the "Merger Agreement"), pursuant to which, among other
things, a wholly-owned subsidiary of Wells Fargo will merge with and
into First Commerce (the "Merger") upon the terms and subject to the
conditions set forth in the Merger Agreement, as more fully described in
the proxy statement-prospectus that follows this notice.
2. Act on any other matters that may properly come before the meeting.
Only holders of First Commerce common stock of record at the close of
business on April 14, 2000 may vote at the special meeting. A list of
shareholders of record who may vote at the meeting will be available during
business hours for any First Commerce shareholder to examine and copy for any
purpose relevant to the meeting. The list will be available from May [2 days
after date below], 2000, through the adjournment of the meeting at the offices
of First Commerce, 1248 O Street, Lincoln, Nebraska 68508-1424, and at the
meeting.
By Order of the Board of Directors
[signature]
James Stuart, Jr.
Chairman and Chief Executive Officer
May , 2000
Please promptly complete, sign, date and return the enclosed proxy card
whether or not you plan to attend the meeting. Failure to return a properly
executed proxy or to vote at the meeting will have the same effect as a vote
against the merger agreement and the merger. You may still vote at the
meeting even if you have previously returned your proxy card.
<PAGE>
[FCBI logo]
The board of directors of First Commerce Bancshares, Inc. has approved the
sale of First Commerce to Wells Fargo & Company. The sale will be accomplished
through the merger of a wholly-owned subsidiary of Wells Fargo with First
Commerce. The sale requires the approval of First Commerce's shareholders and
will be voted on at the special meeting. The time and place of the meeting are
set forth in the notice of special meeting that precedes this proxy statement-
prospectus.
If the sale is completed, each share of First Commerce common stock will be
converted into the right to receive $35.95 in value of Wells Fargo common stock
based upon the average closing price of Wells Fargo common stock during a
twenty-day measurement period prior to the special meeting. If the total number
of shares of Wells Fargo common stock you will receive in the merger does not
equal a whole number, you will receive cash instead of the fractional share.
On May , 2000, Wells Fargo common stock closed at $ . No adjustment will be
made to the number of shares of Wells Fargo common stock to be issued to you to
reflect fluctuations in the price of Wells Fargo common stock occurring after
the special meeting.
The merger is expected to be generally tax free to shareholders of First
Commerce, except for cash received instead of fractional shares.
This document provides detailed information about the proposed sale. Please
read this entire document carefully. You can find additional information about
Wells Fargo and First Commerce from documents filed with the Securities and
Exchange Commission.
Whether or not you plan to attend the meeting, please complete and mail the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, your proxy will be voted in favor of the sale.
If you fail to return your proxy card, or if you fail to instruct your broker
how to vote shares held for you in the broker's name, the effect will be the
same as a vote against the sale.
The common stock of Wells Fargo is listed on the NYSE under the symbol "WFC,"
and the class A and class B common stock of First Commerce is listed on the
NASDAQ Small Cap Market under the symbols "FCBIA" and "FCBIB," respectively.
Approval of the sale of First Commerce to Wells Fargo & Company requires the
affirmative vote of at least two-thirds of the outstanding shares of First
Commerce class A common stock and class B common stock, voting as separate
classes. No vote of Wells Fargo's stockholders is required to approve the
transaction.
[signature]
James Stuart, Jr.
Chairman of the Board and Chief Executive Officer
-------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Wells Fargo common stock to be
issued or determined if this proxy statement-prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The shares of Wells Fargo common stock to be issued in the merger are not
savings or deposit accounts or other obligations of any bank or non-bank
subsidiary of Wells Fargo, and they are not insured by the Federal Deposit
Insurance Corporation, the Bank Insurance Fund or any other governmental
agency.
-------------------------------------
Proxy Statement-Prospectus dated May , 2000.
First mailed to First Commerce shareholders on or about May , 2000.
<PAGE>
ADDITIONAL INFORMATION
This document incorporates important business and financial information about
Wells Fargo and First Commerce that is not included in or delivered with this
document. See "Where You Can Find More Information" on page 66 for a list of
the documents that Wells Fargo and First Commerce have incorporated into this
document. These documents are available to you without charge upon written or
oral request made as follows:
Wells Fargo Documents: First Commerce Documents:
Corporate Secretary Corporate Secretary
Wells Fargo & Company First Commerce Bancshares, Inc.
MAC N9305-173 1248 O Street
Sixth and Marquette Lincoln, Nebraska 68508-1424
Minneapolis, Minnesota 55479 (402) 434-4110
(612) 667-8655
To obtain documents in time for the special meeting, your request should be
received by June [2], 2000.
i
<PAGE>
QUESTIONS AND ANSWERS ABOUT THIS DOCUMENT
What is the purpose of this proxy statement-prospectus?
This document serves as both a proxy statement of First Commerce and a
prospectus of Wells Fargo. As a proxy statement, it's being provided to you by
First Commerce because the board of directors of First Commerce is soliciting
your proxy to vote to approve the proposed merger of First Commerce and Wells
Fargo. As a prospectus, it's being provided to you by Wells Fargo because Wells
Fargo is offering you shares of its common stock in exchange for your shares of
First Commerce common stock if the merger is completed.
Do I need to read the entire document?
Absolutely. Parts of this document summarize information that is presented in
greater detail elsewhere in this document or in the appendices to this
document. Each summary discussion is qualified by reference to the full text.
For example, the summary of the terms of the merger agreement is qualified by
the actual terms of the merger agreement, a copy of which is included as
Appendix A.
Is there other information I should consider?
Yes. Much of the business and financial information about Wells Fargo and
First Commerce that may be important to you is not included directly in this
document. Instead, this information is incorporated into this document by
references to documents separately filed by Wells Fargo and First Commerce with
the Securities and Exchange Commission. This means that Wells Fargo and First
Commerce may satisfy their disclosure obligations to you by referring you to
one or more documents separately filed by them with the SEC. See "Where You Can
Find More Information" on page 66 for a list of documents that Wells Fargo and
First Commerce have incorporated by reference into this proxy statement-
prospectus and for instructions on how to obtain copies of these documents. The
documents are available to you without charge.
What if there is a conflict between documents?
You should rely on the most recently filed document. Information in this
proxy statement-prospectus may update information contained in the Wells Fargo
or First Commerce documents incorporated by reference. Similarly, information
in documents that Wells Fargo or First Commerce may file after the date of this
proxy statement-prospectus may update information contained in this proxy
statement-prospectus or information contained in previously filed documents.
What if I choose not to read the incorporated documents?
Information contained in a document that is incorporated by reference is part
of this proxy statement-prospectus, unless it is superseded by information
contained directly in this proxy statement-prospectus or in documents filed
with the SEC after the date of this proxy statement-prospectus. Information
that is incorporated from another document is considered to have been disclosed
to you whether or not you choose to read the document.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY.................................................................... 1
The Merger............................................................... 1
The Companies............................................................ 1
What You Will Receive In The Merger...................................... 1
The Market Price Of Wells Fargo Stock Will Fluctuate..................... 2
Merger Generally Tax Free To Shareholders of First Commerce.............. 2
First Commerce's Board Recommends Approval Of The Merger................. 3
First Commerce's Financial Advisor Believes Merger Is Fair To First
Commerce Shareholders................................................... 3
Additional Merger Benefits To First Commerce's Management................ 3
You Have No Dissenters' Rights........................................... 3
Surrender Of Shares of First Commerce.................................... 3
First Commerce Special Meeting........................................... 3
Record Date; Vote Required To Approve Merger............................. 4
Some Directors and Officers Have Committed To Vote For The Merger........ 4
We Must Obtain Regulatory Approvals to Complete the Merger............... 4
Other Conditions To Completing The Merger................................ 4
Termination Of The Merger Agreement...................................... 5
Your Rights Will Differ As A Wells Fargo Stockholder..................... 5
Wells Fargo Expects To Use Purchase Accounting........................... 5
Financial Modernization Will Increase Competition........................ 5
Forward-Looking Statements May Prove Inaccurate.......................... 6
Selected Financial Data.................................................. 7
Comparative Per Common Share Data........................................ 8
FIRST COMMERCE SPECIAL MEETING............................................. 9
Time And Place Of The Meeting............................................ 9
Matters To Be Considered At The Meeting.................................. 9
Record Date.............................................................. 9
Outstanding Shares....................................................... 9
Quorum................................................................... 9
Vote Required............................................................ 10
Share Ownership.......................................................... 10
Agreements to Vote For The Merger........................................ 10
Voting And Revocation Of Proxies......................................... 11
Solicitation Of Proxies.................................................. 11
Other Matters Considered At The Meeting.................................. 11
THE MERGER................................................................. 12
Effect Of The Merger..................................................... 12
Background Of And Reasons For The Merger................................. 12
Opinion Of First Commerce's Financial Advisor............................ 14
Interests in the Merger That May Be Different Than Yours................. 23
Dissenters' Rights....................................................... 24
Exchange Of Certificates................................................. 24
Regulatory Approvals..................................................... 25
Effect Of Merger On First Commerce's Employee Benefit Plans.............. 26
U.S. Federal Income Tax Consequences Of The Merger....................... 27
Support Agreements....................................................... 28
Resale Of Wells Fargo Common Stock Issued In The Merger.................. 29
Stock Exchange Listing................................................... 29
Accounting Treatment..................................................... 29
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
THE MERGER AGREEMENT........................................................ 30
Basic Plan Of Merger...................................................... 30
Representations And Warranties............................................ 31
Certain Covenants......................................................... 32
Conditions To The Merger.................................................. 35
Termination Of The Merger Agreement....................................... 36
Effect Of Termination..................................................... 36
Waiver And Amendment...................................................... 36
Expenses.................................................................. 36
INFORMATION ABOUT WELLS FARGO............................................... 37
General................................................................... 37
Management And Additional Information..................................... 37
Competition............................................................... 37
Information On Wells Fargo's Web Site..................................... 38
FIRST SECURITY MERGER
The First Security Merger Transaction..................................... 38
About First Security Corporation.......................................... 38
REGULATION AND SUPERVISION OF WELLS FARGO................................... 39
Introduction.............................................................. 39
Regulatory Agencies....................................................... 39
Bank Holding Company Activities........................................... 40
Dividend Restrictions..................................................... 40
Holding Company Structure................................................. 41
Capital Requirements...................................................... 42
Deposit Insurance Assessments............................................. 43
Fiscal and Monetary Policies.............................................. 44
Future Legislation........................................................ 44
INFORMATION ABOUT FIRST COMMERCE............................................ 45
WELLS FARGO CAPITAL STOCK................................................... 46
Wells Fargo Common Stock.................................................. 46
Wells Fargo Preferred Stock............................................... 47
Wells Fargo Rights Plan................................................... 48
COMPARISON OF SHAREHOLDER/STOCKHOLDER RIGHTS................................ 51
Authorized Capital Stock.................................................. 51
Size of Board of Directors................................................ 51
Cumulative Voting......................................................... 51
Classes of Directors...................................................... 52
Qualifications of Directors............................................... 52
Filling Vacancies on the Board............................................ 52
Removal of Directors...................................................... 53
Nomination of Directors for Election...................................... 53
Anti-Takeover Provisions.................................................. 54
Shareholder/Stockholder Rights Plan....................................... 55
Shareholder/Stockholder Action Without a Meeting.......................... 56
Calling Special Meetings of Shareholders/Stockholders..................... 56
Submission of Shareholder/Stockholder Proposals........................... 56
Notice of Shareholder/Stockholder Meetings................................ 57
Shareholder/Stockholder Vote Required for Mergers......................... 57
Dividends................................................................. 58
Dissenters' Appraisal Rights.............................................. 59
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Shareholder/Stockholder Preemptive Rights................................. 60
Shareholder/Stockholder Class Voting Rights............................... 60
Indemnification........................................................... 60
Limitations on Directors' Liability....................................... 62
Amendment of Articles/Certificate of Incorporation........................ 62
Amendment of Bylaws....................................................... 63
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................................... 65
Wells Fargo Share Prices And Dividends.................................... 65
First Commerce Share Prices And Dividends................................. 65
EXPERTS..................................................................... 66
Wells Fargo's Independent Accountants..................................... 66
First Commerce's Independent Accountants.................................. 66
OPINIONS.................................................................... 66
Share Issuance............................................................ 66
Tax Matters............................................................... 66
DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS.............................. 66
WHERE YOU CAN FIND MORE INFORMATION......................................... 66
Registration Statement.................................................... 66
Other SEC Filings......................................................... 67
Documents Incorporated By Reference....................................... 67
Documents Available Without Charge From The Companies..................... 68
FORWARD-LOOKING STATEMENTS.................................................. 69
</TABLE>
<TABLE>
<C> <S>
APPENDIX A Amended and Restated Agreement and Plan of Reorganization
(including the Agreement and Plan of Merger as Exhibit A-1)
APPENDIX B Form of opinion of Merrill Lynch, Pierce, Fenner & Smith,
Incorporated
</TABLE>
v
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully, and for a more complete description of the legal terms of the
merger, you should carefully read this document and the other documents to
which this document refers you. See "Where You Can Find More Information" on
page 66. Each item in this summary includes a page reference to a more complete
description of that item.
The Merger (page 12)
In the proposed transaction, a Wells Fargo subsidiary will merge with First
Commerce. First Commerce will survive the merger and become a subsidiary of
Wells Fargo. Wells Fargo will exchange shares of its common stock, par value $1
2/3 per share, for all of the outstanding First Commerce common stock, class A,
par value $0.20 per share, and First Commerce common stock, class B, par value
$0.20 per share. When used in this document, the term "First Commerce common
stock" refers to both classes of common stock collectively. After the merger is
completed, you will own shares of Wells Fargo common stock and Wells Fargo will
own all of the outstanding First Commerce common stock.
The amended and restated agreement and plan of reorganization, which includes
the agreement and plan of merger as Exhibit A-1, is included in this document
as Appendix A. When used in this document, the term "merger agreement" refers
to the amended and restated agreement and plan of reorganization and the
agreement and plan of merger together. Please read the merger agreement, as it
is the document that governs the merger.
The Companies (pages 37 and 45)
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
(800) 411-4932
Wells Fargo & Company is a diversified financial services company whose
subsidiaries and affiliates provide banking, insurance, investments, and
mortgage and consumer finance through stores located across North America. At
March 31, 2000, Wells Fargo had assets of $ billion, th largest among U.S.
bank holding companies.
First Commerce Bancshares, Inc.
1248 O Street
Lincoln, Nebraska 68508-1424
(402) 434-4110
First Commerce Bancshares, Inc. is a multi-bank holding company for eight
commercial bank subsidiaries, a mortgage company and an asset management
company. At March 31, 2000, First Commerce had assets of $2.62 billion.
What You Will Receive In The Merger (page 30)
If the merger is completed, each share of First Commerce common stock will be
converted into the right to receive $35.95 in value of Wells Fargo common stock
based upon the average closing price of Wells Fargo common stock during a
twenty-day measurement period prior to the special meeting. Since the price of
Wells
1
<PAGE>
Fargo common stock will fluctuate after the special meeting and the completion
of the merger, First Commerce cannot assure you as to what the value of the
Wells Fargo common stock you receive in the merger will be following the
measurement period.
Wells Fargo will not issue fractional shares in the merger. If the total
number of shares of Wells Fargo common stock you will receive in the merger
does not equal a whole number, you will receive cash instead of the fractional
share.
The Market Price Of Wells Fargo Stock Will Fluctuate (page 46)
Wells Fargo common stock is listed on the New York and Chicago Stock
Exchanges under the symbol "WFC." First Commerce class A and class B common
stock is listed on the NASDAQ Small Cap Market under the symbols "FCBIA" and
"FCBIB," respectively. The following table shows the closing prices of Wells
Fargo common stock and First Commerce class A and class B common stock on
February 1, 2000, the day before the merger was announced, and on May , 2000.
The table also shows the implied value to be received by you, had the merger
been completed on those dates, for each share of First Commerce common stock
that you own.
<TABLE>
<CAPTION>
Value of Merger
Consideration
Wells Fargo First Commerce First Commerce per share of
Common Class A Common Class B Common First Commerce
Stock Stock Stock Common Stock
----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
February 1, 2000..... $40.44 $33.00 $32.00 $35.95
May , 2000.......... 35.95
------ ------ ------
</TABLE>
In addition, recently declared per share dividend information for Wells Fargo
common stock and First Commerce class A and class B common stock is as follows:
<TABLE>
<CAPTION>
First Commerce First Commerce
Class A Class B Wells Fargo
Common Stock Common Stock Common Stock
-------------- -------------- ------------
<S> <C> <C> <C>
Quarter ended December 31, 1999..... $0.09 $0.09 $0.20
Quarter ended March 31, 2000........ 0.10 0.10 0.22
Quarter ended June 30, 2000......... 0.10 0.10
-----
</TABLE>
No adjustments to the exchange ratio will be made to reflect fluctuations in
the price of Wells Fargo common stock occurring after the special meeting.
Merger Generally Tax Free To Shareholders of First Commerce (page 27)
Shareholders of First Commerce generally will not recognize gain or loss for
U.S. federal income tax purposes from the exchange of their shares of First
Commerce common stock for shares of Wells Fargo common stock. Shareholders of
First Commerce will be taxed on cash they receive instead of fractional shares.
The U.S. federal tax treatment described above may not apply to every
shareholder of First Commerce. In addition, this document does not address any
state, local or foreign tax laws that may apply to the merger. Determining the
tax consequences of the merger to you may be complicated. You should consult
your own advisor for a full understanding of the tax consequences of the
merger.
First Commerce is not obligated to complete the merger unless it receives an
opinion of counsel that no gain or loss will be recognized for U.S. federal
income tax purposes by the holders of First Commerce common stock upon receipt
of Wells Fargo common stock except for cash received instead of fractional
shares.
2
<PAGE>
First Commerce's Board Recommends Approval Of The Merger (page 13)
First Commerce's board of directors believes that the merger is in the best
interests of First Commerce shareholders and recommends that First Commerce
shareholders approve the merger. First Commerce's board believes that the
merger will provide First Commerce shareholders with the potential for greater
stock value appreciation and liquidity than if First Commerce had remained
independent.
First Commerce's Financial Advisor Believes Merger Is Fair To First Commerce
Shareholders (page 14)
Among other factors considered in deciding to approve the merger, the First
Commerce board of directors received the oral opinion of its financial advisor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated that, as of January 28, 2000
(the date the First Commerce board voted on the merger) and updated through the
date of this document, the merger consideration was fair to the holders of
First Commerce common stock from a financial point of view. The opinion is
attached to this document as Appendix B. You should read this opinion
completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Merrill Lynch in providing its opinion.
Additional Merger Benefits To First Commerce's Management (page 23)
First Commerce's directors and executive officers have interests in the
merger that are different from yours.
. Bradley F. Korell, Stuart L. Bartruff, Mark W. Hansen and Jo E. Kinsey,
all of whom are officers of First Commerce, have entered into agreements
with Wells Fargo that provide for their employment after the merger.
. The merger agreement provides for rights to indemnification and
continued insurance coverage for the benefit of directors and officers
of First Commerce.
The board of directors of First Commerce was aware of these additional
interests when it approved the merger agreement.
You Have No Dissenters' Rights (page 24)
Under Nebraska law, you do not have dissenter's rights. See "Dissenters'
Rights."
Surrender Of Shares of First Commerce (page 24)
To receive certificates for your shares of Wells Fargo common stock, you will
need to surrender your share certificates of First Commerce common stock. After
the merger is completed, Wells Fargo's stock transfer agent will send you
written instructions for exchanging your stock certificates. Please do not send
in your certificates until you receive these instructions.
First Commerce Special Meeting (page 9)
First Commerce will hold its special meeting of shareholders at 2:00 p.m.,
Lincoln, Nebraska time, on the 11th floor of the NBC Center, 1248 O Street,
Lincoln, Nebraska. The purposes of the meeting are to:
1. Vote on the merger agreement.
2. Act on any other matters that may properly come before the meeting.
3
<PAGE>
Record Date; Vote Required To Approve Merger (page 9)
The record date for the special meeting is April 14, 2000. You can vote at
the meeting if you owned First Commerce common stock at the close of business
on that date. On the record date, there were 2,568,892 shares of First Commerce
class A common stock outstanding and entitled to vote and 10,775,394 shares of
First Commerce class B common stock outstanding and entitled to vote. You can
cast one vote for each share of First Commerce common stock that you owned on
the record date.
Approval of the merger agreement requires the affirmative vote of two-thirds
of the outstanding shares of First Commerce class A common stock and class B
common stock, voting as separate classes. Not voting, or failing to instruct
your broker how to vote shares held for you in the broker's name, will have the
same effect as voting against the merger.
Some Directors and Officers Have Committed To Vote For The Merger (page 10)
At the same time that the merger agreement was signed, Richard C. Schmoker,
William C. Schmoker, Kenneth W. Staab, John C. Osborne, John G. Lowe, III,
Connie Lapaseotes, David T. Calhoun and Scott Stuart, non-employee directors of
First Commerce; James Stuart, Jr., chairman and chief executive officer of
First Commerce; Brad Korell, president of National Bank of Commerce Trust &
Savings Association; Stuart L. Bartruff, executive vice president and secretary
of First Commerce; James Stuart III, Chairman and CEO of First Commerce
Investors, Inc.; and Mark Hansen, executive vice president of First Commerce,
entered into individual support agreements with Wells Fargo. Under their
support agreements, these individuals have agreed, among other things, to vote
in favor of the merger all shares of First Commerce common stock beneficially
owned by them at the record date for the meeting.
At the record date for the meeting, these individuals beneficially owned a
total of 1,564,866 shares of First Commerce class A common stock and 5,982,421
shares of First Commerce class B common stock, respectively. These shares
represent approximately 60.9% of the shares of First Commerce class A common
stock and approximately 55.5% of the shares of First Commerce class B common
stock entitled to vote at the meeting.
We Must Obtain Regulatory Approvals to Complete the Merger (page 25)
The Board of Governors of the Federal Reserve System must approve the merger
before it can be completed. Wells Fargo filed an application with the Federal
Reserve Board on March 30, 2000. As of the date of this document, the Federal
Reserve Board had not acted on Wells Fargo's application for approval of the
merger. Although Wells Fargo expects that the Federal Reserve Board will
approve the merger, it cannot be certain when or if, or on what terms and
conditions, the required approval will be given. It is anticipated that a
modest level of divestitures may be required in connection with obtaining
Federal Reserve Board approval of the merger.
Approval of the Merger must also be obtained from the Colorado State Bank
Commissioner.
Other Conditions To Completing The Merger (page 35)
In addition to the receipt of the approval of the Federal Reserve Board and
the Colorado State Bank Commissioner, there are a number of other conditions
that must be met before the merger can be completed. These conditions include:
. approval of the merger agreement by the holders of First Commerce class
A common stock and class B common stock, voting as separate classes;
. receipt by First Commerce of an opinion of counsel concerning the tax
consequences of the merger;
4
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. authorization for listing on the New York and Chicago Stock Exchanges of
the shares of Wells Fargo common stock to be issued in the merger to
First Commerce shareholders;
. receipt of all necessary governmental approvals, and the absence of an
order of any court or governmental authority prohibiting the merger; and
. material compliance by each party with the terms and provisions of the
merger agreement.
Wells Fargo or First Commerce may waive a condition it is entitled to assert
so long as the law does not require the condition to be met.
Termination Of The Merger Agreement (page 36)
Wells Fargo and First Commerce can agree to terminate the merger agreement at
any time without completing the merger. Also, either company can terminate the
merger agreement without the consent of the other under the following
circumstances:
. a court or other governmental authority prohibits the merger;
. the merger is not completed by October 31, 2000, unless the failure to
complete the merger on or before that date is the fault of the company
seeking to terminate; or
. a governmental authority issues a final and nonappealable order
permanently prohibiting the merger.
Your Rights Will Differ As A Wells Fargo Stockholder (page 51)
Your rights as a First Commerce shareholder are currently governed by
Nebraska law and First Commerce's articles of incorporation and bylaws. Upon
completion of the merger, you will become a Wells Fargo stockholder, and your
rights will be governed by Delaware law and Wells Fargo's restated certificate
of incorporation and bylaws.
Wells Fargo Expects To Use Purchase Accounting (page 29)
Wells Fargo expects to account for the merger under the purchase method of
accounting. Wells Fargo will record, at fair value, the acquired assets and
assumed liabilities of First Commerce. To the extent the total purchase price
exceeds the fair value of the assets acquired and liabilities assumed, Wells
Fargo will record goodwill.
Financial Modernization Will Increase Competition (page 37)
Bank holding companies that elect to become financial holding companies may
affiliate with securities firms and insurance companies and engage in other
activities that are financial in nature. "Financial in nature" includes:
. securities underwriting, dealing and market making;
. sponsoring mutual funds and investment companies;
. insurance underwriting and agency;
. merchant banking activities; and
. activities that the Federal Reserve Board has determined to be closely
related to banking.
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Wells Fargo has elected to become a financial holding company. Securities
firms and insurance companies that elect to become financial holding companies
may acquire banks and other financial institutions. This may significantly
change the competitive environment in which Wells Fargo and its subsidiaries
conduct business.
Forward-Looking Statements May Prove Inaccurate (page 69)
This document, including information incorporated by reference into this
document, may contain forward-looking statements about Wells Fargo and First
Commerce. There are a number of factors that may cause actual conditions,
events or results to differ significantly from those described in the forward-
looking statements. Some of these factors are described or referenced in
"Forward-Looking Statements" on page 69.
6
<PAGE>
Selected Financial Data
The following financial information is to aid you in your analysis of the
financial aspects of the merger. The Wells Fargo balance sheet data for 1995
through 1999 is derived from Wells Fargo's audited consolidated balance sheets
as of December 31, 1999, 1998, 1997 and 1996 and its unaudited financial
information for 1995. The Wells Fargo income statement data for 1995 through
1999 is derived from Wells Fargo's audited consolidated statement of income for
each of the years in the five-year period ended December 31, 1999. The First
Commerce data is derived from its audited consolidated financial statements for
1995 through 1999. Interim financial data as of March 31, 1999 and March 31,
2000 for both Wells Fargo and First Commerce is unaudited. You should not rely
on the information for the three months ended March 31, 2000 as being
indicative of the results expected for the entire year. The information in the
table is only a summary and should be read with the full financial statements
and related notes of Wells Fargo and First Commerce.
----------------
Wells Fargo & Company and Subsidiaries
(dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March
31
(unaudited) Years Ended December 31
------------- -----------------------
2000 1999 1999 1998 1997 1996 1995
---- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ 2,266 $ 9,355 $ 8,990 $ 8,648 $ 8,222 $ 5,923
Net income.............. 884 3,747 1,950 2,499 2,228 1,988
Diluted earnings per
share.................. 0.53 2.23 1.17 1.48 1.36 1.62
Cash dividends per
share.................. 0.185 0.785 0.700 0.615 0.525 0.450
Book value per share.... 12.60 13.44 12.35 11.92 11.66 10.27
Total assets............ 201,430 218,102 202,475 185,685 188,633 122,200
Long-term debt.......... 20,363 23,375 19,709 17,335 18,142 16,726
----------------
First Commerce Bancshares, Inc. and Subsidiaries
(dollars in millions, except per share amounts)
<CAPTION>
Three Months
Ended March
31
(unaudited) Years Ended December 31
------------- -----------------------
2000 1999 1999 1998 1997 1996 1995
---- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ 21.2 $ 87.9 $ 82.2 $ 76.6 $ 70.1 $ 60.9
Net income.............. 8.5 30.9 29.0 26.6 21.8 17.4
Diluted earnings per
share.................. .63 2.33 2.15 1.96 1.60 1.29
Cash dividends per
share.................. .09 0.360 0.340 0.300 0.260 0.227
Book value per share.... 18.44 19.32 18.40 17.19 14.57 13.27
Total assets............ 2,446.8 2,609.6 2,384.7 2,251.1 2,028.0 1,815.6
Long-term debt.......... 13.5 12.5 13.5 16.2 18.7 21.3
</TABLE>
7
<PAGE>
Comparative Per Common Share Data
The following table shows comparative per share data for Wells Fargo common
stock on a historical and pro forma combined basis and for First Commerce
common stock on a historical and pro forma equivalent basis. The information in
the table assumes that Wells Fargo will account for the merger using the
purchase method of accounting. The pro forma equivalent information for First
Commerce is calculated by multiplying the pro forma basic and diluted earnings
per share, the historical cash dividends declared per share of Wells Fargo
common stock and the pro forma book value per share by the assumed exchange
ratio of 0.883119. This information reflects the fact that you will receive a
fraction of a share of Wells Fargo common stock for each First Commerce share
you hold. The assumed exchange ratio of 0.883119 is based on a hypothetical
average closing price of Wells Fargo common stock of $40.708, which is the
average closing price of Wells Fargo common stock for the twenty trading days
ending April 14, 2000. The actual exchange ratio will be determined during the
20-trading-day period ending on the date preceding the special meeting. See
"The Merger--Effect Of The Merger."
You should read the data with the historical financial statements and related
notes of Wells Fargo and First Commerce. Wells Fargo's and First Commerce's
historical financial statements are included in documents filed with the SEC.
See "Where You Can Find More Information" on page 66.
<TABLE>
<CAPTION>
Wells Fargo First Commerce
-------------------- ---------------------
Pro Forma Pro Forma
Historical Combined Historical Equivalent
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings Per Share
Basic
Three months ended March 31,
2000........................... $0.62 $0.62 $0.83 $0.55
Year ended December 31, 1999.... 2.26 2.26 2.33 2.00
Diluted
Three months ended March 31,
2000........................... 0.61 0.62 0.83 0.54
Year ended December 31, 1999.... 2.23 2.23 2.33 1.97
Cash Dividends Declared Per Share
Three months ended March 31,
2000........................... 0.220 0.220 0.100 0.194
Year ended December 31, 1999.... 0.785 0.785 0.360 0.693
Book Value Per Share
March 31, 2000.................. 14.35 14.41 19.91 12.72
December 31, 1999............... 13.44 13.50 19.32 11.92
</TABLE>
8
<PAGE>
FIRST COMMERCE SPECIAL MEETING
The board of directors of First Commerce is soliciting proxies from the
holders of First Commerce class A and class B common stock for use at the
special meeting of First Commerce shareholders and at any adjournments of the
meeting. When used in this document, the term "First Commerce common stock"
refers to both classes of common stock collectively. This document, together
with the form of proxy, is expected to be mailed to holders of First Commerce
common stock on or about May , 2000.
Time And Place Of The Meeting
The time and place of the special meeting of First Commerce shareholders are:
[Friday], June [9], 2000
2:00 p.m., Lincoln, Nebraska time
NBC Center, 11th floor
1248 O Street
Lincoln, Nebraska 68508-2095
Matters To Be Considered At The Meeting
The special meeting of First Commerce shareholders will be held to:
1. Vote on a proposal to approve the amended and restated agreement and
plan of reorganization, entered into as of the 1st day of February,
2000, and amended and restated as of April 14, 2000, but effective as of
February 1, 2000, by and among First Commerce, Wells Fargo, First
National Bank and Trust Co. of Kearney, The Overland National Bank of
Grand Island, Western Nebraska National Bank and The First National Bank
of West Point; and a related agreement and plan of merger, dated as of
, 2000, by and between First Commerce and Wells FCBI Merger Co., a
wholly-owned subsidiary of Wells Fargo. The agreement and plan of
reorganization, which includes the agreement and plan of merger as
Exhibit A-1, is included in this proxy statement-prospectus as Appendix
A. When used in this document, the term "merger agreement" refers to the
agreement and plan of reorganization and the agreement and plan of
merger together. The merger agreement provides for the merger of a
wholly-owned subsidiary of Wells Fargo with and into First Commerce upon
the terms and subject to the conditions set forth in the merger
agreement. See "The Merger Agreement."
2. Act on any other matters that may properly come before the meeting.
Record Date
First Commerce's board of directors has established April 14, 2000 as the
record date for the meeting. Only holders of record of First Commerce common
stock on that date are entitled to attend and vote at the meeting or at any
adjournment of the meeting.
Outstanding Shares
On April 14, 2000, there were 2,568,892 shares of First Commerce class A
common stock outstanding and 10,775,394 shares of class B common stock
outstanding. Each outstanding share of First Commerce common stock is entitled
to one vote.
Quorum
A quorum consisting of the holders of a majority of the shares of First
Commerce common stock outstanding at the record date must be present in person
or represented by proxy for the transaction of business
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<PAGE>
at the special meeting. Shares of First Commerce common stock present in person
at the meeting that are not voted, and shares of First Commerce common stock
for which proxies have been received but that abstain from voting, are counted
in determining whether a quorum is present. Shares held in street name that
have been designated by brokers on proxy cards as not voted will be counted for
purposes of determining whether a quorum exists.
Vote Required
Approval of the merger agreement and the merger requires the affirmative vote
of two-thirds of the First Commerce class A common stock and two-thirds of the
class B common stock, voting as separate classes. Because approval of the
merger requires the affirmative vote of a specified percentage of outstanding
shares, not voting on the proposal, or failing to instruct your broker how to
vote shares held for you by the broker, will have the same effect as voting
against the proposal.
Share Ownership
First Commerce. The Stuart family controls a total of 1,559,232 shares of
First Commerce class A common stock and 5,904,461 of the class B common stock,
representing approximately 60.7% and 54.8% of the shares of class A and class B
common stock entitled to vote at the special meeting, respectively. The
Catherine Stuart Schmoker Family Partnership, The James Stuart, Jr. Family
Partnership and The Scott Stuart Family Partnership share in the investment
and/or voting power with respect to these shares by virtue of being partners in
the Stuart Family Partnership. Catherine Stuart Schmoker and Richard C.
Schmoker individually, and Richard C. Schmoker, Catherine S. Hunnewell, James
Stuart III, William C. Schmoker and Lisa Stuart Schmoker Hesdorffer as
Trustees, share in the investment and/or voting power as to these shares by
virtue of being partners in The Catherine Stuart Schmoker Family Partnership.
James Stuart, Jr. individually and as custodian, Susan S. Stuart individually,
James Stuart III individually and as Trustee, Susan S. Seiler and Lee Rankin
Stuart as Trustees share in the investment and/or voting power with respect to
these shares by virtue of being partners in The James Stuart, Jr. Family
Partnership. Scott Stuart, Scott Stuart, Jr., and Mark Hayes Stuart share in
the investment and/or voting power with respect to these shares by virtue of
being partners in The Scott Stuart Family Partnership.
At the record date for the meeting, all of First Commerce's directors and
executive officers as a group beneficially owned a total of 1,564,866 shares of
First Commerce class A common stock and 5,982,421 shares of the class B common
stock, representing approximately 60.9% and 55.5% of the shares of class A and
class B common stock entitled to vote at the special meeting, respectively.
Each of these directors and officers is expected to vote the First Commerce
common stock beneficially owned by him in favor of the merger. In addition, the
directors and certain senior officers of First Commerce have entered into
agreements to vote in favor of the merger. See "--Agreements to Vote For The
Merger."
Wells Fargo. At the record date, Wells Fargo and its subsidiaries
beneficially owned a total of approximately shares of First Commerce class
A common stock and shares of class B common stock, representing
approximately % and % of the shares of class A and class B common stock
entitled to vote at the special meeting, respectively. At the same date, all of
Wells Fargo's directors and executive officers as a group beneficially owned a
total of shares of First Commerce class A common stock and shares of
class B common stock, representing [less than 0.1%] of the shares of the class
A and class B common stock entitled to vote at the special meeting.
Agreements to Vote For The Merger
In connection with the merger agreement, Richard C. Schmoker, William C.
Schmoker, Kenneth W. Staab, John C. Osborne, John G. Lowe, III, Connie
Lapaseotes, David T. Calhoun and Scott Stuart, non-employee directors of First
Commerce; James Stuart, Jr., chairman and chief executive officer of First
Commerce; Brad
10
<PAGE>
Korell, president of National Bank of Commerce Trust & Savings Association;
Stuart L. Bartruff, executive vice president and secretary of First Commerce;
James Stuart III, Chairman and CEO of First Commerce Investors, Inc.; and Mark
Hansen, executive vice president of First Commerce, entered into agreements
under which they agreed to vote in favor of the merger all shares of First
Commerce common stock beneficially owned by them at the record date for the
meeting. At the record date, these individuals beneficially owned a total of
1,564,866 shares of First Commerce class A common stock and 5,982,421 shares of
class B common stock, representing approximately 60.9% and 55.5% of the shares
of the class A and class B common stock entitled to vote at the meeting,
respectively.
Voting And Revocation Of Proxies
All shares of First Commerce common stock represented at the special meeting
by a properly executed proxy will be voted in accordance with the instructions
indicated on the proxy, unless the proxy is revoked before a vote is taken. If
you sign and return a proxy without voting instructions, and do not revoke the
proxy, the proxy will be voted "FOR" the proposal to approve the merger
agreement and the merger, and "FOR" any other matters that may properly come
before the meeting. You may revoke your proxy at any time before it is voted.
Votes cast by proxy or in person at the special meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum, but as unvoted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
Solicitation Of Proxies
In addition to solicitation by mail, directors, officers and employees of
First Commerce and its subsidiaries may solicit proxies from First Commerce
shareholders, either personally or by telephone or other form of communication.
None of the foregoing persons who solicit proxies will be specifically
compensated for such services. First Commerce does not anticipate that any
other persons will be specifically engaged to solicit proxies or that special
compensation will be paid for that purpose, but First Commerce reserves the
right to do so should it conclude that such efforts are necessary or advisable.
Nominees, fiduciaries and other custodians will be requested to forward
soliciting materials to beneficial owners and will be reimbursed for their
reasonable expenses incurred in sending proxy material to beneficial owners.
First Commerce will bear its own expenses in connection with any solicitation
of proxies for the special meeting.
Other Matters Considered At The Meeting
If an insufficient number of votes for the merger is received before the
scheduled meeting date, Wells Fargo and First Commerce may decide to postpone
or adjourn the special meeting. If this happens, proxies that have been
received that either have been voted for the merger or contain no instructions
will be voted for adjournment.
First Commerce's board of directors is not aware of any business to be
brought before the special meeting other than the proposal to approve the
merger. If other matters are properly brought before the special meeting or any
adjournments or postponements of the meeting, the persons appointed as proxies
will have authority to vote the shares represented by properly executed proxies
in accordance with their discretion and judgment as to the best interests of
First Commerce.
11
<PAGE>
THE MERGER
This summary of the material terms and provisions of the merger agreement is
qualified in its entirety by reference to the merger agreement, which is
attached as Appendix A to this document and is incorporated into this summary
by reference.
Effect Of The Merger
The First Commerce board and the Wells Fargo board have each unanimously
approved the merger agreement, which provides for the merger of a wholly-owned
subsidiary of Wells Fargo into First Commerce at the time the merger becomes
effective, with First Commerce surviving as a wholly-owned subsidiary of Wells
Fargo. As a result of the merger:
. Wells Fargo will exchange shares of its common stock for shares of First
Commerce common stock.
. Wells Fargo will acquire all of the outstanding common stock of First
Commerce, resulting in First Commerce becoming a wholly-owned subsidiary
of Wells Fargo.
. First Commerce shareholders will become Wells Fargo stockholders, with
their rights governed by Delaware law and Wells Fargo's restated
certificate of incorporation and bylaws. See "Comparison Of
Shareholder/Stockholder Rights."
At the completion of the merger, each outstanding share of First Commerce
class A common stock, with a par value of $0.20 per share, and each outstanding
share of First Commerce class B common stock, with a par value of $0.20 per
share, will be converted into the right to receive the number of shares of
Wells Fargo common stock, with a par value of $1 2/3 per share, determined by
dividing $35.95 by the Wells Fargo Measurement Price. When used in this
document, this number is referred to as the "exchange ratio." The "Wells Fargo
Measurement Price" is defined as the average of the closing prices of a share
of Wells Fargo common stock as reported on the consolidated tape of the New
York Stock Exchange during the measurement period of 20 trading days ending on
June [8], 2000, the day immediately preceding the special meeting. Since the
price of Wells Fargo common stock will fluctuate after the special meeting and
the completion of the merger, First Commerce cannot assure you as to what the
value of the Wells Fargo common stock you receive in the merger will be
following the measurement period used to determine the Wells Fargo Measurement
Price.
When used in this document, a "share" of Wells Fargo common stock in this
document generally refers to that share together with one Series C Junior
Participating Preferred Stock Purchase Right issued to Wells Fargo stockholders
under a rights agreement, dated as of October 21, 1998, between Wells Fargo and
ChaseMellon Shareholder Services, L.L.C., as rights agent. When you surrender
your shares of First Commerce common stock in exchange for Wells Fargo common
stock after the merger is completed, each share of Wells Fargo common stock you
receive in exchange will include one Wells Fargo stockholder right. The Wells
Fargo stockholder rights are described in more detail under "Wells Fargo
Capital Stock--Wells Fargo Rights Plan."
Background Of And Reasons For The Merger
Background of the Merger
On several occasions over a number of years, representatives of Norwest
Corporation (now Wells Fargo) informally contacted representatives of First
Commerce regarding a possible merger or acquisition. In June 1999, James Stuart
Sr., advisor to the First Commerce board of directors, and Richard C. Schmoker,
a director of First Commerce, met with representatives of Wells Fargo (Richard
Kovacevich and James Campbell) for exploratory discussions regarding a possible
transaction.
During this time, the management of First Commerce discussed from time to
time the various options open to First Commerce, in light of the changing
banking environment, including the potential enactment of financial
modernization legislation by the Congress of the United States. Also during
this period, First Commerce entered
12
<PAGE>
into a confidentiality agreement with Wells Fargo and provided Wells Fargo with
information concerning First Commerce.
In September 1999, First Commerce retained Merrill Lynch to assist it in a
strategic review of its business and to help it evaluate strategic
alternatives. Merrill Lynch was authorized to contact Wells Fargo, and later
other selected parties, that might potentially be interested in a transaction
with First Commerce.
During the period September through December 1999, representatives of First
Commerce held a series of discussions and communications with representatives
of Wells Fargo concerning the terms of a possible business combination. At the
regular monthly meeting of the board of directors of First Commerce held on
December 21, 1999, James Stuart, Jr., the Chairman and Chief Executive Officer
of First Commerce, briefed the directors on the background and status of the
discussions, including the work of Merrill Lynch and the status of exploration
of a possible transaction. Following the December board meeting and continuing
into January of 2000, representatives of Wells Fargo conducted due diligence
investigations of First Commerce.
Beginning in mid-January 2000, legal counsel to each company began to
negotiate the terms of the definitive documentation with respect to a possible
merger between the two companies, including drafts of a merger agreement and
related agreements, shareholder support agreements, and employment agreements
and non-competition agreements for certain of First Commerce's executives.
During this period, representatives of First Commerce conducted a due
diligence investigation of Wells Fargo. At the regular monthly meeting of the
First Commerce board of directors held on January 25, 2000, the board was fully
briefed on the status of the potential merger. On January 27, 2000, First
Commerce issued a press release indicating that it was in negotiations with
Wells Fargo.
On January 28, 2000, the First Commerce board met to discuss the terms of the
proposed merger. Merrill Lynch outlined the proposed transaction with Wells
Fargo, and discussed its financial terms. During this meeting, the First
Commerce board received the oral opinion of Merrill Lynch, subsequently
confirmed by a written opinion dated January 28, 2000, that, as of that date,
and subject to certain matters stated therein, the exchange ratio set forth in
the merger agreement was fair, from a financial point of view, to the holders
of First Commerce class A and class B common stock. First Commerce's legal
counsel, Wachtell, Lipton, Rosen & Katz and Cline, Williams, Wright, Johnson &
Oldfather, reviewed the terms of the merger agreement and related agreements,
the shareholder support agreements, and the employment and non-competition
agreements, and other relevant legal issues, including a discussion of various
drafting points in the documents that were subject to being finalized with
Wells Fargo. After further discussion of these matters, the First Commerce
board unanimously determined that the merger was fair to, and in the best
interests of, First Commerce and its shareholders, approved the merger and the
merger agreement and related agreements, subject to the resolution of the
unresolved issues, resolved to submit the merger agreement to First Commerce
shareholders for their approval, and authorized senior management to take such
action as was needed to finalize the documents and, if satisfactorily
finalized, to execute the documents and to effectuate the transactions
contemplated in them.
During the weekend of January 29 and 30, and continuing on Monday, January
31, 2000, representatives of First Commerce and Wells Fargo resolved the
remaining drafting issues. On the afternoon of February 1, 2000, the merger
agreement and related documents were signed by First Commerce and Wells Fargo
and on February 2, 2000, First Commerce and Wells Fargo issued a joint press
release announcing the proposed merger.
First Commerce's Board of Directors' Reasons for the Merger
The First Commerce board believes that the proposed merger with Wells Fargo
is in the best interests of First Commerce and its shareholders. In making its
determination, the board considered a number of factors, including the
following:
. the consideration First Commerce shareholders will receive if the merger
is effected and the likelihood that it will deliver greater value to
First Commerce shareholders than that expected if First Commerce
remained independent;
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<PAGE>
. the board's consideration of Merrill Lynch's January 28, 2000
presentation, including Merrill Lynch's opinion that the exchange ratio
was fair to First Commerce shareholders from a financial point of view
as of that date;
. the complementary nature of First Commerce's business, services and
products with Wells Fargo's, and the opportunity to create a combined
business that offers a wider variety of services to First Commerce's
clients and enhances the ability to attract new clients;
. the historical performance of Wells Fargo's common stock and Wells
Fargo's historical financial performance;
. the board's review of other strategic alternatives potentially available
to First Commerce;
. the opinion of First Commerce's advisors that the merger will be
accomplished on a tax-free basis for First Commerce shareholders for
U.S. federal income tax purposes (except for cash received instead of
fractional shares);
. the likelihood of a smooth integration of First Commerce's business with
that of Wells Fargo;
. retention arrangements with key employees of First Commerce in
connection with the merger;
. the terms and conditions of the merger agreement;
. the judgment and advice of First Commerce's senior management; and
. the board's conclusion that the merger would provide First Commerce
shareholders with an opportunity for continued equity participation in a
larger enterprise, and with greater liquidity.
Opinion Of First Commerce's Financial Advisor
First Commerce retained Merrill Lynch to act as its financial advisor in
connection with the merger. On January 28, 2000, the board of directors of
First Commerce held a meeting to evaluate the proposed merger. At this meeting,
Merrill Lynch rendered its oral opinion that, as of that date and based upon
and subject to the factors and assumptions set forth in its opinion, the merger
consideration was fair, from a financial point of view, to the First Commerce
shareholders. [Merrill Lynch subsequently confirmed and updated its oral
opinion in writing by delivering to the board of directors of First Commerce a
written opinion dated as of the date of this document. In connection with its
written opinion dated as of the date of this document, Merrill Lynch confirmed
the appropriateness of its reliance on the analyses used to render its earlier
opinion. It also performed procedures to update certain of its analyses and
reviewed the assumptions used in its analyses and the factors considered in
connection with its earlier opinion.]
The full text of the Merrill Lynch opinion which describes, among other
things, the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by Merrill Lynch is attached as Appendix B
to this document and is incorporated in this document by reference. First
Commerce shareholders should read Merrill Lynch's opinion carefully and in its
entirety.
Merrill Lynch's opinion is directed to the board of directors of First
Commerce and addresses only the fairness, from a financial point of view, of
the merger consideration to the First Commerce shareholders. The opinion does
not address any other aspect of the merger or any related transaction, nor does
it constitute a recommendation to any shareholder as to how to vote at the
First Commerce special meeting. The summary of the fairness opinion set forth
in this document is qualified in its entirety by reference to the full text of
the opinion.
14
<PAGE>
In arriving at its opinion, Merrill Lynch, among other things:
. reviewed certain publicly available business and financial information
relating to First Commerce and Wells Fargo that Merrill Lynch deemed to
be relevant;
. reviewed certain information, including financial forecasts, relating to
the businesses, earnings, assets, liabilities and prospects of First
Commerce furnished to Merrill Lynch by the senior management of First
Commerce;
. conducted discussions with members of senior management and
representatives of First Commerce and Wells Fargo concerning the matters
described in the bullet points set forth above, as well as their
respective businesses and prospects before and after giving effect to
the merger;
. reviewed the market prices and valuation multiples for First Commerce
common stock and Wells Fargo common stock and compared them with those
of publicly traded companies that Merrill Lynch deemed to be relevant;
. reviewed the respective publicly reported financial condition and
results of operations of First Commerce and Wells Fargo and compared
them with those of publicly traded companies that Merrill Lynch deemed
to be relevant;
. compared the proposed financial terms of the merger with the financial
terms of other transactions that Merrill Lynch deemed to be relevant;
. participated in discussions and negotiations with representatives of
First Commerce and Wells Fargo and their financial and legal advisors
with respect to the merger;
. reviewed the merger agreement; and
. reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In rendering its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, or that was discussed with, or reviewed by or for Merrill Lynch,
or that was publicly available, and Merrill Lynch did not assume any
responsibility for independently verifying this information or undertake an
independent evaluation or appraisal of the assets or liabilities of First
Commerce or Wells Fargo nor has Merrill Lynch been furnished any such
evaluation or appraisal.
Merrill Lynch is not an expert in the evaluation of allowances for loan
losses, and neither made an independent evaluation of the adequacy of the
allowances for loan losses of First Commerce or Wells Fargo, nor reviewed any
individual credit files of First Commerce or Wells Fargo or been requested to
conduct such a review and, as a result, Merrill Lynch has assumed that the
aggregate allowances for loan losses for both First Commerce and Wells Fargo
are adequate to cover such losses and will be adequate on a pro forma basis for
the combined company. In addition, Merrill Lynch did not assume any obligation
to conduct, nor did Merrill Lynch conduct, any physical inspection of the
properties or facilities of First Commerce or Wells Fargo. With respect to the
financial and operating forecast information furnished to or discussed with
Merrill Lynch by First Commerce and Wells Fargo, including, without limitation,
financial forecasts, valuations of contingencies and projections regarding
under-performing and non-performing assets, net charge-offs, adequacy of
reserves and future economic conditions, Merrill Lynch assumed that the
information was reasonably prepared and reflected the best currently available
estimates and judgments of the senior management of each of First Commerce and
Wells Fargo as to the future financial and operating performance of First
Commerce, Wells Fargo or the combined entity, as the case may be. Merrill
Lynch's opinion is necessarily based upon market, economic and other conditions
as in effect on, and on the information made available to Merrill Lynch as of,
the date of its opinion.
15
<PAGE>
For purposes of rendering its opinion Merrill Lynch assumed that, in all
respects material to its analyses:
. the merger will be completed substantially in accordance with the terms
set forth in the merger agreement;
. the representations and warranties of each party in the merger agreement
and in all related documents and instruments referred to in the merger
agreement are true and correct;
. each party to the merger agreement and all related documents will
perform all of the covenants and agreements required to be performed by
the party under these documents;
. all conditions to the completion of the merger will be satisfied without
any waivers; and
. in the course of obtaining the necessary regulatory, contractual, or
other consents or approvals for the merger, no restrictions, including
any divestiture requirements, termination or other payments or
amendments or modifications, will be imposed that will have a material
adverse effect on the future results of operations or financial
condition of the combined entity or the contemplated benefits of the
merger.
Merrill Lynch's opinion is not an expression of an opinion as to the prices
at which shares of First Commerce common stock or shares of Wells Fargo common
stock will trade following the announcement of the merger or the actual value
of the shares of common stock of Wells Fargo when issued pursuant to the
merger, or the prices at which the shares of common stock of Wells Fargo will
trade following the completion of the merger.
Analyses of Merrill Lynch
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch, First Commerce and Wells Fargo. Any estimates contained in the
analyses performed by Merrill Lynch are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable
than suggested by these analyses. Additionally, estimates of the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which such businesses or securities might actually be sold.
Accordingly, these analyses and estimates are inherently subject to substantial
uncertainty. In addition, the Merrill Lynch opinion was among several factors
taken into consideration by the board of directors of First Commerce in making
its determination to approve the merger agreement and the merger. Consequently,
the analyses described below should not be viewed as determinative of the
decision of the board of directors of First Commerce or management of First
Commerce with respect to the fairness of the merger consideration.
The following is a summary of the material financial analyses presented by
Merrill Lynch to the board of directors of First Commerce on January 28, 2000
in connection with the rendering of its oral opinion on that date. The summary
is not a complete description of the analyses underlying the Merrill Lynch
opinion or the presentation made by Merrill Lynch to the board of directors of
First Commerce, but summarizes the material analyses performed and presented in
connection with its opinion. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most appropriate
and relevant methods of financial analysis and the application of those methods
to the particular circumstances. Therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description.
In arriving at its opinion, Merrill Lynch did not attribute any particular
weight to any analysis or factor that it considered, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. The financial analyses summarized below include information presented
in tabular format. Accordingly, Merrill Lynch believes that its analyses and
the summary of its analyses must be considered as a whole and that selecting
portions of its analyses and factors or focusing on the information presented
below in tabular format, without considering all analyses and factors or the
full narrative description of the financial
16
<PAGE>
analyses, including the methodologies and assumptions underlying the analyses,
could create a misleading or incomplete view of the process underlying its
analyses and opinion. The tables alone do not constitute a complete description
of the financial analyses.
Calculation of Implied Value of the Merger Consideration. Merrill Lynch
reviewed the terms of the merger. It noted that the transaction had a fixed
aggregate value of $479.5 million with a floating exchange ratio, which implied
a fixed value of approximately $35.95 per share of First Commerce class A
common stock and class B common stock. Merrill Lynch also noted that the fixed
aggregate value of the transaction represented a 74% premium to First
Commerce's aggregate market value on the date 30 trading days preceding January
28, 2000, and also represented a 67% premium to the per share market price of
First Commerce class A common stock and 75% premium to the per share market
price of First Commerce class B common stock on the date 30 trading days
preceding January 28, 2000.
Transaction Pricing Multiple Analysis. Merrill Lynch performed a transaction
pricing multiple analysis of the transaction offer value in the merger. Core
earnings is comprised of total earnings excluding securities gains generated by
First Commerce's "Global Fund." The Global Fund is a portfolio of primarily
equity securities traded for the account of First Commerce. Merrill Lynch based
its analysis on a floating exchange ratio, a transaction value per First
Commerce share of $35.95, and an aggregate offer value of $479.5 million.
Merrill Lynch determined that:
. the transaction value as a multiple of book value (based on financial
data for the period ending December 31, 1999) was 1.86x;
. the transaction value as a multiple of tangible book value (based on
financial data for the period ending December 31, 1999) was 1.92x;
. the transaction value as a multiple of 1999 core earnings was 17.09x;
. the transaction value as a multiple of 2000 estimated management core
earnings per share was 16.21x; and
. the tangible book premium paid as a percentage of First Commerce's
deposits (based on financial data for the period ending December 31,
1999) was 12.67%.
Merrill Lynch further analyzed publicly available financial and stock market
information for First Commerce and for selected bank merger and acquisition
transactions involving commercial bank targets in Nebraska, Kansas, Oklahoma,
South Dakota, North Dakota, Missouri, Iowa and Arkansas to determine the
transaction values of such transactions as a premium to the per share price of
the common stock of the targets involved in such transactions at different
times. The selected comparable transactions were those completed since 1997 and
involved total consideration that ranged from $100 million to $1 billion. The
following table compares the transaction values of the comparable transactions
as a premium to the per share price of the common stock of the targets involved
in these transactions at different times. For purposes of the table, the 52-
week high of First Commerce common stock (class A and class B) was reached on
January 20, 2000, and the figures in the column designated the "Price 30
Trading Days Prior" represents, for the merger, 30 trading days prior to
Merrill Lynch's presentation to the First Commerce Board, and, for each of the
selected comparable transactions, 30 trading days prior to the announcement of
such transactions:
<TABLE>
<CAPTION>
Price One Day Prior to Price 30 Trading 52-Week
Announcement Date Days Prior High Market Value
---------------------- ---------------- -----------------
<S> <C> <C> <C>
Merrill Lynch Selected
Transaction Average.... 14.3% 16.7% --
First Commerce Class A.. 19.2 67.2 1.3%
First Commerce Class B.. 19.2 75.4 16.0
</TABLE>
17
<PAGE>
Discounted Dividend Analysis--First Commerce. Merrill Lynch performed a
discounted dividend analysis to estimate a range of present values per share of
First Commerce common stock assuming First Commerce continued to operate as a
stand-alone entity. This range was determined by adding (1) the present value
of the estimated future dividend stream that First Commerce could generate
through 2004, and (2) the present value at December 31, 1999 of the "terminal
value" of First Commerce common stock at the end of this period.
In calculating a terminal value of First Commerce common stock, Merrill Lynch
applied multiples of 10.0x, 11.0x and 12.0x to year 2005 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
December 31, 1999 using discount rates of 12.0%, 13.0% and 14.0%, which rates
Merrill Lynch viewed as within the appropriate range for a company with First
Commerce's risk characteristics.
In performing this analysis, Merrill Lynch used management's earnings
estimates for 2000. For periods after 2000, earnings were assumed to increase
at First Commerce management's projected annual long-term earnings growth rate
of 7.5% since there were no long term "street" estimates published for First
Commerce by recognized data services that monitor and publish compilations of
earnings estimates by selected research analysts of interest to institutional
investors. Merrill Lynch also assumed an annual asset growth rate of 5%, and
further assumed that earnings in excess of those necessary to maintain First
Commerce's tangible common equity ratio at its then-current value of 9.6% could
be paid out as dividends. Based on the above assumptions, Merrill Lynch
determined that the stand-alone present value of the First Commerce common
stock ranged from $20.92 to $26.10 per share, and that the aggregate company
valuation ranged from $279 million to $348 million.
Discounted Dividend Analysis--Wells Fargo. Merrill Lynch also performed a
discounted dividend analysis to estimate a range of present values per share of
Wells Fargo common stock assuming Wells Fargo continued to operate as a stand-
alone entity. As with the analysis performed with regard to First Commerce,
this range was determined by adding (1) the present value of the estimated
future dividend stream that Wells Fargo could generate through 2004, and (2)
the present value at December 31, 1999 of the "terminal value" of Wells Fargo
common stock at the end of this period.
In calculating a terminal value of Wells Fargo common stock, Merrill Lynch
applied multiples of 12.0x, 13.0x and 14.0x to year 2005 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
December 31, 1999 using discount rates of 14.0%, 15.0% and 16.0%, which rates
Merrill Lynch viewed as within the appropriate range for a company with Wells
Fargo's risk characteristics.
In performing this analysis, Merrill Lynch used First Call earnings per share
estimates for 2000 and 2001 for Wells Fargo of $2.57 and $2.96, respectively.
For periods after 2001, earnings were assumed to increase at First Call's
estimated annual long-term earnings growth rate for Wells Fargo of 14.3%. First
Call is a recognized data service that monitors and publishes compilations of
earnings estimates by selected research analysts regarding companies of
interest to institutional investors. Merrill Lynch also assumed an annual asset
growth rate of 7.5% and further assumed that earnings in excess of those
necessary to maintain Wells Fargo's tangible common equity ratio at its then-
current value of 6.27% could be paid out as dividends. Based on the above
assumptions, Merrill Lynch determined that the stand-alone present value of the
Wells Fargo common stock ranged from $39.39 to $47.91 per share, compared to
Wells Fargo's closing market price as of January 26, 2000 of $38.00.
The analyses set forth in each of the preceding six paragraphs do not
necessarily indicate actual values or actual future results and do not purport
to reflect the prices at which any securities may trade at the present or at
any time in the future. The discount rates applied to First Commerce and Wells
Fargo referred to in such paragraphs were based on several factors, including
the financial advisors' knowledge of each of First Commerce and Wells Fargo and
the industry in which they operate, the business risk of each company and the
overall interest rate environment as of January 28, 2000. The projected asset
growth rates applied for First Commerce and Wells Fargo took into consideration
several factors, including the historical asset growth of each
18
<PAGE>
of First Commerce and Wells Fargo as well as projected long-term growth rates.
Dividend discount analysis is a widely used valuation methodology, but the
results of this methodology are highly dependent upon the numerous assumptions
that must be made, including earnings growth rates, dividend payout rates,
terminal values and discount rates.
Five-Year Stock Price Performance. Merrill Lynch analyzed the price
performance of the First Commerce class A common stock and class B common stock
over the five-year period from December 30, 1994 to January 26, 2000 and
compared this performance to the performance of Wells Fargo common stock and
the Standard & Poors Bank Index over the same period. This analysis indicated
the following cumulative changes in price over the period:
<TABLE>
<S> <C>
Wells Fargo common stock............................................... +227%
Standard & Poors Bank Index............................................ +151%
First Commerce class B common stock.................................... +164%
First Commerce class A common stock.................................... +86%
</TABLE>
Peer Group Analysis--Total Stock Returns. Merrill Lynch compared the total
stock returns of First Commerce to publicly available corresponding data for
selected banks with a market capitalization between $250 million and $450
million that Merrill Lynch determined were comparable to First Commerce. These
selected banks are referred to in this document as the First Commerce peer
group. The following table compares the stock returns of First Commerce with
corresponding average data for the First Commerce peer group ("CAGR" denotes
"Compound Annual Growth Rate"):
<TABLE>
<CAPTION>
One- Two- Three- Four- Five-
year year year year year
CAGR CAGR CAGR CAGR CAGR
------ ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
First Commerce Peer Group Average........ (12.38)% (7.75)% 4.47% 11.02% 15.63%
First Commerce Class A................... 6.36 (0.86) 9.02 9.21 10.86
First Commerce Class B................... 2.92 3.90 19.87 19.17 21.79
</TABLE>
Merrill Lynch also compared the total stock returns of Wells Fargo to
publicly available corresponding data for a peer group consisting of all banks
with a market capitalization between $17 billion and $100 billion. These
selected banks are referred to in this document as the Wells Fargo peer group.
The following table compares the stock returns of Wells Fargo with
corresponding average data for the Wells Fargo peer group:
<TABLE>
<CAPTION>
One- Two- Three- Four- Five-
year year year year year
CAGR CAGR CAGR CAGR CAGR
------ ---- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Wells Fargo Peer Group Average............. (11.57)% 4.54% 13.06% 20.56% 24.70%
Wells Fargo Common Stock................... 9.00 5.61 21.49 26.06 27.66
</TABLE>
Peer Group Analysis--Market Trading Multiples. Merrill Lynch compared
selected operating and stock market results of First Commerce to publicly
available corresponding data for the First Commerce peer group.
The following table compares selected financial data of First Commerce with
corresponding average data for the First Commerce peer group. The multiples
listed are based on the aggregate market value of First Commerce common stock
using the closing price as of December 14, 1999 (30 trading days prior to the
date of Merrill Lynch's presentation to the First Commerce Board). Earnings
estimates for year 2000 are based on management's projections (excluding Global
Fund securities gains) since there are no "street" estimates published for
First Commerce. Financial data is as of December 31, 1999 if available,
otherwise such data is as of September 30, 1999; and market data is as of
January 26, 2000. The calculation of price-to-2000 estimated earnings per share
is based on estimated earnings per share calculated in accordance with
generally accepted accounting principles. The calculation of price-to-2000
estimated cash earnings per share is based on estimated earnings per share plus
amortization of intangible assets per share. Year 2001 earnings estimates were
not
19
<PAGE>
available since there are no "street" estimates published for First Commerce;
as a result, price-to-2001 multiples were only presented for Wells Fargo and
the Wells Fargo peer group.
<TABLE>
<CAPTION>
Price/ Price/ Price/
Price/ Tangible 2000 2000
Book Book Estimated Estimated
Value Value GAAP EPS Cash EPS
------ -------- --------- ---------
<S> <C> <C> <C> <C>
First Commerce Peer Group Average........... 1.86x 1.96x 11.45x 10.98x
First Commerce.............................. 1.07 1.10 9.33 9.10
</TABLE>
Merrill Lynch also compared selected operating and stock market results of
Wells Fargo to publicly available corresponding data for the Wells Fargo peer
group. The following table compares selected financial data of Wells Fargo with
corresponding average data for the Wells Fargo peer group. Financial data is as
of December 31, 1999 if available, otherwise such data is as of September 30,
1999; and market data is as of January 26, 2000. The calculations of price-to-
2000 and price-to-2001 estimated earnings per share are based on estimated
earnings per share calculated in accordance with generally accepted accounting
principles. The calculations of price-to-2000 and price-to-2001 First Call
estimated cash earnings per share are based on estimated earnings per share
plus amortization of intangible assets per share.
<TABLE>
<CAPTION>
Price/
Price/ Price/ Price/ 2001 Projected/
Price/ Tangible 2000 2000 Estimated 2001
Book Book Estimated Estimated GAAP Estimated
Value Value GAAP EPS Cash EPS EPS Cash EPS
------ -------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo Peer Group
Average................ 2.85x 3.53x 13.48x 11.99x 12.70x 11.37x
Wells Fargo............. 2.71 4.71 14.78 12.86 12.50 11.10
</TABLE>
Peer Group Analysis--Growth Rates and Price Earnings Growth Ratios. Merrill
Lynch also analyzed the First Call projected five-year earnings per share
growth rate of Wells Fargo compared with the Wells Fargo peer group. Merrill
Lynch determined that the First Call projected five-year earnings per share
growth rate for Wells Fargo was 14.3% compared to an average of 12.1% for the
Wells Fargo peer group. Merrill Lynch also analyzed Wells Fargo's 2000 price-
to-earnings ratio measured as a percentage of its projected five-year earnings
per share growth rate and compared this measurement to the Wells Fargo peer
group. This analysis indicated that Wells Fargo's 2000 price-to-earnings ratio
measured as a percentage of its five-year earnings per share growth rate was
90%, compared to an average of 99% for the Wells Fargo peer group.
Peer Group Analysis--Historical Growth Analysis. Merrill Lynch also analyzed
the historical growth of Wells Fargo compared with the corresponding publicly
available data for the Wells Fargo peer group. This analysis indicated that the
three-year revenue (net interest income plus noninterest income) compound
annual growth rate of Wells Fargo and the Wells Fargo peer group was 8.9% and
8.7%, respectively, ranking Wells Fargo number 3 among 11 peers. Merrill Lynch
further determined that the three-year earnings compound annual growth rate for
Wells Fargo and the Wells Fargo peer group was 18.9% and 12.5%, respectively,
ranking Wells Fargo number 1 among 11 peers. All historical data was adjusted
to reflect subsequent transactions accounted for as "poolings-of-interests."
Peer Group Analysis - Profitability Ratios. Merrill Lynch compared certain
profitability ratios of First Commerce and Wells Fargo to publicly available
corresponding data for the First Commerce peer group and the Wells Fargo peer
group, respectively. For the two following tables, profitability measures
represent fourth quarter 1999 data annualized and exclude non-recurring charges
and/or gains, except for data for First Commerce, which is for the full year
1999, excluding Global Fund securities gains for purposes of calculating
20
<PAGE>
the return on assets and return on equity. The following table compares certain
profitability ratios of First Commerce with corresponding average data for the
First Commerce peer group:
<TABLE>
<CAPTION>
Cash
Return on Return on Return on Net Fee
Average Average Average Interest Efficiency Income/
Assets Equity Equity Margin Ratio Revenues
--------- --------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
First Commerce Peer
Group Average.......... 1.51% 14.87% 15.53% 4.76% 53.7% 21.9%
First Commerce.......... 1.13 11.28 11.97 3.97 66.2 46.2
</TABLE>
The following table compares certain profitability ratios of Wells Fargo with
corresponding average data for the Wells Fargo peer group:
<TABLE>
<CAPTION>
Cash
Return on Return on Return on Net Fee
Average Average Average Interest Efficiency Income/
Assets Equity Equity Margin Ratio Revenues
--------- --------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo Peer Group
Average................ 1.56% 21.00% 26.21% 3.36% 54.8% 50.7%
Wells Fargo............. 1.93 18.38 21.67 5.61 55.6 40.3
</TABLE>
Peer Group Analysis--Balance Sheet and Asset Quality Ratios. Merrill Lynch
also compared certain balance sheet and asset quality ratios of First Commerce
and Wells Fargo to publicly available data for the First Commerce peer group
and Wells Fargo peer group, respectively. The following table compares certain
balance sheet and asset quality ratios of First Commerce with corresponding
average data for the First Commerce peer group. Financial data for the two
following tables is as of December 31, 1999 if available; otherwise such data
is as of September 30, 1999:
<TABLE>
<CAPTION>
Tangible Non- Reserves/
Common Performing Non-
Equity/ Equity/ Loans/ Assets/ Performing Reserves/
Assets Assets Deposits Assets Loans Loans
------- -------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
First Commerce Peer
Group Average.......... 10.07% 9.65% 83.94% 0.44% 213.08% 1.46%
First Commerce.......... 9.87 9.60 79.49 0.08 1,182.56 1.73
</TABLE>
The following table compares certain balance sheet and asset quality ratios
of Wells Fargo with corresponding average data for the Wells Fargo peer group:
<TABLE>
<CAPTION>
Tangible Non- Reserves/
Common Performing Non-
Equity/ Equity/ Loans/ Assets/ Performing Reserves/
Assets Assets Deposits Assets Loans Loans
------- -------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo Peer Group
Average................ 7.27% 5.80% 90.99% 0.37% 315.20% 1.43%
Wells Fargo............. 10.53 6.27 89.10 0.39 473.80 2.62
</TABLE>
No company or transaction used in the comparable company analyses described
above is identical to First Commerce, Wells Fargo, the pro forma combined
company, or the merger, as the case may be. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning financial and operating characteristics and other factors
that could affect the merger, public trading or other values of the companies
to which they are being compared. Mathematical analysis (such as determining
the average or median) is not in itself a meaningful method of using comparable
transaction data or comparable company data.
Selected Merger and Acquisition Transactions. Merrill Lynch analyzed publicly
available financial, operating, and stock market information for twelve
selected bank merger and acquisition transactions that involved commercial bank
targets in Nebraska, Kansas, Oklahoma, South Dakota, North Dakota, Missouri,
Iowa and Arkansas, that have been completed since 1997 and that involved total
consideration that ranged from $100 million to $1 billion to determine the
multiples and premiums achieved in these transactions. Merrill Lynch then
determined the imputed per share value of First Commerce common stock based on
the multiples and premiums arrived at by Merrill Lynch in its comparability
analysis.
21
<PAGE>
The following transactions were reviewed by Merrill Lynch (in each case, the
first named company is the acquiror and the second named company is the
acquired company in the transaction):
. Mercantile Bancorporation . First Commercial
Inc./First Financial Corporation/Southwest
Bancorporation Bancshares, Inc.
. BancFirst Corporation/AmQuest . Mercantile Bancorporation
Financial Corp. Inc./Mark Twain Bancshares, Inc.
. F&M Bancorporation, . Magna Group, Inc./Homeland
Inc./BancSecurity Corporation Bankshares Corporation
. Commercial Federal . First Bank System, Inc./FirsTier
Corporation/Liberty Financial Financial, Inc.
Corporation
. Mercantile Bancorporation
. Mercantile Bancorporation Inc./Hawkeye Bancorporation
Inc./Horizon Bancorp, Inc.
. Union Planters
. Bank One Corporation/Liberty Corporation/Capital
Bancorp, Inc. Bancorporation, Inc.
Merrill Lynch considered the precedent transactions to be reasonably similar
to the merger, but none of the transactions is identical to the merger. The
following table compares average data for the above-referenced transactions
with comparable data for the merger:
<TABLE>
<CAPTION>
Price/ Last Last
Last Tangible Twelve Twelve
30-Day Price/ Twelve Book Months Months
Market Price/ Tangible Months Deposit Return Return Equity/
Premium Book Value Book Value EPS Premium on Assets on Equity Assets
------- ---------- ---------- ------ -------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Transaction Average.... 16.70% 2.30x 2.44x 18.50x 16.40% 1.23% 14.09% 8.45%
Merger.................. 73.70 1.86 1.92 17.10 12.70 1.13 11.28 9.60
</TABLE>
In determining the 30-day market premium, Merrill Lynch used the price of
First Commerce common stock on December 14, 1999 (the date 30 trading days
prior to the date Merrill Lynch delivered its opinion). In determining the last
twelve months' return on assets and equity, the First Commerce financial
measures are based on core 1999 earnings (excluding Global Fund securities
gains) and the First Commerce balance sheet data as of December 31, 1999.
The actual operating and financial results achieved by the pro forma combined
company may vary from projected results and variations may be material as a
result of business and operational risks, the timing, amount and costs
associated with achieving cost savings and revenue enhancements, as well as
other factors.
First Commerce retained Merrill Lynch based upon its experience and
expertise. Merrill Lynch is an internationally recognized investment banking
and advisory firm. As part of its investment banking business, Merrill Lynch is
regularly engaged in the valuation of businesses and 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.
In addition, in the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of First Commerce
and Wells Fargo for their own account and/or the accounts of their respective
customers, and, accordingly, may at any time hold long or short positions in
these securities. In the past two years, Merrill Lynch has provided to Wells
Fargo financial advisory, investment banking and other services unrelated to
the proposed merger, and has received fees for the rendering of these services.
Merrill Lynch may provide these types of services to the combined company in
the future and receive fees for those services.
22
<PAGE>
Pursuant to a letter agreement between First Commerce and Merrill Lynch,
dated as of September 20, 1999, First Commerce agreed to pay Merrill Lynch the
following fees for financial advisory services rendered through the closing of
the merger:
. a fee of $75,000, which was paid upon the execution of the letter
agreement;
. a fee of $1.25 million, which was paid upon the execution of the merger
agreement; and
. a fee of approximately $2.25 million, payable in cash if and when the
merger is completed.
First Commerce also agreed, among other things, to reimburse Merrill Lynch
for certain expenses incurred in connection with the services provided by
Merrill Lynch, and to indemnify Merrill Lynch and its affiliates from and
against certain liabilities and expenses, which may include certain liabilities
under federal securities laws, in connection with its engagement.
Interests in the Merger That May Be Different Than Yours
First Commerce's directors and executive officers may be considered to have
interests in the merger that are in addition to their interests as shareholders
of First Commerce generally. First Commerce's board of directors was aware of
these interests and considered them, among other things, when it approved the
merger agreement.
Employment and Non-Competition Agreements
In connection with the merger, First Commerce, National Bank of Commerce and
Wells Fargo entered into employment and non-compete agreements with Bradley F.
Korell, Stuart L. Bartruff, Mark W. Hansen and Jo E. Kinsey, officers of First
Commerce and National Bank of Commerce, relating to the employment of these
officers following the merger. Under the employment provisions of the
agreements, National Bank of Commerce will employ these officers in positions
substantially similar to the positions held by these officers prior to the
merger. In consideration of their employment services, Messrs. Korrell,
Bartruff and Hansen and Ms. Kinsey will receive an annual salary of $250,000,
$185,000, $190,000 and $110,000, respectively, and will be eligible to
participate in the Wells Fargo Long-Term Incentive Compensation Plan according
to its terms and Wells Fargo's policies. The term of their employment will
commence on the closing date of the merger and will expire two years later
unless earlier terminated as a result of:
. the officer's death;
. receipt by the officer of notice of termination from First Commerce,
National Bank of Commerce or Wells Fargo arising from:
. the commission of a fraudulent or dishonest act by the officer or
. the officer's willful violation of National Bank of Commerce's or
Wells Fargo's policies or the Wells Fargo Code of Ethics and
Business Conduct; or
. the officer's voluntary resignation.
In addition, the agreements contain non-compete and non-solicitation
provisions that apply while the executive is employed by the company and until
the second anniversary of the closing date.
23
<PAGE>
Other Interests (e.g., change in control, severance arrangements, etc.)
In December, 1999 the Compensation Committee recommended, and the Board of
Directors of First Commerce adopted, a Retention Bonus Program. Under this
program, certain selected key officers of First Commerce and its subsidiary
banks will be paid a retention bonus in the event that a qualifying
transaction, such as the merger, is completed, provided that the respective
officer is still employed by First Commerce, or its successors, on the date
which is four months after the date of closing. The retention bonuses are also
payable in the event the employee is terminated without cause (as defined in
the Retention Bonus Program) or in the event the employee terminates his or her
employment for good reason (as defined in the Retention Bonus Program). Each
officer's retention bonus is either a fixed amount or a multiple of his or her
annual compensation, defined to include the salary paid to the employee for the
year 1999 plus the cash bonus paid to that employee for the year 1998. The
range of bonuses is from $11,700 to three times annual compensation. Payment of
a portion of the retention bonuses for employees whose retention bonus is
either two or three times annual compensation is at the discretion of the board
of directors of First Commerce based upon the Board's evaluation of the
employee's services and cooperation during the period from December 1999
through the date the transaction is completed. For First Commerce's executive
officers, other than Messrs. Stuart, Jr. and Donald Kinley, the amount of the
retention bonus is three times annual compensation; of this amount, an amount
equal to one times annual compensation is at the discretion of the Board. Mr.
Kinley's retention bonus is equal to two times his annual compensation; of this
amount, an amount equal to one times annual compensation is at the discretion
of the Board. The retention bonus for James Stuart, Jr. is $500,000, payable on
the date the transaction is completed.
Indemnification
Wells Fargo has agreed to ensure that all rights to indemnification and all
limitations of liability existing in First Commerce's articles of incorporation
or bylaws in favor of the present and former directors and officers of First
Commerce with respect to claims arising from (a) facts or events that occurred
before the effective time of the merger or (b) the merger agreement, the
support agreements or any of the transactions contemplated by these agreements
will survive the merger and continue in full force and effect.
The merger agreement also provides that Wells Fargo will use its reasonable
best efforts to cover for six years following the effective time the officers
and directors of First Commerce and its subsidiaries under a director's and
officer's liability insurance policy with respect to claims arising out of
facts or events occurring before the effective time. This insurance will
provide at least the same coverage and amounts as the coverage currently
provided by First Commerce for a total premium cost of not more than 200% of
the current amount expended by First Commerce to provide this insurance. If
Wells Fargo is unable to maintain or obtain this insurance, it will use its
reasonable best efforts to obtain as much comparable insurance as is available
for a total premium cost of 200% of the current amount expended by First
Commerce to provide this insurance.
Dissenters' Rights
Under Nebraska law, shareholders of First Commerce common stock do not have
the right to dissent to the merger, because the Nebraska dissenters' rights
statute does not apply to shareholders of a bank or bank holding company.
Exchange Of Certificates
After completion of the merger, Norwest Bank Minnesota, National Association,
acting as exchange agent for Wells Fargo, will mail to each holder of record of
shares of First Commerce common stock a form of letter of transmittal, together
with instructions, for the exchange of the holder's First Commerce stock
certificates for a certificate representing Wells Fargo common stock.
First Commerce shareholders should not send in their certificates until they
receive the letter of transmittal form and instructions.
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No dividend or other distribution declared on Wells Fargo common stock after
completion of the merger will be paid to the holder of any certificates for
shares of First Commerce common stock until after the certificates have been
surrendered for exchange.
When the exchange agent receives a surrendered certificate or certificates
from a First Commerce shareholder, together with a properly completed letter of
transmittal, it will issue and mail to the shareholder a certificate
representing the number of whole shares of Wells Fargo common stock to which
the shareholder is entitled, plus cash for the amount of any remaining
fractional share and any cash dividends that are payable with respect to the
shares of Wells Fargo common stock so issued. No interest will be paid on the
fractional share amount or amounts payable as dividends or other distributions.
A certificate for Wells Fargo common stock may be issued in a name other than
the name in which the surrendered certificate is registered if (a) the
certificate surrendered is properly endorsed and accompanied by all documents
required to transfer the shares to the new holder and (b) the person requesting
the issuance of the Wells Fargo common stock certificate either pays to the
exchange agent in advance any transfer and other taxes due or establishes to
the satisfaction of the exchange agent that such taxes have been paid or are
not due.
The exchange agent will issue stock certificates for Wells Fargo common stock
in exchange for lost, stolen or destroyed certificates for First Commerce
common stock upon receipt of a lost certificate affidavit and a bond
indemnifying Wells Fargo for any claim that may be made against Wells Fargo as
a result of the lost, stolen or destroyed certificates.
After completion of the merger, no transfers will be permitted on the books
of First Commerce. If, after completion of the merger, certificates for First
Commerce common stock are presented for transfer to the exchange agent, they
will be canceled and exchanged for certificates representing Wells Fargo common
stock.
None of Wells Fargo, First Commerce, the exchange agent or any other person
will be liable to any former holder of First Commerce common stock for any
amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
Regulatory Approvals
The merger is subject to the prior approval of the Board of Governors of the
Federal Reserve System. The approval of the Federal Reserve Board is required
because Wells Fargo is a bank holding company registered under the Bank Holding
Company Act.
Wells Fargo has filed an application with the Federal Reserve Board
requesting approval of the merger. Copies of the application have been provided
to the U.S. Department of Justice and other governmental agencies. The
application describes the terms of the merger, the parties involved, the
activities to be conducted by Wells Fargo as a result of the merger, the source
of funds for the merger and provides other financial and managerial
information. In evaluating the application, the Federal Reserve Board will
consider the financial and managerial resources and prospects of the existing
and combined institutions and the benefits that may be expected from the
merger. Among other things, the Federal Reserve Board will evaluate the capital
adequacy of Wells Fargo before and after completion of the merger.
The Federal Reserve Board may deny an application if it determines that the
transaction would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or attempt to monopolize a given business activity
in any part of the United States. The Federal Reserve Board may also deny an
application if it determines that the transaction would substantially lessen
competition or would tend to create a monopoly in any section of the country,
or would in any other manner result in a restraint of trade, unless the Federal
Reserve Board finds that the anti-competitive effects of the transaction are
clearly outweighed by the probable effects of the transaction in providing
benefits to the public. Wells Fargo and First Commerce expect
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that a modest level of divestitures may be required in connection with
obtaining Federal Reserve Board approval of the merger.
Applicable federal law provides for the publication of notice and public
comment on the application filed by Wells Fargo with the Federal Reserve Board.
Under current law, the merger may not be completed until the Federal Reserve
Board has approved the merger and a period of 30 days, or fewer if prescribed
by the Federal Reserve Board with the concurrence of the Attorney General of
the United States, following the date of approval by the Federal Reserve Board,
has expired. Wells Fargo filed an application with the Federal Reserve Board on
March 30, 2000. As of the date of this document, the Federal Reserve Board had
not acted on Wells Fargo's application.
Prior approval of the merger is also required from the Colorado State Bank
Commissioner. First Commerce also owns all of the outstanding capital stock of
First Commerce Technologies, Inc. As a result of the acquisition of First
Commerce, Wells Fargo will also acquire FCTI, which will require that prior
notice be given to the Federal Trade Commission under the Hart Scott Rodino
Antitrust Improvements Act.
The approval of an application means only that the regulatory criteria for
approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by First
Commerce shareholders is fair. Regulatory approval does not constitute an
endorsement or recommendation of the merger.
Wells Fargo and First Commerce are not aware of any governmental approvals or
compliance with banking laws and regulations that are required for the merger
to become effective other than those described above. Wells Fargo and First
Commerce intend to seek any other approval and to take any other action that
may be required to effect the merger. There can be no assurance that any
required approval or action can be obtained or taken prior to the special
meeting.
The merger cannot be completed unless all necessary regulatory approvals are
granted and all statutory waiting periods thereafter have expired. In addition,
Wells Fargo may elect not to complete the merger if any condition under which
any regulatory approval is granted is unreasonably burdensome to Wells Fargo.
However, a divestiture that is required as a condition to a regulatory approval
will not be deemed to be unreasonably burdensome to Wells Fargo if the
divestiture is consistent with U.S. Department of Justice and Federal Reserve
Board guidelines, policies and practices concerning the merger of bank holding
companies that have been used in transaction that have recently been reviewed
by those agencies prior to the date of the merger agreement. See "The Merger
Agreement--Conditions To The Merger" and "--Termination Of The Merger
Agreement."
Effect Of Merger On First Commerce's Employee Benefit Plans
Each person who is an employee of First Commerce or a First Commerce
subsidiary as of the effective date of the merger will be eligible for the
employee welfare plans of Wells Fargo specified in the merger agreement,
subject to any eligibility requirements applicable to such plans. Eligible
employees will enter the specified plans not later than January 1, 2001.
Each person who is an employee of First Commerce or a First Commerce
subsidiary as of the effective date of the merger will be eligible for
participation in the Wells Fargo 401(k) plan, subject to any eligibility
requirements applicable to such plan. Each such employee shall also be eligible
for participation in the Wells Fargo cash balance plan pursuant to the terms
thereof, and shall be eligible for access to Wells Fargo's retiree medical
benefit, subject to any applicable eligibility requirements. Wells Fargo shall
recognize years of past service with First Commerce or a First Commerce
subsidiary and any predecessor of First Commerce or a First Commerce subsidiary
for the purpose of eligibility to access Wells Fargo's retiree medical benefit.
Each person who is an employee of First Commerce or a First Commerce
subsidiary as of the effective date of the merger will be eligible for
participation in the employee benefit plans of Wells Fargo on the same
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basis as similarly situated employees of Wells Fargo, and Wells Fargo will give
each employee of First Commerce credit for prior service with First Commerce or
its subsidiaries, and any of their predecessors, for purposes of eligibility,
vesting and levels of benefits under the Wells Fargo employee benefit plans for
which the employee is eligible, subject to any eligibility requirements
applicable to these plans. Eligible employees will enter the specified plans on
the effective date of the merger or on such later date on which the employee
becomes eligible to participate upon conversion to Wells Fargo's payroll
systems.
U.S. Federal Income Tax Consequences Of The Merger
The following is a summary of the material anticipated U.S. federal income
tax consequences of the merger to First Commerce shareholders who hold First
Commerce common stock as a capital asset. The summary is based on the U.S. tax
code, regulations under the U.S. tax code, administrative rulings and court
decisions, as in effect as of the date of this document, 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. In
particular, this summary may not address U.S. federal income tax considerations
applicable to you if you are a First Commerce shareholder subject to special
treatment under U.S. federal income tax law, including, for example:
. foreign persons
. financial institutions
. dealers in securities
. traders in securities who elect to apply a mark-to-market method of
accounting
. insurance companies
. tax-exempt entities
. holders who dissent from the merger and receive the fair value of their
shares of First Commerce common stock in cash
. holders who acquired their shares of First Commerce common stock through
exercise of an employee stock option or right, or otherwise as
compensation
. holders who hold First Commerce common stock as part of a hedge,
straddle, conversion or constructive sale transaction.
In addition, First Commerce does not provide any information in this document
about the tax consequences of the merger under applicable foreign, state or
local laws or under any federal laws other than those relating to the income
tax.
First Commerce urges you to consult with your tax advisors about the
particular tax consequences of the merger to you, including the effects of U.S.
federal, state or local, or foreign and other tax laws.
[In connection with the filing with the SEC of the registration statement
containing this document, the law firm of Wachtell, Lipton, Rosen & Katz has
delivered to Wells Fargo and First Commerce an opinion addressing the material
U.S. federal income tax consequences of the merger. This opinion has been
rendered on the basis of facts, representations and assumptions set forth or
referred to in the opinion. In rendering this opinion, Wachtell, Lipton, Rosen
& Katz required and relied upon factual representations contained in
certificates of officers of Wells Fargo and First Commerce. The opinion is to
the effect that, for U.S. federal income tax purposes:
. the merger will constitute a reorganization within the meaning of
Section 368 of the U.S. tax code;
. no gain or loss will be recognized by the holders of First Commerce
common stock upon receipt of Wells Fargo common stock, except with
respect to cash received instead of fractional shares of Wells Fargo
common stock;
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. the basis of Wells Fargo common stock received, including fractional
shares deemed received and redeemed as described below, by the
shareholders of First Commerce will be the same as the basis of the
First Commerce common stock exchanged therefor; and
. the holding period of shares of Wells Fargo common stock received,
including fractional shares deemed received and redeemed as described
below, by the shareholders of First Commerce will include the holding
period of the First Commerce common stock, provided that the shares of
First Commerce common stock were held as a capital asset as of the
effective time of the merger.]
First Commerce will not be required to complete the merger unless it receives
an additional opinion of its counsel, dated the closing date of the merger,
based on the facts and assumptions stated in that opinion, substantially to the
same effect as the opinion described above. In rendering that opinion, counsel
may require and rely on customary representations contained in certificates of
officers of Wells Fargo, First Commerce and others.
None of the tax opinions delivered or to be delivered to the parties in
connection with the merger as described in this document are binding on the
Internal Revenue Service or the courts, and First Commerce does not intend to
request a ruling from the IRS with respect to the merger.
If you receive cash instead of a fractional share interest in Wells Fargo
common stock, you will be treated as having received that fractional share
interest and then as having received the cash in redemption of the fractional
share interest, and in most cases you should recognize capital gain or loss for
U.S. 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 First
Commerce common stock allocable to the fractional share interest. This capital
gain or loss would be a long-term capital gain or loss if the holding period
for the fractional share interest in Wells Fargo common stock is greater than
one year at the effective time.
Information Reporting and Backup Withholding. Payments related to First
Commerce 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 you, or another payee, if you or the payee completes and signs the
substitute Form W-9 that will be included as part of the transmittal letter, or
otherwise proves to Wells Fargo and the exchange agent that you or the payee is
exempt from backup withholding.
Support Agreements
At the same time that the merger agreement was signed, Richard C. Schmoker,
William C. Schmoker, Kenneth W. Staab, John C. Osborne, John G. Lowe, III,
Connie Lapaseotes, David T. Calhoun and Scott Stuart, non-employee directors of
First Commerce; James Stuart, Jr., chairman and chief executive officer of
First Commerce; Brad Korell, president of National Bank of Commerce Trust &
Savings Association; Stuart L. Bartruff, executive vice president and secretary
of First Commerce; James Stuart III, Chairman and CEO of First Commerce
Investors, Inc. and Mark Hansen, executive vice president of First Commerce,
entered into individual support agreements with Wells Fargo. Under the support
agreements, these individuals agreed, among other things:
. not to sell or transfer any shares of First Commerce common stock held
by them except (a) pursuant to the merger, (b) in connection with the
exercise of stock options or (c) with Wells Fargo's prior written
consent;
. to vote in favor of the merger all shares of First Commerce common stock
owned by them at the record date for any meeting of shareholders of
First Commerce called to consider and vote on the merger;
. not to solicit any inquiries or proposals or enter into any discussions,
negotiations or agreements relating to a business combination, merger or
consolidation of First Commerce with any person other than Wells Fargo;
and
. not to vote in favor of any business combination, merger or
consolidation of First Commerce with any person other than Wells Fargo.
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At the record date for the special meeting, the individuals signing the
support agreements beneficially owned a total of 1,564,886 shares of First
Commerce class A common stock and 5,982,421 shares of First Commerce class B
common stock, respectively. These shares represent approximately 60.9% of the
shares of First Commerce class A common stock and approximately 55.5% of the
shares of First Commerce class B common stock entitled to vote at the special
meeting.
Resale Of Wells Fargo Common Stock Issued In The Merger
The Wells Fargo common stock issued in the merger will be freely transferable
under the Securities Act of 1933, except for shares issued to First Commerce
shareholders who are considered to be "affiliates" of First Commerce or Wells
Fargo under Rule 145 under the Securities Act or of Wells Fargo under Rule 144
under the Securities Act. The definition of "affiliate" is complex and depends
on the specific facts, but generally includes directors, executive officers,
10% stockholders and other persons with the power to direct the management and
policies of the company in question.
Affiliates of First Commerce may not sell the shares of Wells Fargo common
stock received in the merger except:
. pursuant to an effective registration statement under the Securities
Act;
. in compliance with an exemption from the registration requirements of
the Securities Act; or
. in compliance with Rule 145 under the Securities Act.
Generally, those rules permit resales of stock received by First Commerce
affiliates during the year following the completion of the merger so long as
Wells Fargo has complied with certain reporting requirements and the selling
shareholder complies with certain volume and manner of sale restrictions, and
freely thereafter.
First Commerce has agreed to use its best efforts to deliver to Wells Fargo
signed representations by each person who may be deemed to be an affiliate of
First Commerce that the person will not sell, transfer or otherwise dispose of
the shares of Wells Fargo common stock to be received by the person in the
merger except in compliance with the applicable provisions of the Securities
Act and the rules and regulations promulgated thereunder.
This document does not cover any resales of Wells Fargo common stock received
by affiliates of First Commerce.
Stock Exchange Listing
The shares of Wells Fargo common stock to be issued in the merger will be
listed on the New York Stock Exchange and the Chicago Stock Exchange. The
listing of the Wells Fargo common stock to be issued in the merger is a
condition to First Commerce's obligation to complete the merger.
Accounting Treatment
Wells Fargo will account for the merger as a purchase. Wells Fargo will
record, at fair value, the acquired assets and assumed liabilities of First
Commerce. To the extent the total purchase price exceeds the fair value of the
assets acquired and liabilities assumed, Wells Fargo will record goodwill.
Wells Fargo will include in its results of operations the results of First
Commerce's operations after the merger.
The unaudited pro forma data included in this proxy statement-prospectus for
the merger have been prepared using the purchase method of accounting. See
"Summary--Comparative Per Common Share Data."
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THE MERGER AGREEMENT
The following is a summary of certain provisions of the merger agreement. A
copy of the merger agreement is attached to this document as Appendix A and is
incorporated by reference into this document. This summary is qualified in its
entirety by reference to the full text of the merger agreement. First Commerce
shareholders are encouraged to read the merger agreement carefully and in its
entirety. Parenthetical references are to the relevant paragraph or paragraphs
of the merger agreement.
Basic Plan Of Merger
The merger agreement provides that a wholly-owned subsidiary of Wells Fargo
will merge by statutory merger with and into First Commerce, with First
Commerce as the surviving corporation. (paragraph 1(a))
Exchange Of Wells Fargo Shares For First Commerce Shares
Under the merger agreement, each share of First Commerce common stock
outstanding immediately before the merger is to be converted into the right to
receive the number of shares of Wells Fargo common stock determined by dividing
$35.95 by the Wells Fargo Measurement Price, which is the average of the
closing prices of a share of Wells Fargo common stock as reported on the
consolidated tape of the New York Stock Exchange during the measurement period
of 20 trading days ending on June [8], 2000, the day immediately preceding the
special meeting. (paragraph 1(a))
Since the price of Wells Fargo common stock will fluctuate, First Commerce
cannot assure you as to what the price of Wells Fargo common stock will be
during the measurement period used to determine the Wells Fargo Measurement
Price and, therefore, First Commerce cannot assure you as to the number of
shares of Wells Fargo common stock you will receive in the merger, although
that number will in all events have a value equivalent to $35.95 based on the
Wells Fargo Measurement Price, less any cash you receive in lieu of a
fractional share of Wells Fargo common stock. As an example, however, assume
the special meeting had taken place on April 15, 2000. The average closing
price of Wells Fargo common stock as reported on the consolidated tape of the
New York Stock Exchange during the measurement period of 20 trading days ending
on April 14, 2000, the day immediately preceding this hypothetical special
meeting, was $40.708. In this example, you would receive 0.883119 shares of
Wells Fargo common stock for each share of First Commerce common stock you own
on the record date.
No Adjustments For Price Fluctuations
No adjustment will be made to the number of shares of Wells Fargo common
stock you will receive for your shares of First Commerce common stock to
reflect fluctuations in the price of Wells Fargo common stock occurring after
the special meeting.
Adjustments For Changes In Capitalization
If, before the merger is completed, the outstanding shares of Wells Fargo are
increased or decreased in number or changed into or exchanged for a different
number or kind of shares or securities as a result of a reorganization,
reclassification, recapitalization, stock dividend, stock split or other
similar change in capitalization, then an appropriate and proportionate
adjustment will be made to the exchange ratio. (paragraph 1(b))
Cash In Lieu Of Fractional Shares
If the aggregate number of shares of Wells Fargo common stock you will
receive in the merger does not equal a whole number, you will receive cash
instead of the fractional share. The cash payment will be equal to the product
of the fractional part of the share of Wells Fargo common stock multiplied by
the average of the
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closing prices of a share of Wells Fargo common stock as reported on the
consolidated tape of the New York Stock Exchange for each of the five trading
days ending on the second day immediately preceding the effective date of the
merger. (paragraph 1(c))
Treasury Shares
Shares of First Commerce common stock held by First Commerce or Wells Fargo,
other than shares held in a fiduciary capacity for third parties, such as
shares held in trust accounts, managed accounts and the like, and any shares
held by First Commerce or Wells Fargo or any of their subsidiaries in respect
of debts previously contracted, will be canceled and will not be converted into
the right to receive Wells Fargo common shares.
Effective Date And Time Of The Merger
The effective date of the merger will be the day on which a certificate of
merger is filed with and accepted by the Nebraska Secretary of State. The
merger agreement provides that a certificate of merger will be filed within
five business days after the satisfaction or waiver of all conditions to the
merger or on such other date as Wells Fargo and First Commerce may agree. See
"Conditions To The Merger." The effective time of the merger will be 11:59
p.m., Lincoln, Nebraska time, on the effective date of the merger. (paragraph
1(e))
Revised Merger Structure
Subject to the conditions described below, Wells Fargo has the right under
the merger agreement to revise the structure of the proposed transaction so
that:
. First Commerce is merged into a subsidiary of Wells Fargo; or
. First Commerce is merged directly into Wells Fargo.
Wells Fargo may revise the structure of the transaction only if the revised
structure does not:
. change the amount or kind of consideration to be received by First
Commerce in the merger;
. adversely affect the tax treatment of the merger to First Commerce
shareholders; and
. impede or delay the completion of the merger.
Assuming these conditions are met, Wells Fargo may revise the structure of
the transaction without notice to you.
Representations And Warranties
The merger agreement contains various representations and warranties by Wells
Fargo and First Commerce concerning, among other things (paragraphs 2 and 3):
. corporate organization, standing and authority;
. subsidiaries;
. capitalization;
. corporate authority and action;
. compliance of the merger agreement with, and the need for consent or
approval under applicable law and contracts and organizational
documents;
. governmental and third party consents and approvals;
. good title to properties and effectiveness of leases;
. financial statements and filings with the SEC and other governmental
agencies;
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. the filing of tax returns, the payment of taxes and the absence of
certain tax proceedings;
. absence of material changes in business since December 31, 1998;
. contracts and commitments;
. absence of undisclosed litigation;
. insurance;
. compliance with laws;
. labor matters;
. material interests of certain persons in material contracts of First
Commerce or its subsidiaries;
. employee benefit plans;
. information provided for inclusion in this document;
. absence of any obligation to register securities;
. absence of undisclosed broker's fees;
. proper administration of fiduciary accounts;
. absence of default on material agreements;
. absence of undisclosed environmental liabilities;
. compliance with Year 2000 requirements;
. sufficiency of the vote of two-thirds of the outstanding shares of First
Commerce class A common stock and class B common stock, voting as
separate classes, to approve the merger agreement and the merger; and
. First Commerce common stock owned by First Commerce subsidiaries.
Certain Covenants
The merger agreement has a number of covenants and agreements that govern the
actions of First Commerce and Wells Fargo pending completion of the merger.
Some of the covenants and agreements are summarized below.
Conduct Of Business
First Commerce
Except as otherwise permitted or required by the merger agreement, or as
otherwise agreed to in writing by Wells Fargo, First Commerce and each First
Commerce subsidiary will:
. maintain its corporate existence in good standing;
. maintain the general character of its business;
. conduct its business in the ordinary and usual manner;
. extend credit in accordance with existing lending policies and provide
Wells Fargo access to its loan files, except that it will not, without
the prior written consent of Wells Fargo, which consent will be deemed
waived under certain specified circumstances, make any new loan or
modify, restructure or renew any existing loan (except pursuant to
commitments made prior to the merger agreement) to any borrower if the
amount of the resulting loan, when aggregated with all other loans or
extensions of credit to such person, would exceed $1,000,000;
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. maintain proper business and accounting records in accordance with
generally accepted principles;
. maintain its properties in good repair and condition, with the exception
of ordinary wear and tear;
. maintain in all material respects insurance coverage or its commercial
equivalent;
. use its commercially reasonable efforts to preserve its business
organization intact, to keep the services of its present principal
employees and to preserve its good will and the good will of its
suppliers, customers and others having business relationships with it;
. use its commercially reasonable efforts to obtain any approvals or
consents required to maintain existing leases and other contracts in
effect following the merger;
. comply in all material respects with all laws, regulations, ordinances,
codes, orders, licenses and permits applicable to the properties and
operations of First Commerce and each First Commerce subsidiary the non-
compliance with which reasonably could be expected to have a material
adverse effect with respect to First Commerce; and
. permit Wells Fargo and its representatives (including KPMG LLP) to
examine its and its subsidiaries books, records and properties and to
interview officers, employees and agents at all reasonable times when it
is open for business. (paragraph 4(a))
Except as otherwise permitted or required by the merger agreement, or as
otherwise agreed to in writing by Wells Fargo, until the effective date of the
merger, First Commerce and each First Commerce subsidiary will not:
. amend or otherwise change its articles of incorporation or association
or bylaws;
. issue or sell or authorize for issuance or sale, or grant any options or
make other agreements with respect to the issuance or sale or conversion
of, any shares of its capital stock, phantom shares or other share
equivalents, or any other of its securities;
. authorize or incur any long-term debt (other than deposit liabilities);
. mortgage, pledge or subject to a lien or other encumbrance any of its
properties, except in the ordinary course of business;
. subject to specified exceptions, enter into any material agreement,
contract or commitment that:
. is in excess of $300,000, or
. is related to data processing, ATMs or related technology and is in
excess of $100,000;
. make any investments except U.S. Treasury and federal agency securities
made by First Commerce's bank subsidiaries in the ordinary course of
business for terms of up to one year and in amounts of $100,000 or less;
. amend or terminate any employee benefit plan except as required by law
or by the merger agreement;
. make any contributions to any specified employee benefit plan except as
required by the terms of the plan in effect as of the date of the merger
agreement, or as amended to comply with applicable law;
. declare, set aside, make or pay any dividend or other distribution with
respect to its capital stock except any dividend declared by a First
Commerce subsidiary's board of directors in accordance with applicable
law and regulation, provided that:
. First Commerce's board of directors may declare and pay cash
dividends out of the net earnings of First Commerce between the date
of the merger agreement and the effective date of the merger in
accordance with applicable law and regulation and in accordance with
past practice in an amount not to exceed an annualized rate of $0.40
per share, and
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. First Commerce shareholders will be entitled to have a cash dividend
declared on First Commerce common stock or on Wells Fargo common
stock, but not both, in the calendar quarter in which the merger
closes;
. redeem, purchase or otherwise acquire any capital stock of First
Commerce or its subsidiary banks;
. increase the compensation of any officers, directors or executive
employees, except pursuant to existing compensation plans, agreements or
practices;
. sell or otherwise dispose of any shares of capital stock of any First
Commerce subsidiary; or
. sell or otherwise dispose of any of its assets or properties other than
in the ordinary course of business. (paragraph 4(b))
Wells Fargo
Wells Fargo has agreed to conduct its business and to cause its significant
subsidiaries to conduct their respective businesses in compliance with all
material obligations and duties imposed by laws, regulations, rules and
ordinances or by judicial orders, judgments and decrees applicable to them or
to their businesses or properties. (paragraph 5(a))
Competing Transactions
Neither First Commerce or any First Commerce subsidiary nor any director,
officer, representative or agent of First Commerce or any First Commerce
subsidiary may, directly or indirectly, solicit, authorize the solicitation of
or except to the extent that (1) First Commerce is not otherwise in violation
of the provision of the merger agreement dealing with competing transactions,
and (2) First Commerce's board of directors concludes in good faith, after
taking into account the written advice of its outside counsel that to fail to
do so would violate its fiduciary obligations under applicable law, enter into
any discussions with any entity or group, other than Wells Fargo, concerning
any offer or possible offer to:
. purchase its common stock, any security convertible into its common
stock, or any other equity security of First Commerce or any of its
subsidiaries;
. make a tender or exchange offer for any shares of its common stock or
other equity security of First Commerce or any of its subsidiaries;
. purchase, lease or otherwise acquire the assets of First Commerce or any
of its subsidiaries except in the ordinary course of business; or
. merge, consolidate or otherwise combine with First Commerce or any of
its subsidiaries.
First Commerce and each of its subsidiaries, as applicable, have also agreed to
promptly inform Wells Fargo if any such entity or group makes an offer or
inquiry concerning any of the foregoing. (paragraph 4(h))
Other Covenants
The merger agreement contains various other covenants, including covenants
relating to the preparation and distribution of this document, access to
information, and the listing by Wells Fargo on the New York and Chicago Stock
Exchanges of the shares of Wells Fargo common stock to be issued in the merger.
In addition, First Commerce has agreed to:
. establish such additional accruals and reserves as are necessary to
conform its accounting and credit loss reserve practices and methods to
those of Wells Fargo and Wells Fargo's plans with respect to the conduct
of First Commerce's business after the merger, with certain exceptions;
. terminate its Dividend Reinvestment Plan and Employee Stock Purchase
Plan; and
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. use its best efforts to deliver to Wells Fargo prior to completion of
the merger signed representations substantially in the form attached as
Exhibit B to the merger agreement from each executive officer, director
or shareholder of First Commerce who may reasonably be deemed an
"affiliate" of First Commerce within the meaning of such term as used in
Rule 145 of the Securities Act. (paragraphs 4(l) and 4(m) and Exhibit B)
See "The Merger--Resale Of Wells Fargo Common Stock Issued In The Merger."
Conditions To The Merger
Under the merger agreement, various conditions are required to be met before
the parties are obligated to complete the merger. These conditions are
customary and include such items as:
. the continued accuracy of the other party's representations and
warranties,
. the performance by the other party of its obligations under the merger
agreement,
. the receipt of shareholder and regulatory approval, and the absence of
any order restraining or enjoining the merger; and
. subject to certain exceptions, the absence of any changes that have had
or might be reasonably expected to have a material adverse effect on the
other party.
Various additional conditions must be met before First Commerce is obligated
to complete the merger, including:
. the listing of the Wells Fargo shares to be delivered to the First
Commerce shareholders on the New York Stock Exchange or the Chicago
Stock Exchange;
. the receipt by Wells Fargo of all securities law or blue sky
authorizations necessary to carry out the merger; and
. the receipt by First Commerce of a favorable tax opinion. See "The
Merger--U.S. Federal Income Tax Consequences Of The Merger."
In addition, various conditions must be met before Wells Fargo is obligated
to complete the merger, including:
. the receipt by First Commerce and each First Commerce subsidiary (other
than any First Commerce subsidiary that is not actively engaged in an
aviation, banking, insurance, mortgage, finance company, leasing or
international banking business) of any and all consents or waivers from
third parties to loan agreements, leases or other contracts required for
the consummation of the merger, and the receipt by First Commerce and
each First Commerce subsidiary of any and all permits, authorizations,
consents, waivers and approvals required for the lawful consummation by
it of the merger;
. the total number of shares of First Commerce common stock outstanding
and subject to issuance upon exercise, assuming for this purpose that
phantom shares and other share-equivalents constitute First Commerce
common stock, of all warrants, options, conversion rights, phantom
shares or other share-equivalents shall not exceed 13,344,286;
. the absence of any material loss or interference with the business of
First Commerce or its subsidiaries taken as a whole from any civil
disturbance or any fire, explosion, flood or other calamity, whether or
not covered by insurance;
. the absence of environmental liabilities;
. the absence of Year 2000 problems in First Commerce's data processing,
operating or platform systems; and
. the resignation of each member of First Commerce's board of directors.
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Some of the conditions to the merger are subject to exceptions and/or a
"materiality" standard. Certain conditions to the merger may be waived by the
party seeking to assert the condition. (paragraphs 6 and 7)
Termination Of The Merger Agreement
Termination by Mutual Consent
Wells Fargo and First Commerce can agree to terminate the merger agreement at
any time before completion of the merger. (paragraph 9(a)(i))
Termination by Either Wells Fargo or First Commerce
Either Wells Fargo or First Commerce can terminate the merger agreement
without the consent of the other if any of the following occurs:
. The merger has not been completed by October 31, 2000, unless the
failure to complete the merger is due to the failure of the party
seeking to terminate to perform or observe in all material respects the
covenants and agreements to be observed or performed by the party.
(paragraph 9(a)(ii))
. A court or governmental authority of competent jurisdiction has issued a
final order restraining, enjoining or otherwise prohibiting the
transactions contemplated by the merger agreement. (paragraph 9(a)(iii))
Effect Of Termination
Generally, if either party terminates the merger agreement, it becomes void
without any liability to either party other than for willful and material
breaches occurring before termination; however, the provisions of the merger
agreement governing confidential information and expenses incurred in
connection with the merger continue in effect after termination of the merger
agreement. (paragraph 9(b))
Waiver And Amendment
Either Wells Fargo or First Commerce may waive any inaccuracies in the
representations and warranties of the other party or compliance by the other
party with any of the covenants or conditions contained in the merger
agreement. (paragraph 16)
Wells Fargo and First Commerce can amend the merger agreement at any time
before the merger is completed; however, the merger agreement prohibits them
from amending the merger agreement after First Commerce shareholders approve
the merger if the amendment would change in a manner adverse to First Commerce
shareholders the consideration to be received by First Commerce shareholders in
the merger. (paragraph 17)
Expenses
Wells Fargo and First Commerce will each pay their own expenses in connection
with the merger, including fees and expenses of their respective independent
auditors and counsel. (paragraph 10)
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INFORMATION ABOUT WELLS FARGO
General
Wells Fargo is a diversified financial services company. Through its
subsidiaries and affiliates, Wells Fargo provides retail, commercial, real
estate and mortgage banking, asset management and consumer finance, as well as
a variety of other financial services, including equipment leasing,
agricultural 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 March 31, 2000, Wells Fargo had consolidated total assets of $ billion,
consolidated total deposits of $ billion and stockholders' equity of $
billion. Based on assets at March 31, 2000, Wells Fargo was the th largest
commercial banking organization in the United States.
Wells Fargo expands its business in part by acquiring banking institutions
and other companies engaged in activities closely related to banking. Wells
Fargo continues to explore opportunities to acquire banking institutions and
other companies permitted by the Bank Holding Company Act of 1956. Discussions
are continually being carried on related 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 Wells Fargo not to comment on such
discussions or possible acquisitions until a definitive agreement with respect
thereto has been signed.
Wells Fargo is a legal entity separate and distinct from its banking and non-
banking subsidiaries. As a result, the right of Wells Fargo--and thus the right
of Wells Fargo's creditors--to participate in any distribution of 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 Of Wells Fargo--
Dividend Restrictions" for a discussion of the restrictions on the subsidiary
banks' ability to pay dividends to Wells Fargo.
Wells Fargo's principal executive offices are located at 420 Montgomery
Street, San Francisco, California 94163, and its telephone number is (800) 411-
4932.
Management And Additional Information
Information concerning executive compensation, the principal holders of
voting securities, certain relationships and related transactions, and other
related matters concerning Wells Fargo is included or incorporated by reference
in its annual report on Form 10-K for the year ended December 31, 1999. Wells
Fargo's annual report on Form 10-K is incorporated by reference into this proxy
statement-prospectus. First Commerce shareholders who want a copy of this
annual report or any document incorporated by reference into the report may
contact Wells Fargo at the address or phone number indicated below under "Where
You Can Find More Information."
Competition
The financial services industry is highly competitive. Wells Fargo's
subsidiaries compete with financial services providers, such as banks, savings
and loan associations, credit unions, finance companies, mortgage banking
companies, insurance companies, and money market and mutual fund companies.
They also face increased competition from non-banking institutions such as
securities firms and insurance companies, as well as from financial services
subsidiaries of commercial and manufacturing companies. Many of these
competitors enjoy the benefits of advanced technology, fewer regulatory
constraints and lower cost structures.
Effective March 13, 2000, securities firms and insurance companies that elect
to become financial holding companies may acquire banks and other financial
institutions. This may significantly change the competitive environment in
which Wells Fargo and its subsidiaries conduct business. The financial services
industry is also
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likely to become more competitive as further technological advances enable more
companies to provide financial services. These technological advances may
diminish the importance of depository institutions and other financial
intermediaries in the transfer of funds between parties.
Information On Wells Fargo's Web Site
Information on the internet web site of Wells Fargo or any subsidiary of
Wells Fargo is not part of this proxy statement-prospectus, and you should not
rely on that information in deciding whether to approve the merger unless that
information is also in this proxy statement-prospectus or in a document that is
incorporated by reference into this proxy statement-prospectus.
FIRST SECURITY MERGER
The following information describes the pending merger transaction between
Wells Fargo & Company and First Security Corporation. Wells Fargo will acquire
First Security as a result of the transaction. The description is not complete
and is qualified in its entirety by reference to the more detailed information
contained in Wells Fargo's Current Report on Form 8-K, dated as of April 9,
2000 and filed on April 21, 2000. The Form 8-K is incorporated herein by
reference.
The First Security Merger Transaction
On April 9, 2000, Wells Fargo and First Security entered into a merger
agreement that provides for the merger of a wholly-owned subsidiary of Wells
Fargo in First Security, with First Security surviving as a wholly-owned
subsidiary of Wells Fargo. If the First Security merger is completed, each
outstanding share of First Security common stock will be converted into 0.355
of a share of Wells Fargo common stock. Wells Fargo expects to issue
approximately 71.6 million shares of its common stock in the First Security
merger, representing approximately of Wells Fargo common stock
outstanding as of March 31, 2000. First Security has granted to Wells Fargo an
option exercisable, in whole or in part, upon the occurrence of specified
conditions, to purchase up to 19.9% of the outstanding shares of First Security
common stock.
The First Security merger is subject of a number of conditions, including
approvals by First Security stockholders and regulatory agencies. No vote of
Wells Fargo stockholders is required to complete the First Security merger.
Wells Fargo expects to complete the First Security merger in the third quarter
of 2000, after the Wells Fargo/First Commerce merger closes. Wells Fargo cannot
guarantee when or if the merger with First Security will be completed.
About First Security Corporation
First Security is the nation's oldest multistate bank holding company and is
the parent corporation for First Security Bank, N.A. and several other banking
subsidiaries and subsidiaries that engage in banking-related services. First
Security is headquartered in Salt Lake City, Utah. Through its subsidiaries,
First Security operated banking stores in the states of California, Idaho,
Nevada, New Mexico, Oregon, Utah and Wyoming as of March 31, 2000. At that
date, First Security had assets of $ billion, deposits of $ billion
and stockholders' equity of $ billion. Spencer F. Eccles, chairman and chief
executive officer of First Security, is expected to be elected as a director of
Wells Fargo upon completion of the First Security merger.
You may find more information about First Security from its reports filed
with the SEC under SEC file number 005-15790.
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REGULATION AND SUPERVISION OF WELLS FARGO
To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to the full
text of those provisions. Also, such statutes, regulations and policies are
continually under review by Congress and state legislatures and federal and
state regulatory agencies. A change in statutes, regulations or regulatory
policies applicable to Wells Fargo could have a material effect on the business
of Wells Fargo.
Introduction
Wells Fargo, its banking subsidiaries and many of its non-banking
subsidiaries are subject to extensive regulation by federal and state agencies.
The regulation of bank holding companies and their subsidiaries is intended
primarily for the protection of depositors, federal deposit insurance funds and
the banking system as a whole and not for the protection of security holders.
As discussed in more detail below, this regulatory environment, among other
things, may restrict Wells Fargo's ability to diversify into certain areas of
financial services, acquire depository institutions in certain states and pay
dividends on its capital stock. It may also require Wells Fargo to provide
financial support to one or more of its banking subsidiaries, maintain capital
balances in excess of those desired by management and pay higher deposit
insurance premiums as a result of the deterioration in the financial condition
of depository institutions in general.
Additional information about the regulation and supervision of Wells Fargo is
contained in Wells Fargo's annual and quarterly reports filed with the SEC. See
"Where You Can Find More Information."
Regulatory Agencies
Bank Holding Company
Wells Fargo & Company, as a bank holding company, is subject to regulation
under the Bank Holding Company Act of 1956 and to inspection, examination and
supervision by the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act. As of March 13, 2000, Wells Fargo became a financial
holding company under the Bank Holding Company Act.
Subsidiary Banks
Wells Fargo's national banking subsidiaries are subject to regulation and
examination primarily by the Office of the Comptroller of the Currency and
secondarily by the Federal Reserve Board and the Federal Deposit Insurance
Corporation. Wells Fargo's state-chartered banking subsidiaries are subject to
primary federal regulation and examination by the FDIC or the Federal Reserve
Board and, in addition, are regulated and examined by banking departments of
the states where they are chartered.
Nonbank Subsidiaries
Many of Wells Fargo's non-bank subsidiaries also are subject to regulation by
the Federal Reserve Board and other applicable federal and state agencies.
Wells Fargo's brokerage subsidiaries are regulated by the SEC, the National
Association of Securities Dealers, Inc. and state securities regulators. Wells
Fargo's insurance subsidiaries are subject to regulation by applicable state
insurance regulatory agencies. Other non-bank subsidiaries of Wells Fargo are
subject to the laws and regulations of both the federal government and the
various states in which they conduct business.
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Bank Holding Company Activities
"Financial in Nature" Requirement
As a bank holding company that has elected also to become a financial holding
company, Wells Fargo may affiliate with securities firms and insurance
companies and engage in other activities that are financial in nature.
"Financial in nature" activities include securities underwriting, dealing and
market making, sponsoring mutual funds and investment companies, insurance
underwriting and agency, merchant banking, and activities that the Federal
Reserve Board has previously determined to be closely related to banking. A
bank holding company that is not also a financial holding company is limited to
engaging in banking and such other activities determined by the Federal Reserve
Board to be closely related to banking.
No Federal Reserve Board approval is required for Wells Fargo to acquire a
company, other than a bank holding company, bank or savings association,
engaged in activities that are financial in nature or incidental to activities
that are financial in nature, as determined by the Federal Reserve Board. Prior
Federal Reserve Board approval is required before Wells Fargo may acquire the
beneficial ownership or control of more than 5% of the voting shares or
substantially all of the assets of a bank holding company, bank or savings
association.
If any subsidiary bank of Wells Fargo ceases to be "well capitalized" or
"well managed" under applicable regulatory standards, the Federal Reserve Board
may, among other actions, order Wells Fargo to divest the subsidiary bank.
Alternatively, Wells Fargo may elect to conform its activities to those
permissible for a bank holding company that is not also a financial holding
company. If any subsidiary bank of Wells Fargo receives a rating under the
Community Reinvestment Act of 1977 of less than satisfactory, Wells Fargo will
be prohibited from engaging in new activities or acquiring companies other than
bank holding companies, banks or savings associations.
Interstate Banking
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, a bank holding company may acquire banks in states other than its home
state, subject to any state requirement that the bank has been organized and
operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company not control, prior to or following
the proposed acquisition, more than 10% of the total amount of deposits of
insured depository institutions nationwide or, unless the acquisition is the
bank holding company's initial entry into the state, more than 30% of such
deposits in the state, or such lesser or greater amount set by the state. The
Riegle-Neal Act also authorizes banks to merge across state lines, thereby
creating interstate branches. States were permitted to opt out of the Riegle-
Neal Act and, by doing so, prohibit interstate mergers in the state.
Regulatory Approval
In determining whether to approve a proposed bank acquisition, federal
banking regulators will consider, among other factors, the effect of the
acquisition on competition, the public benefits expected to be received from
the acquisition, the projected capital ratios and levels on a post-acquisition
basis, and the acquiring institution's record of addressing the credit needs of
the communities it serves, including the needs of low and moderate income
neighborhoods, consistent with the safe and sound operation of the bank, under
the Community Reinvestment Act of 1977.
Dividend Restrictions
Wells Fargo & Company is a legal entity separate and distinct from its
subsidiary banks and other subsidiaries. Its principal source of funds to pay
dividends on its common and preferred stock and debt service
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on its debt is dividends from its subsidiaries. Various federal and state
statutory provisions and regulations limit the amount of dividends that Wells
Fargo's bank subsidiaries may pay without regulatory approval. Dividends
payable by a national bank without the express approval of the OCC are limited
to the bank's retained net profits for the preceding two calendar years plus
retained net profits up to the date of any dividend declaration in the current
calendar year. The OCC defines retained net profits as net income, less
dividends declared during the period, both of which are based on regulatory
accounting principles. Wells Fargo's state-chartered subsidiary banks also are
subject to state regulations that limit dividends.
Before Wells Fargo Bank, National Association can declare dividends in 2000
without the prior approval of the OCC, it must have net income of approximately
$500 million plus an amount equal to or greater than the dividends declared in
2000. Because it is not expected to meet this requirement, Wells Fargo Bank,
National Association will likely be required to obtain the prior approval of
the OCC before it declares any dividends in 2000.
Federal bank regulatory agencies have the authority to prohibit Wells Fargo's
subsidiary banks from engaging in unsafe or unsound practices in conducting
their businesses. The payment of dividends, depending on the financial
condition of the bank in question, could be deemed an unsafe or unsound
practice. The ability of Wells Fargo's subsidiary banks to pay dividends in the
future is currently influenced, and could be further influenced, by bank
regulatory policies and capital guidelines.
Holding Company Structure
Transfer of Funds from Banking Subsidiaries
Wells Fargo's banking subsidiaries are subject to restrictions under federal
law that limit the transfer of funds or other items of value from these
subsidiaries to Wells Fargo and its non-banking subsidiaries, including
affiliates, whether in the form of loans and other extensions of credit,
investments and asset purchases, or as other transactions involving the
transfer of value from a subsidiary to an affiliate or for the benefit of an
affiliate. Unless an exemption applies, these transactions by a banking
subsidiary with a single affiliate are limited to 10% of the subsidiary bank's
capital and surplus and, with respect to all covered transactions with
affiliates in the aggregate, to 20% of the subsidiary bank's capital and
surplus. Also, loans and extensions of credit to affiliates generally are
required to be secured in specified amounts.
Source of Strength Doctrine
Under current Federal Reserve Board policy, Wells Fargo is expected to act as
a source of financial and managerial strength to each of its subsidiary banks
and, under appropriate circumstances, to commit resources to support each such
subsidiary bank. This support could be required at times when Wells Fargo might
not have the resources to provide it. In addition, the OCC may order the pro
rata assessment of Wells Fargo if the capital of one of its national bank
subsidiaries were to become impaired. If Wells Fargo failed to pay the
assessment within three months, the OCC could order the sale of its stock in
the national bank subsidiary to cover the deficiency.
Capital loans from Wells Fargo to any of its subsidiary banks are subordinate
in right of payment to deposits and certain other indebtedness of the
subsidiary bank. In the event of Wells Fargo's bankruptcy, any commitment by
Wells Fargo to a federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Depositor Preference
The FDI Act provides that, in the event of the "liquidation or other
resolution" of an insured depository institution, the claims of depositors of
the institution, including the claims of the FDIC as subrogee of insured
depositors, and certain claims for administrative expenses of the FDIC as a
receiver will have priority over
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other general unsecured claims against the institution. If an insured
depository institution fails, insured and uninsured depositors, along with the
FDIC, will have priority in payment ahead of unsecured, nondeposit creditors,
including Wells Fargo.
Liability of Commonly Controlled Institutions
All of Wells Fargo's banks are insured by the FDIC. FDIC-insured depository
institutions can be held liable for any loss incurred, or reasonably expected
to be incurred, by the FDIC due to the default of an FDIC-insured depository
institution controlled by the same bank holding company, or for any assistance
provided by the FDIC to an FDIC-insured depository institution controlled by
the same bank holding company that is in danger of default. "Default" means
generally the appointment of a conservator or receiver. "In danger of default"
means generally the existence of certain conditions indicating that a default
is likely to occur in the absence of regulatory assistance.
Capital Requirements
General
Wells Fargo is subject to risk-based capital requirements and guidelines
imposed by the Federal Reserve Board. These are substantially similar to the
capital requirements and guidelines imposed by the OCC and the FDIC on the
depository institutions under their jurisdictions. For this purpose, a
depository institution's or holding company's assets, and some of its 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, depending on type:
Supplementary ("Tier 2") Market Risk ("Tier 3")
Core ("Tier 1") Capital Capital Capital
----------------------- ------------------------ ----------------------
. common equity among other items: . qualifying unsecured
subordinated debt
. retained earnings . perpetual preferred
stock not meeting the
. qualifying Tier 1 definition
noncumulative
perpetual preferred . qualifying mandatory
stock convertible securities
. a limited amount of . qualifying
qualifying cumulative subordinated debt
perpetual preferred
stock at the holding . allowances for loan
company level and lease losses,
subject to
. minority interests in limitations
equity accounts of
consolidated
subsidiaries
. less goodwill and most
intangible assets
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 to at least 4% and 8%, respectively, of its total risk-
weighted assets (including various off-balance-sheet items, such as standby
letters of credit). For a holding company to be considered "well capitalized"
for regulatory purposes, its Tier 1 and total capital ratios must be 6% and 10%
on a risk-adjusted basis, respectively. At March 31, 2000, Wells Fargo met both
requirements, with Tier 1 and total capital equal to % and % of its
respective total risk-weighted assets.
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Federal Reserve Board, FDIC and OCC rules require Wells Fargo to incorporate
market and interest rate risk components into its risk-based capital standards.
Under these market risk requirements, capital is 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 other requirements,
or of 3% plus an additional "cushion" of at least one to two percentage points
if the holding company does not meet these requirements. Wells Fargo's leverage
ratio at March 31, 2000 was %.
The Federal Reserve Board may set capital requirements higher than the
minimums described 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. The
Federal Reserve Board has also indicated that it will consider a "tangible Tier
1 capital leverage ratio" (deducting all intangibles) and other indications of
capital strength in evaluating proposals for expansion or new activities.
Wells Fargo's banking subsidiaries are subject to similar risk-based and
leverage capital requirements adopted by its applicable federal banking agency.
Wells Fargo's management believes that each of Wells Fargo's subsidiary banks
met all capital requirements to which they are subject.
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 restrictions on its business, which are described under "--Federal
Deposit Insurance Corporation Improvement Act of 1991."
Federal Deposit Insurance Corporation Improvement Act of 1991
The Federal Deposit Insurance Corporation Improvement Act of 1991, among
other things, identifies five capital categories for insured depository
institutions: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized. It requires
U.S. federal bank regulatory agencies to implement systems for "prompt
corrective action" for insured depository institutions that do not meet minimum
capital requirements based on these categories. The FDICIA imposes
progressively more restrictive constraints on operations, management and
capital distributions, depending on the category in which an institution is
classified. Unless a bank or thrift is well capitalized, it is subject to
restrictions on its ability to offer brokered deposits and on other aspects of
its operations. An undercapitalized bank or thrift must develop a capital
restoration plan, and its parent holding company must guarantee the bank's or
thrift's compliance with the plan up to the lesser of 5% of the bank's or
thrift's assets at the time it became undercapitalized and the amount needed to
comply with the plan.
As of March 31, 2000, Wells Fargo believes that each of its significant bank
subsidiaries was well capitalized, based on the prompt corrective action ratios
and guidelines described above. A bank's capital category is determined solely
for the purpose of applying the OCC's or the FDIC's prompt corrective action
regulations, and the capital category may not constitute an accurate
representation of the bank's overall financial condition or prospects for other
purposes.
Deposit Insurance Assessments
Through the Bank Insurance Fund, the FDIC insures the deposits of Wells
Fargo's depository institution subsidiaries up to prescribed limits for each
depositor. The amount of FDIC assessments paid by each BIF member institution
is based on its relative risk of default as measured by regulatory capital
ratios and other factors. Specifically, the assessment rate is based on the
institution's capitalization risk category and supervisory subgroup category.
An institution's capitalization risk category is based on the FDIC's
determination of whether the institution is well capitalized, adequately
capitalized or less than adequately capitalized. An institution's
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supervisory subgroup category is based on the FDIC's assessment of the
financial condition of the institution and the probability that FDIC
intervention or other corrective action will be required.
The BIF assessment rate currently ranges from zero to $0.27 per $100 of
domestic deposits. The FDIC may increase or decrease the assessment rate
schedule on a semi-annual basis. An increase in the BIF assessment rate could
have a material adverse effect on Wells Fargo's earnings, depending on the
amount of the increase. The FDIC is authorized to terminate a depository
institution's deposit insurance upon a finding by the FDIC that the
institution's financial condition is unsafe or unsound or that the institution
has engaged in unsafe or unsound practices or has violated any applicable rule,
regulation, order or condition enacted or imposed by the institution's
regulatory agency. The termination of deposit insurance for one or more of
Wells Fargo's subsidiary depository institutions could have a material adverse
effect on Wells Fargo's earnings, depending on the collective size of the
particular institutions involved.
All FDIC-insured depository institutions must pay an annual assessment to
provide funds for the payment of interest on bonds issued by the Financing
Corporation, a federal corporation chartered under the authority of the Federal
Housing Finance Board. The bonds, commonly referred to as FICO bonds, were
issued to capitalize the Federal Savings and Loan Insurance Corporation. The
FDIC established the FICO assessment rates effective for the second quarter of
2000 at approximately $0.21 per $100 annually for BIF-assessable deposits. The
FICO assessments are adjusted quarterly to reflect changes in the assessment
bases of the FDIC insurance funds and do not vary depending on a depository
institution's capitalization or supervisory evaluations.
Fiscal and Monetary Policies
Wells Fargo's business and earnings are affected significantly by the fiscal
and monetary policies of the federal government and its agencies. Wells Fargo
is particularly affected by the policies of the Federal Reserve Board, which
regulates the supply of money and credit in the United States. Among the
instruments of monetary policy available to the Federal Reserve are:
. conducting open market operations in United States government
securities;
. changing the discount rates of borrowings of depository institutions;
. imposing or changing reserve requirements against depository
institutions' deposits; and
. imposing or changing reserve requirements against certain borrowing by
banks and their affiliates.
These methods are used in varying degrees and combinations to directly affect
the availability of bank loans and deposits, as well as the interest rates
charged on loans and paid on deposits. For that reason alone, the policies of
the Federal Reserve Board have a material effect on the earnings of Wells
Fargo.
Future Legislation
Various legislation, including proposals to substantially change the
financial institution regulatory system and to expand or contract the powers of
banking institutions and bank holding companies, is from time to time
introduced in the Congress. This legislation may change banking statutes and
the operating environment of Wells Fargo and its subsidiaries in substantial
and unpredictable ways. If enacted, such legislation could increase or decrease
the cost of doing business, limit or expand permissible activities or affect
the competitive balance among banks, savings associations, credit unions, and
other financial institutions. Wells Fargo cannot predict whether any of this
potential legislation will be enacted, and if enacted, the effect that it, or
any implementing regulations, would have on the financial condition or results
of operations of Wells Fargo or any of its subsidiaries.
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INFORMATION ABOUT FIRST COMMERCE
First Commerce is a bank holding company having its principal office in
Lincoln, Nebraska. It was incorporated under the laws of the State of Nebraska
on May 2, 1985. First Commerce's primary business is the ownership and
management of eight commercial banking subsidiaries, a mortgage company and an
asset management company. The primary business of First Commerce's bank
subsidiaries consists of accepting demand and time deposits and extending
personal, agricultural, commercial, installment and mortgage loans. In
addition, First Commerce operates, directly and indirectly, several non-bank
subsidiaries that provide data processing services, service mortgages, issue
credit cards, underwrite credit insurance, provide investment advisory
services, advise mutual funds, originate and sell residential real estate
loans, and own various properties. First Commerce maintains full service
banking offices in Alliance, Bridgeport, Grand Island, Hastings, Kearney,
Lincoln, McCook, North Platte, Valentine and West Point in Nebraska, and in
Colorado Springs, Colorado. In addition, First Commerce operates loan/deposit
production offices in Cairo, Holdredge, Hyannis, Mullen, Snyder, and Wood
River, Nebraska; Burlington, Colorado; and Goodland, Kansas.
At March 31, 2000, First Commerce had total assets of $2.62 billion and total
shareholders' equity of $ million. Net income totaled $ million for
the quarter ending March 31, 2000.
First Commerce's executive offices are located at 1248 O Street, Lincoln,
Nebraska 68508-1424, and its telephone number is (402) 434-4110.
Management and Additional Information
First Commerce's Annual Report on Form 10-K for the year ended December 31,
1999 incorporates by reference or sets forth information relating to executive
compensation; various benefit plans, including stock option plans; voting
securities and their principal holders; various relationships; related
transactions and other related matters pertaining to First Commerce. First
Commerce incorporates this Annual Report on Form 10-K in this document by
reference. If you would like copies of this document, you may contact First
Commerce at the address or telephone number indicated under "Where You Can Find
More Information."
Information on First Commerce's Web Site
Information on the internet web site of First Commerce or any subsidiary of
First Commerce is not part of this proxy statement-prospectus, and you should
not rely on that information in deciding whether to approve the merger unless
that information is also in this proxy statement-prospectus or in a document
that is incorporated by reference into this proxy statement-prospectus.
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WELLS FARGO CAPITAL STOCK
As a result of the merger, you will become a Wells Fargo stockholder. Your
rights as a Wells Fargo stockholder will be governed by Delaware law, Wells
Fargo's restated certificate of incorporation and Wells Fargo's bylaws. This
description of Wells Fargo's capital stock, including the Wells Fargo common
stock to be issued in the merger, reflects the anticipated state of affairs at
the effective time of the merger.
The following summarizes the material terms of Wells Fargo's capital stock
but does not purport to be complete, and is qualified in its entirety by
reference to the applicable provisions of federal law governing bank holding
companies, Delaware law and Wells Fargo's restated certificate of incorporation
and bylaws and the rights agreement, dated as of October 21, 1998, between
Wells Fargo and ChaseMellon Shareholder Services, L.L.C., as rights agent,
relating to rights to purchase shares of Wells Fargo Series C Junior
Participating Preferred Stock.
A copy of Wells Fargo's restated certificate of incorporation as in effect as
of the date of this document is attached as an exhibit to Wells Fargo's current
report on Form 8-K dated June 28, 1993, and amendments to its certificate of
incorporation are attached as exhibits to its current report on Form 8-K dated
July 3, 1995 and quarterly report on Form 10-Q for the quarter ended September
30, 1998. A copy of Wells Fargo's bylaws as in effect as of the date of this
document are attached as an exhibit to Wells Fargo's annual report on Form 10-K
for the year ended December 31, 1999. A copy of the rights agreement is
attached as an exhibit to Wells Fargo's registration statement on Form 8-A
dated as of October 21, 1998. Wells Fargo's restated certificate of
incorporation and bylaws and the rights agreement are incorporated by reference
into this document.
Wells Fargo Common Stock
Wells Fargo is authorized to issue 4,000,000,000 shares of common stock, par
value $1 2/3 per share. At March 31, 2000, there were shares of Wells Fargo
common stock outstanding. All of the issued and outstanding shares of Wells
Fargo common stock are, and upon the issuance of Wells Fargo common stock in
connection with the merger will be, validly issued, fully paid and
nonassessable. Holders of Wells Fargo common stock are not entitled to any
preemptive rights.
Voting and Other Rights. The holders of Wells Fargo common stock are entitled
to one vote per share, and, in general, a plurality of votes cast with respect
to a matter will be sufficient to authorize action upon routine matters.
However:
. Wells Fargo's restated certificate of incorporation may be amended only
if the proposed amendment is approved by Wells Fargo's board of
directors and thereafter approved by a majority of the outstanding stock
entitled to vote on the amendment and by a majority of the outstanding
stock of each class entitled to vote on the amendment as a class.
. Wells Fargo's stockholders may amend its bylaws by the affirmative vote
of a majority of the outstanding stock entitled to vote thereon.
. With some exceptions, under Delaware law the affirmative vote of a
majority of the outstanding shares of Wells Fargo common stock entitled
to vote is required to approve a merger or consolidation involving Wells
Fargo or the sale, lease or exchange of all or substantially all of
Wells Fargo's corporate assets. See "Comparison of
Shareholder/Stockholder Rights--Shareholder/Stockholder Vote Required
for Mergers" for a description of the exceptions to this rule.
Directors are to be elected by a plurality of the votes cast, and Wells Fargo
stockholders do not have the right to cumulate their votes in the election of
directors. For that reason, holders of a majority of the shares of Wells Fargo
common stock entitled to vote in any election of directors of Wells Fargo may
elect all of the directors standing for election. The Wells Fargo board is not
classified.
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Assets Upon Dissolution. In the event of liquidation, holders of Wells Fargo
common stock would be entitled to receive proportionately any assets legally
available for distribution to stockholders of Wells Fargo with respect to
shares held by them, subject to any prior rights of any Wells Fargo preferred
stock then outstanding.
Distributions. As a Delaware corporation, Wells Fargo may pay dividends out
of surplus or, if there is no surplus, out of net profits for the fiscal year
in which declared and for the preceding fiscal year. Section 170 of the
Delaware General Corporation Law also provides that dividends may not be paid
out of net profits if, after the payment of the dividend, capital is less than
the capital represented by the outstanding stock of all classes having a
preference upon the distribution of assets.
As a bank holding company, the ability of Wells Fargo to pay distributions
will be affected by the ability of its banking subsidiaries to pay dividends.
The ability of these banking subsidiaries, as well as of Wells Fargo, to pay
dividends in the future currently is, and could be further, influenced by bank
regulatory requirements and capital guidelines. See "Regulation and Supervision
of Wells Fargo--Dividend Restrictions" for a more detailed description.
Restrictions on Ownership. The Bank Holding Company Act requires any "bank
holding company" (as defined in the Bank Holding Company Act) to obtain the
approval of the Federal Reserve Board prior to acquiring 5% or more of Wells
Fargo's outstanding common stock. Any person other than a bank holding company
is required to obtain prior approval of the Federal Reserve Board to acquire
10% or more of Wells Fargo's outstanding common stock under the Change in Bank
Control Act. Any holder of 25% or more of Wells Fargo's outstanding common
stock (or a holder of 5% or more if that holder otherwise exercises a
"controlling influence" over Wells Fargo), other than an individual, is subject
to regulation as a bank holding company under the Bank Holding Company Act.
Preferred Share Purchase Rights. Each issued share of Wells Fargo common
stock includes a Series C Junior Participating Preferred Stock purchase right.
See "--Wells Fargo Rights Plan" below.
Wells Fargo Preferred Stock
Wells Fargo's restated certificate of incorporation currently authorizes the
issuance of 20,000,000 shares of preferred stock without par value and
4,000,000 shares of preference stock without par value. At March 31, 2000,
there were shares of Wells Fargo preferred stock outstanding and no shares
of Wells Fargo preference stock outstanding.
The Wells Fargo board is authorized to issue preferred stock and preference
stock in one or more series, to fix the number of shares in each such series,
and to determine the designations and voting powers, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions of each series. The preferred stock and preference
stock may be issued at any time in any amount, provided that not more than
20,000,000 shares of preferred stock and 4,000,000 shares of preference stock
are outstanding at any one time.
The Wells Fargo board may determine the designation and number of shares
constituting a series, dividend rates, whether the series is redeemable and the
terms of redemption, liquidation preferences, sinking fund requirements,
conversion privileges, voting rights, as well as other preferences and
relative, participating, optional or other special rights and qualifications,
limitations and restrictions of these special rights, all without any vote or
other action on the part of stockholders.
The Wells Fargo board has designated 4,000,000 shares of Wells Fargo
preferred stock for issuance as Series C Junior Participating Preferred Stock
under the rights agreement. No shares of Wells Fargo Series C Junior
Participating Preferred Stock are outstanding as of the date of this document.
See "--Wells Fargo Rights Plan" below.
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Wells Fargo Rights Plan
On October 21, 1998, Wells Fargo's board of directors declared a dividend of
one Series C Junior Participating Preferred Stock purchase right for each
outstanding share of Wells Fargo common stock. The dividend was paid on
November 23, 1998 to Wells Fargo stockholders of record on that date. Each
right entitles the registered holder to purchase from Wells Fargo one one-
thousandth of a share of Wells Fargo Series C Junior Participating Preferred
Stock, subject to adjustment, at a price of $160 per one one-thousandth of a
share of Wells Fargo Series C Junior Participating Preferred Stock. The
description and terms of the rights are set forth in the rights agreement.
Until the earlier to occur of (1) ten days following a public announcement
that a person or group of affiliated or associated persons (an "acquiring
person") have acquired beneficial ownership of 15% or more of the outstanding
shares of Wells Fargo common stock or (2) ten business days (or a later date as
may be determined by action of Wells Fargo's board of directors prior to the
time that 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 15% or more of the outstanding shares of Wells Fargo common stock
(the earlier of these dates being called the "rights distribution date"), the
rights will be evidenced, with respect to any of the Wells Fargo common stock
certificates outstanding as of November 23, 1998, by a Wells Fargo common stock
certificate with a copy of the summary of rights, attached to the rights
agreement as Exhibit C, attached to the certificate.
The rights agreement provides that, until the distribution date, the rights
can only be transferred with the shares of Wells Fargo common stock to which
they are attached. Until the distribution date (or earlier redemption or
expiration of the rights), new Wells Fargo common stock certificates issued
after November 23, 1998, upon transfer or new issuance of Wells Fargo common
stock, will contain a notation incorporating the rights agreement by reference.
Until the distribution date (or earlier redemption or expiration of the
rights), the surrender for transfer of any certificates for shares of Wells
Fargo common stock, outstanding as of November 23, 1998, even without this
notation or a copy of the summary of rights being attached to the certificates,
will also constitute the transfer of the rights associated with the shares of
Wells Fargo common stock represented by the certificate. As soon as practicable
following the distribution date, separate certificates evidencing the rights
will be mailed to holders of record of the shares of Wells Fargo common stock
as of the close of business on the distribution date and these separate rights
certificates alone will evidence the rights.
The rights are not exercisable until the distribution date. The rights will
expire on November 23, 2008, unless that date is extended or unless the rights
are earlier redeemed by Wells Fargo, in each case, as described below.
The purchase price payable, and the number of shares of Wells Fargo Series C
Junior Participating Preferred Stock or other securities or property issuable,
upon exercise of the rights are subject to adjustment from time to time to
prevent dilution:
. in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Wells Fargo Series C Junior Participating
Preferred Stock;
. upon the grant to holders of the Wells Fargo Series C Junior
Participating Preferred Stock of certain rights or warrants to subscribe
for or purchase Wells Fargo Series C Junior Participating Preferred
Stock at a price, or securities convertible into Wells Fargo Series C
Junior Participating Preferred Stock with a conversion price, less than
the then-current market price of the Wells Fargo Series C Junior
Participating Preferred Stock; or
. upon the distribution to holders of the Wells Fargo Series C Junior
Participating Preferred Stock of evidences of indebtedness or assets,
excluding regular quarterly cash dividends or dividends payable in Wells
Fargo Series C Junior Participating Preferred Stock or of subscription
rights or warrants (other than those referred to above).
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The number of outstanding rights and the number of one one-thousandths of a
share of Wells Fargo Series C Junior Participating Preferred Stock issuable
upon exercise of each right are also subject to adjustment in the event of a
stock split of the shares of Wells Fargo common stock or a stock dividend on
the shares of Wells Fargo common stock payable in shares of Wells Fargo common
stock or subdivisions, consolidations or combinations of the shares of Wells
Fargo common stock occurring, in any such case, prior to the distribution date.
Wells Fargo Series C Junior Participating Preferred Stock purchasable upon
exercise of the rights will not be redeemable. Each share of Wells Fargo Series
C Junior Participating Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $10 per share but will be entitled
to an aggregate dividend of 1000 times the dividend declared per share of Wells
Fargo common stock. In the event of liquidation, the holders of the Wells Fargo
Series C Junior Participating Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1000 per share but will be entitled to an
aggregate payment of 1000 times the payment made per share of Wells Fargo
common stock. Each share of Wells Fargo Series C Junior Participating Preferred
Stock will have 1000 votes, voting together with the shares of Wells Fargo
common stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Wells Fargo common stock are exchanged, each
share of Wells Fargo Series C Junior Participating Preferred Stock will be
entitled to receive 1000 times the amount received per share of Wells Fargo
common stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Wells Fargo Series C Junior Participating
Preferred Stock's dividend, liquidation and voting rights, the value of the one
one-thousandth interest in a share of Wells Fargo Series C Junior Participating
Preferred Stock purchasable upon exercise of each right should approximate the
value of one share of Wells Fargo common stock.
In the event that Wells Fargo 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 right
will then have the right to receive, upon the exercise of the right at its
then-current exercise price, 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 right. In the event that any person or
group of affiliated or associated persons becomes the beneficial owner of 15%
or more of the outstanding shares of Wells Fargo common stock, proper provision
will be made so that each holder of a right, other than rights beneficially
owned by the acquiring person (which will be void after that time), will then
have the right to receive upon exercise that number of shares of Wells Fargo
common stock having a market value of two times the exercise price of the
right.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Wells Fargo common stock, and prior to their acquisition of 50% or
more of the outstanding shares of Wells Fargo common stock, the Wells Fargo
board may exchange the rights (other than rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one share
of Wells Fargo common stock, or one one-thousandth of a share of Wells Fargo
Series C Junior Participating Preferred Stock (or of a share of a class or
series of Wells Fargo preferred stock having equivalent rights, preferences and
privileges), per right (subject to adjustment).
With some exceptions, no adjustment in the purchase price will be required
until cumulative adjustments require an adjustment of at least 1% in the
purchase price. No fractional shares of Wells Fargo Series C Junior
Participating Preferred Stock will be issued, other than fractions which are
integral multiples of one one-thousandth of a share of Wells Fargo Series C
Junior Participating Preferred Stock, which may, at the election of Wells
Fargo, be evidenced by scrip or depositary receipts; and, in lieu of fractional
shares, an adjustment in cash will be made based on the market price of the
Wells Fargo Series C Junior Participating Preferred Stock on the last trading
day prior to the date of exercise.
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At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Wells Fargo common stock, the Wells Fargo board may redeem the rights
in whole, but not in part, at a price of $.01 per right. The redemption of the
rights may be made effective at the time, on the basis, and with the conditions
that the Wells Fargo board, in its sole discretion, may establish. Immediately
upon any redemption of the rights, the right to exercise the rights will
terminate and the only right of the holders of the rights will be to receive
the redemption price.
The terms of the rights may be amended by the Wells Fargo board without the
consent of the holders, including an amendment to lower the 15% triggering
thresholds described above to not less than the greater of:
. 0.001% greater than the largest percentage of the outstanding shares of
Wells Fargo common stock then known to Wells Fargo to be beneficially
owned by any person or group of affiliated or associated persons, and
. 10%.
However, from and after the time that any person becomes an Acquiring Person,
no amendment may adversely affect the interests of the holders of the rights.
Until a right is exercised, the holder, as such, will have no rights as a
stockholder of Wells Fargo, including, without limitation, the right to vote or
to receive dividends.
The Rights Have Anti-Takeover Effects. The stockholder rights will cause
substantial dilution to a person or group that attempts to acquire Wells Fargo
on terms not approved by the Wells Fargo board, except by means of an offer
conditioned on a substantial number of rights being acquired. The rights should
not interfere with any merger or other business combination approved by the
Wells Fargo board, as the rights may be redeemed by Wells Fargo at the required
redemption price prior to the time that a person or group has acquired
beneficial ownership of 15% or more of the shares of Wells Fargo common stock.
The rights agreement, specifying the terms of the rights and including, as an
exhibit, the form of the certificate of designation setting forth the terms of
the Wells Fargo Series C Junior Participating Preferred Stock, is attached as
an exhibit to Wells Fargo's registration statement on Form 8-A, dated October
21, 1998, and is incorporated in this document by reference. The foregoing
description of the Wells Fargo Series C Junior Participating Preferred Stock
purchase rights is qualified in its entirety by reference to this exhibit. See
"Where You Can Find More Information" for information on how to obtain this
document.
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COMPARISON OF SHAREHOLDER/STOCKHOLDER RIGHTS
The rights of First Commerce shareholders are currently governed by the
Nebraska Business Corporation Act, or NBCA, First Commerce's articles of
incorporation and First Commerce's bylaws. The rights of Wells Fargo
stockholders are currently governed by the Delaware General Corporation Law, or
DGCL, Wells Fargo's restated certificate of incorporation and Wells Fargo's
bylaws. The following is a summary of material differences between the rights
of First Commerce shareholders and the rights of Wells Fargo stockholders. It
is not a complete statement of the provisions affecting, and the differences
between, the rights of First Commerce shareholders and Wells Fargo
stockholders. The summary is qualified in its entirety by reference to the
NBCA, the DGCL, First Commerce's articles of incorporation and bylaws, and
Wells Fargo's restated certificate of incorporation and bylaws.
Authorized Capital Stock
First Commerce Wells Fargo
. 10,000,000 shares of class A common stock . 4,000,000,000 shares of common
stock
. 40,000,000 shares of class B common stock
. 20,000,000 shares of preferred
stock
. 4,000,000 shares of preference
stock
Size of Board of Directors
First Commerce Wells Fargo
The NBCA provides that the board of The DGCL provides that the board of
directors of a Nebraska corporation directors of a Delaware corporation
shall consist of one or more shall consist of one or more
directors as fixed by the directors as fixed by the
corporation's articles of corporation's certificate of
incorporation or bylaws. Under First incorporation or bylaws. Under Wells
Commerce's articles of Fargo's restated certificate of
incorporation, the specific number incorporation, the number of
of directors shall be as provided directors shall be as specified in
for in the bylaws. First Commerce's the bylaws but in no event less than
bylaws provide that the size of the three. Wells Fargo's bylaws provide
board of directors shall be fixed at for a board of directors consisting
ten members. Each director will hold of not less than ten nor more than
office until his successor shall 28 persons, each serving a term of
have become elected and qualified. one year or until his or her earlier
death, resignation or removal. The
number of directors of Wells Fargo
is currently fixed at 18.
Cumulative Voting
Cumulative voting entitles each stockholder to cast an aggregate number of
votes equal to the number of voting shares held, multiplied by the number of
directors to be elected. Each stockholder may cast all of his or her votes for
one nominee or distribute them among two or more nominees, thus permitting
holders of less than a majority of the outstanding shares of voting stock to
achieve board representation. Where cumulative voting is not permitted, holders
of all outstanding shares of voting stock of a corporation elect the entire
board of directors of the corporation, thereby precluding the election of any
directors by the holders of less than a majority of the outstanding shares of
voting stock.
First Commerce Wells Fargo
The NBCA provides for cumulative Under the DGCL, stockholders do not
voting in the election of directors. have the right to cumulate their
First Commerce's bylaws provide for votes in the election of directors
cumulative voting in the election of unless such right is granted in the
directors. certificate of incorporation. Wells
Fargo's restated certificate of
incorporation does not provide for
cumulative voting.
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Classes of Directors
First Commerce Wells Fargo
The NBCA permits the articles of The DGCL permits classification of a
incorporation of a Nebraska Delaware corporation's board of
corporation to provide for the directors, and for staggered terms.
classification of the board of
directors, and for staggered terms. Wells Fargo's board of directors is
not classified. The entire board is
First Commerce's board of directors elected each year.
is classified. Approximately one-
third of the board of directors is
elected each year for a term of
three years.
Qualifications of Directors
First Commerce Wells Fargo
Under the NBCA, a director need not Under the DGCL, a director need not
be a resident of the state of be a resident of the state of
Nebraska unless the certificate of Delaware unless the certificate of
incorporation or bylaws so incorporation or bylaws so
prescribe. Otherwise, qualifications prescribe. Otherwise, qualifications
for directors may be set forth in for directors may be set forth in
the articles of incorporation or the certificate of incorporation or
bylaws. First Commerce's articles of bylaws. Wells Fargo's restated
incorporation and bylaws specify certificate of incorporation
that directors need not be requires directors to be
shareholders of First Commerce or stockholders of Wells Fargo.
residents of the state of Nebraska.
Filling Vacancies on the Board
First Commerce Wells Fargo
The NBCA provides that, unless the The DGCL provides that, unless the
articles of incorporation provide governing documents of a corporation
otherwise, vacancies and newly provide otherwise, vacancies and
created directorships resulting from newly created directorships
an increase in the authorized number resulting from a resignation or an
of directors may be filled by the increase in the authorized number of
shareholders, by the board of directors elected by all of the
directors, or by a majority of the stockholders having the right to
directors then in office if the vote as a single class may be filled
remaining directors constitute less by a majority of the directors then
than a quorum. in office.
First Commerce's bylaws provide that Vacancies on Wells Fargo's board of
vacancies on the board of directors directors may be filled by majority
may be filled by a majority of the vote of the remaining directors or,
directors then in office even though in the event a vacancy is not so
less than a quorum; provided, filled or if no director remains, by
however, that vacancies occurring as the stockholders.
the result of an increase in the
number of directors shall be filled
by an election at an annual or
special meeting of the shareholders.
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Removal of Directors
First Commerce Wells Fargo
The NBCA provides the removal of The DGCL provides that a director or
directors by shareholders, with the the entire board of directors may be
following conditions: removed, with or without cause, by
the holders of a majority of the
. shareholders may remove directors shares then entitled to vote at an
with or without cause unless the election of directors. However, in
articles of incorporation provide the case of a corporation whose
that the director may only be board is classified, the directors
removed for cause; may be removed only for cause unless
the certificate of incorporation
. a director elected by a voting provides otherwise. Wells Fargo's
group of shareholders may only be board is not classified, so
removed by that voting group; directors may be removed with or
without cause by the holders of a
. if cumulative voting is majority of the shares then entitled
authorized, a director may not be to vote at an election of directors.
removed if the number of votes
sufficient to elect the director
under cumulative voting is voted
against his or her removal; if
cumulative voting is not
authorized, a director may be
removed only if the number of
votes in favor of removal exceeds
those against; and
. a director may be removed by the
shareholders only at a meeting
called for that purpose, and this
purpose must be stated in the
meeting notice.
Since the NBCA and First Commerce's
bylaws provide for cumulative
voting, a director may not be
removed if the number of votes
sufficient to elect the director
under cumulative voting is voted
against his or her removal.
Nomination of Directors for Election
First Commerce Wells Fargo
Neither First Commerce's articles of Under Wells Fargo's bylaws,
incorporation nor its bylaws make nominations for Wells Fargo's board
express provision as to the may be made by the board or by any
nomination of directors. stockholder who complies with the
notice procedures described in Wells
Fargo's bylaws. These procedures
require the notice to be received by
Wells Fargo not less than 30 nor
more than 60 days prior to the
meeting. However, if less than 40
days' prior public disclosure of the
date of the meeting is given to
stockholders, then the notice must
be received no later than 10 days
after the first public announcement
of the meeting date.
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Anti-Takeover Provisions
First Commerce Wells Fargo
Section 21-2451 of the Nebraska The DGCL contains a business
Revised Statutes provides that a combination statute that protects
person who acquires shares of domestic corporations from hostile
certain Nebraska publicly traded takeovers, and from actions
corporations, including First following such a takeover, by
Commerce, in a "control share prohibiting some transactions once
acquisition" will have voting rights an acquiror has gained a significant
as a shareholder on matters other holding in the corporation.
than the election of directors only
if a majority of disinterested Section 203 of the DGCL prohibits
shareholders and, if applicable, the "business combinations," including
majority of each class of mergers, sales and leases of assets,
shareholders, vote to approve such issuances of securities and similar
voting rights. "Control share transactions by a corporation or a
acquisition" is defined as an subsidiary with an "interested
acquisition of voting stock that stockholder" who beneficially owns
would give the acquiring person 15% or more of a corporation's
power to exercise or direct the voting stock, within three years
exercise, when combined with all after the person or entity becomes
other voting shares owned by such an interested stockholder, unless:
person, of voting power over a new
range of ownership within any of the . the transaction that will cause
following parameters: the person to become an interested
stockholder is approved by the
. at least 20% but less than 33 1/3%, board of directors of the target
prior to the transaction;
. at least 33 1/3% but less than or
equal to 50%, or . after the completion of the
transaction in which the person
. greater than 50%. becomes an interested stockholder,
the interested stockholder holds
An acquisition, such as the proposed at least 85% of the voting stock
merger, is not a control share of the corporation not including
acquisition if it is consummated, (a) shares held by officers and
among other ways, pursuant to a directors of interested
merger or plan of share exchange stockholders and (b) shares held
effected in compliance with the by specified employee benefit
statutory merger provisions of plans; or
Nebraska law, including satisfaction
of board and shareholder approval . after the person becomes an
requirements. interested stockholder, the
business combination is approved
In addition, Section 21-2452 by the board of directors and
restricts certain business holders of at least 66 2/3% of the
combinations with an interested outstanding voting stock,
shareholder, which is defined to excluding shares held by the
include a person who owns in excess interested stockholder.
of 10% of the voting shares of the
corporation, with the exception of A Delaware corporation may elect not
persons who owned in excess of 10% to be governed by Section 203 by a
of the voting shares prior to April provision contained in its original
9, 1988 and who have not since certificate of incorporation or an
increased their proportionate voting amendment thereto or to the bylaws,
power. Section 21-2452 prohibits which amendment must be approved by
certain "business combinations" a majority of the shares entitled to
between a publicly held Nebraska vote and may not be further amended
corporation and any interested by the board of directors. Such an
shareholder for a period of five amendment is not effective until 12
years after the interested months following its adoption. Wells
shareholder's acquisition, unless Fargo has not made such an election.
the board of directors of the
corporation approves the transaction
prior to the date the interested
shareholder first became an
interested shareholder. "Business
combination" is defined broadly to
include mergers, consolidations,
sales or other disposition of assets
having an aggregate value in excess
of 10% of the consolidated assets of
the corporation or the aggregate
market value of the outstanding
stock of the corporation, and
certain
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transactions that would increase an
interested shareholder's
proportionate share ownership in the
corporation.
Since the proposed transaction is a
merger, the transaction will not be
a control share acquisition and,
since Wells Fargo is not an
"interested stockholder" with regard
to First Commerce, Section 21-2452
would not apply to the merger.
First Commerce's articles of
incorporation also include a
provision that requires any person
or group that acquires beneficial
ownership of 10% or more of the
class A common stock outstanding
that does not own an equal or
greater percentage of the class B
common stock outstanding to make a
tender offer for a number of shares
of class B common stock sufficient
to equalize the percentage of each
class owned. The tender offer is
subject to fair price provisions
that require the offer price to be
the greater of:
. the highest price per share paid
by the significant shareholder for
any First Commerce class A common
stock in the six-month period
ending on the day that the person
or group became a significant
shareholder;
. the greater of the bid price of
First Commerce class A or class B
common stock on the date the
person or group became a
significant shareholder; or
. the greater of the bid price of
First Commerce class A or class B
common stock on the day before the
tender offer.
Further, under First Commerce's
articles of incorporation, holders
of class B common stock are entitled
to the same consideration as holders
of class A common stock in the event
of a merger or consolidation of the
company, provided, however, that in
a share exchange, holders of class B
common stock may be issued non-
voting shares while the holders of
class A common stock are issued
voting shares.
Shareholder/Stockholder Rights Plan
First Commerce Wells Fargo
First Commerce has not implemented a Wells Fargo has implemented a
shareholder rights plan. stockholder rights plan, under which
a group of persons becomes an
acquiring person upon a public
announcement that
55
<PAGE>
they have acquired or intend to
acquire 15% of Wells Fargo's voting
stock. This threshold can be reduced
by amendment. Each share of Wells
Fargo common stock issued in the
merger will be issued with an
attached right. See "Wells Fargo
Capital Stock--Wells Fargo Rights
Plan."
Shareholder/Stockholder Action Without a Meeting
Wells Fargo
First Commerce
In accordance with Section 228 of
Under the NBCA, action may only be the DGCL, Wells Fargo's bylaws
taken by the shareholders of First provide that any action required or
Commerce without a meeting if such permitted to be taken at a
action is taken by all of the stockholders' meeting may be taken
shareholders entitled to vote on the without a meeting pursuant to the
action. Similarly, the First written consent of the holders of
Commerce bylaws provide that the number of shares that would have
shareholders may act on matters by been required to effect the action
written consent, in lieu of voting at an actual meeting of the
on such matter at an annual or stockholders, and provide certain
special meeting of shareholders, procedures to be followed in such
only if such written consent is cases.
unanimous.
Calling Special Meetings of Shareholders/Stockholders
First Commerce Wells Fargo
The NBCA requires a corporation to Under the DGCL, a special meeting of
hold a special meeting of its stockholders may be called by the
shareholders on the call of its board of directors or by any other
board of directors or the persons person authorized to do so in the
authorized to do so in its articles certificate of incorporation or the
of incorporation or bylaws, or upon bylaws. Wells Fargo's bylaws provide
the written demand of holders of at that a special meeting of
least 10% of the votes entitled to stockholders may be called only by
be cast on any issue proposed to be the chairman of the board, a vice
considered at any special meeting. chairman, the president or a
First Commerce's bylaws provide that majority of Wells Fargo's board of
a special meeting of the directors. Holders of Wells Fargo
shareholders may be called by the common stock do not have the ability
president or by the board of to call a special meeting of
directors, and shall be called by stockholders.
the president at the request of
holders of 25% of all outstanding
shares entitled to vote at the
meeting.
Submission of Shareholder/Stockholder Proposals
First Commerce Wells Fargo
Neither First Commerce's articles of The Wells Fargo bylaws provide that
incorporation nor its bylaws make in order for a stockholder to bring
express provision as to submission business before the annual meeting,
by First Commerce shareholders of the stockholder must give timely
proposals. notice of the proposal to Wells
Fargo. To be timely, the notice must
be received not later than the 90th
day nor earlier than the 120th day
prior to the first anniversary of
the preceding year's annual meeting.
However, if the annual meeting is
more than 30 days before or more
than 60 days after the anniversary
of the prior year's annual meeting,
to be timely the notice must be
delivered no earlier than 120 days
prior to the annual meeting and no
later than the later of 90 days
prior to the annual meeting or 10
days after the first public
announcement of the meeting date.
56
<PAGE>
Notice of Shareholder/Stockholder Meetings
First Commerce Wells Fargo
The NBCA requires notice of The DGCL requires notice of
shareholders' meetings to be sent to stockholders' meetings to be sent to
all shareholders of record entitled all stockholders of record entitled
to vote thereon not less than 10 nor to vote thereon not less than 10 nor
more than 60 days prior to the date more than 60 days prior to the date
of the meeting. First Commerce's of the meeting. Wells Fargo's bylaws
bylaws provide that written notice provide for written notice to
of annual or special meetings be stockholders of record at least 10
given not less than 10 nor more than days prior to an annual or special
50 days prior to the date of the meeting.
meeting.
Shareholder/Stockholder Vote Required for Mergers
First Commerce Wells Fargo
Under the NBCA, unless a greater Under the DGCL, a merger,
vote of shareholders is required by consolidation or sale of all or
a corporation's articles of substantially all of a corporation's
incorporation, or unless the board assets must be approved by the board
of directors conditions its approval of directors and by a majority of
of a merger or share exchange on the outstanding stock of the
attaining a higher vote, a plan of corporation entitled to vote
merger or share exchange requires thereon. However, under DGCL 251(f),
the affirmative vote of two-thirds no vote of stockholders of a
of each voting group entitled to constituent corporation surviving a
vote separately on the plan. merger is required, unless the
Separate voting by voting groups is corporation provides otherwise in
required on a plan of merger if the its certificate of incorporation,
plan contains a provision that, if if:
contained in a proposed amendment to
the articles of incorporation, would . the merger agreement does not
entitle the shareholders to vote as amend the certificate of
a separate class. See "-- incorporation of the surviving
Shareholder/Stockholder Class Voting corporation;
Rights."
. each share of stock of the
However, under the NBCA, no surviving corporation outstanding
shareholder vote is required if: before the merger is an identical
outstanding or treasury share
. the articles of incorporation of after the merger; and
the surviving corporation will not
differ from its articles of . either no shares of common stock
incorporation before the merger in of the surviving corporation are
any way that would have required a to be issued or delivered pursuant
shareholder vote under the NBCA; to the merger or, if such common
stock will be issued or delivered,
. each shareholder of the surviving it will not increase the number of
corporation will hold exactly the shares of common stock outstanding
same number of identical shares as immediately prior to the merger by
they did before the merger; more than 20%.
. the number of voting shares of the
surviving corporation outstanding
immediately after the merger, plus
the number of voting shares
issuable as a result of the
merger, will not exceed the total
number of voting shares authorized
by the corporation's articles of
incorporation immediately prior to
the merger; and
. the number of shares of the
surviving corporation that entitle
their holders to participate
without
57
<PAGE>
limitation in distributions that
are outstanding immediately after
the merger, plus the number of
these shares issuable as a result
of the merger, will not exceed the
total number of these shares
authorized by the corporation's
articles of incorporation
immediately prior to the merger.
In addition, First Commerce's
ability to engage in mergers may
also be restricted by certain
provisions of Nebraska law relating
to business combinations. See "--
Anti-Takeover Provisions" above.
Dividends
First Commerce Wells Fargo
Under the NBCA, a corporation may Delaware corporations may pay
make a distribution in cash or in dividends out of surplus or, if
property to its shareholders upon there is no surplus, out of net
the authorization of its board of profits for the fiscal year in which
directors unless, after giving declared and for the preceding
effect to such distribution: fiscal year. Section 170 of the DGCL
also provides that dividends may not
. the corporation would be unable to be paid out of net profits if, after
pay its debts as they become due the payment of the dividend, capital
in the usual course of business; is less than the capital represented
or by the outstanding stock of all
classes having a preference upon the
. the corporation's total assets distribution of assets. Wells Fargo
would be less than all liabilities is also subject to Federal Reserve
plus the amount that would be Board policies regarding payment of
needed, if the corporation were to dividends, which generally limit
be dissolved at the time of the dividends to operating earnings. See
distribution, to satisfy the "Regulation and Supervision of Wells
preferential rights of Fargo." Wells Fargo's bylaws provide
shareholders whose rights are that the stockholders have the right
superior to those receiving the to receive dividends if and when
distribution. declared by Wells Fargo's board.
Dividends may be paid in cash,
First Commerce's articles of property or shares of capital stock.
incorporation permit distributions
from capital surplus so long as:
. First Commerce is not insolvent
and the distributions would not
make it insolvent;
. all cumulative dividends accrued
on all preferred and special
classes of shares entitled to
preferential dividends have been
paid; and
. if the distributions would not
reduce the remaining net assets of
First Commerce below the aggregate
preferential amount payable in
voluntary liquidations to holders
of shares having preferential
rights to assets.
First Commerce's articles of
incorporation also provide that
holders of class A and class B
common stock are entitled to
participate equally in all
dividends, except that dividends of
common stock shall be payable in
shares of class B common stock to
class B shareholders and in shares
of class A common stock to class A
shareholders. First Commerce's
bylaws provide for the payment of
dividends upon the terms and
conditions provided
58
<PAGE>
for by law and under First
Commerce's articles of
incorporation.
For a comparison of dividends
historically paid by each of First
Commerce and Wells Fargo, see "Price
Range of Common Stock and
Dividends."
Dissenters' Appraisal Rights
First Commerce Wells Fargo
Under the NBCA, a shareholder of a Section 262 of the DGCL provides
Nebraska corporation may exercise stockholders of a corporation
dissenters' rights in connection involved in a merger the right to
with any of the following corporate demand and receive payment of the
actions: fair value of their stock in certain
mergers. However, appraisal rights
. a plan of merger that either are not available to holders of
provides for a shareholder vote or shares:
is the merger of a 90% owned
subsidiary into its parent; . listed on a national securities
exchange;
. a plan of exchange involving the
acquisition of the corporation's . designated as a national market
shares providing for a shareholder system security on an interdealer
vote; quotation system operated by the
National Association of Securities
. a sale or exchange of all, or Dealers, Inc.; or
substantially all, of the property
of the corporation other than in . held of record by more than 2,000
the usual and regular course of stockholders
business, providing for a
shareholder vote, except for a unless holders of stock are required
sale pursuant to court order or a to accept in the merger anything
sale for cash where the cash is other than any combination of:
distributed to shareholders within
one year; . shares of stock or depository
receipts of the surviving
. an amendment of the articles of corporation in the merger;
incorporation that materially and
adversely affects the rights of . shares of stock or depository
the dissenter's shares; and receipts of another corporation
that, at the effective date of the
. any corporate action taken by merger, will be:
shareholder vote for which the
articles of incorporation, bylaws . listed on a national securities
or resolution of the board of exchange,
directors provide for dissenters'
rights. . designated as a national market
system security on an interdealer
However, the right to dissent and quotation system operated by the
obtain payment does not apply to the National Association of Securities
shareholders of a bank or the Dealers, Inc., or
holding company of a bank.
Accordingly, First Commerce . held of record by more than 2,000
shareholders do not have the right holders; and
to dissent from the merger.
. cash instead of fractional shares
of the stock or depository
receipts received.
Dissenters' appraisal rights are not
available to the Wells Fargo
stockholders with respect to the
merger because the DGCL does not
require that Wells Fargo
stockholders vote to approve the
merger agreement. Moreover, Wells
Fargo common stock is listed on the
New York and Chicago Stock Exchange
and currently held by more than
2,000 stockholders. As a result,
assuming that the other conditions
described above are satisfied,
holders of Wells Fargo common stock
will not have appraisal rights in
connection with consolidations and
mergers involving Wells Fargo.
59
<PAGE>
Shareholder/Stockholder Preemptive Rights
First Commerce Wells Fargo
Under the NBCA, the shareholders of The DGCL provides that no
a Nebraska corporation do not have stockholder shall have any
preemptive rights unless the preemptive rights to purchase
articles of incorporation so additional securities of the
provide. First Commerce's articles corporation unless the certificate
of incorporation expressly state of incorporation expressly grants
that no preemptive rights exist with these rights. Wells Fargo's restated
respect to shares of First Commerce certificate of incorporation does
stock. not provide for preemptive rights.
Shareholder/Stockholder Class Voting Rights
First Commerce Wells Fargo
Separate voting by voting groups is The DGCL requires voting by separate
required on a proposed amendment to classes of shares only with respect
the articles of incorporation if the to amendments to a corporation's
amendment would affect the rights of certificate of incorporation that
the voting group as enumerated below adversely affect the holders of
under "--Amendment of those classes or that increase or
Articles/Certificate of decrease the aggregate number of
Incorporation." authorized shares or the par value
of the shares of any of those
A two-thirds vote of a class is classes.
required with respect to amendments
to a corporation's articles of
incorporation that materially and
adversely affect the holders of that
class. In addition, under the NBCA,
the adoption or amendment of a bylaw
that adds, changes, or deletes a
greater quorum or voting requirement
for shareholders must meet the same
quorum requirement and be adopted by
the same class vote required to take
action under the quorum and voting
requirement then in effect or
proposed to be adopted, whichever is
greater.
Further, as described above under
"--Shareholder/Stockholder Vote
Required for Mergers," a plan of
merger or share exchange requires
the affirmative vote of two-thirds
of each voting group entitled to
vote separately on the plan.
Indemnification
First Commerce Wells Fargo
The NBCA permits a corporation to The DGCL provides that, subject to
indemnify directors so long as the certain limitations in the case of
director: "derivative" suits brought by a
corporation's stockholders in its
. acted in good faith; name, a corporation may indemnify
any person who is made a party to
. if acting in an official capacity, any third-party suit or proceeding
reasonably believed that his or on account of being a director,
her conduct was in the officer, employee or agent of the
corporation's best interests; corporation against expenses,
including attorney's fees,
. if acting in another capacity, judgments, fines and amounts paid in
reasonably believed that his or settlement reasonably incurred by
her conduct was not opposed to the him or her in connection with the
corporation's best interests; and action, through, among other
60
<PAGE>
things, a majority vote of a quorum
. if involved in a criminal consisting of directors who were not
proceeding, had no reason to parties to the suit or proceeding,
believe his or her conduct was if the person:
unlawful.
. acted in good faith and in a
In addition, under First Commerce's manner he or she reasonably
bylaws, in non-derivative suits believed to be in or not opposed
indemnification is required of to the best interests of the
directors and officers so long as corporation or, in some
the director or officer: circumstances, at least not
opposed to its best interests; and
. acted in good faith;
. in a criminal proceeding, had no
. acted in a manner he reasonably reasonable cause to believe his or
believed to be in or not opposed her conduct was unlawful.
to the best interests of the
corporation; and To the extent a director, officer,
employee or agent is successful in
. with respect to any criminal the defense of such an action, suit
action or proceeding, had no or proceeding, the corporation is
reason to believe his or her required by the DGCL to indemnify
conduct was unlawful. such person for reasonable expenses
incurred thereby.
In derivative suits, indemnification
is required so long as the director Wells Fargo's restated certificate
or officer acted in good faith and of incorporation provides that Wells
in a manner he reasonably believed Fargo must indemnify, to the fullest
to be in or not opposed to the best extent authorized by the DGCL, each
interests of the corporation; person who was or is made a party
provided, however, that no to, is threatened to be made a party
indemnification is provided if the to or is involved in any action,
person is adjudged to be liable for suit or proceeding because he or she
negligence or misconduct in the is or was a director or officer of
performance of his duty to First Wells Fargo (or was serving at the
Commerce, unless the court deems request of Wells Fargo as a
otherwise. director, trustee, officer,
employee, or agent of another
Both the NBCA and First Commerce's entity) while serving in such
bylaws require indemnification if capacity against all expenses,
the director or officer is wholly liabilities, or loss incurred by
successful on the merits of the such person in connection therewith,
action or otherwise. provided that indemnification in
connection with a proceeding brought
by such person will be permitted
only if the proceeding was
authorized by Wells Fargo's board of
directors.
Wells Fargo's restated certificate
of incorporation also provides that
Wells Fargo must pay expenses
incurred in defending the
proceedings specified above in
advance of their final disposition,
provided that, if so required by the
DGCL, such advance payments for
expenses incurred by a director or
officer may be made only if he or
she undertakes to repay all amounts
so advanced if it is ultimately
determined that the person receiving
such payments is not entitled to be
indemnified. Wells Fargo's restated
certificate of incorporation
authorizes Wells Fargo to provide
similar indemnification to employees
or agents of Wells Fargo.
Pursuant to Wells Fargo's restated
certificate of incorporation, Wells
Fargo may maintain insurance, at its
expense, to protect itself and any
directors, officers, employees or
agents of Wells Fargo or another
entity against any expense,
liability or loss,
61
<PAGE>
regardless of whether Wells Fargo
has the power or obligation to
indemnify that person against such
expense, liability or loss under the
DGCL.
The right to indemnification is not
exclusive of any other right which
any person may have or acquire under
any statute, provision of Wells
Fargo's restated certificate of
incorporation or bylaws, agreement,
vote of stockholders or
disinterested directors or
otherwise.
Limitations on Directors' Liability
First Commerce Wells Fargo
The NBCA allows the articles of Wells Fargo's restated certificate
incorporation to eliminate or limit of incorporation provides that a
the liability of a director to a director (including an officer who
corporation or its shareholders from is also a director) of Wells Fargo
monetary damages for any action shall not be liable personally to
taken as a director, except for: Wells Fargo or its stockholders for
monetary damages for breach of
. liability for the amount of a fiduciary duty as a director, except
financial benefit the director for liability arising out of:
received to which the director is
not entitled; . any breach of the director's duty
of loyalty to Wells Fargo or its
. an intentional infliction of harm stockholders;
on the corporation or the
shareholder; . acts or omissions not in good
faith or which involve intentional
. an intentional authorization of misconduct or a knowing violation
unlawful distributions; or of law;
. an intentional violation of . payment of a dividend or approval
criminal law. of a stock repurchase in violation
of Section 174 of the DGCL; or
The First Commerce articles of
incorporation do not currently limit . any transaction from which the
or eliminate directors' liability in director derived an improper
any manner. personal benefit.
This provision protects Wells
Fargo's directors against personal
liability for monetary damages from
breaches of their duty of care. It
does not eliminate the director's
duty of care and has no effect on
the availability of equitable
remedies, such as an injunction or
rescission, based upon a director's
breach of his or her duty of care.
Amendment of Articles/Certificate of Incorporation
First Commerce Wells Fargo
Under the NBCA, unless a greater Under the DGCL, amendments to a
vote of shareholders is required by corporation's certificate of
the NBCA or a corporation's articles incorporation require the approval
of incorporation, or unless the of the board of directors and
board of directors conditions its stockholders holding a majority of
approval of a merger or share the outstanding stock of such class
exchange on attaining a higher vote, entitled to vote on such amendment
an amendment to the articles of as a class, unless a different
incorporation requires the proportion is specified in the
affirmative vote of: certificate of incorporation or by
other provisions of the DGCL.
62
<PAGE>
. two-thirds of each voting group, Wells Fargo's restated certificate
if the amendment would materially of incorporation may be amended only
and adversely affect their rights, if the proposed amendment is
or approved by Wells Fargo's board of
directors and thereafter approved by
. a majority of the votes cast by a majority of the outstanding stock
every voting group entitled to entitled to vote thereon and by a
vote on the amendment. majority of the outstanding stock of
each class entitled to vote thereon
Under the NBCA, holders of the as a class.
outstanding shares of a class are
entitled to vote as a separate Shares of Wells Fargo preferred
voting group on amendments to the stock and Wells Fargo preference
articles of incorporation if the stock currently authorized in Wells
amendment would: Fargo's restated certificate of
incorporation may be issued by Wells
. effect the exchange or Fargo's board of directors without
reclassification of the shares amending Wells Fargo's restated
into shares of another class; certificate of incorporation or
otherwise obtaining the approval of
. effect the exchange or Wells Fargo's stockholders.
reclassification, or create the
right of exchange, of all or part
of the shares of another class
into shares of the class;
. change the designation, rights,
preferences or limitations of all
or part of the shares of the
class;
. change the shares of all or part
of the class into a different
number of shares of the same
class;
. create a new class of shares with
rights or preferences that are
prior, superior, or substantially
equal to shares of the class;
. increase the rights or preferences
of shares of another class such
that these shares would have
rights or preferences that are
prior, superior, or substantially
equal to shares of the class;
. limit or deny an existing
preemptive right of all or part of
shares of the class; or
. cancel or otherwise affect rights
to dividends that have been
accumulated by the shares of the
class but not yet paid.
The First Commerce articles of
incorporation reserve the right to
amend the articles of incorporation
in the manner prescribed by statute.
Amendment of Bylaws
First Commerce Wells Fargo
The NBCA vests the authority to Under the DGCL, holders of a
amend the bylaws of a Nebraska majority of the voting power of a
corporation in the hands of the corporation, and, when provided in
board of directors, unless the the certificate of incorporation,
articles of incorporation reserve the directors of the corporation,
this power exclusively for the have the power to adopt, amend and
shareholders. First Commerce's repeal the bylaws of a corporation.
articles of incorporation grant the
board of directors the power to Wells Fargo's bylaws generally
amend the bylaws. Both the NBCA and provide for amendment by a majority
the First Commerce articles of of Wells Fargo's board of
incorporation also grant
shareholders the right to
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<PAGE>
amend the bylaws. Further, both the directors or by a majority of the
NBCA and the First Commerce articles outstanding stock entitled to vote
of incorporation provide that the thereon. However, Wells Fargo's
board of directors may not amend or bylaws require the affirmative vote
repeal a bylaw adopted by the or consent of 80% of the common
shareholders that expressly provides stock outstanding to amend a bylaw
that it may not be amended or provision related to maintaining
repealed by the board of directors. local directorships at subsidiaries
with which Wells Fargo has an
agreement to so maintain local
directorships.
The NBCA also provides that, if
authorized by the articles of
incorporation, the shareholders may
adopt or amend a bylaw that fixes a
greater quorum or voting requirement
for shareholders or voting groups of
shareholders than is required by the
NBCA. Such a bylaw may be subject to
class voting rights as described
above under "--
Shareholder/Stockholder Class Voting
Rights." Further, if the
shareholders adopt a bylaw that
fixes a greater quorum or voting
requirement for the board of
directors, the bylaw may be amended
or repealed only by the
shareholders.
64
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Wells Fargo Share Prices And Dividends
Wells Fargo common stock is listed on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol "WFC." Before November 3, 1998, the
common stock traded under the symbol "NOB." The following table shows, for the
periods indicated, the high and low sales prices of Wells Fargo common stock on
the NYSE composite transactions reporting system and the cash dividends paid
per share.
<TABLE>
<CAPTION>
Price Range
------------- Dividends
High Low Paid
------ ------ ---------
<S> <C> <C> <C>
1998
First Quarter........................................... $43.88 $34.75 $0.165
Second Quarter.......................................... 43.75 34.00 0.165
Third Quarter........................................... 39.75 27.50 0.185
Fourth Quarter.......................................... 40.88 30.19 0.185
1999
First Quarter........................................... 40.44 32.13 0.185
Second Quarter.......................................... 44.88 34.38 0.200
Third Quarter........................................... 45.31 36.44 0.200
Fourth Quarter.......................................... 49.94 38.38 0.200
2000
First Quarter........................................... 41.69 31.88 0.220
Second Quarter (through May )..........................
</TABLE>
The timing and amount of future dividends will depend on earnings, cash
requirements, the financial condition of Wells Fargo and its subsidiaries,
applicable government regulations and other factors deemed relevant by Wells
Fargo's board of directors in its discretion. As described in "Regulation And
Supervision Of Wells Fargo--Dividend Restrictions," various federal and state
laws limit the ability of affiliate banks to pay dividends to Wells Fargo.
First Commerce Share Prices And Dividends
First Commerce class A and class B common stock trades on the NASDAQ Small
Cap Market under the symbols "FCBIA" and "FCBIB," respectively. The following
table shows, for the periods indicated, the high and low closing prices for
First Commerce class A and class B common stock as reported on the NASDAQ and
the cash dividends paid per share.
<TABLE>
<CAPTION>
Class A Common Class B Common
Stock Stock
------------------------ ---------------------------
Price Price
Range Range
----------- Dividends -------------- Dividends
High Low Paid High Low Paid
---- --- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
1998
First Quarter............ $32 $29 $.085 $32 1/2 $27 1/2 $.085
Second Quarter........... 31 1/2 27 .085 30 1/2 25 7/8 .085
Third Quarter............ 29 3/4 25 .085 33 1/2 24 3/4 .085
Fourth Quarter........... 28 1/2 24 3/4 .085 31 24 .085
1999
First Quarter............ 29 1/2 24 1/2 .090 30 21 1/4 .090
Second Quarter........... 26 3/4 18 1/2 .090 27 7/8 21 .090
Third Quarter............ 26 18 .090 24 15/16 18 3/4 .090
Fourth Quarter........... 26 19 1/2 .090 24 1/4 17 3/4 .090
2000
First Quarter............ 39 1/2 20 1/8 .100 35 18 .100
Second Quarter (through
May )..................
</TABLE>
65
<PAGE>
EXPERTS
Wells Fargo's Independent Accountants
The consolidated financial statements of Wells Fargo and subsidiaries as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
First Commerce's Independent Accountants
The consolidated financial statements of First Commerce Bancshares, Inc.,
incorporated in this document by reference to First Commerce's Annual Report
on Form 10-K for the year ended December 31, 1999, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
OPINIONS
Share Issuance
Stanley S. Stroup, Executive Vice President and General Counsel of Wells
Fargo, has rendered a legal opinion that the shares of Wells Fargo common
stock offered hereby, when issued in accordance with the merger agreement,
will be validly issued, fully paid and nonassessable. Mr. Stroup beneficially
owns shares of Wells Fargo common stock and options to purchase additional
shares of Wells Fargo common stock. As of the date of this document, the total
number of shares Mr. Stroup owns or has the right to acquire upon exercise of
his options is less than 0.1% of the outstanding shares of Wells Fargo common
stock.
Tax Matters
Wachtell, Lipton, Rosen & Katz has given an opinion regarding the material
U.S. federal income tax consequences of the merger. See "The Merger--U.S.
Federal Income Tax Consequences Of The Merger."
DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS
First Commerce will hold a 2000 annual meeting of shareholders only if the
merger is not completed. If a 2000 annual meeting is held, any proposal to be
presented at the meeting from a shareholder who wishes to have the proposal
included in First Commerce's proxy materials sent to shareholders for the
meeting using the processes contained in Rule 14a-8 of the Securities Exchange
Act of 1934 must have been received by the Corporate Secretary of First
Commerce at 1248 O Street, Lincoln, Nebraska 68508-1424, not later than
November 12, 1999.
WHERE YOU CAN FIND MORE INFORMATION
Registration Statement
Wells Fargo has filed a registration statement on Form S-4 to register with
the SEC the Wells Fargo common stock to be issued to First Commerce
shareholders in the merger. This proxy statement-prospectus is part of that
registration statement. The registration statement, including the exhibits to
the registration statement, contains additional relevant information about
Wells Fargo and Wells Fargo common stock. As allowed by SEC rules, this proxy
statement-prospectus does not contain all of the information you can find in
the registration statement or the exhibits to the registration statement.
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Other SEC Filings
Wells Fargo and First Commerce file annual, quarterly and current reports,
proxy statements and other information with the SEC. Wells Fargo's and First
Commerce's SEC filings are available to the public over the Internet at the
SEC's web site at http://www.sec.gov. You can also read and copy any document
filed by Wells Fargo or First Commerce with the SEC at the following SEC
locations:
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
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Wells Fargo's SEC filings are also available from commercial document
retrieval services and from the New York and Chicago Stock Exchanges. For
information on obtaining copies of Wells Fargo's SEC filings at the New York
Stock Exchange, call (212) 656-5060, and at the Chicago Stock Exchange, call
(312) 663-2423. First Commerce's SEC filings are also available from commercial
document retrieval services.
Documents Incorporated By Reference
Some of the information you may want to consider in deciding how to vote on
the merger is not physically included in this document. Instead, the
information is "incorporated by reference" to documents that have been filed by
Wells Fargo or First Commerce with the SEC.
Wells Fargo Documents
This proxy statement-prospectus incorporates by reference the Wells Fargo SEC
documents set forth below. All of the documents were filed under SEC File No.
001-2979. Documents filed before November 3, 1998 were filed under the name
Norwest Corporation.
. Annual Report on Form 10-K for the year ended December 31, 1999,
including information specifically incorporated by reference into the
Form 10-K from Wells Fargo's 1999 Annual Report to Stockholders and
Wells Fargo's definitive Notice and Proxy Statement for Wells Fargo's
2000 Annual Meeting of Stockholders;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
. Current Reports on Form 8-K filed January 18, 2000, and January 26,
2000;
. The description of Wells Fargo common stock contained in the Current
Report on Form 8-K filed October 14, 1997, including any amendment or
report filed to update such description;
. The description of preferred stock purchase rights contained in the
Registration Statement on Form 8-A dated October 21, 1998, including any
amendment or report filed to update such description; and
. All reports and definitive proxy or information statements filed by
Wells Fargo pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy statement-
prospectus and before completion of the merger and the exchange of Wells
Fargo common stock for First Commerce common stock.
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First Commerce Documents
This proxy statement-prospectus incorporates by reference the First Commerce
SEC documents set forth below. All of the documents were filed under SEC File
No. 000-14277.
. Annual Report on Form 10-K for the year ended December 31, 1999;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
. The description of First Commerce common stock contained in the
Registration Statement on Form S-4/A filed February 6, 1995; and
. All reports and definitive proxy or information statements filed by
First Commerce pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy statement-
prospectus and before the date of the special meeting.
Documents Available Without Charge From The Companies
Wells Fargo and First Commerce will provide, without charge, copies of any
report incorporated by reference into this document, excluding exhibits other
than those that are specifically incorporated by reference in this document.
You may obtain a copy of any document incorporated by reference by writing or
calling Wells Fargo or First Commerce as follows:
Wells Fargo: First Commerce:
Corporate Secretary Corporate Secretary
Wells Fargo & Company First Commerce Bancshares, Inc.
MAC N9305-173 1248 O Street
Sixth and Marquette Lincoln, Nebraska 68508-1424
Minneapolis, MN 55479 (402) 434-4110
(612) 667-8655
To ensure delivery of the copies in time for the special meeting, your
request should be received by June [2], 2000.
In deciding how to vote on the merger, you should rely only on the
information contained or incorporated by reference in this document. Neither
Wells Fargo nor First Commerce has authorized any person to provide you with
any information that is different from what is contained in this document. This
document is dated May , 2000. You should not assume that the information
contained in this document is accurate as of any date other than such date, and
neither the mailing to you of this document nor the issuance to you of shares
of Wells Fargo common stock will create any implication to the contrary.
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FORWARD-LOOKING STATEMENTS
This document, including information incorporated by reference into this
document, may contain forward-looking statements about Wells Fargo and First
Commerce, including one or more of the following:
. projections of revenues, income, earnings per share, capital
expenditures, dividends, capital structure or other financial items;
. descriptions of plans or objectives of management for future operations,
products or services;
. forecasts of future economic performance;
. descriptions of assumptions underlying or relating to any of the
foregoing.
Forward-looking statements can be identified by the fact that they do not
relate strictly to historical or current facts. They often include words such
as "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of
similar meaning, or future or conditional verbs such as "will," "would,"
"should," "could" or "may."
Forward-looking statements consist of expectations or predictions of future
conditions, events or results. They are not guarantees of future performance.
By their nature, forward-looking statements are subject to risks and
uncertainties. There are a number of factors--many of which are beyond the
control of Wells Fargo and First Commerce--that could cause actual conditions,
events or results to differ significantly from those described in the forward-
looking statements.
Wells Fargo's and First Commerce's reports filed with the SEC, including
Wells Fargo's and First Commerce's Forms 10-K for the year ended December 31,
1999, describe some of these factors. For example, Wells Fargo's Form 10-K
describes certain credit, market, operational, liquidity and interest rate
risks associated with Wells Fargo's business and operations. Other factors
described in Wells Fargo's Form 10-K include changes in business and economic
conditions, competition, fiscal and monetary policies, disintermediation,
legislation (including financial modernization legislation), the combination of
the former Norwest Corporation and the former Wells Fargo & Company, and other
mergers and acquisitions.
There are other factors besides these that could cause actual conditions,
events or results to differ significantly from those described in the forward-
looking statements or otherwise affect in the future Wells Fargo's and/or First
Commerce's business, results of operations and financial condition.
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Appendix A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of the
1st day of February, 2000, and amended and restated as of April 14, 2000, but
effective as of February 1, 2000, by and between FIRST COMMERCE BANCSHARES,
INC. ("Company"), a Nebraska corporation, and WELLS FARGO & COMPANY ("Wells
Fargo"), a Delaware corporation, and First National Bank and Trust Co. of
Kearney, The Overland National Bank of Grand Island, Western Nebraska National
Bank, and The First National Bank of West Point.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Wells Fargo will merge with and into Company (the
"Merger") pursuant to an agreement and plan of merger (the "Merger Agreement")
in substantially the form attached hereto as Exhibit A-1, which provides, among
other things, for the conversion of the shares of Class A Voting Common Stock
of Company of the par value of $.20 per share ("Class A Stock") and shares of
the Company's Class B Non-Voting Common Stock of the par value of $.20 per
share ("Class B Stock") (collectively, "Company Common Stock") outstanding
immediately prior to the time the Merger becomes effective in accordance with
the provisions of the Merger Agreement into the right to receive shares of
voting Common Stock of Wells Fargo of the par value of $1 2/3 per share ("Wells
Fargo Common Stock"); and
WHEREAS, Wells Fargo desires that, if necessary to provide Wells Fargo with
ownership, directly or indirectly, of 100% of the outstanding Bank Common Stock
after the Merger, immediately following the Merger, Wells Fargo will contribute
its newly formed, wholly-owned bank subsidiaries (collectively, "Wells Fargo
Banks") to Company and, immediately thereafter, one of the Wells Fargo Banks
will consolidate with each of First National Bank and Trust Co. of Kearney, The
Overland National Bank of Grand Island, Western Nebraska National Bank, and The
First National Bank of West Point (collectively referred to as the "Banks")
(each a "Consolidation" and collectively, the "Consolidations") pursuant to
agreements of consolidation (each a "Consolidation Agreement" and collectively,
the "Consolidation Agreements") in substantially the form attached hereto as
Exhibit A-2, which provides, among other things, for the conversion of the
shares of voting common stock of the Banks outstanding immediately prior to the
time the Consolidations become effective in accordance with the provisions of
the applicable Consolidation Agreement and owned by shareholders other than
Company (collectively and individually, "Bank Common Stock") into the right to
receive an amount in cash set forth on Schedule 1(a)(ii); and
WHEREAS, in connection with the execution and delivery of this Agreement,
certain significant shareholders, directors, and executive officers of the
Company are entering into agreements with Wells Fargo (the "Support
Agreements") pursuant to which they shall agree to vote all of the shares of
Company Common Stock owned by them in favor of the Merger; and
WHEREAS, this Agreement, the Merger Agreement and Consolidation Agreements
are hereafter sometimes referred to collectively as the "Transaction
Agreements" and the Merger and Consolidations are hereafter sometimes referred
to collectively as the "Transactions."
NOW, THEREFORE, to effect such reorganization and in consideration of the
promises and the mutual covenants and agreements contained herein, the parties
hereto do hereby represent, warrant, covenant and agree as follows:
1. Basic Plan of Reorganization
(a) Transactions.
(i) Merger. Subject to the terms and conditions contained herein, a wholly-
owned subsidiary of Wells Fargo (the "Merger Co.") will be merged by statutory
merger with and into Company pursuant to the Merger
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Agreement, with Company as the surviving corporation (the "Surviving
Corporation"), in which Merger (A) each share of Class A Stock and Class B
Stock outstanding immediately prior to the Effective Time of the Merger (as
defined in paragraph 1(d) below) (other than shares of Company Common Stock
owned, directly or indirectly, by Wells Fargo or the Company (other than shares
of Company 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 ("Trust Account Shares"), and any
shares of Company Common Stock held by the Company or Wells Fargo or any of
their respective subsidiaries in respect of a debt previously contracted ("DPC
Shares")) will be converted into the right to receive a number of shares of
Wells Fargo Common Stock equal to $35.95 divided by the Wells Fargo Measurement
Price.
(ii) Consolidation. Following the Effective Time of the Merger and on the
terms and conditions contained herein, Wells Fargo will, to the extent
necessary to provide Wells Fargo with ownership, directly or indirectly, or
100% of the outstanding Bank Common Stock, contribute five interim national
associations to Company and, immediately thereafter, each will be consolidated
with one of the Banks under the charter of such Bank pursuant to a
Consolidation Agreement, in which Consolidation each share of such Bank's
Common Stock outstanding immediately prior to the Effective Time of such
Consolidation (other than shares owned by the Surviving Corporation, shares as
to which statutory dissenters' appraisal rights have been exercised, and
directors qualifying "Shares Subject to Buy-Back Agreements" (as defined in
paragraph 2(b))) will be converted into the right to receive an amount in cash
as set forth in Schedule 1(a)(ii).
(iii) Wells Fargo Measurement Price. The Wells Fargo Measurement Price is
defined as the average of the closing prices of a share of Wells Fargo Common
Stock as reported on the consolidated tape of the New York Stock Exchange
during the period of twenty (20) trading days ending on the day immediately
preceding the date of the shareholders' meeting to consider the Merger as
contemplated by paragraph 4(c).
(b) Wells Fargo Common Stock Adjustments. If, between the date hereof and
the Effective Time of the Merger, shares of Wells Fargo Common Stock shall
be changed into a different number of shares or a different class of shares
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or if a stock dividend thereon shall be
declared with a record date within such period (a "Common Stock
Adjustment"), then the number of shares of Wells Fargo Common Stock for
which a share of Company Common Stock shall be exchanged pursuant to
subparagraph (a), above, will be appropriately and proportionately adjusted
so that the number of such shares of Wells Fargo Common Stock for which a
share of Company Common Stock shall be exchanged will equal the number of
shares of Wells Fargo Common Stock which holders of shares of Company
Common Stock would have received pursuant to such Common Stock Adjustment
had the record date therefor been immediately following the Effective Time
of the Merger.
(c) Fractional Shares. No fractional shares of Wells Fargo Common Stock
and no certificates or scrip certificates therefor shall be issued to
represent any such fractional interest, and any holder thereof shall be
paid an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Wells Fargo Common Stock as reported by
the consolidated tape of the New York Stock Exchange for each of the five
(5) trading days ending on the second day immediately preceding the
Effective Date of the Merger (as defined in paragraph 1(d) of this
Agreement).
(d) Treasury Shares. At the Effective Time, all shares of Company Common
Stock owned, directly or indirectly, by the Company or by Wells Fargo,
other than Trust Account Shares or DPC Shares, shall be canceled and shall
cease to exist, and no capital stock of Wells Fargo or other consideration
shall be delivered in exchange therefor.
(e) Mechanics of Closing Merger. Subject to the terms and conditions set
forth herein:
(i) The Merger Agreement shall be executed and it or Articles of
Merger shall be filed with the Secretary of State of the State of
Nebraska within five (5) business days following the satisfaction or
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waiver of all conditions precedent set forth in Sections 6 and 7 of
this Agreement or on such other date as may be agreed to by the parties
(the "Closing Date"), provided that the Closing Date shall not occur on
the last business day of a calendar month. Each of the parties agrees
to use its best efforts to cause the Merger to be completed as soon as
practicable after the receipt of final regulatory approval of the
Merger and the expiration of all required waiting periods. The time
that the filing referred to in the first sentence of this paragraph is
made is herein referred to as the "Time of Filing." The day on which
such filing is made and accepted is herein referred to as the
"Effective Date of the Merger." The "Effective Time of the Merger"
shall be 11:59 p.m. Lincoln, Nebraska time on the Effective Date of the
Merger. At the Effective Time of the Merger on the Effective Date of
the Merger, the separate existence of Merger Co. shall cease and Merger
Co. will be merged with and into Company pursuant to the Merger
Agreement.
(ii) The Consolidations shall become effective at the time specified
in the applicable Consolidation Agreement (each, the "Effective Time of
the Consolidation") on the date specified in the Certificate of
Approval of Merger to be issued by the Office of the Comptroller of the
Currency ("Comptroller"), which date shall be the first business day
after the Effective Date of the Merger (the "Effective Date of the
Consolidation").
The closing of the Transactions contemplated by this Agreement and the
Merger Agreement and the Consolidation Agreements (the "Closing") shall
take place on the Closing Date at the offices of Wells Fargo, Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota.
(f) Reservation of Right to Revise Structure. At Wells Fargo's election,
the Merger may alternatively be structured so that (1) Company is merged
with and into any other direct or indirect wholly owned subsidiary of Wells
Fargo, (2) any direct or indirect wholly owned subsidiary of Wells Fargo is
merged with and into Company, or (3) Company is merged with and into Wells
Fargo; provided, however, that no such change shall (A) alter or change the
amount or kind of consideration to be issued to the Company's stockholders
in the Merger or the Banks' respective stockholders pursuant to Section
1(a), (B) adversely affect the tax treatment of Company's stockholders as a
result of receiving the Consideration or prevent the parties from obtaining
the opinion referred to in paragraph 6(h), or (C) impede or delay
consummation of the Merger or the Consolidations. In the event of such
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
2. Representations and Warranties of Company. Except as set forth in the
Company disclosure schedules to this Agreement, Company represents and warrants
to Wells Fargo as follows:
(a) Organization and Authority. Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nebraska,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
Material Adverse Effect with respect to Company and has corporate power and
authority to own its properties and assets and to carry on its business as it
is now being conducted. "Material Adverse Effect" with respect to Wells Fargo
or Company, as the case may be, means any fact, circumstance, event, or thing
that (1) has a material adverse effect on the business, financial position, or
results of operations of such party and its subsidiaries, taken as a whole
(other than to the extent such fact, circumstance, event, or thing is due to
(x) general changes in conditions, including interest rates, in the banking
industry or in the global or United States economy or financial markets or (y)
changes in applicable generally accepted accounting principles or in laws,
regulations, or regulatory policies of general applicability) or (2) prevents
consummation by such party of, or materially impedes the ability of such party
to consummate, the transactions contemplated by this Agreement. Company is
registered as a bank holding company with the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"). Company has furnished Wells Fargo true and
correct copies of its articles of incorporation and by-laws, as amended.
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(b) Company's Subsidiaries. Schedule 2(b) sets forth a complete and correct
list of all of Company's subsidiaries as of the date hereof (individually a
"Company Subsidiary" and collectively the "Company Subsidiaries"), all shares
of the outstanding capital stock of each of which, except as set forth on
Schedule 2(b), are owned directly or indirectly by Company. Except as set forth
on Schedule 2(b), all shares of any Company Subsidiary not owned directly or
indirectly by Company constitute directors qualifying shares which such Company
Subsidiary may repurchase at book value pursuant to buy-back or redemption
agreements, true and correct copies of which have previously been provided to
Wells Fargo ("Shares Subject to Buy-Back Agreements"). No equity security of
any Company Subsidiary is or may be required to be issued by reason of any
option, warrant, scrip, preemptive right, right to subscribe to, call or
commitment of any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary, and there are
no contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or any
option, warrant or right to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. (S) 55 (1982) and the Nebraska Business
Corporation Act, all of such shares so owned by Company are fully paid and
nonassessable and are owned by it free and clear of any lien, claim, charge,
option, encumbrance or agreement with respect thereto. Each Company Subsidiary
is a corporation or national banking association duly organized, validly
existing, duly qualified to do business and in good standing under the laws of
its jurisdiction of incorporation, and has corporate power and authority to own
or lease its properties and assets and to carry on its business as it is now
being conducted. Except as set forth on Schedule 2(b), Company does not own
beneficially, directly or indirectly, more than 5% of any class of equity
securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.
(c) Capitalization. The authorized capital stock of Company consists of
50,000,000 shares of common stock, $.20 par value, consisting of 10,000,000
shares of Class A Voting Common Stock, $.20 par value, and 40,000,000 shares of
Class B Non-Voting Common Stock, $.20 par value, of which, as of the close of
business on September 30, 1999, 2,568,892 shares of Class A Stock and
10,775,394 of Class B Stock were outstanding and no shares of Class A Stock and
no shares of Class B Stock were held in the treasury. The maximum number of
shares of Company Common Stock (assuming for this purpose that phantom shares
and other share-equivalents constitute Company Common Stock) that would be
outstanding as of the Effective Date of the Merger if all options, warrants,
conversion rights and other rights with respect thereto were exercised is
13,344,286. All of the outstanding shares of capital stock of Company have been
duly and validly authorized and issued and are fully paid and nonassessable.
Except as set forth in Schedule 2(c), there are no outstanding subscriptions,
contracts, conversion privileges, options, warrants, calls, preemptive rights
or other rights obligating Company or any Company Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares
of capital stock of Company or any Company Subsidiary. Except as set forth in
Schedule 2(c) and for the regular quarterly dividends paid or payable with
respect to the Company Common Stock, since September 30, 1999 no shares of
Company capital stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by Company or any Company Subsidiary and no dividends
or other distributions have been declared, set aside, made or paid to the
stockholders of Company.
(d) Authorization. Company has, and each Bank upon execution of the
Consolidation Agreement will have, the corporate power and authority to enter
into this Agreement and the Merger Agreement and the Consolidation Agreements,
as applicable, and, subject to any required approvals of its stockholders, to
carry out its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the Merger Agreement by Company and of the
Consolidation Agreements by the Banks, as the case may be, and the consummation
of the transactions contemplated hereby and thereby have been (and, in the case
of the Banks, will be) duly authorized by the Board of Directors of Company and
Banks, as applicable. Subject to such approvals of stockholders and of
government agencies and other governing boards having regulatory authority over
Company as may be required by statute or regulation, this Agreement and the
Merger Agreement and the Consolidation Agreements are (and, in the case of the
Banks, will be if and when entered into pursuant hereto) valid and binding
obligations of Company and Banks, as the case may be, enforceable against them
in accordance with their respective terms.
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Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Company of this Agreement or the Merger Agreement and of the
Consolidation Agreements by the Banks, as the case may be, nor the consummation
of the transactions contemplated hereby and thereby, nor compliance by Company
and Banks with any of the provisions hereof or thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
of, or result in the creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of Company or any Company
Subsidiary under any of the terms, conditions or provisions of (x) its articles
of incorporation, articles of association, or by-laws or (y) any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Company or any Company Subsidiary is a party
or by which it may be bound, or to which Company or any Company Subsidiary or
any of the properties or assets of Company or any Company Subsidiary may be
subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any statute, rule or regulation or,
to the best knowledge of Company, violate any judgment, ruling, order, writ,
injunction or decree applicable to Company or any Company Subsidiary or any of
their respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the
"Securities Act"), the Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), the securities or blue sky laws of
the various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act"), 12 U.S.C. (S) 21, et seq. (the "National
Bank Act"), and filings required to effect the Merger under Nebraska law and
the Consolidations under the laws of the United States, no notice to, filing
with, exemption or review by, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Company of the
transactions contemplated by this Agreement and the Merger Agreement and the
Consolidation Agreements.
(e) Company Financial Statements. The consolidated balance sheets of Company
as of December 31, 1998 and 1997 and related consolidated statements of income,
stockholders' equity and cash flows for the three years ended December 31,
1998, together with the notes thereto, audited by Deloitte & Touche LLP and
included in Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "Company 10-K") as filed with the Securities and
Exchange Commission (the "SEC"), and the unaudited consolidated balance sheets
of Company as of September 30, 1999 and the related unaudited consolidated
statements of income and cash flows for the nine (9) months then ended included
in Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999 as filed with the SEC (collectively, the "Company Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto) and present fairly (subject, in the case of financial
statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Company and Company's Subsidiaries at the
dates and the consolidated results of operations and cash flows of Company and
Company's Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1995, Company and each Company Subsidiary has
filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii) the
Federal Reserve Board, (iii) the Federal Deposit Insurance Corporation (the
"FDIC"), (iv) the Comptroller, and (v) any applicable state securities or
banking authorities. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein as the
"Company Reports." As of their respective dates, the Company Reports complied
in all material respects with all the rules and regulations promulgated by the
SEC, the Federal Reserve Board, the FDIC, the Comptroller and applicable state
securities or banking authorities, as the case may be, and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Copies
of all the Company Reports have been made available to Wells Fargo by Company.
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(g) Properties and Leases. Except as may be reflected in the Company
Financial Statements and except for any lien for current taxes not yet
delinquent, Company and each Company Subsidiary have good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Company's
consolidated balance sheet as of September 30, 1999 included in Company's
Quarterly Report on Form 10-Q, and all real and personal property acquired
since such date, except such real and personal property as has been disposed of
in the ordinary course of business. All leases of real property and all other
leases material to Company or any Company Subsidiary pursuant to which Company
or such Company Subsidiary, as lessee, leases real or personal property are
valid and effective in accordance with their respective terms, and there is
not, under any such lease, any material existing default by Company or such
Company Subsidiary or any event which, with notice or lapse of time or both,
would constitute such a material default. Substantially all Company's and each
Company Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Except as set forth in Schedule 2(h), each of Company and the
Company Subsidiaries has filed all federal, state, county, local and foreign
tax returns, including information returns, required to be filed by it, and
paid all taxes owed by it as shown on such returns and has accrued all other
taxes owed by it, including those with respect to income, withholding, social
security, unemployment, workers compensation, franchise, ad valorem, premium,
excise and sales taxes, and no taxes shown on such returns to be owed by it or
assessments received by it are delinquent. The federal income tax returns of
Company and the Company Subsidiaries for the fiscal year ended December 31,
1995, and for all fiscal years prior thereto, are for the purposes of routine
audit by the Internal Revenue Service closed because of the statute of
limitations, and no claims for additional taxes for such fiscal years are
pending. Except only as set forth on Schedule 2(h), (i) neither Company nor any
Company Subsidiary is a party to any pending action or proceeding, nor to the
knowledge of Company is any such action or proceeding threatened by any
governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies and (ii) no issue has been raised by any
federal, state, local or foreign taxing authority in connection with an audit
or examination of the tax returns, business or properties of Company or any
Company Subsidiary which has not been settled, resolved and fully satisfied.
Each of Company and the Company Subsidiaries has paid or accrued all taxes owed
or which it is required to withhold from amounts owing to employees, creditors
or other third parties. The consolidated balance sheet as of September 30,
1999, referred to in paragraph 2(e) hereof, includes adequate provision for all
accrued but unpaid federal, state, county, local and foreign taxes, interest,
penalties, assessments or deficiencies of Company and the Company Subsidiaries
with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since December 31, 1998 there has been no
change in the business, financial condition or results of operations of Company
or any Company Subsidiary, which has had, or may reasonably be expected to
have, a Material Adverse Effect with respect to Company.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j), neither
Company nor any Company Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay,
liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those that are terminable at
will by Company or such Company Subsidiary);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retention payment, retirement
payment, profit sharing or similar arrangement with respect to any present
or former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract containing covenants that limit the ability of Company
or any Company Subsidiary to compete in any line of business or with any
person or which involve any restriction of the geographical
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area in which, or method by which, Company or any Company Subsidiary may
carry on its business (other than as may be required by law or applicable
regulatory authorities);
(v) any other contract or agreement which is a "material contract" within
the meaning of Item 601(b)(10) of Regulation S-K;
(vi) any real property lease and any other lease with annual rental
payments aggregating $25,000 or more;
(vii) any agreement or commitment with respect to the Community
Reinvestment Act with any state or federal bank regulatory authority or any
other party; or
(viii) any contract or understanding with any current or former director,
officer, employee, consultant, financial adviser, broker, dealer, or agent
providing for any rights of indemnification in favor of such person or
entity.
(k) Litigation and Other Proceedings. Company has furnished Wells Fargo
copies of (i) all attorney responses to the request of the independent auditors
for Company with respect to loss contingencies as of December 31, 1998 in
connection with the Company Financial Statements, and (ii) a written list,
through the date hereof, of legal and regulatory proceedings filed against
Company or any Company Subsidiary since said date. There is no pending or, to
the best knowledge of Company, threatened, claim, action, suit, investigation
or proceeding, against Company or any Company Subsidiary, nor is Company or any
Company Subsidiary subject to any order, judgment or decree, except for matters
which, in the aggregate, will not have, or cannot reasonably be expected to
have, a Material Adverse Effect with respect to Company.
(l) Insurance. Company and each Company Subsidiary are presently insured, and
during each of the past five calendar years (or during such lesser period of
time as Company has owned such Company Subsidiary) have been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Each of Company and each Company Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to
own or lease its properties and assets and to carry on its business as
presently conducted and that are material to the business of Company or such
Company Subsidiary; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the best knowledge of
Company, no suspension or cancellation of any of them is threatened; and all
such filings, applications and registrations are current. The conduct by
Company and each such Company Subsidiary of its business and the condition and
use of its properties do not violate or infringe, in any respect material to
any such business, any applicable domestic (federal, state or local) or foreign
law, statute, ordinance, license or regulation. Neither Company nor any such
Company Subsidiary is in default under any order, license, regulation or demand
of any federal, state, municipal or other governmental agency or with respect
to any order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application and except as set forth on
Schedule 2(m), no federal, state, municipal or other governmental authority has
placed any restriction on the business or properties of Company or any Company
Subsidiary which reasonably could be expected to have a Material Adverse Effect
with respect to Company.
(n) Labor. No work stoppage involving Company or any Company Subsidiary is
pending or, to the best knowledge of Company, threatened. Neither Company nor
any Company Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding that would
reasonably be expected to have a Material Adverse Effect with respect to
Company. Employees of Company and the Company Subsidiaries are not represented
by any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees.
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(o) Material Interests of Certain Persons. Except as set forth on Schedule
2(o), to the best knowledge of Company, no officer or director of Company or
any Company Subsidiary, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director, has any interest
in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Company or any Company
Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from Company
or any Company Subsidiary to any present officer, director, employee or any
associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Company's or such Company Subsidiary's Board of Directors.
(p) Company Benefit Plans.
(i) Schedule 2(p)(i) sets forth each employee benefit plan with respect
to which Company or any Company Subsidiary contributes to or sponsors (the
"Plans"). For purposes of this Section 2(p) and Schedule 2(p)(i), "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended, and
the term "Plan" or "Plans" means all employee benefit plans as defined in
Section 3(3) of ERISA, and all other benefit arrangements including,
without limitation, any plan, program, agreement, policy or commitment
providing for insurance coverage of employees, workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, severance or termination of employment benefits, life,
health, death, disability or accidental benefits.
(ii) Except as disclosed on Schedule 2(p)(ii), no Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iii) Except as disclosed on Schedule 2(p)(iii), no Plan promises or
provides health or life benefits to retirees or former employees except as
required by federal continuation of coverage laws or similar state laws.
(iv) Except as disclosed on Schedule 2(p)(iv) or where any failure to do
so would not reasonably be expected to have a Material Adverse Effect with
respect to Company, (a) each Plan is and has been in all material respects
operated and administered in accordance with its provisions and applicable
law including, if applicable, ERISA and the Code; (b) all reports and
filings with governmental agencies (including but not limited to the
Department of Labor, Internal Revenue Service, Pension Benefit Guaranty
Corporation and the Securities and Exchange Commission) required in
connection with each Plan have been timely made; (c) all disclosures and
notices required by law or Plan provisions to be given to participants and
beneficiaries in connection with each Plan have been properly and timely
made; (d) there are no actions, suits or claims pending, other than routine
uncontested claims for benefits with respect to each Plan; and (e) each
Plan intended to be qualified under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service stating
that the Plan (including all amendments to the extent such amended
provisions have been required to be submitted to the Internal Revenue
Service for a determination letter as of the date of this Agreement) is tax
qualified under Section 401(a) of the Code and Company knows of no reason
that any such Plan is not qualified within the meaning of Section 401(a) of
the Code and knows of no reason that each related Plan trust is not exempt
from taxation under Section 501(a) of the Code.
(v) Except as disclosed on Schedule 2(p)(v) or as would not reasonably be
expected to have a Material Adverse Effect with respect to Company, (a) all
contributions, premium payments and other payments required to be made in
connection with the Plans as of the date of this Agreement have been made;
(b) a proper accrual has been made on the books of Company for all
contributions, premium payments and other payments due in the current
fiscal year but not made as of the date of this Agreement; (c) no
contribution, premium payment or other payment has been made in support of
any Plan that is in excess of the allowable deduction for federal income
tax purposes for the year with respect to which the
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contribution was made (whether under Sections 162, 280G, 404, 419, 419A of
the Code or otherwise); and (d) with respect to each Plan that is subject
to Section 301 of ERISA or Section 412 of the Code, Company is not liable
for any accumulated funding deficiency as that term is defined in Section
412 of the Code and the projected benefit obligations determined as of the
date of this Agreement do not exceed the assets of the Plan.
(vi) Except as disclosed in Schedule 2(p)(vi) and to best knowledge of
Company, no Plan or any trust created thereunder, nor any trustee,
fiduciary or administrator thereof, has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Code or
Section 406 of ERISA or violated any of the fiduciary standards under Part
4 of Title 1 of ERISA, which could subject such Plan or trust, or any
trustee, fiduciary or administrator thereof, or any party dealing with any
such Plan or trust, to a tax penalty or prohibited transactions imposed by
Section 4975 of the Code that would reasonably be expected to result in a
Material Adverse Effect with respect to Company.
(vii) No Plan subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events"
as that term is defined in Section 4043 of ERISA, with respect to any Plan,
other than those events which may result from the transactions contemplated
by this Agreement and the Merger Agreement.
(viii) Except as disclosed in Schedule 2(p)(viii), neither the execution
and delivery of this Agreement and the Merger Agreement nor the
consummation of the transactions contemplated hereby and thereby will (a)
result in any material payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to
any director or employee or former employee of Company under any Plan or
otherwise, (b) materially increase any benefits otherwise payable under any
Plan, or (c) result in the acceleration of the time of payment or vesting
of any such benefits to any material extent.
(q) Proxy Statement, etc. None of the information regarding Company and the
Company Subsidiaries supplied or to be supplied by Company for inclusion in (i)
a Registration Statement on Form S-4 and the prospectus included therein to be
filed with the SEC by Wells Fargo for the purpose of registering the shares of
Wells Fargo Common Stock to be exchanged for shares of Company Common Stock
pursuant to the provisions of the Merger Agreement (the "Registration
Statement"), (ii) the proxy statement included in the Registration Statement to
be mailed to Company's stockholders in connection with the meeting to be called
to consider the Merger (the "Proxy Statement"), and (iii) any other documents
to be filed with the SEC or any regulatory authority in connection with the
transactions contemplated hereby or by the Merger Agreement or Consolidation
Agreements will, at the respective times such Registration Statement, Proxy
Statement and other documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, and, in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the meeting of stockholders referred to in paragraph 4(c), and at
the Effective Time of the Merger, contain any untrue statement of a material
fact, or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. All documents which
Company and the Company Subsidiaries are responsible for filing with the SEC
and any other regulatory authority in connection with the Merger and, if
applicable, Consolidations will comply as to form in all material respects with
the provisions of applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r), neither
Company nor any Company Subsidiary is under any obligation, contingent or
otherwise, by reason of any agreement to register any of its securities under
the Securities Act.
(s) Brokers and Finders. Except for Merrill Lynch & Co. which has been
retained to advise Company in connection with the Merger and the
Consolidations, neither Company nor any Company Subsidiary nor any of their
respective officers, directors or employees has employed any broker or finder
or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted
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directly or indirectly for Company or any Company Subsidiary, in connection
with this Agreement and the Merger Agreement or the transactions contemplated
hereby and thereby.
(t) Fiduciary Activities. Except as would not reasonably be expected to have
a Material Adverse Effect with respect to Company, Company and each Company
Subsidiary has properly administered all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law. Except as would
not reasonably be expected to have a Material Adverse Effect with respect to
Company, neither Company, any Company Subsidiary, nor any director, officer or
employee of Company or any Company Subsidiary has committed any breach of trust
with respect to any such fiduciary account, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
(u) No Defaults. Neither Company nor any Company Subsidiary is in default,
nor has any event occurred that, with the passage of time or the giving of
notice, or both, would constitute a default, under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by
which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
Material Adverse Effect with respect to Company. To the best of Company's
knowledge, all parties with whom Company or any Company Subsidiary has material
leases, agreements or contracts or who owe to Company or any Company Subsidiary
material obligations other than those arising in the ordinary course of the
banking business of the Company Subsidiaries are in compliance therewith in all
material respects.
(v) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition of, on Company or any Company Subsidiary, any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or to
the best of Company's knowledge, threatened against Company or any Company
Subsidiary the result of which has had or would reasonably be expected to have
a Material Adverse Effect with respect to Company; except as set forth in
Schedule 2(v), to the best of Company's knowledge, there is no reasonable basis
for any such proceeding, claim or action; and to the best of Company's
knowledge neither Company nor any Company Subsidiary is subject to any
agreement, order, judgment, or decree by or with any court, governmental
authority or third party imposing any such environmental liability. Company has
made available to Wells Fargo with copies of all environmental assessments,
reports, studies and other related information in its possession with respect
to each bank facility and each non-residential OREO property.
(w) Compliance with Year 2000 Requirements. Company is in compliance with its
Year 2000 project management process as set forth in the May 5, 1997 Federal
Financial Institutions Examination Council ("FFIEC") Interagency Statement on
the Year 2000 and subsequent guidance documents (the "FFIEC Requirements").
Company has made its Year 2000 project assessment and remediation plan
available to Wells Fargo for review.
(x) Required Shareholder Approval. The affirmative vote of two-thirds of the
outstanding shares of Class A Stock and Class B Stock, voting as separate
classes of Company is sufficient to approve the Merger, this Agreement, and the
Merger Agreement and the transactions contemplated thereby pursuant to the
Nebraska Business Corporation Act and pursuant to the articles and bylaws of
Company.
(y) Company Common Stock Held by Subsidiaries. Except as set forth on
Schedule 2(y) (and excluding DPC Shares and Trust Shares), no Company
Subsidiary owns any Company Common Stock.
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3. Representations and Warranties of Wells Fargo. Wells Fargo represents and
warrants to Company as follows:
(a) Organization and Authority. Wells Fargo is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
Material Adverse Effect with respect to Company and has corporate power and
authority to own its properties and assets and to carry on its business as it
is now being conducted. Wells Fargo is registered as a bank holding company
with the Federal Reserve Board under the BHC Act.
(b) Wells Fargo Subsidiaries. Schedule 3(b) sets forth a complete and correct
list as of December 31, 1998, of Wells Fargo's Significant Subsidiaries (as
defined in Regulation S-X promulgated by the SEC) (individually a "Wells Fargo
Subsidiary" and collectively the "Wells Fargo Subsidiaries"), all shares of the
outstanding capital stock of each of which, except as set forth in Schedule
3(b), are owned directly or indirectly by Wells Fargo. No equity security of
any Wells Fargo Subsidiary is or may be required to be issued to any person or
entity other than Wells Fargo by reason of any option, warrant, scrip,
preemptive right, right to subscribe to, call or commitment of any character
whatsoever relating to, or security or right convertible into, shares of any
capital stock of such subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Wells Fargo Subsidiary is bound to
issue additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. Subject to 12
U.S.C. (S) 55 (1982), all of such shares so owned by Wells Fargo are fully paid
and nonassessable and are owned by it free and clear of any lien, claim,
charge, option, encumbrance or agreement with respect thereto. Each Wells Fargo
Subsidiary is a corporation or national banking association duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of incorporation, and has corporate power and
authority to own or lease its properties and assets and to carry on its
business as it is now being conducted.
(c) Wells Fargo Capitalization. As of September 30, 1999, the authorized
capital stock of Wells Fargo consists of (i) 20,000,000 shares of Preferred
Stock, without par value, of which as of the close of business on September 30,
1999, 980,000 shares of Cumulative Tracking Preferred Stock, at $200 stated
value, 9,532 shares of ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value, 19,790 shares of 1995 ESOP Cumulative Convertible Preferred
Stock, at $1,000 stated value, 21,111 shares of 1996 ESOP Cumulative
Convertible Preferred Stock, at $1,000 stated value, 13,639 shares of 1997 ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value, 8,472 shares of
1998 ESOP Cumulative Convertible Preferred Stock, $1,000 stated value, 22,653
shares of 1999 ESOP Cumulative Convertible Preferred Stock, $1,000 stated
value, 1,500,000 shares of Adjustable-Rate Cumulative Preferred Stock, Series
B, $50 stated value, and 4,000,000 shares of 6.59% Adjustable Rate
Noncumulative Preferred Stock, Series H, $50 stated value, were outstanding;
(ii) 4,000,000 shares of Preference Stock, without par value, of which as of
the close of business on September 30, 1999, no shares were outstanding; and
(iii) 4,000,000,000 shares of Common Stock, $1 2/3 par value, of which as of
the close of business on September 30, 1999, 1,649,763,637 shares were
outstanding and 16,331,628 shares were held in the treasury. All of the
outstanding shares of capital stock of Wells Fargo have been duly and validly
authorized and issued and are fully paid and nonassessable.
(d) Authorization. Wells Fargo has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Wells Fargo and the consummation
of the transactions contemplated hereby have been duly authorized by the Board
of Directors of Wells Fargo. No approval or consent by the stockholders of
Wells Fargo is necessary for the execution and delivery of this Agreement and
the Merger Agreement and the consummation of the transactions contemplated
hereby and thereby. Subject to such approvals of government agencies and other
governing boards having regulatory authority over Wells Fargo as may be
required by statute or regulation, this Agreement is a valid and binding
obligation of Wells Fargo enforceable against Wells Fargo in accordance with
its terms.
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Neither the execution, delivery and performance by Wells Fargo of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Wells Fargo with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration of, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Wells Fargo or any Wells Fargo Subsidiary under any of the terms,
conditions or provisions of, (x) its certificate of incorporation or by-laws or
(y) any material note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Wells Fargo or any
Wells Fargo Subsidiary is a party or by which it may be bound, or to which
Wells Fargo or any Wells Fargo Subsidiary or any of the properties or assets of
Wells Fargo or any Wells Fargo Subsidiary may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in the next paragraph,
violate any statute, rule or regulation or, to the best knowledge of Wells
Fargo, violate any judgment, ruling, order, writ, injunction or decree
applicable to Wells Fargo or any Wells Fargo Subsidiary or any of their
respective properties or assets.
Other than in connection with or in compliance with the provisions of the
Securities Act, the Exchange Act, the securities or blue sky laws of the
various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act or the HSR Act, and filings required to
effect the Merger under Nebraska law, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by Wells Fargo of the transactions
contemplated by this Agreement and the Merger Agreement.
(e) Wells Fargo Financial Statements. The consolidated balance sheets of
Wells Fargo and Wells Fargo's subsidiaries as of December 31, 1998 and 1997 and
related consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for the three years ended December 31,
1998, together with the notes thereto, audited by KPMG LLP and included in
Wells Fargo's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 (the "Wells Fargo 10-K") as filed with the SEC, and the unaudited
consolidated balance sheets of Wells Fargo and its subsidiaries as of September
30, 1999 and the related unaudited consolidated statements of income, changes
in stockholders' equity and comprehensive income, and cash flows for the nine
(9) months then ended included in Wells Fargo's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1999, as filed with the SEC
(collectively, the "Wells Fargo Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and present fairly (subject, in the case of financial
statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Wells Fargo and its subsidiaries at the
dates and the consolidated results of operations, changes in financial position
and cash flows of Wells Fargo and its subsidiaries for the periods stated
therein. The Year 2000 disclosure contained in Wells Fargo's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1999, as filed with the SEC
and designated as the Year 2000 Readiness Disclosures related to the Year 2000
Information and Readiness Disclosure Act, is true and correct in all material
respects as of the date hereof.
(f) Reports. Since December 31, 1995, Wells Fargo and each Wells Fargo
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements,
(ii) the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v)
any applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Wells Fargo Reports." As of their respective dates,
the Wells Fargo Reports complied in all material respects with all the rules
and regulations promulgated by the SEC, the Federal Reserve Board, the FDIC,
the Comptroller and any applicable state securities or banking authorities, as
the case may be, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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(g) Properties and Leases. Except as may be reflected in the Wells Fargo
Financial Statements and except for any lien for current taxes not yet
delinquent, Wells Fargo and each Wells Fargo Subsidiary has good title free and
clear of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Wells Fargo's
consolidated balance sheet as of September 30, 1999 included in Wells Fargo's
Quarterly Report on Form 10-Q, and all real and personal property acquired
since such date, except such real and personal property that has been disposed
of in the ordinary course of business. All leases of real property and all
other leases material to Wells Fargo or any Wells Fargo Subsidiary pursuant to
which Wells Fargo or such Wells Fargo Subsidiary, as lessee, leases real or
personal property, are valid and effective in accordance with their respective
terms, and there is not, under any such lease, any material existing default by
Wells Fargo or such Wells Fargo Subsidiary or any event which, with notice or
lapse of time or both, would constitute such a material default. Substantially
all Wells Fargo's and each Wells Fargo Subsidiary's buildings and equipment in
regular use have been well maintained and are in good and serviceable
condition, reasonable wear and tear excepted.
(h) Taxes. Each of Wells Fargo and the Wells Fargo Subsidiaries has filed all
material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Wells Fargo and the Wells Fargo Subsidiaries for
the fiscal year ended December 31, 1982, and for all fiscal years prior
thereto, are for the purposes of routine audit by the Internal Revenue Service
closed because of the statute of limitations, and no claims for additional
taxes for such fiscal years are pending. Except only as set forth on Schedule
3(h), (i) neither Wells Fargo nor any Wells Fargo Subsidiary is a party to any
pending action or proceeding, nor to Wells Fargo's knowledge is any such action
or proceeding threatened by any governmental authority, for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies that
could reasonably be expected to have any Material Adverse Effect with respect
to Wells Fargo, and (ii) no issue has been raised by any federal, state, local
or foreign taxing authority in connection with an audit or examination of the
tax returns, business or properties of Wells Fargo or any Wells Fargo
Subsidiary that has not been settled, resolved and fully satisfied, or
adequately reserved for. Each of Wells Fargo and the Wells Fargo Subsidiaries
has paid all taxes owed or which it is required to withhold from amounts owing
to employees, creditors or other third parties.
(i) Absence of Certain Changes. Since December 31, 1998, there has been no
change in the business, financial condition or results of operations of Wells
Fargo or any Wells Fargo Subsidiary which has had, or would reasonably be
expected to have, a Material Adverse Effect with respect to Wells Fargo.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as of
December 31, 1998 neither Wells Fargo nor any Wells Fargo Subsidiary is a party
or subject to any of the following (whether written or oral, express or
implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business containing
covenants which materially limit the ability of Wells Fargo or any Wells
Fargo Subsidiary to compete in any line of business or with any person or
which involve any material restriction of the geographical area in which,
or method by which, Wells Fargo or any Wells Fargo Subsidiary may carry on
its business (other than as may be required by law or applicable regulatory
authorities);
(iii) any other contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. There is no pending or, to the best
knowledge of Wells Fargo, threatened, claim, action, suit, investigation or
proceeding, against Wells Fargo or any Wells Fargo Subsidiary nor is Wells
Fargo or any Wells Fargo Subsidiary subject to any order, judgment or decree,
except for matters
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which, in the aggregate, will not have, or cannot reasonably be expected to
have, a Material Adverse Effect with respect to Wells Fargo.
(l) Insurance. Wells Fargo and each Wells Fargo Subsidiary is presently
insured or self insured, and during each of the past five calendar years (or
during such lesser period of time as Wells Fargo has owned such Wells Fargo
Subsidiary) has been insured or self-insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable law and regulation.
(m) Compliance with Laws. Wells Fargo and each Wells Fargo Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to
own or lease its properties or assets and to carry on its business as presently
conducted and that are material to the business of Wells Fargo or such Wells
Fargo Subsidiary; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect, and to the best knowledge of Wells
Fargo, no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Wells Fargo
and each Wells Fargo Subsidiary of its business and the condition and use of
its properties does not violate or infringe, in any respect material to any
such business, any applicable domestic (federal, state or local) or foreign
law, statute, ordinance, license or regulation. Neither Wells Fargo nor any
Wells Fargo Subsidiary is in default under any order, license, regulation or
demand of any federal, state, municipal or other governmental agency or with
respect to any order, writ, injunction or decree of any court. Except for
statutory or regulatory restrictions of general application, no federal, state,
municipal or other governmental authority has placed any restrictions on the
business or properties of Wells Fargo or any Wells Fargo Subsidiary which
reasonably could be expected to have a Material Adverse Effect with respect to
Wells Fargo.
(n) Labor. No work stoppage involving Wells Fargo or any Wells Fargo
Subsidiary is pending or, to the best knowledge of Wells Fargo, threatened.
Neither Wells Fargo nor any Wells Fargo Subsidiary is involved in, or
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding that would reasonably be expected to have a Material
Adverse Effect with respect to Wells Fargo. Except as set forth on Schedule
3(j), employees of Wells Fargo and the Wells Fargo Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) Wells Fargo Benefit Plans.
(i) For purposes of this Section 3(o), the term "Wells Fargo Plan" or
"Wells Fargo Plans" means all employee benefit plans as defined in Section
3(3) of ERISA, to which Wells Fargo contributes, sponsors, or otherwise has
any obligations.
(ii) No Wells Fargo Plan is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA.
(iii) Each Wells Fargo Plan is and has been in all material respects
operated and administered in accordance with its provisions and applicable
law, including, if applicable, ERISA and the Code.
(iv) Each Wells Fargo Plan intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the Internal
Revenue Service stating that the Wells Fargo Plan (including all
amendments) is tax qualified under Section 401(a) of the Code and Wells
Fargo knows of no reason that any such Wells Fargo Plan is not qualified
within the meaning of Section 401(a) of the Code and knows of no reason
that each related Wells Fargo Plan trust is not exempt from taxation under
Section 501(a) of the Code.
(v) All contributions, premium payments, and other payments required to
be made in connection with the Wells Fargo Plans as of the date of this
Agreement have been made.
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(vi) With respect to each Wells Fargo Plan that is subject to Section 301
of ERISA or Section 412 of the Code, neither Wells Fargo nor any Wells
Fargo Subsidiary is liable for any accumulated funding deficiency as that
term is defined in Section 412 of the Code.
(vii) The present value of all benefits vested and all benefits accrued
under each Wells Fargo Plan that is subject to Title IV of ERISA does not,
in each case, exceed the value of the assets of the Wells Fargo Plans
allocable to such vested or accrued benefits as of the end of the most
recent Plan Year.
(p) Registration Statement, etc. None of the information regarding Wells
Fargo and its subsidiaries supplied or to be supplied by Wells Fargo for
inclusion in (i) the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such Registration Statement, Proxy Statement and
other documents are filed with the SEC or any regulatory authority and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, and, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the meeting of
stockholders referred to in paragraph 4(c), and at the Effective Time of the
Merger contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. All documents which Wells Fargo and the Wells Fargo
Subsidiaries are responsible for filing with the SEC and any other regulatory
authority in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Wells Fargo nor any Wells Fargo Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Wells Fargo or any Wells Fargo Subsidiary in
connection with this Agreement and the Merger Agreement or the transactions
contemplated hereby and thereby.
(r) No Defaults. Neither Wells Fargo nor any Wells Fargo Subsidiary is in
default, nor has any event occurred that, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
Material Adverse Effect with respect to Wells Fargo. To the best of Wells
Fargo's knowledge, all parties with whom Wells Fargo or any Wells Fargo
Subsidiary has material leases, agreements or contracts or who owe to Wells
Fargo or any Wells Fargo Subsidiary material obligations, other than those
arising in the ordinary course of the banking business of the Wells Fargo
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition, on Wells Fargo or any Wells Fargo Subsidiary of any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or to the best of Wells Fargo's
knowledge, threatened against Wells Fargo or any Wells Fargo Subsidiary, the
result of which has had or could reasonably be expected to have a Material
Adverse Effect with respect to Wells Fargo; to the best of Wells Fargo's
knowledge, there is no reasonable basis for any such proceeding, claim or
action; and to the best of Wells Fargo's knowledge, neither Wells Fargo nor any
Wells Fargo Subsidiary is subject to any agreement, order, judgment, or decree
by or with any court, governmental authority or third party imposing any such
environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a corporation duly
organized, validly existing, duly qualified to do business and in good standing
under the laws of its jurisdiction of incorporation, and will have corporate
power and authority to own or lease its properties and assets and to carry on
its business. As of the Closing Date, the execution, delivery and performance
by Merger Co. of the Merger
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Agreement will have been duly authorized by Merger Co.'s Board of Directors and
stockholders, and the Merger Agreement will be a valid and binding obligation
of Merger Co., enforceable against Merger Co. in accordance with its terms.
(u) Wells Fargo Banks. As of the Effective Date of the applicable
Consolidation, each Wells Fargo Bank will be a national banking association
duly organized, validly existing, duly qualified to do business, and in good
standing under the laws of the United States, and will have corporate power and
authority to own or lease its properties and assets and to carry on its
business. As of the Effective Date of the applicable Consolidation, the
execution, delivery, and performance by each Wells Fargo Bank of the
Consolidation Agreement will have been duly authorized by the Board of
Directors and shareholders of such Wells Fargo Bank and such Consolidation
Agreement will be a valid and binding obligation of such Wells Fargo Bank
enforceable against such Wells Fargo Bank in accordance with its terms.
4. Covenants of Company. Company covenants and agrees with Wells Fargo as
follows:
(a) Affirmative Covenants. Except as (i) otherwise permitted or required by
this Agreement, or (ii) Wells Fargo shall otherwise agree in writing, which
agreement shall not be unreasonably withheld or delayed, from the date hereof
until the Effective Time of the Merger, Company, and each Company Subsidiary
will: maintain its corporate existence in good standing; maintain the general
character of its business and conduct its business in its ordinary and usual
manner; extend credit in accordance with existing lending policies and provide
Wells Fargo access to its loan files (including credits extended after the date
hereof), except that it shall not, without the prior written consent of Wells
Fargo (which shall be deemed to be waived if Wells Fargo has made no response
by the end of the second complete business day following the receipt, as
evidenced by confirmed facsimile, of the request by the Wells Fargo
representative designated in writing), make any new loan or modify, restructure
or renew any existing loan (except pursuant to commitments made prior to the
date of this Agreement) to any borrower if the amount of the resulting loan,
when aggregated with all other loans or extensions of credit to such person
would be in excess of $1,000,000; maintain proper business and accounting
records in accordance with generally accepted principles; maintain its
properties in good repair and condition, ordinary wear and tear excepted;
maintain in all material respects presently existing insurance coverage or its
commercial equivalent; use its commercially reasonable efforts to preserve its
business organization intact, to keep the services of its present principal
employees and to preserve its good will and the good will of its suppliers,
customers and others having business relationships with it; use its
commercially reasonable efforts to obtain any approvals or consents required to
maintain existing leases and other contracts in effect following the Merger;
comply in all material respects with all laws, regulations, ordinances, codes,
orders, licenses and permits applicable to the properties and operations of
Company and each Company Subsidiary the non-compliance with which reasonably
could be expected to have a Material Adverse Effect with respect to Company;
and permit Wells Fargo and its representatives (including KPMG LLP) to examine
its and its subsidiaries books, records and properties and to interview
officers, employees and agents at all reasonable times when it is open for
business. No such examination by Wells Fargo or its representatives either
before or after the date of this Agreement shall in any way affect, diminish or
terminate any of the representations, warranties or covenants of Company herein
expressed.
(b) Negative Covenants. Except as (i) otherwise contemplated or required by
this Agreement or as set forth on Schedule 4(b), or (ii) Wells Fargo shall
otherwise agree in writing, which agreement shall not be unreasonably withheld
or delayed, from the date hereof until the Effective Time of the Merger,
Company and each Company Subsidiary will not (without the prior written consent
of Wells Fargo): amend or otherwise change its articles of incorporation or
association or by-laws; issue or sell or authorize for issuance or sale, or
grant any options or make other agreements with respect to the issuance or sale
or conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities; authorize or incur any long-
term debt (other than deposit liabilities); mortgage, pledge or subject to lien
or other encumbrance any of its properties, except in the ordinary course of
business; enter into any material agreement, contract or commitment which (i)
is in excess of $300,000 or (ii) is related to data processing, ATMs or related
technology
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and is in excess of $100,000, except banking transactions in the ordinary
course of business and in accordance with policies and procedures in effect on
the date hereof; make any investments except U.S. Treasury and federal agency
securities made by the Company's bank subsidiaries in the ordinary course of
business for terms of up to one (1) year and in amounts of $100,000 or less;
amend or terminate any Plan except as required by law or by paragraphs 4(j) and
4(k) hereof; make any contributions to any Plan except as required by the terms
of such Plan in effect as of the date hereof or amended to comply with
applicable law; declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock except any dividend declared by
a Company Subsidiary's Board of Directors in accordance with applicable law and
regulation, provided, however, that the Board of Directors of Company may
declare and pay cash dividends to the Company stockholders out of the net
earnings of the Company between the date of this Agreement and the Effective
Time of the Merger in accordance with applicable law and regulation and in
accordance with past practice in an amount not to exceed an annualized rate of
$.40 per share and provided further, however, that Company shareholders shall
be entitled to a dividend on Company Common Stock or Wells Fargo Common Stock,
but not both, in the calendar quarter in which the Closing shall occur; redeem,
purchase or otherwise acquire, directly or indirectly, any of the capital stock
of Company or the Banks; increase the compensation of any officers, directors
or executive employees, except pursuant to existing compensation or employment
plans, agreements, or practices; sell or otherwise dispose of any shares of the
capital stock of any Company Subsidiary; or sell or otherwise dispose of any of
its assets or properties other than in the ordinary course of business.
(c) Stockholder Meeting.
(i) The Board of Directors of Company will duly call, and will cause to
be held not later than twenty-five (25) business days following the
effective date of the Registration Statement (or on such other date as may
be agreed to by the parties and reasonably acceptable to Wells Fargo), a
meeting of its stockholders and will direct that this Agreement and the
Merger Agreement be submitted to a vote at such meeting. The Board of
Directors of Company will (i) cause proper notice of such meeting to be
given to its stockholders in compliance with the Nebraska Business
Corporation Act and other applicable law and regulation, and (ii) except to
the extent that the Board of Directors of Company shall conclude in good
faith, after taking into account the advice of its outside counsel, that to
do so would violate its fiduciary obligations under applicable law, (A)
recommend by the affirmative vote of the Board of Directors a vote in favor
of approval of this Agreement and the Merger Agreement, and (B) use its
reasonable best efforts to obtain stockholder approval thereof.
(ii) Company will, to the extent any Consolidation Agreements are entered
into pursuant hereto, use reasonable best efforts to cause the Boards of
Directors of Banks to duly call, and cause to be held not later than
twenty-five (25) business days following the effective date of the
Registration Statement referred to in paragraph 5(c) hereof, and on a date
acceptable to Wells Fargo, meetings of their respective shareholders and
direct that this Agreement and the applicable Consolidation Agreement be
submitted to a vote at such meetings. Company will, to the extent any
Consolidation Agreements are entered into pursuant hereto, use reasonable
best efforts to cause the Boards of Directors of Banks to (A) cause proper
notice of such meetings to be given to their respective shareholders in
compliance with the National Bank Act and other applicable law and
regulation, (B) recommend by the affirmative vote of the Boards of
Directors a vote in favor of approval of this Agreement and the
Consolidation Agreements, and (C) use their reasonable best efforts to
solicit from their respective shareholders proxies in favor thereof.
(iii) Company and Banks, to the extent any Consolidation Agreements are
entered into pursuant hereto, agree to use reasonable best efforts to cause
the meetings (or unanimous consent actions in lieu of meetings) of their
respective shareholders to be held on or be effective on the same date.
(d) Information Furnished by Company. Company will furnish or cause to be
furnished to Wells Fargo all the information concerning Company and the Company
Subsidiaries required for inclusion in the Registration Statement, or any
statement or application made by Wells Fargo to any governmental body in
connection with the transactions contemplated by this Agreement. Any financial
statement for any fiscal year
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provided under this paragraph must include the audit opinion and the consent of
Deloitte & Touche LLP to use such opinion in such Registration Statement.
(e) Approvals. Company will take all necessary corporate and other action and
use its commercially reasonable efforts to obtain all approvals of regulatory
authorities, consents and other approvals required of Company to carry out the
transactions contemplated by this Agreement and will cooperate with Wells Fargo
to obtain all such approvals and consents required of Wells Fargo.
(f) Delivery of Closing Documents. Company will use its best efforts to
deliver to the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(g) Confidential Information. Company will hold in confidence all documents
and information concerning Wells Fargo and its subsidiaries furnished to
Company and its representatives in connection with the transactions
contemplated by this Agreement and will not release or disclose such
information to any other person, except as required by law and except to
Company's outside professional advisers in connection with this Agreement, with
the same undertaking from such professional advisers. If the transactions
contemplated by this Agreement shall not be consummated, such confidence shall
be maintained and such information shall not be used in competition with Wells
Fargo (except to the extent that such information can be shown to be previously
known to Company, in the public domain, or later acquired by Company from other
legitimate sources) and, upon request, all such documents, any copies thereof
and extracts therefrom shall immediately thereafter be returned to Wells Fargo.
(h) Competing Transactions. Neither Company, nor any Company Subsidiary, nor
any director, officer, representative or agent thereof, will, directly or
indirectly, solicit, authorize the solicitation of or except to the extent that
(i) the Company is not otherwise in violation of this paragraph 4(h), and (ii)
the Board of Directors of Company shall conclude in good faith, after taking
into account the written advice of its outside counsel, that to fail to do so
would violate its fiduciary obligations under applicable law, enter into any
discussions with any corporation, partnership, person or other entity or group
(other than Wells Fargo) concerning any offer or possible offer (i) to purchase
any shares of common stock, any option or warrant to purchase any shares of
common stock, any securities convertible into any shares of such common stock,
or any other equity security of Company or any Company Subsidiary, (ii) to make
a tender or exchange offer for any shares of such common stock or other equity
security, (iii) to purchase, lease or otherwise acquire the assets of Company
or any Company Subsidiary except in the ordinary course of business, or (iv) to
merge, consolidate or otherwise combine with Company or any Company Subsidiary.
If any corporation, partnership, person or other entity or group makes an offer
or inquiry to Company or any Company Subsidiary concerning any of the
foregoing, Company or such Company Subsidiary will promptly disclose such offer
or inquiry, including the terms thereof, to Wells Fargo.
(i) Public Disclosure. Company shall consult with Wells Fargo as to the form
and substance of any proposed press release or other proposed public disclosure
of matters related to this Agreement or any of the transactions contemplated
hereby.
(j) Benefit Plans. To the extent permitted by applicable law and the terms of
the Plans, Company and each Company Subsidiary will take all action necessary
or required (i) to terminate or amend as of the Effective Date of the Merger,
if requested by Wells Fargo, all qualified retirement and welfare benefit plans
and all non-qualified benefit plans and compensation arrangements to facilitate
the merger of such plans with Wells Fargo plans without gaps in coverage for
participants in the plans and without duplication of costs caused by the
continuation of such plans after coverage is available under Wells Fargo plans,
and (ii) to submit application to the Internal Revenue Service for a favorable
determination letter for each of the Plans that is subject to the qualification
requirements of Section 401(a) of the Code prior to the Effective Date of the
Merger if a new determination letter is required for any Plan which is to be
amended pursuant to paragraph 4(b) or terminated or amended pursuant to
subparagraph 4(j)(i); provided that no Plan will be required to be
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terminated, or amended in a manner that reduces benefits, unless the Company
Employees are credited for their prior service with Company or the Company
Subsidiaries under the comparable employee benefit plan of Wells Fargo for
purposes of eligibility, vesting, and levels of benefits (but not for purposes
of benefit accruals under any defined benefit pension plan) in which such
Company Employee is eligible to participate following the Effective Time.
(k) Stock Plans. Company shall take all action necessary to terminate the
Company's Dividend Reinvestment Plan ("DRIP") and Employee Stock Purchase Plan
("ESPP") effective as reasonably promptly after the date of this Agreement as
permitted under the terms of the DRIP and the ESPP.
(l) Affiliate Letters. Company shall use its commercially reasonable efforts
to obtain and deliver prior to the Effective Date of the Merger signed
representations substantially in the form attached hereto as Exhibit B to Wells
Fargo by each executive officer, director or stockholder of Company who may
reasonably be deemed an "affiliate" of Company within the meaning of such term
as used in Rule 145 under the Securities Act.
(m) Accruals and Reserves. Company shall establish, immediately prior to the
Effective Time of the Merger, such additional accruals and reserves as may be
necessary (i) to conform Company's accounting and credit loss reserve practices
and methods to those of Wells Fargo, consistent with Wells Fargo's plans with
respect to the conduct of Company's business following the Merger and (ii) to
the extent permitted by generally accepted accounting principles, to provide
for the costs and expenses relating to the consummation by Company of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that (a) Company shall not be required to take such actions more than
three (3) business days prior to the Closing Date or prior to the time Wells
Fargo agrees that all of the conditions to their obligation to close as set
forth in paragraph 7 have been satisfied or waived (other than the deliveries
to be made on the Closing Date) and no such adjustment shall (i) require any
prior filing with any governmental agency or regulatory authority, or (ii)
violate any law, rule or regulation applicable to Company; provided that in any
event no accrual or reserve made by Company pursuant to this paragraph 4(m),
shall constitute or be deemed to be a breach, violation of or failure to
satisfy any representation, warranty, covenant, condition or other provision of
this Agreement or otherwise be considered in determining whether any such
breach, violation or failure to satisfy shall have occurred.
(n) Environmental Assessments. Company shall obtain, at its sole expense,
Phase I environmental assessments for each owned bank facility and each non-
residential OREO property (other than those listed in Schedule 4(n)). Oral
reports of such environmental assessments shall be delivered to Wells Fargo no
later than six (6) weeks and written reports shall be delivered to Wells Fargo
no later than ten (10) weeks from the date of this Agreement. Company shall
obtain, at its sole expense, Phase II environmental assessments for properties
identified by Wells Fargo on the basis of the results of such Phase I
environmental assessments. Company shall obtain a survey and assessment of all
potential asbestos containing material in owned or leased real properties
(other than OREO property) and a written report of the results shall be
delivered to Wells Fargo within six (6) weeks of execution of this Agreement.
(o) Title Commitments and Boundary Surveys. Company shall use its reasonable
best efforts to obtain and deliver to Wells Fargo no later than six (6) weeks
from the date of this Agreement, at its sole expense, commitments for title
insurance and boundary surveys for each owned bank facility.
(p) Year 2000. Company will comply with the FFIEC Requirements and will not
rely on the consummation of the transactions contemplated by this Agreement to
satisfy its FFIEC requirements. Company will provide Wells Fargo with access to
its Year 2000 project and remediation plan documentation and permit Wells Fargo
to review and investigate Company's continuing Year 2000 compliance efforts and
the results thereof.
(q) Bank Approvals. Company shall cause each of the Banks to take all
appropriate corporate action as is necessary to enter into this Agreement, as
promptly as reasonably practicable after the date of this
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Agreement, but in any case, within twenty (20) calendar days after the date of
this Agreement, at which point Company and Wells Fargo shall cause the
Agreement to be amended to add the Banks as signatories hereto, with the same
effect as if the Banks had entered into this Agreement as of the date of this
Agreement. Upon such event, the parties shall amend and restate the Agreement
in its entirety to reflect the addition of the Banks as parties hereto.
(r) Repurchase of Bank Stock. Company shall use its reasonable best efforts
to cause each Bank to obtain the resignation, effective as of the Effective
Date of the related Consolidation, of each member of the Board of Directors of
such Bank and to cause, effective as of such time, the redemption of the Shares
Subject to Buy-Back Agreements in accordance with the terms of such agreements,
provided that a Bank may be substituted for the Company as the purchaser of its
Shares thereunder.
5. Covenants of Wells Fargo. Wells Fargo covenants and agrees with Company as
follows:
(a) Affirmative Covenants. From the date hereof until the Effective Time of
the Merger, Wells Fargo will maintain its corporate existence in good standing;
conduct, and cause the Wells Fargo Subsidiaries to conduct, their respective
businesses in compliance with all material obligations and duties imposed on
them by all laws, governmental regulations, rules and ordinances, and judicial
orders, judgments and decrees applicable to Wells Fargo or the Wells Fargo
Subsidiaries, their businesses or their properties; maintain all books and
records of it and the Wells Fargo Subsidiaries, including all financial
statements, in accordance with generally accepted accounting principles and
practices consistent with those used for the Wells Fargo Financial Statements,
except for changes in such principles and practices required under generally
accepted accounting principles.
(b) Information Provided by Wells Fargo. Wells Fargo will furnish to Company
all the information concerning Wells Fargo required for inclusion in a proxy
statement or statements to be sent to the stockholders of Company, or in any
statement or application made by Company to any governmental body in connection
with the transactions contemplated by this Agreement. Any financial statement
for any fiscal year provided under this paragraph must include the audit
opinion and the consent of KPMG LLP to use such opinion in the proxy statement.
(c) Registration Statement. As promptly as practicable after the execution of
this Agreement, Wells Fargo will file with the SEC the Registration Statement
and any other applicable documents, relating to the shares of Wells Fargo
Common Stock to be delivered to the stockholders of Company pursuant to the
Merger Agreement and will use its best efforts to cause the Registration
Statement to become effective. At the time the Registration Statement becomes
effective, the Registration Statement will comply in all material respects with
the provisions of the Securities Act and the published rules and regulations
thereunder, and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not false or misleading, and at the time of mailing
thereof to the Company stockholders, at the time of the Company stockholders'
meeting and at the Effective Time of the Merger the prospectus included as part
of the Registration Statement, as amended or supplemented by any amendment or
supplement filed by Wells Fargo (hereinafter the "Prospectus"), will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not false or misleading;
provided, however, that none of the provisions of this subparagraph shall apply
to statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished by Company
or any Company Subsidiary for use in the Registration Statement or the
Prospectus.
(d) Stock Exchange Listings. Wells Fargo will file all documents required to
be filed to list the Wells Fargo Common Stock to be issued pursuant to the
Merger on the New York Stock Exchange and the Chicago Stock Exchange and use
its best efforts to effect said listings.
(e) Wells Fargo Shares. The shares of Wells Fargo Common Stock to be issued
by Wells Fargo to the stockholders of Company pursuant to this Agreement and
the Merger Agreement will, upon such issuance and delivery to said stockholders
pursuant to the Merger Agreement, be duly authorized, validly issued, fully
paid
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and nonassessable. The shares of Wells Fargo Common Stock to be delivered to
the stockholders of Company pursuant to the Merger Agreement are and will be
free of any preemptive rights of the stockholders of Wells Fargo.
(f) Blue Sky Approvals. Wells Fargo will file all documents required to
obtain, prior to the Effective Time of the Merger, all necessary Blue Sky
permits and approvals, if any, required to carry out the transactions
contemplated by this Agreement, will pay all expenses incident thereto and will
use its best efforts to obtain such permits and approvals.
(g) Approvals. As promptly as practicable after the execution of this
Agreement, Wells Fargo will take all necessary corporate and other action and
file all documents required to obtain and will use its best efforts to obtain
all approvals of regulatory authorities, consents and approvals required of it
to carry out the transactions contemplated by this Agreement and will cooperate
with Company to obtain all such approvals and consents required by Company.
(h) Confidential Information. Wells Fargo will hold in confidence all
documents and information concerning Company and Company's Subsidiaries
furnished to it and its representatives in connection with the transactions
contemplated by this Agreement and will not release or disclose such
information to any other person, except as required by law and except to its
outside professional advisers in connection with this Agreement, with the same
undertaking from such professional advisers. If the transactions contemplated
by this Agreement shall not be consummated, such confidence shall be maintained
and such information shall not be used in competition with Company (except to
the extent that such information can be shown to be previously known to Wells
Fargo, in the public domain, or later acquired by Wells Fargo from other
legitimate sources) and, upon request, all such documents, copies thereof or
extracts therefrom shall immediately thereafter be returned to Company.
(i) Merger Filings. Wells Fargo will file any documents or agreements
required to be filed in connection with the Merger and the Consolidations under
the Nebraska Business Corporation Act and National Bank Act, respectively.
(j) Delivery of Closing Documents. Wells Fargo will use its best efforts to
deliver to the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(k) Public Disclosure. Wells Fargo shall consult with Company as to the form
and substance of any proposed press release or other proposed public disclosure
of matters related to this Agreement or any of the transactions contemplated
hereby.
(l) Notice of Regulatory Approvals. Wells Fargo shall give Company notice of
receipt of the regulatory approvals referred to in paragraph 7(e).
(m) Indemnification of Directors and Officers. With respect to the
indemnification of directors and officers, Wells Fargo agrees as follows:
(i) Wells Fargo shall ensure that all rights to indemnification and all
limitations of liability existing in favor of any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time of the Merger, a director or officer of Company or any
Company Subsidiary (an "Indemnified Party" and, collectively, the
"Indemnified Parties"), in Company's Articles of Incorporation or By-laws
or similar governing documents of any Company Subsidiary, as applicable in
the particular case and as in effect on the date hereof, shall, with
respect to claims arising from (A) facts or events that occurred before the
Effective Time of the Merger, or (B) this Agreement, the Merger Agreement,
the Consolidation Agreements, and the Support Agreements or any of the
transactions contemplated hereby or thereby, whether in any case asserted
or arising before or after the Effective Time of the Merger, survive
A-21
<PAGE>
the Merger and shall continue in full force and effect. Nothing contained
in this paragraph 5(m)(i) shall be deemed to preclude the liquidation,
consolidation or merger of Company or any Company Subsidiary, in which case
all of such rights to indemnification and limitations on liability shall be
deemed to survive and continue as contractual rights notwithstanding any
such liquidation or consolidation or merger; provided, however, that in the
event of liquidation or sale of substantially all of the assets of Company,
Wells Fargo shall guarantee, to the extent of the greater of the net asset
value of Company as of the Effective Date of the Merger or as of the date
of such liquidation or sale, the indemnification obligations of Company or
any Company Subsidiary to the extent of indemnification obligations of
Company and the Company Subsidiaries described above. Each Indemnified
Party shall have the right to assert claims for indemnification directly
against Wells Fargo without first having to assert such claim against
Company or any Company Subsidiary. Notwithstanding anything to the contrary
contained in this paragraph 5(m)(i), nothing contained herein shall require
Wells Fargo to indemnify any person who was a director or officer of
Company or any Company Subsidiary to a greater extent than Company or any
Company Subsidiary is, as of the date of this Agreement, required to
indemnify any such person;
(ii) any Indemnified Party wishing to claim indemnification under
paragraph 5(m)(i), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Wells Fargo thereof, but
the failure to so notify shall not relieve Wells Fargo of any liability it
may have to such Indemnified Party. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time of the Merger), (A) Wells Fargo shall have the right to
assume the defense thereof and Wells Fargo shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with
the defense thereof, except that if Wells Fargo elects not to assume such
defense or counsel for the Indemnified Party advises that there are issues
which raise conflicts of interest between Wells Fargo and the Indemnified
Party, the Indemnified Party may retain counsel satisfactory to them, and
Wells Fargo shall pay the reasonable fees and expenses of such counsel for
the Indemnified Party promptly as statements therefor are received;
provided, however, that Wells Fargo shall be obligated pursuant to this
subparagraph (ii) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of interest
and (B) such Indemnified Party shall cooperate in the defense of any such
matter;
(iii) for a period of six years from the Effective Time, Wells Fargo
shall use its reasonable best efforts to provide that portion of director's
and officer's liability insurance that serves to reimburse the present and
former officers and directors of the Company or any Company Subsidiary with
respect to claims against such directors and officers arising from facts or
events that occurred before the Effective Time, which insurance shall
contain at least the same coverage and amounts, and contain terms and
conditions no less advantageous, as that coverage currently provided by the
Company; provided however, that in no event shall Wells Fargo be required
to expend more than 200% of the current amount expended by the Company
(such limit on the premiums required to be expended by Wells Fargo, the
"Insurance Amount") to maintain or procure such director's and officer's
insurance coverage for a comparable six-year period; provided further, that
if Wells Fargo is unable to maintain or obtain the insurance called for by
this Section 5(m)(iii), Wells Fargo shall use its reasonable best efforts
to obtain as much comparable insurance as is available for the Insurance
Amount.
(iv) if Wells Fargo or any of its successors or assigns (A) shall
consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (B) shall transfer all or substantially all of
its properties and assets to any individual, corporation or other entity,
then and in each such case, proper provision shall be made so that the
successors and assigns of Wells Fargo shall assume the obligations set
forth in this paragraph 5(m); and
(v) the provisions of this paragraph 5(m) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
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<PAGE>
6. Conditions Precedent to Obligation of Company. The obligation of Company
to effect the Merger shall be subject to the satisfaction at or before the Time
of Filing of the following further conditions, which may be waived in writing
by Company:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except for activities or transactions
after the date of this Agreement made in the ordinary course of business and
not expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 3 hereof shall be true and correct in all respects as of
the Time of Filing as if made as of the Time of Filing (except to the extent
such representations and warranties are by their express provisions made as of
an earlier date, in which case as of such date), except where the failure to be
so true and correct has not had or would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to
Wells Fargo.
(b) Performance of Wells Fargo Obligations. Wells Fargo shall have, or shall
have caused to be, performed and observed in all material respects all
covenants, agreements and conditions hereof to be performed or observed by it
and Merger Co. at or before the Time of Filing.
(c) Wells Fargo Compliance Certificate. Company shall have received a
favorable certificate, dated as of the Effective Date of the Merger, signed by
the Chairman, the President or any Executive Vice President or Senior Vice
President and by the Secretary or Assistant Secretary of Wells Fargo, as to the
matters set forth in subparagraphs (a) and (b) of this paragraph 6.
(d) Stockholder Approvals. (i) This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Articles of Incorporation and the
Nebraska Business Corporation Act, and (ii) to the extent entered into pursuant
hereto, the Consolidation Agreements shall have been approved by the
affirmative vote of the holders of the percentage of the outstanding shares of
the Banks required for approval of a plan of consolidation in accordance with
the provisions of such Bank's Articles of Association and the National Bank
Act.
(e) Governmental Approvals. Wells Fargo shall have received approval by the
Federal Reserve Board and the Comptroller and by such state banking, insurance
and finance company authorities as may be required by law of the transactions
contemplated by this Agreement and the Merger Agreement and the Consolidation
Agreements, and all waiting and appeal periods prescribed by applicable law or
regulation shall have expired.
(f) No Restraining Order, Etc. No court or governmental authority of
competent jurisdiction shall have issued an order which is then in effect
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement.
(g) Shares Authorized for Listing. The shares of Wells Fargo Common Stock to
be delivered to the stockholders of Company pursuant to this Agreement and the
Merger Agreement shall have been authorized for listing on the New York Stock
Exchange and the Chicago Stock Exchange.
(h) Tax Opinion. Company shall have received an opinion, dated the Closing
Date, of counsel to Company, substantially to the effect that, for federal
income tax purposes: (i) the Merger will constitute a reorganization within the
meaning of Sections 368 of the Code; (ii) no gain or loss will be recognized by
the holders of Company Common Stock or upon receipt of Wells Fargo Common Stock
except for cash received in lieu of fractional shares; (iii) the basis of the
Wells Fargo Common Stock received by the stockholders of Company will be the
same as the basis of Company Common Stock exchanged therefor; and (iv) the
holding period of the shares of Wells Fargo Common Stock received by the
stockholders of Company will include the holding period of the Company Common
Stock, provided such shares of Company Common Stock were held as a capital
asset as of the Effective Time of the Merger. In rendering such opinion,
counsel to Company may
A-23
<PAGE>
require and rely upon customary representations contained in certificates of
officers of Wells Fargo (in form and substance reasonably acceptable to Wells
Fargo), Company, or others.
(i) Registration Statement Effective; No Stop Order, Etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or
supplemented) shall have become effective under the Securities Act and shall
not be subject to any stop order, and no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness of the Registration
Statement shall have been initiated and be continuing, or have been threatened
and be unresolved. Wells Fargo shall have received all state securities law or
blue sky authorizations necessary to carry out the transactions contemplated by
this Agreement.
(j) No Material Adverse Change. Since September 30, 1999, no change shall
have occurred and no circumstances shall exist which has had or would
reasonably be expected to have a Material Adverse Effect with respect to Wells
Fargo.
7. Conditions Precedent to Obligation of Wells Fargo. The obligation of Wells
Fargo to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following conditions, which may be waived in writing
by Wells Fargo:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except for activities or transactions
after the date of this Agreement made in the ordinary course of business and
not expressly prohibited by this Agreement, the representations and warranties
contained in paragraph 2 hereof shall be true and correct in all respects as of
the Time of Filing as if made as of the Time of Filing (except to the extent
such representations and warranties are by their express provisions made as of
an earlier date, in which case as of such date), except where the failure to be
so true and correct has not had or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to
Company.
(b) Performance of Company Obligations. Company shall have, or shall have
caused to be, performed and observed in all material respects all covenants,
agreements and conditions hereof to be performed or observed by it at or before
the Time of Filing.
(c) Stockholder Approvals. (i) This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Articles of Incorporation and the
Nebraska Business Corporation Act, and (ii) to the extent entered into pursuant
hereto, the Consolidation Agreements shall have been approved by the
affirmative vote of the holders of the percentage of the outstanding shares of
Banks required for approval of a plan of consolidation in accordance with the
provisions of the Bank's Articles of Association and the National Bank Act.
(d) Company's Compliance Certificate. Wells Fargo shall have received a
favorable certificate dated as of the Effective Date of the Merger signed by
the Chairman or President and by the Secretary or Assistant Secretary of
Company, as to the matters set forth in subparagraphs (a) through (c) of this
paragraph 7.
(e) Governmental Approvals. Wells Fargo shall have received approval by all
governmental agencies as may be required by law of the transactions
contemplated by this Agreement and the Merger Agreement and the Consolidation
Agreements and all waiting and appeal periods prescribed by applicable law or
regulation shall have expired. No approvals, licenses or consents granted by
any regulatory authority shall contain any condition or requirement relating to
Company or any Company Subsidiary that, in the good faith judgment of Wells
Fargo, is unreasonably burdensome to Wells Fargo. For purposes of this Section
7(e), a divestiture required as a condition to any regulatory approval shall
not be deemed to be unreasonably burdensome if such divestiture is consistent
with Department of Justice and Federal Reserve Board guidelines, policies, and
practices regarding the merger of bank holding companies that have been used in
transactions that have recently been reviewed prior to the date of this
Agreement.
A-24
<PAGE>
(f) Consents, Authorizations, Etc. Obtained. Company and each Company
Subsidiary (other than any Company Subsidiary which is not actively engaged in
an aviation, banking, insurance, mortgage, finance company, leasing or
international banking business) shall have obtained any and all consents or
waivers from other parties to loan agreements, leases or other contracts
required for the consummation of the Merger, and Company and each such Company
Subsidiary shall have obtained any and all permits, authorizations, consents,
waivers and approvals required for the lawful consummation by it of the Merger,
except in each case for such consents, waivers, authorizations, permits, and
approvals that would not reasonably be expected to have a Material Adverse
Effect with respect to Company.
(g) No Restraining Order, etc. No court or governmental authority of
competent jurisdiction shall have issued an order which is then in effect
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement.
(h) Number of Outstanding Shares. As of the Closing Date, the total number of
shares of Company Common Stock outstanding and subject to issuance upon
exercise (assuming for this purpose that phantom shares and other share-
equivalents constitute Company Common Stock) of all warrants, options,
conversion rights, phantom shares or other share-equivalents shall not exceed
13,344,286.
(i) Registration Statement Effective; No Stop Order, etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or
supplemented) shall have become effective under the Securities Act and shall
not be subject to any stop order, and no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness of the Registration
Statement shall be pending or threatened.
(j) No Casualty Losses, Etc. Company and the Company Subsidiaries considered
as a whole shall not have sustained since December 31, 1998 any material loss
or interference with their business from any civil disturbance or any fire,
explosion, flood or other calamity, whether or not covered by insurance, except
for such loss or interference that has not had or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to Company.
(k) No Environmental Liability. Except with respect to matters listed on
Schedule 2(v), there shall be no claim or action of any nature seeking to
impose, or that could result in the imposition on Company or any Company
Subsidiary of, any liability relating to the release of hazardous substances as
defined under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended, which has had or
would reasonably be expected to have a Material Adverse Effect with respect to
Company.
(l) No Material Adverse Change. Since September 30, 1999, no change shall
have occurred and no circumstances shall exist which has had or would
reasonably be expected to have a Material Adverse Effect with respect to
Company.
(m) Year 2000. Company shall be in full compliance with current FFIEC
Requirements; there shall be no feature of Company data processing, operating
or platform systems that would prevent those systems from continuing to run
independently after December 31, 1999 until such time as a subsequent
conversion to Wells Fargo systems can be completed; Company's computer hardware
and software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission, or other utilization of data or in the
operation of mechanical or electrical systems of any kind will function at
least as effectively in all material respects after December 31, 1999 as in the
case of dates or time periods occurring prior to January 1, 2000; except for
such failure to be in compliance, feature, or failure to so function that would
not have, individually or in the aggregate, a Material Adverse Effect with
respect to Company.
(n) Resignations. Company shall have delivered or cause to be delivered the
resignations of each member of its Board of Directors as of the Effective Time,
and such resignations shall not have been withdrawn.
A-25
<PAGE>
8. Employee Benefit Plans: Company Employees. Each person who is an employee
of Company or any Company Subsidiary as of the Effective Date of the Merger
("Company Employees") shall be eligible for participation in the employee
welfare and retirement plans of Wells Fargo, as in effect from time to time, as
follows:
(a) Employee Welfare Benefit Plans. Each Company Employee shall be eligible
for participation in the employee welfare benefit plans of Wells Fargo listed
below subject to any eligibility requirements applicable to such plans (and not
subject to pre-existing condition exclusions, except with respect to the Wells
Fargo Long Term Care Plan and Wells Fargo Long Term Disability Plan) and shall
enter each plan not later than January 1, 2001 (the "Benefits Conversion
Date"):
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Salary Continuation Pay Plan
Paid Time Off Program
Adoption Assistance Plan
It is intended that the transition from Company's Plans to the Wells Fargo
Plans will be facilitated without gaps in coverage to the participants without
duplication of costs to Wells Fargo. Company Employees shall receive credit for
years of service to Company, the Company Subsidiaries and any predecessors of
Company or the Company Subsidiaries (to the extent generally recognized by
Company and the Company Subsidiaries) for the purpose of determining benefits
under the Wells Fargo Paid Time Off Program, Salary Continuation Pay Plan and
Short Term Disability Plan. From and after the Effective Time, Wells Fargo will
give each Company Employee credit for the plan year in which the Effective Time
occurs towards applicable deductibles incurred prior to the Effective Time.
Company Employees shall be eligible for participation in the Wells Fargo Salary
Continuation Pay Plan subject to any eligibility requirements applicable to
such plans immediately following the Effective Time of the Merger; provided,
however, that no Company Employee who is a participant in any Company severance
or salary continuation plan or who has an employment agreement with Company or
any Company Subsidiary at the Effective Time of the Merger shall be eligible to
participate in the Wells Fargo Salary Continuation Pay Plan until such Company
Employee is no longer covered by such Company severance or salary continuation
plan or employment agreement; provided further, that no Company Employee who is
a participant in any Company retention pay plan at the Effective Time of the
Merger shall be eligible to participate in the Wells Fargo Salary Continuation
Pay Plan until eight (8) months after receipt by Company Employee of the last
payment due under such plan.
(b) Employee Retirement Benefit and Other Plans. Each Company Employee shall
be eligible to participate in the Wells Fargo 401(k) Plan (the "401(k) Plan"),
subject to any eligibility requirements applicable to the 401(k) Plan (with
full credit for years of past service to Company and the Company Subsidiaries
and any predecessor of Company or Company Subsidiary, to the extent credited
under the Company's defined contribution Plan, for the purpose of satisfying
any eligibility and vesting periods applicable to the 401(k) Plan), and shall
enter the 401(k) Plan as of the Benefits Conversion Date.
Each Company Employee shall be eligible for participation, as a new employee,
in the Wells Fargo Cash Balance Plan pursuant to the terms thereof.
A-26
<PAGE>
Each Company Employee shall be eligible for access to Wells Fargo's retiree
medical benefit, subject to any eligibility requirements applicable to such
benefit. Wells Fargo shall recognize years of past service with Company and the
Company Subsidiaries and any predecessor of Company or Company Subsidiary for
the purpose of eligibility to access Wells Fargo's retiree medical benefit.
Except as otherwise specifically provided herein, from and after the
Effective Time (or on such later date on which Company Employees become
eligible to participate upon conversion to Wells Fargo's payroll systems),
Company Employees shall be eligible to participate in the employee benefit
plans of Wells Fargo on the same basis as similarly situated employees of Wells
Fargo, and Wells Fargo will credit each Company Employee's prior service with
Company and the Company Subsidiaries and any predecessor of Company or the
Company Subsidiaries for purposes of eligibility, vesting and levels of
benefits under the Wells Fargo employee benefit plans in which such Company
Employee is eligible to participate following the Effective Time, provided that
such crediting of service does not result in the duplication of benefits.
Wells Fargo will honor, in accordance with their terms, all accrued benefit
obligations to, and contractual rights of, current and former employees of
Company and the Company Subsidiaries.
(c) Additional Benefits. Wells Fargo agrees to provide or to cause the
Surviving Corporation to continue to provide the additional benefits set forth
on Schedule 8(c).
(d) Continuation of Benefits. For the period from the Effective Time through
the Benefits Conversion Date, the employee benefits to be provided to Company
Employees shall be provided to such employees under the employee benefits
plans, programs, and arrangements of Company and the Company Subsidiaries, as
in effect immediately prior to the Effective Time (other than the DRIP and
ESPP, which shall be terminated in accordance with Section 5(k) hereof).
9. Termination of Agreement.
(a) This Agreement may be terminated at any time prior to the Time of Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the other
party if the Merger shall not have been consummated by October 31, 2000
unless such failure of consummation shall be due to the failure of the
party seeking to terminate to perform or observe in all material respects
the covenants and agreements hereof to be performed or observed by such
party; or
(iii) by Company or Wells Fargo upon written notice to the other party if
any court or governmental authority of competent jurisdiction shall have
issued a final and nonappealable order permanently restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
by this Agreement.
(b) In the event of termination of this Agreement pursuant to paragraph 9(a),
this Agreement shall forthwith become null and void, there shall be no
liability under this Agreement on the part of Wells Fargo or Company or any of
their respective officers or directors, and all rights and obligations of each
party hereto shall cease; provided, however, that paragraphs 4(g), 5(h) and 10
shall survive such termination, and (ii) nothing herein shall release, or be
construed as so releasing, either party hereto from any liability or damage to
the other party hereto arising out of the breaching party's willful and
material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder.
10. Expenses. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Company and Company Subsidiaries shall be borne by
Company, and all such expenses incurred by Wells Fargo shall be borne by
A-27
<PAGE>
Wells Fargo; provided, however, that if Wells Fargo exercises its right to
revise the structure of the Merger pursuant to paragraph 1(e) hereof, Wells
Fargo agrees to reimburse Company for its actual expenses in connection with
such restructuring.
11. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
but shall not be assignable by either party hereto without the prior written
consent of the other party hereto.
12. Third Party Beneficiaries. Each party hereto intends that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than the parties hereto except as expressly contemplated by
Schedule 8(c) and except that the Indemnified Parties shall have the right to
enforce their rights under Section 5(m).
13. Notices. Any notice or other communication provided for herein or given
hereunder to a party hereto shall be in writing and shall be (i) delivered in
person, or (ii) shall be mailed by first class registered or certified mail,
postage prepaid, or (iii) shall be sent by facsimile, or (iv) shall be sent by
reputable overnight courier service addressed as follows:
If to Wells Fargo:
Wells Fargo & Company
MAC N9305-173
Sixth and Marquette
Minneapolis, Minnesota 55479
Attention: Corporate Secretary
If to Company and Banks:
First Commerce Bancshares, Inc.
NBC Center
1248 "O" Street
Lincoln, Nebraska 68508
Attn: James Stuart, Jr., Chairman and CEO
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Adam D. Chinn, Esq.
Telecopy: (212) 403-2000
and:
Cline, William, Wright, Johnson & Oldfather
233 South 13th Street, #1900
Lincoln, Nebraska 68508
Attn: Robert J. Routh, Esq.
Telecopy: (402) 475-5343
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. Complete Agreement. This Agreement, including the Exhibits and Schedules
hereto, the Merger Agreement and the Consolidation Agreements and any other
agreements or documents executed and delivered with this Agreement contain the
complete agreement between the parties hereto with respect to the Merger and
Consolidations and other transactions contemplated hereby and supersede all
prior agreements and understandings between the parties hereto with respect
thereto.
A-28
<PAGE>
15. Captions. The captions contained in this Agreement and the Exhibits and
Schedules hereto are for convenience of reference only and do not form a part
of this Agreement or the Exhibits or Schedules.
16. Waiver and Other Action. Either party hereto may, by a signed writing,
give any consent, take any action pursuant to paragraph 9 hereof or otherwise,
or waive any inaccuracies in the representations and warranties by the other
party and compliance by the other party with any of the covenants and
conditions herein.
17. Amendment. At any time before the Time of Filing, the parties hereto, by
action taken by their respective Boards of Directors or pursuant to authority
delegated by their respective Boards of Directors, may amend this Agreement;
provided, however, that no amendment after approval by the stockholders of
Company or the Banks shall be made which changes in a manner adverse to such
stockholders the consideration to be provided to said stockholders pursuant to
this Agreement, the Merger Agreement, and the Consolidation Agreements.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to the
conflict of laws provisions thereof.
19. Non-Survival of Representations and Warranties. No representation or
warranty contained in the Agreement or the Merger Agreement shall survive the
Merger or, except as set forth in paragraph 9(b), the termination of this
Agreement.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but both which shall constitute but one
instrument.
[The rest of this page has intentionally been left blank.]
A-29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Wells Fargo & Company First Commerce Bancshares, Inc.
/s/ John A. Berg /s/ James Stuart, Jr.
By __________________________________ By __________________________________
Its Executive Vice President Its Chairman and CEO
First National Bank and Trust Co. of The Overland National Bank of Grand
Kearney Island
/s/ Larry L. Jepson /s/ Richard L. Harbaugh
By __________________________________ By __________________________________
Its Chairman and CEO Its President and CEO
Western Nebraska National Bank The First National Bank of West
Point
/s/ Mary C. Gerdes /s/ Paul Bachman
By __________________________________ By __________________________________
Its President and CEO Its President and CEO
[Signature page to Amended and Restated Agreement and Plan of Reorganization
by and between First Commerce Bancshares, Inc. and Wells Fargo & Company and
the Banks]
A-30
<PAGE>
SCHEDULE 1(a)(ii)
Calculation of Value of Per-Share Cash Consideration
to be Paid in the Consolidations
<TABLE>
<CAPTION>
Number of Total Book Cash
Shares to Be Value of Consideration
Converted Shares* Payable Per
Bank ("Shares") 1.50 Share
---- ------------ ---------- -------------
<S> <C> <C> <C>
First National Bank and Trust Co. of
Kearney................................ 228 235,510.41 1,046.09
The Overland National Bank of Grand Is-
land................................... 1,410 253,309.26 181.07
The First National Bank of West Point... 180 321,821.80 1,787.90
Western Nebraska National Bank.......... 170 127,283.77 748.73
</TABLE>
- --------
* The balance of the shares of these subsidiaries not owned by First Commerce
Bancshares, Inc. will be repurchased for cash pursuant to existing
repurchase agreements.
A-31
<PAGE>
EXHIBIT A-1
AGREEMENT AND PLAN OF MERGER
between
FIRST COMMERCE BANCSHARES, INC.
a Nebraska corporation
(the surviving corporation)
and
WELLS FCBI MERGER CO.,
a Nebraska corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of , 2000,
between FIRST COMMERCE BANCSHARES, INC. ("FCBI"), a Nebraska corporation
(hereinafter sometimes called "FCBI" and sometimes called the "surviving
corporation"), and WELLS FCBI MERGER CO., a Nebraska corporation ("Wells FCBI
Merger Co.") (said corporations being hereinafter sometimes referred to as the
"constituent corporations").
WHEREAS, Wells FCBI Merger Co., a wholly-owned subsidiary of Wells Fargo &
Company, a Delaware corporation ("Wells Fargo"), was incorporated by Articles
of Incorporation filed in the office of the Secretary of State of the State of
Nebraska on , 2000, and said corporation is now a
corporation subject to and governed by the provisions of the Nebraska Business
Corporation Act. Wells FCBI Merger Co. has authorized capital stock of
shares, consisting of shares of common stock, $.20 par
value per share ("Wells FCBI Merger Co. Common Stock"). As of
, 2000, there were shares of Wells FCBI Merger Co.
Common Stock outstanding and no shares were held in the treasury; and
WHEREAS, FCBI was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of Nebraska on May 2, 1984, and
said corporation is now a corporation subject to and governed by the provisions
of the Nebraska Business Corporation Act, with authorized capital stock
consisting of 50,000,000 shares, consisting of 50,000,000 shares of common
stock, $.20 par value per share ("FCBI Common Stock"), consisting of 10,000,000
shares of Class A Voting Common Stock, $.20 par value per share ("Class A
Stock"), and 40,000,000 shares of Class B Non-Voting Common Stock ($.20 par
value per share ("Class B Stock"), of which as of , 2000,
shares of Class A Stock and shares of Class B Stock were
outstanding and no shares of FCBI Common Stock were held in the treasury; and
WHEREAS, Wells Fargo and FCBI and certain subsidiaries of FCBI are parties to
an Agreement and Plan of Reorganization dated as of February , 2000 (the
"Reorganization Agreement"), setting forth certain representations, warranties
and covenants in connection with the merger provided for herein;
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporation and for the best interests of the respective shareholders of
said corporations that said corporations merge and that Wells FCBI Merger Co.
be merged with and into FCBI, with FCBI continuing as the surviving
corporation, on the terms and conditions hereinafter set forth in accordance
with the provisions of the Nebraska Business Corporation Act, which statute
permits such merger; and
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Wells FCBI Merger Co. and FCBI, in consideration of the
premises and of the mutual covenants and agreements contained herein and of the
benefits to accrue to the parties hereto, have agreed and do hereby agree that
Wells FCBI Merger Co. shall be merged with and into FCBI pursuant to the laws
of the State of Nebraska, and do hereby agree upon, prescribe and set forth the
terms and conditions of the merger of Wells FCBI Merger Co. with and into FCBI,
the mode of carrying said merger into effect, the manner and basis of
exchanging the shares of FCBI
A-1-1
<PAGE>
Common Stock for shares of common stock, par value $1-2/3 per share, of Wells
Fargo ("Wells Fargo Common Stock"), and such other provisions with respect to
said merger as are deemed necessary or desirable, as follows:
FIRST: At the time of merger, Wells FCBI Merger Co. shall be merged with and
into FCBI, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Wells FCBI Merger Co. shall cease
and the name of the surviving corporation shall remain "Nebraska Financial
Corporation."
SECOND: The Articles of Incorporation of FCBI at the time of merger shall be
the Articles of Incorporation of the surviving corporation until amended
according to law, except that Article VIII of the Articles of FCBI shall be
amended in the entirety as follows:
"ARTICLE VIII
The number of the directors of the Corporation shall not be less than
one nor more than six, the exact number of directors to be determined
from time to time by resolution adopted by a majority of the entire
Board, and such exact number shall be three until otherwise determined
by resolution adopted by a majority of the entire Board."
THIRD: The Bylaws of FCBI at the time of merger shall be and remain the
Bylaws of the surviving corporation until amended according to the provisions
of the Articles of Incorporation of the surviving corporation or of said
Bylaws.
FOURTH: At the time of merger, the following-named persons shall become the
directors of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected and qualify:
[To be provided by Wells Fargo]
FIFTH: At the time of merger, the following named persons shall become the
officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify:
Name Title
_________________________ _____________________
[To be provided by Wells Fargo]
SIXTH: The manner and basis of converting the shares of FCBI Common Stock
shall be as follows:
1. Subject to the terms and conditions contained herein, Wells FCBI
Merger Co. will be merged by statutory merger with and into FCBI, with FCBI
as the surviving corporation, in which Merger (A) each share of Class A
Stock and Class B Stock outstanding immediately prior to the effective time
of the merger (other than shares of FCBI Common Stock owned, directly or
indirectly, by Wells Fargo or FCBI (other than shares of FCBI 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), and any shares of FCBI Common Stock held by FCBI
or Wells Fargo or any of their respective subsidiaries in respect of a debt
previously contracted) will be converted into the right to receive, subject
to paragraph 4 of this Article Sixth, a number of shares of Wells Fargo
Common Stock equal to $35.95 divided by the Wells Fargo Measurement Price.
The Wells Fargo Measurement Price is defined as the average of the closing
prices of a share of Wells Fargo Common Stock as reported on the
consolidated tape of the New York Stock Exchange during the period of
twenty (20) trading days ending on the day immediately preceding the date
of the shareholders' meeting to consider the merger contemplated hereby.
A-1-2
<PAGE>
2. As soon as practicable after the merger becomes effective, each holder
of a certificate which, prior to the effective time of the merger,
represented shares of FCBI Common Stock outstanding immediately prior to
the time of merger (other than shares of FCBI Common Stock owned, directly
or indirectly, by Wells Fargo or FCBI (other than shares of FCBI 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, and any shares of FCBI Common Stock held by FCBI or
Wells Fargo or any of their respective subsidiaries in respect of a debt
previously contracted) shall be entitled, upon surrender of such
certificate representing a share of FCBI Common Stock for cancellation to
the surviving corporation or to Norwest Bank Minnesota, National
Association, as the designated agent of the surviving corporation (the
"Agent"), to receive a new certificate representing the number of whole
shares of Wells Fargo Common Stock and cash in lieu of fractional shares to
which such holder shall be entitled on the basis set forth in paragraphs 1
and 4 of this Article Sixth. Until so surrendered each certificate which,
immediately prior to the time of merger, represented shares of FCBI Common
Stock shall not be transferable on the books of the surviving corporation
but shall be deemed to evidence only the right to receive (except for the
payment of dividends as provided below) the number of whole shares of Wells
Fargo Common Stock issuable and cash in lieu of fractional shares payable
on the basis above set forth; provided, however, until the holder of such
certificate for FCBI Common Stock shall have surrendered the same as above
set forth, no dividend payable to holders of record of Wells Fargo Common
Stock as of any date subsequent to the effective date of merger shall be
paid to such holder with respect to the shares of Wells Fargo Common Stock,
if any, issuable in connection with the merger, but, upon surrender and
exchange thereof as herein provided, there shall be paid by the surviving
corporation or the Agent to the record holder of such certificate
representing Wells Fargo Common Stock issued in exchange therefor an amount
with respect to such shares of Wells Fargo Common Stock equal to all
dividends that shall have been paid or become payable to holders of record
of Wells Fargo Common Stock between the effective date of merger and the
date of such exchange.
3. If, between the date hereof and the time of merger, shares of Wells
Fargo Common Stock shall be changed into a different number of shares or a
different class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a
record date within such period, then the number of shares of Wells Fargo
Common Stock, if any, into which a share of FCBI Common Stock shall be
exchangeable on the basis above set forth, will be appropriately and
proportionately adjusted so that the number of such shares of Wells Fargo
Common Stock into which a share of FCBI Common Stock shall be exchanged
will equal the number of shares of Wells Fargo Common Stock which the
holders of shares of FCBI Common Stock would have received pursuant to such
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or stock dividend had the record date therefor been
immediately following the time of merger.
4. No fractional shares of Wells Fargo Common Stock and no certificates
or scrip certificates therefor shall be issued to represent any such
fractional interest, and any holder of a fractional interest shall be paid
an amount of cash equal to the product obtained by multiplying the
fractional share interest to which such holder is entitled by the average
of the closing prices of a share of Wells Fargo Common Stock as reported by
the consolidated tape of the New York Stock Exchange for each of the five
(5) trading days ending on the second day immediately preceding the
effective date of the merger.
5. Each share of Wells FCBI Merger Co. Common Stock issued and
outstanding at the time of merger shall be converted into and exchanged for
one (1) share of the surviving corporation after the time of merger.
SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which the Articles
of Merger (as described in subparagraph 1(b) of this Article Seventh) shall
be delivered to and filed by the Secretary of State of the State of
Nebraska, or such later date as may be specified in said Articles;
provided, however, that all of the following actions shall have been taken
in the following order:
A-1-3
<PAGE>
a. This Agreement shall be approved and adopted on behalf of Wells FCBI
Merger Co. and FCBI in accordance with the Nebraska Business Corporation
Act; and
b. Articles of merger (with this Agreement attached as part thereof) with
respect to the merger, setting forth the information required by the
Nebraska Business Corporation Act, shall be executed by the President or a
Vice President of Wells FCBI Merger Co. and by the Secretary or an
Assistant Secretary of Wells FCBI Merger Co., and by the President or a
Vice President of FCBI and by the Secretary or an Assistant Secretary of
FCBI, and shall be filed with the Office of the Secretary of State of the
State of Nebraska in accordance with the Nebraska Business Corporation Act;
and
2. The merger shall become effective as of 11:59 p.m. (the "time of
merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Wells FCBI Merger Co. shall cease, and the
corporate existence and identity of FCBI shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section
21.20,133 of the Nebraska Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. If at any time following the effective time of the merger, FCBI or
Wells FCBI Merger Co. shall consider or be advised that any further
assignment or assurance in law or other action is necessary or desirable to
vest, perfect or confirm in FCBI the title to any property or rights of
Wells FCBI Merger Co. acquired or to be acquired as a result of the merger
provided for herein, the proper officers and directors of FCBI and Wells
FCBI Merger Co. may execute and deliver such deeds, assignments and
assurances in law and take such other action as may be necessary or proper
to vest, perfect or confirm title to such property or right in FCBI and
otherwise carry out the purposes of this Agreement.
2. For the convenience of the parties and to facilitate the filing of
this Agreement, any number of counterparts hereof may be executed and each
such counterpart shall be deemed to be an original instrument.
3. This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the laws of the State of
Nebraska.
4. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
5. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Nebraska, this Agreement may be
terminated in accordance with the terms of the Reorganization Agreement
upon approval by the Board of Directors of either of the constituent
corporations notwithstanding the approval of the shareholders of either
constituent corporation.
6. FCBI will be responsible for the payment of all fees and franchise
taxes that may be owed by Wells FCBI Merger Co. and FCBI will be obligated
to pay such fees and franchise taxes if the same are not timely paid.
[The rest of this page has intentionally been left blank.]
A-1-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement and Plan of
Merger to be signed in their respective corporate names by the undersigned
officers pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
WELLS FCBI MERGER CO.
By: _________________________________
Its _____________________________
Attest:
_____________________________
______, [Assistant] Secretary
[Signature page to Agreement and Plan of Merger between
First Commerce Bancshares, Inc. and Wells FCBI Merger Co.]
A-1-5
<PAGE>
FIRST COMMERCE BANCSHARES, INC.
By: _________________________________
Its______________________________
Attest:
_____________________________
__________________, Secretary
[Signature page to Agreement and Plan of Merger between
First Commerce Bancshares, Inc. and Wells FCBI Merger Co.]
A-1-6
<PAGE>
Appendix B
, 2000
Board of Directors
First Commerce Bancshares, Inc.
1248 O Street
Lincoln, NE 68508
Members of the Board:
We understand that First Commerce Bancshares, Inc. ("First Commerce") and
Wells Fargo & Company ("Wells Fargo") propose to enter into an Agreement and
Plan of Reorganization, dated as of February 1, 2000 (the "Merger Agreement"),
pursuant to which a subsidiary of Wells Fargo is to be merged with and into
First Commerce, with First Commerce being the surviving corporation (the
"Merger"). Pursuant to the Merger, and as set forth more fully in the Merger
Agreement, each outstanding share of Class A Voting Common Stock, par value
$0.20 per share, of First Commerce and each outstanding share of Class B Non-
Voting Common Stock, par value $0.20 per share, of First Commerce
(collectively, the "First Commerce Shares"), will be converted into the right
to receive that number of shares (the "Merger Consideration") of the voting
common stock of Wells Fargo, par value $1-2/3 per share, (the "Wells Fargo
Shares") equal to $35.95 divided by the Wells Fargo Measurement Price (as
defined in the Merger Agreement).
You have asked us whether, in our opinion, the Merger Consideration is fair
to the shareholders of First Commerce from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to First Commerce and Wells Fargo that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the respective business, earnings, assets, liabilities and prospects
of First Commerce furnished to us by senior management of First
Commerce;
(3) Conducted discussions with members of senior management and
representatives of First Commerce and Wells Fargo concerning the
matters described in (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to the Merger;
(4) Reviewed the market prices and valuation multiples for the First
Commerce Shares and the Wells Fargo Shares and compared them with those
of certain publicly traded companies that we deemed to be relevant;
(5) Reviewed the respective publicly reported financial condition and
results of operations of First Commerce and Wells Fargo and compared
them with those of certain publicly traded companies that we deemed to
be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of First Commerce and Wells Fargo and their financial
and legal advisors with respect to the Merger;
(8) Reviewed the most recent draft of the Merger Agreement provided to us;
and
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of First Commerce or Wells Fargo or been furnished with any such
B-1
<PAGE>
evaluation or appraisal. We are not experts in the evaluation of allowances for
loan losses, and we have neither made an independent evaluation of the adequacy
of the allowances for loan losses of First Commerce or Wells Fargo, nor have we
reviewed any individual credit files of First Commerce or Wells Fargo or been
requested to conduct such a review, and, as a result, we have assumed that the
respective allowances for loan losses for First Commerce and Wells Fargo are
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity. In addition, we have not assumed any obligation to conduct,
nor have we conducted any physical inspection of the properties or facilities
of First Commerce or Wells Fargo. With respect to the financial and operating
information, including without limitation, financial forecasts, valuations of
contingencies and projections regarding under-performing and non-performing
assets, net charge-offs, adequacy of reserves, future economic conditions,
furnished to or discussed with us by First Commerce or Wells Fargo, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates and judgments of the senior management of First Commerce
and Wells Fargo as to the future financial and operating performance of First
Commerce, Wells Fargo or the combined entity, as the case may be.
Our opinion is necessarily based upon market, economic and other conditions
as in effect on, and on the information made available to us as of, the date
hereof. For the purposes of rendering this opinion, we have assumed that the
Merger will be consummated substantially in accordance with the terms set forth
in the Merger Agreement, including in all respects material to our analysis,
that the representations and warranties of each party in the Merger Agreement
and in all related documents and instruments (collectively, the "Documents")
that are referred to therein are true and correct, that each party to the
Documents will perform all of the covenants and agreements required to be
performed by such party under such Documents, that all conditions to the
consummation of the Merger will be satisfied without waiver thereof, and that
the final form of the Merger Agreement and the Documents will be substantially
similar to the most recent drafts provided to us. We have also assumed that, in
the course of obtaining the necessary regulatory or other consents or approvals
(contractual or otherwise) for the Merger, no restrictions, including any
divestiture requirements, termination or other payments or amendments or
modifications, will be imposed that will have a material adverse effect on the
future results of operations or financial condition of First Commerce, Wells
Fargo or the combined entity, as the case may be, or on the contemplated
benefits of the Merger.
We have been retained by the Board of Directors of First Commerce to act as
financial advisor to First Commerce in connection with the Merger and will
receive a fee from First Commerce for our services, a significant portion of
which is contingent upon the consummation of the Merger. In addition, First
Commerce has agreed to indemnify us for certain liabilities arising out of our
engagement. We have in the past provided financial advisory, investment banking
and other services to Wells Fargo and have received fees for the rendering of
such services, and we may continue to provide such services in the future. In
the ordinary course of our business, we also may actively trade the First
Commerce Shares and other securities of First Commerce and its affiliates and
the Wells Fargo Shares and other securities of Wells Fargo and its affiliates
for our own account and for the accounts of our customers, and, accordingly,
may at any time hold long or short positions in such securities.
This opinion is for the sole and exclusive use and benefit of the Board of
Directors of First Commerce. It is further understood that this opinion will
not be reproduced, summarized, described or referred to or given to any person
without Merrill Lynch's prior written consent. Our opinion does not address the
merits of the underlying decision by First Commerce to engage in the Merger and
does not constitute a recommendation to any shareholder of First Commerce as to
how such shareholder should vote on the proposed Merger or any other matter
related thereto.
We have not considered, nor are we expressing any opinion herein with respect
to, the prices at which First Commerce Shares or Wells Fargo Shares will trade
following the announcement of the Merger or the price at which the Wells Fargo
Shares will trade following the consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Merger Consideration is fair to shareholders of First
Commerce from a financial point of view.
Very truly yours,
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE 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 and 8.1.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
posteffective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) ((S)230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price represent no
more than 20% change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such posteffective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a posteffective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered
II-1
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(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 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of San Francisco, state of
California, on April 19, 2000.
WELLS FARGO & COMPANY
/s/ Richard M. Kovacevich
By: _________________________________
Richard M. Kovacevich
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed on April 19, 2000 by the following persons in the
capacities indicated:
<TABLE>
<S> <C>
/s/ Richard M. Kovacevich President and Chief
___________________________________________ Executive Officer
Richard M. Kovacevich (Principal Executive
Officer)
/s/ Ross J. Kari Executive Vice President
___________________________________________ and Chief Financial
Ross J. Kari Officer (Principal
Financial Officer)
/s/ Les L. Quock Senior Vice President
___________________________________________ and Controller
Les L. Quock (Principal Accounting
Officer)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
LES S. BILLER ) RICHARD D. McCORMICK )
MICHAEL R. BOWLIN ) BENJAMIN F. MONTOYA )
EDWARD M. CARSON ) CYNTHIA H. MILLIGAN )
DAVID A. CHRISTENSEN ) PHILIP J. QUIGLEY )
WILLIAM S. DAVILA ) DONALD B. RICE )
SUSAN E. ENGEL ) IAN M. ROLLAND ) A majority of
PAUL HAZEN ) SUSAN G. SWENSON ) the Board of
WILLIAM A. HODDER ) DANIEL M. TELLEP ) Directors*
REATHA CLARK KING ) CHANG-LIN TIEN )
RICHARD M. KOVACEVICH ) MICHAEL W. WRIGHT )
) JOHN A. YOUNG )
</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 Amended and Restated Agreement and Plan of Reorganization, entered
into as of February 1, 2000, and amended and restated as of April 14,
2000, effective as of February 1, 2000, by and between First Commerce
Bancshares, Inc. and Wells Fargo & Company, included as Appendix A to
the accompanying proxy statement-prospectus.
3.1 Restated Certificate of Incorporation, incorporated by reference to
Exhibit 3(b) to the Registrant's Current Report on Form 8-K dated June
28, 1993. Certificates of Amendment of Certificate of Incorporation,
incorporated by reference to Exhibit 3 to the Registrant's Current
Report on Form 8-K dated July 3, 1995 (authorizing preference stock),
and Exhibits 3(b) and 3(c) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998 (changing the
Registrant's name and increasing authorized common and preferred
stock, respectively).
3.2 Certificate of Change of Location of Registered Office and Change of
Registered Agent, incorporated by reference to Exhibit 3(b) to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999.
3.3 Certificate of Designations for the Registrant's ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 4 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994.
3.4 Certificate of Designations for the Registrant's 1995 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 4 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
3.5 Certificate Eliminating the Certificate of Designations for the
Registrant's Cumulative Convertible Preferred Stock, Series B,
incorporated by reference to Exhibit 3(a) to the Registrant's Current
Report on Form 8-K dated November 1, 1995.
3.6 Certificate Eliminating the Certificate of Designations for the
Registrant's 10.24% Cumulative Preferred Stock, incorporated by
reference to Exhibit 3 to the Registrant's Current Report on Form 8-K
dated February 20, 1996.
3.7 Certificate of Designations for the Registrant's 1996 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Registrant's Current Report on Form 8-K dated February 26, 1996.
3.8 Certificate of Designations for the Registrant's 1997 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Registrant's Current Report on Form 8-K dated April 14, 1997.
3.9 Certificate of Designations for the Registrant's 1998 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Registrant's Current Report on Form 8-K dated April 20, 1998.
3.10 Certificate of Designations for the Registrant's Adjustable Cumulative
Preferred Stock, Series B, incorporated by reference to Exhibit 3(j)
to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.
3.11 Certificate of Designations for the Registrant's Fixed/Adjustable Rate
Noncumulative Preferred Stock, Series H, incorporated by reference to
Exhibit 3(k) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
3.12 Certificate of Designations for the Registrant's Series C Junior
Participating Preferred Stock, incorporated by reference to Exhibit
3(l) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
3.13 Certificate Eliminating the Certificate of Designations for the
Registrant's Series A Junior Participating Preferred Stock,
incorporated by reference to Exhibit 3(a) to the Registrant's Current
Report on Form 8-K dated April 21, 1999.
3.14 Certificate of Designations for the Registrant's 1999 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3(b)
to the Registrant's Current Report on Form 8-K dated April 21, 1999.
3.15 By-Laws, incorporated by reference to Exhibit 3(m) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998.
4.1 See Exhibits 3.1 through 3.15.
4.2 Rights Agreement, dated as of October 21, 1998, between the Registrant
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form 8-A dated October 21, 1998.
5.1 Opinion of Stanley S. Stroup as to the legality of the shares to be
issued (including consent).
8.1 Form of opinion of Wachtell, Lipton, Rosen & Katz regarding the U.S.
federal income tax consequences of the merger (including consent).
23.1 Consent of Stanley S. Stroup (included in Exhibit 5.1).
23.2 Consent of KPMG LLP relating to the audited financial statements of
Wells Fargo & Company.
23.3 Consent of Deloitte & Touche LLP relating to the audited financial
statements of First Commerce Bancshares, Inc.
23.4 Consent of Wachtell, Lipton, Rosen & Katz regarding its tax opinion
(included in Exhibit 8.1).
24.1 Powers of Attorney.
99.1 Form of proxy for special meeting of shareholders of First Commerce
Bancshares, Inc.
99.2 Form of consent of Merrill Lynch, Pierce, Fenner & Smith, Incorporated
relating to First Commerce Bancshares, Inc.
</TABLE>
<PAGE>
Exhibit 5.1
[LETTERHEAD OF STANLEY S. STROUP
EXECUTIVE VICE PRESIDENT AND GENERAL
COUNSEL OF WELLS FARGO & COMPANY]
April 19, 2000
Board of Directors
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Ladies and Gentlemen:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of a maximum of 16,000,000 shares of common stock, par value $1-2/3
per share, of Wells Fargo & Company, a Delaware corporation (the "Company"),
and associated preferred stock purchase rights (such shares and rights
collectively referred to as the "Shares"), which are proposed to be issued by
the Company in connection with the merger (the "Merger") of a wholly-owned
subsidiary of the Company with First Commerce Bancshares, Inc., I have examined
such corporate records and other documents, including the registration
statement on Form S-4 relating to the Shares, 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 Company is a corporation duly organized and existing under the laws
of the state of Delaware.
2. All necessary corporate action on the part of the Company has been taken
to authorize the issuance of the Shares in connection with the Merger,
and when issued as described in the registration statement, the Shares
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.
Sincerely,
/s/ Stanley S. Stroup
<PAGE>
Exhibit 8.1
, 2000
First Commerce Bancshares, Inc.
NBC Center
1248 "O" Street
Lincoln, Nebraska 68508
Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94163
Ladies and Gentlemen:
We have acted as special counsel to First Commerce Bancshares, Inc., a
Nebraska corporation ("First Commerce"), in connection with the proposed merger
(the "Merger") of a direct, wholly-owned subsidiary of Wells Fargo & Company, a
Delaware corporation ("Wells Fargo"), with and into First Commerce, upon the
terms and conditions set forth in the Amended and Restated Agreement and Plan
of Reorganization, dated as of February 1, 2000, as amended and restated as of
April 14, 2000, by and among First Commerce, Wells Fargo, First National Bank
and Trust Co. of Kearney, The Overland National Bank of Grand Island, Western
Nebraska National Bank, and the First National Bank of West Point (the
"Agreement"). 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. Any capitalized term used and not defined herein has the meaning given
to it in the Agreement.
For purposes of the opinion set forth below, we have relied, with the
consent of First Commerce 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 First Commerce and Wells
Fargo dated the date hereof, and have assumed that such statements and
representations will be complete and accurate at the Effective Time of the
Merger and that all statements and representations made to the knowledge of any
person or entity or with similar qualification are and will be true and correct
as if made without such qualification. We have also relied upon the accuracy of
the Registration Statement and the proxy statement-prospectus included therein
(the "Proxy Statement").
We have also assumed that (i) the transactions contemplated by the Agreement
will be consummated in accordance therewith and as described in the
Registration Statement and the Proxy Statement (and no terms or conditions
therein material to this opinion will be waived), (ii) the Merger will be
reported by First Commerce and Wells Fargo on their respective federal income
tax returns in a manner consistent with the opinion set forth below, and (iii)
the Merger will qualify as a statutory merger under the applicable laws of the
State of Nebraska.
Based upon and subject to the foregoing, under currently applicable United
States federal income tax law, 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 of the Internal Revenue Code of 1986, as
amended, (ii) no gain or loss will be recognized by the holders of First
Commerce common stock upon receipt of Wells Fargo common stock, except with
respect to cash received in lieu of fractional shares of Wells Fargo common
stock, (iii) the basis of Wells Fargo common stock received, including
fractional shares deemed received and redeemed, by the shareholders of First
Commerce will be the same as the basis of the First Commerce common stock
exchanged therefor and (iv) the holding period of shares of Wells Fargo common
stock received, including fractional shares deemed received and redeemed, by
the shareholders of First Commerce will include the holding period of the First
Commerce common stock, provided that the shares of First Commerce common stock
were held as a capital asset as of the Effective Time of the Merger.
<PAGE>
First Commerce Bancshares, Inc.
Wells Fargo & Company
, 2000
Page 2
We express no opinion as to the United States federal income tax
consequences of the Merger to stockholders subject to special treatment under
United States federal income tax law (including, for example, foreign persons,
financial institutions, dealers in securities, traders in securities who elect
to apply a mark-to-market method of accounting, insurance companies, tax-exempt
entities, holders who dissent from the Merger and receive the fair value of
their shares of First Commerce common stock in cash, holders who acquired their
shares of First Commerce common stock through the exercise of an employee stock
option or right or otherwise as compensation, and holders who hold First
Commerce common stock as part of a hedge, straddle, conversion or constructive
sale transaction). In addition, no opinion is expressed with respect to the tax
consequences of the Merger under applicable foreign, state or local laws or
under any federal tax laws other than those pertaining to the income tax.
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 "The Merger--U.S. Federal Income Tax
Consequences of the Merger" 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.
We are furnishing this opinion to you solely in connection with the filing
of the Registration Statement and this opinion is not to be relied upon,
circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Wells Fargo & Company:
We consent to the incorporation by reference in the proxy statement-prospectus
included in this Registration Statement on Form S-4 of Wells Fargo & Company
related to the acquisition of First Commerce Bancshares Inc., of our report
dated January 18, 2000, with respect to the consolidated balance sheet of Wells
Fargo & Company and Subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 1999, and to the reference to our firm under the
heading "Experts" in the proxy statement-prospectus.
/s/ KPMG LLP
San Francisco, California
April 19, 2000
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Wells Fargo & Company on Form S-4 of our report dated February 11, 2000,
appearing in the Annual Report on Form 10-K of First Commerce Bancshares, Inc.
for the year ended December 31, 1999, and to the reference to us under the
heading "Experts" in the Proxy Statement-Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
April 17, 2000
<PAGE>
Exhibit 24.1
WELLS FARGO & COMPANY
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer
of WELLS FARGO & COMPANY, a Delaware corporation, does hereby make, constitute
and appoint RICHARD M. KOVACEVICH, LES BILLER, ROSS J. KARI, STANLEY S. STROUP,
AND LAUREL A. HOLSCHUH, 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 Company 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 Company with the
Securities and Exchange Commission, Washington, D.C., in connection with the
registration under the Securities Act of 1933, as amended, of up to 16,000,000
shares of Common Stock of the Company and any preferred stock purchase rights
associated with such shares, 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 acquisition by the Company of First Commerce Bancshares,
Inc., Lincoln, Nebraska and its subsidiaries, 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
22nd day of February, 2000.
/s/ LES S. BILLER /s/ RICHARD D. McCORMICK
/s/ MICHAEL R. BOWLIN /s/ CYNTHIA H. MILLIGAN
/s/ EDWARD M. CARSON /s/ BENJAMIN F. MONTOYA
/s/ DAVID A. CHRISTENSEN /s/ PHILIP J. QUIGLEY
/s/ WILLIAM S. DAVILA /s/ DONALD B. RICE
/s/ SUSAN E. ENGEL /s/ IAN M. ROLLAND
/s/ PAUL HAZEN /s/ SUSAN G. SWENSON
/s/ WILLIAM A. HODDER /s/ DANIEL M. TELLEP
/s/ REATHA CLARK KING /s/ CHANG-LIN TIEN
/s/ RICHARD M. KOVACEVICH /s/ MICHAEL W. WRIGHT
/s/ JOHN A. YOUNG
<PAGE>
EXHIBIT 99.1
PROXY
FIRST COMMERCE BANCSHARES, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John C. Osborne and Richard Schmoker proxies,
each with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote all the shares of Class A and Class
B Common Stock of First Commerce Bancshares, Inc. held of record by the
undersigned on April 14, 2000 with all powers which the undersigned would
possess if present at the Special Meeting of Stockholders of the Company to be
held June 9, 2000 or any adjournment thereof.
The proxies are authorized to vote in their discretion on any other matters
that may properly come before the meeting.
PLEASE VOTE ALL CLASSES OF SHARES YOU OWN.
Class A Shares
- --------------
For Against Abstain
[_] [_] [_]
1. Proposal to approve the Amended and Restated Agreement and Plan of
Reorganization, entered into as of the 1st day of February, 2000, and amended
and restated as of April 14, 2000, but effective as of February 1, 2000, by
and among First Commerce, Wells Fargo & Company ("Wells Fargo"), First
National Bank and Trust Co. of Kearney, The Overland National Bank of Grand
Island, Western Nebraska National Bank and The First National Bank of West
Point and a related Agreement and Plan of Merger, dated as of
___________________, 2000, by and between First Commerce and Wells FCBI
Merger Co., a wholly-owned subsidiary of Wells Fargo, included as Exhibit A-1
to the Agreement and Plan of Merger (collectively, the "Merger Agreement")
and the transactions contemplated by the Merger Agreement.
Class B Shares
- --------------
For Against Abstain
[_] [_] [_]
1. Proposal to approve the Merger Agreement and the transactions contemplated by
the Merger Agreement.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE APPROVAL OF THE MERGER AGREEMENT. IF YOU OWN
BOTH CLASSES OF SHARES AND GIVE DIRECTION FOR VOTING ONLY ONE CLASS, THIS PROXY
WILL BE VOTED IN THE SAME MANNER FOR BOTH CLASSES.
Please be sure to sign and date this Proxy in the box below.
- ----------------------
Date
- --------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
- -------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
(FIRST COMMERCE BANCSHARES, INC.)
- --------------------------------------------------------------------------------
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99.2
CONSENT OF MERRILL LYNCH
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of First Commerce Bancshares, Inc. ("First Commerce"), to be dated
the date of the Proxy Statement/Prospectus which forms a part of the
Registration Statement on Form S-4 relating to the proposed merger of First
Commerce with Wells Fargo & Company, as Appendix B to the Proxy
Statement/Prospectus, and to the references to such opinion in such Proxy
Statement/Prospectus under the captions "SUMMARY--First Commerce's Financial
Advisor Believes Merger Is Fair To First Commerce Shareholders," and "THE
MERGER--Background Of And Reasons For The Merger," and "--Opinion Of First
Commerce's Financial Advisor." In giving such consent, we do not admit that we
come 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, nor do we thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ____________________________________
, 2000
