EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and between
XXXXX FARGO & COMPANY
and
NORWEST CORPORATION
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DATED AS OF JUNE 7, 1998
TABLE OF CONTENTS
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Page
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AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
1.1 The Merger............................................................ 1
1.2 Effective Time........................................................ 2
1.3 Effects of the Merger................................................. 2
1.4 Conversion of Xxxxx Fargo Common Stock; Xxxxx Fargo Preferred Stock... 2
1.5 Norwest Capital Stock................................................. 4
1.6 Options............................................................... 4
1.7 Certificate of Incorporation.......................................... 5
1.8 By-Laws............................................................... 6
1.9 Tax and Accounting Consequences....................................... 6
1.10 Management............................................................ 6
1.11 Board of Directors.................................................... 6
1.12 Headquarters of Surviving Corporation................................. 6
ARTICLE II
EXCHANGE OF SHARES
2.1 Norwest to Make Shares Available...................................... 7
2.2 Exchange of Shares.................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORWEST
3.1 Corporate Organization............................................... 9
3.2 Capitalization....................................................... 10
3.3 Authority; No Violation.............................................. 12
3.4 Consents and Approvals............................................... 13
3.5 Reports.............................................................. 14
3.6 Financial Statements................................................. 15
3.7 Broker's Fees........................................................ 16
3.8 Absence of Certain Changes or Events................................. 16
3.9 Legal Proceedings.................................................... 16
3.10 Taxes and Tax Returns................................................ 17
3.11 Employees............................................................ 18
3.12 SEC Reports.......................................................... 20
3.13 Compliance with Applicable Law....................................... 20
3.14 Certain Contracts.................................................... 21
3.15 Agreements with Regulatory Agencies.................................. 22
3.16 Interest Rate Risk Management Instruments............................ 22
3.17 Undisclosed Liabilities.............................................. 23
3.18 Insurance............................................................ 23
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3.19 Environmental Liability.............................................. 23
3.20 State Takeover Laws; Norwest Rights Agreement........................ 24
3.21 Year 2000............................................................ 24
3.22 Reorganization; Pooling of Interests................................. 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX FARGO
4.1 Corporate Organization............................................... 25
4.2 Capitalization....................................................... 25
4.3 Authority; No Violation.............................................. 27
4.4 Consents and Approvals............................................... 28
4.5 Reports.............................................................. 28
4.6 Financial Statements................................................. 29
4.7 Broker's Fees........................................................ 30
4.8 Absence of Certain Changes or Events................................. 30
4.9 Legal Proceedings.................................................... 30
4.10 Taxes and Tax Returns................................................ 31
4.11 Employees............................................................ 32
4.12 SEC Reports.......................................................... 34
4.13 Compliance with Applicable Law....................................... 34
4.14 Certain Contracts.................................................... 35
4.15 Agreements with Regulatory Agencies.................................. 36
4.16 Interest Rate Risk Management Instruments............................ 36
4.17 Undisclosed Liabilities.............................................. 37
4.18 Insurance............................................................ 37
4.19 Environmental Liability.............................................. 37
4.20 State Takeover Laws.................................................. 37
4.21 Year 2000............................................................ 38
4.22 Reorganization; Pooling of Interests................................. 38
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.................... 38
5.2 Forbearances......................................................... 38
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters................................................... 42
6.2 Access to Information................................................ 44
6.3 Stockholders' Approvals.............................................. 45
6.4 Legal Conditions to Merger........................................... 45
6.5 Affiliates; Publication of Combined Financial Results................ 45
6.6 Stock Exchange Listing............................................... 46
6.7 Employee Benefit Plans............................................... 46
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6.8 Indemnification; Directors' and Officers' Insurance................... 47
6.9 Additional Agreements................................................. 48
6.10 Advice of Changes..................................................... 48
6.11 Dividends............................................................. 48
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger............ 48
7.2 Conditions to Obligations of Xxxxx Fargo.............................. 50
7.3 Conditions to Obligations of Norwest.................................. 51
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination........................................................... 51
8.2 Effect of Termination................................................. 52
8.3 Amendment............................................................. 53
8.4 Extension; Waiver..................................................... 53
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing............................................................... 53
9.2 Nonsurvival of Representations, Warranties and Agreements............. 54
9.3 Expenses.............................................................. 54
9.4 Notices............................................................... 54
9.5 Interpretation........................................................ 54
9.6 Counterparts.......................................................... 55
9.7 Entire Agreement...................................................... 55
9.8 Governing Law......................................................... 55
9.9 Publicity............................................................. 55
9.10 Assignment; Third Party Beneficiaries................................. 55
Exhibit A - Xxxxx Fargo Option Agreement
Exhibit B - Norwest Option Agreement
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to Norwest
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to Xxxxx Fargo
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INDEX OF DEFINED TERMS
Section Page No.
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1995 ESOP Convertible Preferred............. 3.2(a)......................... 10
1996 ESOP Convertible Preferred............. 3.2(a)......................... 10
1997 ESOP Convertible Preferred............. 3.2(a)......................... 10
1998 ESOP Convertible Preferred ............ 3.2(a)......................... 10
Agreement .................................. Recitals....................... 1
BHC Act..................................... 3.1(a)......................... 10
CERCLA...................................... 3.19........................... 23
Certificate................................. 1.4(d)......................... 3
Certificate of Merger....................... 1.2............................ 2
Closing..................................... 9.1............................ 54
Closing Date................................ 9.1............................ 54
Code........................................ 1.6(b)......................... 5
Confidentiality Agreement................... 6.2(b)......................... 44
Delaware Secretary.......................... 1.2............................ 2
DGCL........................................ 1.1(a)......................... 1
DPC Shares.................................. 1.4(a)......................... 3
Effective Time.............................. 1.2............................ 2
ERISA....................................... 3.11(a)........................ 18
ESOP Convertible Preferred.................. 3.2(a)......................... 10
Exchange Act................................ 3.6............................ 15
Exchange Agent.............................. 2.1............................ 7
Exchange Fund............................... 2.1............................ 7
Exchange Ratio.............................. 1.4(a)......................... 3
Federal Reserve Board....................... 3.4............................ 13
GAAP........................................ 1.9............................ 6
Governmental Entity......................... 3.4............................ 14
Indemnified Parties......................... 6.8(a)......................... 47
Injunction.................................. 7.1(e)......................... 49
IRS......................................... 3.10(a)........................ 17
Joint Proxy Statement....................... 3.4............................ 14
Liens....................................... 3.2(b)......................... 12
Material Adverse Effect..................... 3.1(a)......................... 9
Merger...................................... Recitals....................... 1
Merger Consideration........................ 1.1(b)......................... 2
New Benefit Plans........................... 6.7(a)......................... 46
Non-Subsidiary Affiliate.................... 3.2(b)......................... 12
Norwest..................................... Recitals....................... 1
Norwest 10-K................................ 3.6............................ 15
Norwest Benefit Plans....................... 3.11(a)........................ 18
Norwest Capital Stock....................... 3.2(a)......................... 11
Norwest Certificate......................... 1.7............................ 5
Norwest Common Stock........................ 1.4(a)......................... 3
Norwest Contract............................ 3.14(a)........................ 22
Norwest Convertible Debentures.............. 3.2(a)......................... 10
Norwest Convertible Preferred Stock......... 3.2(a)......................... 10
Norwest Disclosure Schedule................. 3.............................. 9
Norwest DRIP................................ 3.2(a)......................... 11
Norwest ERISA Affiliates.................... 3.11(a)........................ 18
Norwest New Preferred Stock................. 1.4(c)......................... 3
Norwest Option Agreement.................... Recitals....................... 1
Norwest Preference Stock.................... 3.2(a)......................... 11
Norwest Preferred Stock..................... 3.2(a)......................... 10
Norwest Regulatory Agreement................ 3.15........................... 22
Norwest Reports............................. 3.12........................... 20
Norwest Rights.............................. 3.2(a)......................... 11
Norwest Rights Agreement.................... 1.4(a)......................... 3
Norwest Series B Adjustable Preferred....... 1.4(b)......................... 3
Norwest Series H Adjustable Preferred....... 1.4(c)......................... 3
Norwest Stock Plans......................... 3.2(a)......................... 11
Norwest Stockholder Rights.................. 1.4(a)......................... 3
Norwest Warrants............................ 3.2(a)......................... 11
NYSE........................................ 2.2(e)......................... 8
OCC......................................... 3.5............................ 14
Option Agreements........................... Recitals....................... 1
Pending Norwest Acquisitions................ 3.2(a)......................... 11
Permitted Norwest Acquisitions.............. 5.2(b)(iii).................... 40
Permitted Xxxxx Fargo Acquisitions.......... 5.2(b)(iii).................... 40
Regulatory Agencies......................... 3.5............................ 14
Requisite Regulatory Approvals.............. 7.1(c)......................... 49
S-4......................................... 3.4............................ 14
SBA......................................... 3.4............................ 14
SEC......................................... 3.4............................ 13
Securities Act.............................. 3.12........................... 20
SRO......................................... 3.4............................ 14
State Approvals............................. 3.4............................ 13
State Regulator............................. 3.5............................ 14
Subsidiary.................................. 3.1(a)......................... 9
Surviving Corporation....................... Recitals....................... 1
Tax......................................... 3.10(b)........................ 18
Taxes....................................... 3.10(b)........................ 18
Trust Account Shares........................ 1.4(a)......................... 2
Xxxxx Fargo................................. Recitals....................... 1
Xxxxx Fargo 10-K............................ 4.6............................ 29
Xxxxx Fargo Benefit Plans................... 4.11(a)........................ 30
Xxxxx Fargo Capital Stock................... 1.4(a)......................... 2
Xxxxx Fargo Certificate..................... 4.1............................ 25
Xxxxx Fargo Common Stock.................... 1.4(a)......................... 2
Xxxxx Fargo Contract........................ 4.14(a)........................ 35
Xxxxx Fargo Disclosure Schedule............. 4.............................. 25
Xxxxx Fargo DRIP............................ 4.2(a)......................... 26
Xxxxx Fargo ERISA Affiliate................. 4.11(a)........................ 31
Xxxxx Fargo ESPP............................ 4.2(a)......................... 26
Xxxxx Fargo Option Agreement................ Recitals....................... 1
Xxxxx Fargo Preferred Stock................. 1.4(c)......................... 3
Xxxxx Fargo Regulatory Agreement............ 4.15........................... 36
Xxxxx Fargo Reports......................... 4.12........................... 34
Xxxxx Fargo Rights.......................... 4.2(a)......................... 26
Xxxxx Fargo Series B Preferred.............. 1.4(b)......................... 3
Xxxxx Fargo Series H Preferred.............. 1.4(c)......................... 3
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Xxxxx Fargo Stock Plans..................... 4.2(a)......................... 26
Year 2000 Issues............................ 3.21........................... 24
Year 2000 Deficiency Notification Letter.... 3.21........................... 24
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 7, 1998 (this
"Agreement"), by and between XXXXX FARGO & COMPANY, a Delaware corporation
("Xxxxx Fargo"), and NORWEST CORPORATION, a Delaware corporation ("Norwest").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Norwest and Xxxxx Fargo have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which Xxxxx Fargo will, subject to the terms and
conditions set forth herein, merge with and into Norwest (the "Merger"), so that
Norwest is the surviving corporation (hereinafter sometimes referred to in such
capacity as the "Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the Norwest Option
Agreement, Xxxxx Fargo and Norwest are entering into a Xxxxx Fargo stock option
agreement (the "Xxxxx Fargo Option Agreement") in the form attached hereto as
Exhibit A; and
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the Xxxxx Fargo Option
Agreement, Xxxxx Fargo and Norwest are entering into a Norwest stock option
agreement (the "Norwest Option Agreement"; and together with the Xxxxx Fargo
Option Agreement, the "Option Agreements") in the form attached hereto as
Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions of this
Agreement, in accordance with General Corporation Law of the State of Delaware
(the "DGCL"), at the Effective Time,
Xxxxx Fargo shall merge with and into Norwest. Norwest shall be the Surviving
Corporation in the Merger, and shall continue its corporate existence under the
laws of the State of Delaware. Upon consummation of the Merger, the separate
corporate existence of Xxxxx Fargo shall terminate.
(b) Norwest and Xxxxx Fargo may at any time change the method of
effecting the combination of Xxxxx Fargo and Norwest (including without
limitation the provisions of this Article I) if and to the extent they deem such
change to be desirable, including without limitation to provide for a merger of
either party with a wholly-owned subsidiary of the other; provided, however,
that no such change shall (A) alter or change the amount of consideration to be
provided to holders of Xxxxx Fargo Capital Stock as provided for in this
Agreement (the "Merger Consideration"), (B) adversely affect the tax treatment
of stockholders as a result of receiving the Merger Consideration or (C)
materially impede or delay consummation of the transactions contemplated by this
Agreement.
1.2 Effective Time. The Merger shall become effective as set forth in
the certificate of merger (the "Certificate of Merger") which shall be filed
with the Secretary of State of the State of Delaware (the "Delaware Secretary")
on the Closing Date. The term "Effective Time" shall be the date and time when
the Merger becomes effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL.
1.4 Conversion of Xxxxx Fargo Common Stock; Xxxxx Fargo Preferred
Stock. At the Effective Time, by virtue of the Merger and without any action on
the part of Xxxxx Fargo, Norwest or the holder of any of the following
securities:
(a) Subject to Section 2.2(e), each share of the common stock, par
value $5.00 per share, of Xxxxx Fargo (the "Xxxxx Fargo Common Stock" and,
together with the Xxxxx Fargo Preferred Stock, the "Xxxxx Fargo Capital Stock")
issued and outstanding immediately prior to the Effective Time, except for
shares of Xxxxx Fargo Common Stock owned by Xxxxx Fargo as treasury stock or
owned, directly or indirectly, by Xxxxx Fargo or Norwest or any of their
respective wholly-owned subsidiaries (other than shares of Xxxxx Fargo Common
Stock held, directly or indirectly, in trust accounts, managed accounts and the
like, or otherwise held in a fiduciary capacity, that are beneficially owned by
third parties (any such shares, whether held directly or indirectly by Xxxxx
Fargo or Norwest, as the case may be, being referred to herein as "Trust Account
Shares") and other than any shares of Xxxxx Fargo Capital Stock held by
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Xxxxx Fargo or Norwest or any of their respective Subsidiaries in respect of a
debt previously contracted (any such shares of Xxxxx Fargo Capital Stock, and
shares of Norwest Common Stock which are similarly held, whether held directly
or indirectly by Xxxxx Fargo or Norwest or any of their respective Subsidiaries,
being referred to herein as "DPC Shares")) shall be converted into the right to
receive 10.0 shares (the "Exchange Ratio") of the common stock, par value $1-2/3
per share, of Norwest (together with the preferred share purchase rights (the
"Norwest Stockholder Rights") issued to the holders thereof pursuant to that
certain Rights Agreement, dated as of November 22, 1988 (as such may be amended,
supplemented, restated or replaced from time to time), between Norwest and
Citibank, N.A. (the "Norwest Rights Agreement"), the "Norwest Common Stock"),
together with the same number of Norwest Stockholder Rights attached thereto.
(b) Each share of Xxxxx Fargo Adjustable Rate Cumulative Preferred
Stock, Series B, without par value (the "Xxxxx Fargo Series B Preferred"),
issued and outstanding immediately prior to the Effective Time shall be
converted, automatically and without the requirement of any exchange of any
certificate representing such stock, into one share of adjustable-rate
cumulative preferred stock of Norwest designated as the Adjustable Rate
Cumulative Preferred Stock, Series B, of Norwest (the "Norwest Series B
Adjustable Preferred"). The terms of the Norwest Series B Adjustable Preferred
shall be substantially the same as the terms of the Xxxxx Fargo Series B
Preferred.
(c) Each share of Xxxxx Fargo 6.59% Adjustable Rate Noncumulative
Preferred Stock, Series H, without par value (the "Xxxxx Fargo Series H
Preferred" and, together with the Xxxxx Fargo Series B Preferred, the "Xxxxx
Fargo Preferred Stock"), issued and outstanding immediately prior to the
Effective Time, shall be converted, automatically and without the requirement of
any exchange of any certificate representing such stock, into one share of 6.59%
Adjustable-Rate Noncumulative Preferred Stock of Norwest, Series H (the "Norwest
Series H Adjustable Preferred" and, together with the Norwest Series B
Adjustable Preferred, the "Norwest New Preferred Stock"). The terms of the
Norwest Series H Adjustable Preferred shall be substantially the same as the
terms of the Xxxxx Fargo Series H Preferred.
(d) All of the shares of Xxxxx Fargo Common Stock converted into the
right to receive Norwest Common Stock pursuant to this Article I shall no longer
be outstanding and shall automatically be cancelled and shall cease to exist as
of the Effective Time, and each certificate (each a "Certificate") previously
representing any such shares of Xxxxx Fargo Common Stock shall thereafter
represent only the right to receive (i)
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a certificate representing the number of whole shares of Norwest Common Stock
and (ii) cash in lieu of fractional shares into which the shares of Xxxxx Fargo
Common Stock represented by such Certificate have been converted pursuant to
this Section 1.4 and Section 2.2(e). Certificates previously representing shares
of Xxxxx Fargo Common Stock shall be exchanged for certificates representing
whole shares of Norwest Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such Certificates in
accordance with Section 2.2, without any interest thereon. If, prior to the
Effective Time, the outstanding shares of Norwest Common Stock or Xxxxx Fargo
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in capitalization, an appropriate
and proportionate adjustment shall be made to the Exchange Ratio.
(e) At the Effective Time, all shares of Xxxxx Fargo Common Stock that
are owned, directly or indirectly, by Xxxxx Fargo or Norwest or any of their
respective wholly-owned Subsidiaries (other than Trust Account Shares and DPC
Shares) shall be cancelled and shall cease to exist and no stock of Norwest or
other consideration shall be delivered in exchange therefor. All shares of
Norwest Common Stock that are owned by Xxxxx Fargo or any of its wholly-owned
Subsidiaries (other than Trust Account Shares and DPC Shares) shall as of the
Effective Time become treasury stock of Norwest Common Stock.
(f) All of the shares of Xxxxx Fargo Preferred Stock converted into
Norwest New Preferred Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of Xxxxx Fargo Preferred Stock shall as of the Effective Time be deemed to
represent as of the Effective Time the number of shares of corresponding Norwest
New Preferred Stock into which the shares of Xxxxx Fargo Preferred Stock
represented by such preferred stock certificate have been converted pursuant to
this Section 1.4.
1.5 Norwest Capital Stock. Except as otherwise provided in Section
1.4(e), at and after the Effective Time, each share of Norwest Capital Stock
issued and outstanding immediately prior to the Closing Date shall remain an
issued and outstanding share of capital stock of the Surviving Corporation and
shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option granted by Xxxxx
Fargo to purchase shares of Xxxxx Fargo Common Stock which is outstanding and
unexercised immediately prior
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thereto shall cease to represent a right to acquire shares of Xxxxx Fargo Common
Stock and shall be converted automatically into an option to purchase shares of
Norwest Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Xxxxx Fargo Stock
Plans and the agreements evidencing grants thereunder):
(i) The number of shares of Norwest Common Stock to be subject to
the new option shall be equal to the product of the number of shares of
Xxxxx Fargo Common Stock subject to the original option and the
Exchange Ratio, provided that any fractional shares of Norwest Common
Stock resulting from such multiplication shall be rounded to the
nearest whole share; and
(ii) The exercise price per share of Norwest Common Stock under
the new option shall be equal to the exercise price per share of Xxxxx
Fargo Common Stock under the original option divided by the Exchange
Ratio, provided that such exercise price shall be rounded to the
nearest whole cent.
(b) The adjustment provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. The duration
and other terms of the new option shall be the same as the original option
except that all references to Xxxxx Fargo shall be deemed to be references to
Norwest.
1.7 Certificate of Incorporation. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Restated Certificate of
Incorporation of Norwest, as amended (the "Norwest Certificate"), shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law, except that:
(i) Article FIRST of the Norwest Certificate shall be amended to state
in its entirety:
FIRST: The name of this corporation is Xxxxx Fargo & Company.
(ii) The first sentence of Article FOURTH of the Norwest Certificate
shall be amended to state in its entirety:
FOURTH: The total number of shares of all classes of stock which
the corporation shall have authority to issue is Four Billion
Twenty-Four Million (4,024,000,000), consisting of Twenty Million
(20,000,000) shares of Preferred Stock without par value, Four Million
(4,000,000)
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shares of Preference Stock without par value, and Four Billion
(4,000,000,000) shares of Common Stock of the par value of
$1-2/3 per share.
(iii) The first sentence of Section 1 of Article FOURTH of the Norwest
Certificate shall be amended to state in its entirety:
1. The Preferred Stock may be issued at any time or from time to
time in any amount, provided not more than 20,000,000 shares thereof
shall be outstanding at any one time, as Preferred Stock of one or more
series, as hereinafter provided.
1.8 By-Laws. Subject to the terms and conditions of this Agreement, at
the Effective Time, the By-Laws of Norwest shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law, except
that the first sentence of Section 14 of the Norwest By-Laws shall be amended to
read in its entirety as follows: "The property and business of the Corporation
shall be managed by its Board of not less than ten or more than twenty-eight
directors, with the number to be designated from time to time by resolution of
the Board."
1.9 Tax and Accounting Consequences. It is intended that the Merger
shall constitute a "reorganization" within the meaning of Section 368(a) of the
Code, that this Agreement shall constitute a "plan of reorganization" for the
purposes of Sections 354 and 361 of the Code and that the Merger shall be
accounted for as a "pooling of interests" under generally accepted accounting
principles ("GAAP").
1.10 Management. At the Effective Time, Xxxx Xxxxx shall be Chairman of
the Board of Directors of the Surviving Corporation and Xxxxxxx X. Xxxxxxxxxx
shall be President and Chief Executive Officer of the Surviving Corporation.
1.11 Board of Directors. From and after the Effective Time, until duly
changed in compliance with applicable law and the Certificate of Incorporation
and Bylaws of the Surviving Corporation, the Board of Directors of the Surviving
Corporation shall consist of (i) Xx. Xxxxxxxxxx, Xx. Xxxxx, Xxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxx and (ii) the then-current members of the Norwest Board of
Directors, other than Messrs. Xxxxxxxxxx and Xxxxxx and (iii) a number of
persons designated by Xx. Xxxxx and the Board of Directors of Xxxxx Fargo equal
to the number of directors contemplated by clause (ii) of this sentence.
1.12 Headquarters of Surviving Corporation. From and after the
Effective Time, the location of the headquarters and
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principal executive offices of the Surviving Corporation shall be that of the
headquarters and principal executive offices of Xxxxx Fargo as of the date of
this Agreement.
ARTICLE II
EXCHANGE OF SHARES
2.1 Norwest to Make Shares Available. At or prior to the Effective
Time, Norwest shall deposit, or shall cause to be deposited, with Norwest Bank
Minnesota, N.A., or another bank or trust company reasonably acceptable to each
of Xxxxx Fargo and Norwest (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Norwest Common Stock, and cash in lieu
of any fractional shares (such cash and certificates for shares of Norwest
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund"), to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Xxxxx Fargo Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of one or more Certificates a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Norwest Common Stock and any cash in lieu of fractional shares into
which the shares of Xxxxx Fargo Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon proper
surrender of a Certificate or Certificates for exchange and cancellation to the
Exchange Agent, together with such properly completed letter of transmittal,
duly executed, the holder of such Certificate or Certificates shall be entitled
to receive in exchange therefor, as applicable, (i) a certificate representing
that number of whole shares of Norwest Common Stock to which such holder of
Xxxxx Fargo Common Stock shall have become entitled pursuant to the provisions
of Article I and (ii) a check representing the amount of any cash in lieu of
fractional shares which such holder has the right to receive in respect of the
Certificate or Certificates surrendered pursuant to the provisions of this
Article II, and the Certificate or Certificates so surrendered shall forthwith
be cancelled. No interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates.
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(b) No dividends or other distributions declared with respect to
Norwest Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of Norwest Common
Stock represented by such Certificate.
(c) If any certificate representing shares of Norwest Common Stock is
to be issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered, it shall be a condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Norwest Common Stock in any name other than that of the registered
holder of the Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Xxxxx Fargo of the shares of Xxxxx Fargo Capital Stock that
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Norwest Common Stock or Norwest New
Preferred Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Norwest Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Norwest Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Norwest. In lieu of the issuance of any such fractional share, Norwest shall pay
to each former stockholder of Xxxxx Fargo who otherwise would be entitled to
receive such fractional share an amount in cash determined by multiplying (i)
the average of the closing-sale prices of Norwest Common Stock on the New York
Stock Exchange, Inc. (the "NYSE") as reported by The Wall Street Journal for the
five trading days immediately preceding the date of the
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Effective Time by (ii) the fraction of a share (rounded to the nearest
thousandth when expressed in decimal form) of Norwest Common Stock to which such
holder would otherwise be entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Xxxxx Fargo for 12 months after the Effective Time shall be paid
to Norwest. Any former stockholders of Xxxxx Fargo who have not theretofore
complied with this Article II shall thereafter look only to Norwest for payment
of the shares of Norwest Common Stock, cash in lieu of any fractional shares and
any unpaid dividends and distributions on the Norwest Common Stock deliverable
in respect of each share of Xxxxx Fargo Common Stock, as the case may be, such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Xxxxx
Fargo, Norwest, the Exchange Agent or any other person shall be liable to any
former holder of shares of Xxxxx Fargo Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Norwest, the posting by such person of a bond in such amount as Norwest may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Norwest
Common Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORWEST
Except as disclosed in the Norwest disclosure schedule delivered to
Xxxxx Fargo concurrently herewith (the "Norwest Disclosure Schedule") Norwest
hereby represents and warrants to Xxxxx Fargo as follows:
3.1 Corporate Organization. (a) Norwest is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Norwest has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties
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and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not,
either individually or in the aggregate, have a Material Adverse Effect on
Norwest. As used in this Agreement, the term "Material Adverse Effect" means,
with respect to Xxxxx Fargo, Norwest or the Surviving Corporation, as the case
may be, a material adverse effect on (i) the business, operations, results of
operations or financial condition of such party and its Subsidiaries taken as a
whole or (ii) the ability of such party to timely consummate the transactions
contemplated hereby. As used in this Agreement, the word "Subsidiary" when used
with respect to any party, means any bank, corporation, partnership, limited
liability company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes. Norwest is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). True and complete
copies of the Norwest Certificate and By-Laws of Norwest, as in effect as of the
date of this Agreement, have previously been made available by Norwest to Xxxxx
Fargo.
(b) Each Norwest Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Norwest and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of Norwest
consists of (i) 2,000,000,000 shares of Norwest Common Stock (each of which
includes one Norwest Stockholder Right), of which, as of May 31, 1998,
759,498,405 shares were issued and outstanding and 11,614,744 shares were held
in treasury, (ii) 5,000,000 shares of preferred stock, without par value (the
"Norwest Preferred Stock"), of which, as of the date hereof, (A) 27,508 shares
were issued and outstanding as 1998 ESOP Cumulative Convertible Preferred Stock,
$1,000 stated value per share (the "1998 ESOP Convertible Preferred"); (B)
20,135 shares were issued and outstanding as 1997 ESOP Cumulative Convertible
Preferred Stock, $1,000 stated value per share (the "1997 ESOP Convertible
Preferred"); (C) 22,644 shares were issued and outstanding as 1996 ESOP
Cumulative Convertible Preferred Stock, $1,000 stated value per share (the "1996
ESOP Convertible Preferred"); (D) 20,510 shares were issued and outstanding as
1995 ESOP Cumulative Convertible Preferred Stock, $1,000 stated value per
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share (the "1995 ESOP Convertible Preferred"); (E) 9,956 shares were issued and
outstanding as ESOP Cumulative Convertible Preferred Stock, $1,000 stated value
per share (the "ESOP Convertible Preferred" and, together with the 1998 ESOP
Convertible Preferred, the 1997 ESOP Convertible Preferred, the 1996 ESOP
Convertible Preferred and the 1995 ESOP Convertible Preferred, the "Norwest
Convertible Preferred Stock"); (F) 980,000 shares (including 25,000 shares held
by a Norwest Subsidiary) were issued and outstanding as Cumulative Tracking
Preferred Stock, $200 stated value per share; and (F) no shares were issued or
outstanding as Series A Junior Participating Preferred Stock or of any other
series, and (iii) 4,000,000 shares of Norwest Preference Stock, without par
value (the "Norwest Preference Stock"), of which no shares are issued or
outstanding as of the date hereof. All of the issued and outstanding shares of
Norwest Common Stock, Norwest Preferred Stock and Norwest Preference Stock
(collectively, the "Norwest Capital Stock") have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of (i) the Norwest Option
Agreement, (ii) options and stock issued pursuant to employee and director stock
plans of Norwest in effect as of the date hereof (the "Norwest Stock Plans"),
(iii) the Norwest Convertible Preferred Stock, (iv) the Norwest Rights
Agreement, (v) the Norwest 6-3/4% Convertible Subordinated Debentures, due 2003
(the "Norwest Convertible Debentures"), (vi) warrants exercisable for shares of
Norwest Common Stock held by Subsidiaries of Norwest as described in the Norwest
10-K (the "Norwest Warrants") and (vii) for certain acquisitions (the "Pending
Norwest Acquisitions") pending as of the date hereof (a list of which has
previously been made available to Xxxxx Fargo) pursuant to which not more than
19,800,000 shares of Norwest Common Stock in the aggregate shall be issued or
become issuable, Norwest does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Norwest Capital
Stock or any other equity securities of Norwest or any securities representing
the right to purchase or otherwise receive any shares of Norwest Capital Stock
(collectively, including the items contemplated by clauses (i) through (v) of
this sentence, the "Norwest Rights"). As of May 31, 1998, no shares of Norwest
Capital Stock were reserved for issuance, except for 151,139,585 shares of
Norwest Common Stock reserved for issuance upon exercise of the Norwest Option
Agreement, 2,500,057 shares of Norwest Common Stock reserved for issuance in
connection with the Norwest Direct Purchase Plan, including divident
reinvestment (the "Norwest DRIP"), 131,949,375 shares of Norwest Common Stock
reserved for issuance upon the exercise of stock options pursuant to the Norwest
Stock Plans and in respect of the employee and director savings, compensation
and deferred compensation plans described in the Norwest 10-K and 34,600 shares
of Norwest Common Stock reserved for issuance in connection with the Norwest
Convertible Debentures, 35,928,348
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shares of Norwest Common Stock reserved for issuance in respect of the Norwest
Warrants, 19,800,000 shares of Norwest Common Stock reserved in connection with
the Pending Norwest Acquisitions and 1,125,000 shares of Series A Junior
Participating Preferred Stock reserved for issuance in connection with the
Norwest Rights Agreement. Since May 31, 1998, Norwest has not issued any shares
of its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than as permitted by Section 5.2(b) and
pursuant to the Norwest Option Agreement. Norwest has previously provided Xxxxx
Fargo with a list of the option holders, the date of each option to purchase
Norwest Common Stock granted, the number of shares subject to each such option,
the expiration date of each such option, and the price at which each such option
may be exercised under an applicable Norwest Stock Plan. In no event will the
aggregate number of shares of Norwest Common Stock outstanding at the Effective
Time (including all shares of Norwest Common Stock subject to Norwest Rights
other than the Norwest Option Agreement) exceed the number specified in Section
3.2(a) of the Norwest Disclosure Schedule.
(b) Norwest owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the Norwest Subsidiaries, free and clear of any liens, pledges, charges,
encumbrances and security interests whatsoever ("Liens"), and all of such shares
or equity ownership interests are duly authorized and validly issued and are
fully paid, nonassessable (subject to 12 U.S.C. ss. 55) and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
Norwest Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity security
of such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Section 3.2(b) of the Norwest Disclosure Schedule sets forth a
list of the material investments of Norwest in corporations, joint ventures,
partnerships, limited liability companies and other entities other than its
Subsidiaries (each a "Non-Subsidiary Affiliate").
3.3 Authority; No Violation. (a) Norwest has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Norwest. The Board of Directors of
Norwest has directed that this Agreement and the transactions contemplated
hereby be submitted to Norwest's stockholders for adoption at a meeting of such
stockholders and, except for (i) the adoption of this Agreement by
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the affirmative vote of the holders of a majority of the outstanding shares of
Norwest Common Stock, (ii) the filing by Norwest with the Delaware Secretary of
certificate of designations with respect to the Norwest New Preferred Stock and
(iii) the amendment of the Norwest Certificate contemplated by Section 1.7 and
the amendment of the Norwest By-laws contemplated by Section 1.8, no other
corporate proceedings on the part of Norwest are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Norwest and (assuming due
authorization, execution and delivery by Xxxxx Fargo) constitutes a valid and
binding obligation of Norwest, enforceable against Norwest in accordance with
its terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by Norwest nor
the consummation by Norwest of the transactions contemplated hereby, nor
compliance by Norwest with any of the terms or provisions hereof, will (i)
violate any provision of the Norwest Certificate or By-Laws or (ii) assuming
that the consents and approvals referred to in Section 3.4 are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Norwest, any of its Subsidiaries or
Non-Subsidiary Affiliates or any of their respective properties or assets or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of Norwest, any of its Subsidiaries or Non-Subsidiary
Affiliates under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Norwest, any of its Subsidiaries or its
Non-Subsidiary Affiliates is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults which,
either individually or in the aggregate, will not have a Material Adverse Effect
on Norwest.
3.4 Consents and Approvals. Except for (i) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the Federal Reserve
Act, as amended, and approval of such applications and notices, (ii) the filing
of any required applications or notices with any state or foreign agencies and
approval of such applications and
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notices (the "State Approvals"), (iii) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy statement in definitive form
relating to the meetings of Xxxxx Fargo's and Norwest's stockholders to be held
in connection with this Agreement and the transactions contemplated hereby (the
"Joint Proxy Statement"), and of the registration statement on Form S-4 (the
"S-4") in which the Joint Proxy Statement will be included as a prospectus, (iv)
the filing of the Certificate of Merger with the Delaware Secretary pursuant to
the DGCL, (v) any notices to or filings with the Small Business Administration
("SBA"), (vi) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory organization ("SRO"),
and the rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws, (vii) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Norwest Capital
Stock pursuant to this Agreement and (viii) the approval of this Agreement by
the requisite vote of the stockholders of Xxxxx Fargo and Norwest (including the
approval of the amendment of the Norwest Certificate contemplated by Section
1.7), no consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") are necessary in connection with
(A) the execution and delivery by Norwest of this Agreement and (B) the
consummation by Norwest of the Merger and the other transactions contemplated
hereby.
3.5 Reports. Norwest and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since January
1, 1996 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC and
(vi) any SRO (collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material
-14-
Adverse Effect on Norwest. Except for normal examinations conducted by a
Regulatory Agency in the ordinary course of the business of Norwest and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of Norwest, investigation into the business or operations of Norwest
or any of its Subsidiaries since January 1, 1996, except where such proceedings
or investigation will not, either individually or in the aggregate, have a
Material Adverse Effect on Norwest. There is no unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of Norwest or any of its Subsidiaries which, in the
reasonable judgment of Norwest, will, either individually or in the aggregate,
have a Material Adverse Effect on Norwest.
3.6 Financial Statements. Norwest has previously made available to
Xxxxx Fargo copies of (i) the consolidated balance sheets of Norwest and its
Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the
related consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in Norwest's Annual Report on Form 10-K for the fiscal
year ended December 31, 0000 (xxx "Xxxxxxx 00-X") filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Norwest; and (ii) the consolidated balance sheets of
Norwest and its Subsidiaries as of March 31, 1998 and the related consolidated
statements of comprehensive income, changes in stockholders' equity and cash
flows for the three months ended March 31, 1998, as reported in Norwest's
Quarterly Report on Form 10-Q for the three months ended March 31, 1998 filed
with the SEC under the Exchange Act. The March 31, 1998 consolidated balance
sheet of Norwest (including the related notes, where applicable) fairly presents
in all material respects the consolidated financial position of Norwest and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 3.6 (including the related notes, where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of Norwest
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, subject to normal adjustments in the case of unaudited
statements; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each case, as
indicated in such
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statements or in the notes thereto. The books and records of Norwest and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
3.7 Broker's Fees. Neither Norwest nor any Norwest Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Norwest Reports filed prior to the date hereof, since December 31,
1997, no event or events have occurred that have had, either individually or in
the aggregate, a Material Adverse Effect on Norwest.
(b) Except as publicly disclosed in Norwest Reports filed prior to the
date hereof, since December 31, 1997, Norwest and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary course.
(c) Since December 31, 1997, neither Norwest nor any of its
Subsidiaries has (i) except for such actions as are in the ordinary course of
business or except as required by applicable law, (A) increased the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable
to any executive officer, employee, or director from the amount thereof in
effect as of December 31, 1997, or (B) granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonuses, which in the aggregate exceed 5% of Norwest's 1997 salary and
employee benefits expenses (other than customary year-end bonuses for fiscal
1997 and, if applicable, 1998) or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance which will, either individually or in the
aggregate, have a Material Adverse Effect on Norwest.
3.9 Legal Proceedings. (a) Neither Norwest nor any of its Subsidiaries
is a party to any, and there are no pending or, to the best of Norwest's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Norwest or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Norwest
Option Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely determined,
will, either individually or in the aggregate, have a Material Adverse Effect on
Norwest.
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(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon Norwest, any of its Subsidiaries or the assets
of Norwest or any of its Subsidiaries that has had, or will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest or the
Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Each of Norwest and its Subsidiaries
has duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not, either individually or in the aggregate, have a Material
Adverse Effect on Norwest. The federal income tax returns of Norwest and its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") for
all years to and including 1990 and for 1992 and any liability with respect
thereto has been satisfied or any liability with respect to deficiencies
asserted as a result of such examination is covered by adequate reserves. To the
best of Norwest's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon Norwest or any of its Subsidiaries for
which Norwest does not have adequate reserves. In addition, (A) proper and
accurate amounts have been withheld by Norwest and its Subsidiaries from their
employees for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable federal, state and local laws, except
where failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Norwest, (B) federal, state, and local returns which
are accurate and complete in all material respects have been filed by Norwest
and its Subsidiaries for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes, except where
failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Norwest, (C) the amounts shown on such federal, state
or local returns to be due and payable have been paid in full or adequate
provision therefor has been included by Norwest in its consolidated financial
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statements, except where failure to do so will not, either individually or in
the aggregate, have a Material Adverse Effect on Norwest and (D) there are no
Tax liens upon any property or assets of Norwest or its Subsidiaries except
liens for current taxes not yet due or liens that will not, either individually
or in the aggregate, have a Material Adverse Effect on Norwest. Neither Norwest
nor any of its Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by Norwest or any of its Subsidiaries, and the
IRS has not initiated or proposed any such adjustment or change in accounting
method, in either case which has had or will have, either individually or in the
aggregate, a Material Adverse Effect on Norwest. Except as set forth in the
financial statements described in Section 3.6, neither Norwest nor any of its
Subsidiaries has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, local, and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon.
No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Norwest or any Subsidiary
of Norwest under any contract, plan, program, arrangement or understanding will
have, either individually or in the aggregate, a Material Adverse Effect on
Norwest.
3.11 Employees. (a) The Norwest Disclosure Schedule sets forth a true
and complete list of each material employee or director benefit plan,
arrangement or agreement that is maintained, or contributed to, as of the date
of this Agreement (the "Norwest Benefit Plans") by Norwest, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a
"Norwest ERISA Affiliate"), all of which together with Norwest would be deemed a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(b) Norwest has heretofore made available to Xxxxx Fargo true and
complete copies of each of the Norwest Benefit Plans and certain related
documents, including, but not limited to,
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(i) the actuarial report for such Norwest Benefit Plan (if applicable) for each
of the last two years and (ii) the most recent determination letter from the IRS
(if applicable) for such Norwest Benefit Plan.
(c) (i) Each of the Norwest Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Norwest
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and there are no existing circumstances or any events
that have occurred that will adversely affect the qualified status of any such
Norwest Benefit Plan, (iii) with respect to each Norwest Benefit Plan that is
subject to Title IV of ERISA, the present value of accrued benefits under such
Norwest Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Norwest Benefit
Plan's actuary with respect to such Norwest Benefit Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such
Norwest Benefit Plan allocable to such accrued benefits, (iv) no Norwest Benefit
Plan provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees or
directors of Norwest or its Subsidiaries beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension plan" (as such
term is defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of Norwest or its Subsidiaries or (D)
benefits the full cost of which is borne by the current or former employee or
director (or his beneficiary), (v) no material liability under Title IV of ERISA
has been incurred by Norwest, its Subsidiaries or any Norwest ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to Norwest, its Subsidiaries or any Norwest ERISA Affiliate of
incurring a material liability thereunder, (vi) no Norwest Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA), (vii) all contributions or other amounts payable by Norwest or its
Subsidiaries as of the Effective Time with respect to each Norwest Benefit Plan
in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) none of Norwest, its
Subsidiaries or any other person, including any fiduciary, has engaged in a
transaction in connection with which Norwest, its Subsidiaries or any Norwest
Benefit Plan will be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of Norwest
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf
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of or against any of the Norwest Benefit Plans or any trusts related thereto
that will have, either individually or in the aggregate, a Material Adverse
Effect on Norwest.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result (either alone or upon the
occurrence of any additional acts or events) in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Norwest or any of its
affiliates from Norwest or any of its affiliates under any Norwest Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any Norwest
Benefit Plan or (iii) other than the Norwest Corporation Directors' Stock
Deferral Plan and the Norwest Corporation Employees' Stock Deferral Plan, result
in any acceleration of the time of payment or vesting of any such benefits which
will, either individually or in the aggregate, have a Material Adverse Effect on
Norwest.
3.12 SEC Reports. Norwest has previously made available to Xxxxx Fargo
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1996 by Norwest with the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act (the "Norwest Reports") and
prior to the date hereof and (b) communication mailed by Norwest to its
stockholders since January 1, 1996 and prior to the date hereof, and no such
Norwest Report or communication, as of the date thereof, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date (but before the date hereof) shall be deemed to
modify information as of an earlier date. Since January 1, 1996, as of their
respective dates, all Norwest Reports filed under the Securities Act and the
Exchange Act complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. (a) Norwest and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Norwest or any of its Subsidiaries, except where the failure to hold such
license,
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franchise, permit or authorization or such noncompliance or default
will not, either individually or in the aggregate, have a Material Adverse
Effect on Norwest.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Norwest, Norwest and each Norwest Subsidiary have
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of Norwest, any Norwest Subsidiary, or any
director, officer or employee of Norwest or of any Norwest Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that
will have a Material Adverse Effect on Norwest, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account.
3.14 Certain Contracts. (a) Neither Norwest nor any of its Subsidiaries
is a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Xxxxx Fargo, Norwest, the
Surviving Corporation, or any of their respective Subsidiaries to any officer or
employee thereof, (iii) which is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date
of this Agreement that has not been filed or incorporated by reference in the
Norwest Reports, (iv) which materially restricts the conduct of any line of
business by Norwest or upon consummation of the Merger will materially restrict
the ability of the Surviving Corporation to engage in any line of business in
which a bank holding company may lawfully engage, (v) with or to a labor union
or guild (including any collective bargaining agreement) or (vi) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
stockholder approval or the consummation of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement, other than (with respect to clauses (ii) and (vi) of this sentence)
the Norwest Corporation Directors' Stock Deferral
-21-
Plan and the Norwest Corporation Employees' Stock Deferral Plan. Norwest has
previously made available to Xxxxx Fargo true and correct copies of all
employment and deferred compensation agreements which are in writing and to
which Norwest is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14(a), whether or not set
forth in the Norwest Disclosure Schedule, is referred to herein as a "Norwest
Contract", and neither Norwest nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, either individually or in the aggregate, will have a Material
Adverse Effect on Norwest.
(b) (i) Each Norwest Contract is valid and binding on Norwest or any of
its Subsidiaries, as applicable, and in full force and effect, (ii) Norwest and
each of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each Norwest Contract, except where
such noncompliance, either individually or in the aggregate, will not have a
Material Adverse Effect on Norwest, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of Norwest or any of its Subsidiaries under any
such Norwest Contract, except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on Norwest.
3.15 Agreements with Regulatory Agencies. Neither Norwest nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Norwest Disclosure Schedule, a "Norwest
Regulatory Agreement"), nor has Norwest or any of its Subsidiaries been advised
since January 1, 1996, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
3.16 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Norwest or for
the account of a customer of Norwest or one of its Subsidiaries, were entered
into in the ordinary course of business and, to Norwest's knowledge, in
accordance with prudent banking practice and applicable
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rules, regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations of Norwest or one of its Subsidiaries enforceable
in accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies), and are in full
force and effect. Norwest and each of its Subsidiaries have duly performed in
all material respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued; and, to Norwest's knowledge,
there are no material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
3.17 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of Norwest
included in the Norwest March 31, 1998 Form 10-Q and for liabilities incurred in
the ordinary course of business consistent with past practice, since March 31,
1998, neither Norwest nor any of its Subsidiaries has incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either individually or in the aggregate, has
had or will have a Material Adverse Effect on Norwest.
3.17 Insurance. Norwest and its Subsidiaries have in effect insurance
coverage with reputable insurers or are self-insured, which in respect of
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by bank holding companies
and their subsidiaries comparable in size and operations to Norwest and its
Subsidiaries.
3.19 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Norwest of any liability or obligation arising under
common law or under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), pending or threatened against Norwest, which liability or obligation
will, either individually or in the aggregate, have a Material Adverse Effect on
Norwest. To the knowledge of Norwest, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose any
liability or obligation that will, individually or in the aggregate, have a
Material Adverse Effect on Norwest. Norwest is not subject to
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any agreement, order, judgment, decree, letter or memorandum by or with any
court, governmental authority, regulatory agency or third party imposing any
liability or obligation with respect to the foregoing that will have, either
individually or in the aggregate, a Material Adverse Effect on Norwest.
3.20 State Takeover Laws; Norwest Rights Agreement. (a) The Board of
Directors of Norwest has approved the transactions contemplated by this
Agreement and the Option Agreements for purposes of Section 203(a)(1) of the
DGCL such that the provisions of Section 203 of the DGCL will not apply to this
Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
(b) Norwest has taken all action, if any, necessary or appropriate so
that the entering into of this Agreement and the Stock Option Agreements, and
the consummation of the transactions contemplated hereby and thereby do not and
will not result in the ability of any person to exercise any Norwest Stockholder
Rights under the Norwest Rights Agreement or enable or require the Norwest
Stockholder Rights to separate from the shares of Norwest Common Stock to which
they are attached or to be triggered or become exercisable. No "Distribution
Date" or "Shares Acquisition Date" (as such terms are defined in the Norwest
Rights Plan) has occurred.
3.21 Year 2000. None of Norwest or any of the Norwest Subsidiaries has
received, or reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve's Supervision and
Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). Norwest has disclosed
to Xxxxx Fargo a complete and accurate copy of Norwest's plan, including an
estimate of the anticipated associated costs, for addressing the issues ("Year
2000 Issues") set forth in the statements of the Federal Financial Institutions
Examination Council, dated May 5, 1997, entitled "Year 2000 Project Management
Awareness," and December 1997, entitled "Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk," as such issues affect Norwest and its
Subsidiaries. Between the date of this Agreement and the Effective Time, Norwest
shall use commercially practicable efforts to implement such plan.
3.22 Reorganization; Pooling of Interests. As of the date of this
Agreement, Norwest has no reason to believe that the Merger will not qualify as
a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF XXXXX FARGO
Except as disclosed in the Xxxxx Fargo disclosure schedule delivered to
Norwest concurrently herewith (the "Xxxxx Fargo Disclosure Schedule") Xxxxx
Fargo hereby represents and warrants to Norwest as follows:
4.1 Corporate Organization. (a) Xxxxx Fargo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Xxxxx Fargo has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Xxxxx Fargo. Xxxxx Fargo is duly registered as a bank holding company
under the BHC Act. True and complete copies of the Restated Certificate of
Incorporation (the "Xxxxx Fargo Certificate") and By-Laws of Xxxxx Fargo, as in
effect as of the date of this Agreement, have previously been made available by
Xxxxx Fargo to Norwest.
(b) Each Xxxxx Fargo Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and in good standing in all jurisdictions (whether
Federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would have a Material Adverse Effect on Xxxxx Fargo,
and (iii) has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now conducted.
4.2 Capitalization. (a) The authorized capital stock of Xxxxx Fargo
consists of 150,000,000 shares of Xxxxx Fargo Common Stock, of which, as of May
31, 1998, 85,085,763 shares were issued and outstanding, and 25,000,000 shares
of Xxxxx Fargo Preferred Stock, no par value, of which (i) 1,500,000 shares were
designated, issued and outstanding as Xxxxx Fargo Series B Preferred and (ii)
4,000,000 shares were designated, issued and outstanding as Xxxxx Fargo Series H
Preferred. As of May 31, 1998, no shares of Xxxxx Fargo Common Stock were held
in Xxxxx Fargo's treasury. As of the date hereof, no shares of Xxxxx Fargo
Common Stock or Xxxxx Fargo Preferred Stock were reserved for issuance, except
for (i) the shares of Xxxxx Fargo Common Stock issuable pursuant to the Xxxxx
Fargo Option Agreement,
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(ii) 5,975,188 shares reserved for issuance pursuant to the Xxxxx Fargo Tax
Advantage and Retirement Plan, the Xxxxx Fargo Long-Term and Equity Incentive
Plans and other employee and director stock plans of Xxxxx Fargo in effect as of
the date hereof (the "Xxxxx Fargo Stock Plans"), (iii) 4,065,122 shares reserved
for issuance pursuant to the Xxxxx Fargo Dividend Reinvestment and Common Stock
Purchase Plan (the "Xxxxx Fargo DRIP") and (iv) 587,220 shares reserved for
issuance pursuant to the Xxxxx Fargo Employee Stock Purchase Plan (the "Xxxxx
Fargo ESPP"). All of the issued and outstanding shares of Xxxxx Fargo Capital
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except for
the Xxxxx Fargo Option Agreement, the Xxxxx Fargo Stock Plans and the Xxxxx
Fargo mandatory convertible debt (as described in the Xxxxx Fargo 10-K), Xxxxx
Fargo does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Xxxxx Fargo Capital Stock or any other
equity securities of Xxxxx Fargo or any securities representing the right to
purchase or otherwise receive any shares of Xxxxx Fargo Capital Stock
(collectively, "Xxxxx Fargo Rights"). Since May 31, 1997, Xxxxx Fargo has not
issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than as permitted by
Section 5.2(b) and pursuant to (A) the exercise of employee stock options
granted prior to such date, (B) the Xxxxx Fargo DRIP and the Xxxxx Fargo ESPP,
and (C) pursuant to the Xxxxx Fargo Option Agreement. Xxxxx Fargo has previously
provided Norwest with a list of the option holders, the date of each option to
purchase Xxxxx Fargo Common Stock granted, the number of shares subject to each
such option, the expriation date of each such option and the price at which each
such option may be exercised under an applicable Xxxxx Fargo Stock Plan. In no
event will the aggregate number of shares of Xxxxx Fargo Common Stock
outstanding at the Effective Time (including all shares of Xxxxx Fargo Common
Stock subject to then-outstanding Xxxxx Fargo Rights other than the Xxxxx Fargo
Option Agreement) exceed the number specified in Section 4.2(a) of the Xxxxx
Fargo Disclosure Schedule.
(b) Xxxxx Fargo owns, directly or indirectly, all of the issued
and outstanding shares of capital stock or other equity ownership interests of
each of the Xxxxx Fargo Subsidiaries, free and clear of any Liens, and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable (subject to 12 U.S.C. ss. 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Xxxxx Fargo Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for
-26-
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Section 4.2(b) of the Xxxxx Fargo Disclosure Schedule sets
forth a list of the material investments of Xxxxx Fargo in Non-Subisidiary
Affiliates.
4.3 Authority; No Violation. (a) Xxxxx Fargo has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Xxxxx Fargo. The Board of
Directors of Xxxxx Fargo has directed that this Agreement and the transactions
contemplated hereby be submitted to Xxxxx Fargo's stockholders for adoption at a
meeting of such stockholders and, except for the adoption of this Agreement by
the affirmative vote of the holders of a majority of the outstanding shares of
Xxxxx Fargo Common Stock, no other corporate proceedings on the part of Xxxxx
Fargo are necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Xxxxx Fargo and (assuming due authorization, execution and delivery
by Norwest) constitutes a valid and binding obligation of Xxxxx Fargo,
enforceable against Xxxxx Fargo in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies).
(b) Neither the execution and delivery of this Agreement by Xxxxx
Fargo, nor the consummation by Xxxxx Fargo of the transactions contemplated
hereby, nor compliance by Xxxxx Fargo with any of the terms or provisions
hereof, will (i) violate any provision of the Xxxxx Fargo Certificate or
By-Laws, or (ii) assuming that the consents and approvals referred to in Section
4.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Xxxxx
Fargo, any of its Subsidiaries or Non-Subsidiary Affiliates or any of their
respective properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Xxxxx Fargo, any of its Subsidiaries or its Non-Subsidiary Affiliates
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of
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trust, license, lease, agreement or other instrument or obligation to which
Xxxxx Fargo, any of its Subsidiaries or Non-Subsidiary Affiliates is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have a Material Adverse Effect on Xxxxx Fargo.
4.4 Consents and Approvals. Except for (i) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act and
the Federal Reserve Act, as amended, and approval of such applications and
notices, (ii) the State Approvals, (iii) the filing with the SEC of the Joint
Proxy Statement and the S-4, (iv) the filing of the Certificate of Merger with
the Delaware Secretary pursuant to the DGCL, (v) any notices to or filings with
the SBA, (vi) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable SRO, and the rules of the NYSE, or which are
required under consumer finance, mortgage banking and other similar laws, (vii)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of these shares of Norwest Capital Stock pursuant to this Agreement and (viii)
the approval of this Agreement by the requisite vote of the stockholders of
Xxxxx Fargo and Norwest, no consents or approvals of or filings or registrations
with any Governmental Entity are necessary in connection with (A) the execution
and delivery by Xxxxx Fargo of this Agreement and (B) the consummation by Xxxxx
Fargo of the Merger and the other transactions contemplated hereby.
4.5 Reports. Xxxxx Fargo and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 1996 with the Regulatory Agencies, and all other reports and
statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Xxxxx Fargo. Except for
normal examinations conducted by a Regulatory Agency in the ordinary course of
the
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business of Xxxxx Fargo and its Subsidiaries, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of Xxxxx Fargo, investigation
into the business or operations of Xxxxx Fargo or any of its Subsidiaries since
January 1, 1996, except where such proceedings or investigation will not have,
either individually or in the aggregate, a Material Adverse Effect on Xxxxx
Fargo. There is no unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of Xxxxx Fargo or any of its Subsidiaries which, in the reasonable
judgment of Xxxxx Fargo, will have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxx Fargo.
4.6 Financial Statements. Xxxxx Fargo has previously made available to
Norwest copies (i) of the consolidated balance sheets of Xxxxx Fargo and its
Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1995 through 1997, inclusive, as reported in
Xxxxx Fargo's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 filed with the SEC under the Exchange Act (the "Xxxxx Fargo 10-K"), in each
case accompanied by the audit report of KPMG Peat Marwick LLP, independent
public accountants with respect to Xxxxx Fargo; and (ii) the consolidated
balance sheets of Xxxxx Fargo and its Subsidiaries as of March 31, 1998 and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the three months ended March 31, 1998, as reported in Xxxxx
Fargo's Quarterly Report on Form 10-Q for the three months ended March 31, 1998
filed with the SEC under the Exchange Act. The March 31, 1998 consolidated
balance sheet of Xxxxx Fargo (including the related notes, where applicable)
fairly presents in all material respects the consolidated financial position of
Xxxxx Fargo and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Xxxxx Fargo and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth, subject to normal
year-end audit adjustments in the case of unaudited statements; each of such
statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto. The books and records of Xxxxx Fargo and its Subsidiaries have
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been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 Broker's Fees. Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Xxxxx Fargo Reports filed prior to the date hereof, since December
31, 1997, no event or events have occurred which has had, individually or in the
aggregate, a Material Adverse Effect on Xxxxx Fargo.
(b) Except as publicly disclosed in Xxxxx Fargo Reports filed prior to
the date hereof, since December 31, 1997, Xxxxx Fargo and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
course.
(c) Since December 31, 1997, neither Xxxxx Fargo nor any of its
Subsidiaries has (i) except for such actions as are in the ordinary course of
business or except as required by applicable law, (A) increased the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable
to any executive officer, employee, or director from the amount thereof in
effect as of December 31, 1997, or (B) granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonuses, which in the aggregate exceed 5% of Xxxxx Fargo's 1997 salary
and employee benefit expenses (other than customary year-end bonuses for fiscal
1997 and, if applicable, 1998) or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance which will have, either individually or in
the aggregate, a Material Adverse Effect on Xxxxx Fargo.
4.9 Legal Proceedings. (a) Neither Xxxxx Fargo nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Xxxxx Fargo's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Xxxxx Fargo or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
Xxxxx Fargo Option Agreement as to which, in any such case, there is a
reasonable probability of an adverse determination and which, if adversely
determined, will have, either individually or in the aggregate, a Material
Adverse Effect on Xxxxx Fargo.
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(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon Xxxxx Fargo, any of its Subsidiaries or the
assets of Xxxxx Fargo or any of its Subsidiaries that has had or will have,
either individually or in the aggregate, a Material Adverse Effect on Xxxxx
Fargo or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Each of Xxxxx Fargo and its
Subsidiaries has duly filed all federal, state, foreign and local information
returns and tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all material respects)
and has duly paid or made provisions for the payment of all Taxes and other
governmental charges which have been incurred or are due or claimed to be due
from it by federal, state, foreign or local taxing authorities on or prior to
the date of this Agreement (including, without limitation, if and to the extent
applicable, those due in respect of its properties, income, business, capital
stock, deposits, franchises, licenses, sales and payrolls) other than (i) Taxes
or other charges which are not yet delinquent or are being contested in good
faith and have not been finally determined, or (ii) information returns, tax
returns, Taxes or other governmental charges as to which the failure to file,
pay or make provision for will not have, either individually or in the
aggregate, a Material Adverse Effect on Xxxxx Fargo. The federal income tax
returns of Xxxxx Fargo and its Subsidiaries have been examined by the IRS
through 1993 and any liability with respect thereto has been satisfied or any
liability with respect to deficiencies asserted as a result of such examination
is covered by adequate reserves. To the best of Xxxxx Fargo's knowledge, there
are no material disputes pending, or claims asserted for, Taxes or assessments
upon Xxxxx Fargo or any of its Subsidiaries for which Xxxxx Fargo does not have
adequate reserves. In addition, (A) proper and accurate amounts have been
withheld by Xxxxx Fargo and its Subsidiaries from their employees for all prior
periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where failure to
do so will not, either individually or in the aggregate, have a Material Adverse
Effect on Xxxxx Fargo, (B) federal, state and local returns which are accurate
and complete in all material respects have been filed by Xxxxx Fargo and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes, except
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where failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Xxxxx Fargo, (C) the amounts shown on such federal,
state or local returns to be due and payable have been paid in full or adequate
provision therefor has been included by Xxxxx Fargo in its consolidated
financial statements, except where failure to do so will not, individually or in
the aggregate, have a Material Adverse Effect on Xxxxx Fargo and (D) there are
no Tax liens upon any property or assets of Xxxxx Fargo or its Subsidiaries
except liens for current taxes not yet due or liens that will not have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxx Fargo.
Neither Xxxxx Fargo nor any of its Subsidiaries has been required to include in
income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by Xxxxx Fargo or any of its
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case, which has had or will have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxx Fargo.
Except as set forth in the financial statements described in Section 4.6,
neither Xxxxx Fargo nor any of its Subsidiaries has entered into a transaction
which is being accounted for as an installment obligation under Section 453 of
the Code, which will have, either individually or in the aggregate, a Material
Adverse Effect on Xxxxx Fargo.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Xxxxx Fargo or any
Subsidiary of Xxxxx Fargo under any contract, plan, program, arrangement or
understanding will have, either individually or in the aggregate, a Material
Adverse Effect on Xxxxx Fargo.
4.11 Employees. (a) The Xxxxx Fargo Disclosure Schedule sets forth a
true and complete list of each material employee benefit plan, arrangement or
agreement that is maintained, or contributed to, as of the date of this
Agreement (the "Xxxxx Fargo Benefit Plans") by Xxxxx Fargo, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a "Xxxxx
Fargo ERISA Affiliate"), all of which together with Xxxxx Fargo would be deemed
a "single employer" within the meaning of Section 4001 of ERISA.
(b) Xxxxx Fargo has heretofore made available to Norwest true and
complete copies of each of the Xxxxx Fargo Benefit Plans and certain related
documents, including, but not limited to, (i) the actuarial report for such
Xxxxx Fargo Benefit Plan (if applicable) for each of the last two years, and
(ii) the most recent determination letter from the IRS (if applicable) for such
Xxxxx Fargo Benefit Plan.
(c) (i) Each of the Xxxxx Fargo Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Xxxxx Fargo
Benefit Plans intended to be "qualified" within the meaning of Section 401(a)
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of the Code is so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the qualified status of any
such Xxxxx Fargo Benefit Plan, (iii) with respect to each Xxxxx Fargo Benefit
Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Xxxxx Fargo Benefit Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Xxxxx Fargo Benefit Plan's actuary with respect to such Xxxxx
Fargo Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Xxxxx Fargo Benefit Plan allocable to such
accrued benefits, (iv) no Xxxxx Fargo Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees or directors of Xxxxx Fargo or its
Subsidiaries beyond their retirement or other termination of service, other than
(A) coverage mandated by applicable law, (B) death benefits or retirement
benefits under any "employee pension plan" (as such term is defined in Section
3(2) of ERISA), (C) deferred compensation benefits accrued as liabilities on the
books of Xxxxx Fargo or its Subsidiaries or (D) benefits the full cost of which
is borne by the current or former employee or director (or his beneficiary), (v)
no material liability under Title IV of ERISA has been incurred by Xxxxx Fargo,
its Subsidiaries or any Xxxxx Fargo ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to Xxxxx Fargo,
its Subsidiaries or any Xxxxx Fargo ERISA Affiliate of incurring a material
liability thereunder, (vi) no Xxxxx Fargo Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by Xxxxx Fargo or its Subsidiaries as of
the Effective Time with respect to each Xxxxx Fargo Benefit Plan in respect of
current or prior plan years have been paid or accrued in accordance with GAAP
and Section 412 of the Code, (viii) none of Xxxxx Fargo, its Subsidiaries or any
other person, including any fiduciary, has engaged in a transaction in
connection with which Xxxxx Fargo, its Subsidiaries or any Xxxxx Fargo Benefit
Plan will be subject to either a material civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a material tax imposed pursuant to Section
4975 or 4976 of the Code, and (ix) to the best knowledge of Xxxxx Fargo there
are no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Xxxxx Fargo Benefit Plans or
any trusts related thereto which will have, either individually or in the
aggregate, a Material Adverse Effect on Xxxxx Fargo.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event)
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(i) result (either alone or upon the occurrence of any additional acts or
events) in any payment (including, without limitation, severance, unemployment
compensation, "excess parachute payment" (within the meaning of Section 280G of
the Code), forgiveness of indebtedness or otherwise) becoming due to any
director or any employee of Xxxxx Fargo or any of its affiliates from Xxxxx
Fargo or any of its affiliates under any Xxxxx Fargo Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Xxxxx Fargo Benefit Plan
or (iii) result in any acceleration of the time of payment or vesting of any
such benefits that will have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxx Fargo.
4.12 SEC Reports. Xxxxx Fargo has previously made available to Norwest
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1996 by Xxxxx Fargo with the SEC pursuant to the Securities Act or the
Exchange Act (the "Xxxxx Fargo Reports") and prior to the date hereof and (b)
communication mailed by Xxxxx Fargo to its stockholders since January 1, 1996
and prior to the date hereof, and no such Xxxxx Fargo Report or communication,
as of the date thereof, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date (but
before the date hereof) shall be deemed to modify information as of an earlier
date. Since January 1, 1996, as of their respective dates, all Xxxxx Fargo
Reports filed under the Securities Act and the Exchange Act complied in all
material respects with the published rules and regulations of the SEC with
respect thereto.
4.13 Compliance with Applicable Law. (a) Xxxxx Fargo and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Xxxxx
Fargo or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect on Xxxxx
Fargo.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Xxxxx Fargo, Xxxxx Fargo and each Xxxxx Fargo
Subsidiary have properly administered all accounts for which it acts as a
fiduciary, including
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accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of Xxxxx Fargo, any Xxxxx Fargo Subsidiary, or
any director, officer or employee of Xxxxx Fargo or of any Xxxxx Fargo
Subsidiary, has committed any breach of trust with respect to any such fiduciary
account that will have a Material Adverse Effect on Xxxxx Fargo, and the
accountings for each such fiduciary account are true and correct in all material
respects and accurately reflect the assets of such fiduciary account.
4.14 Certain Contracts. (a) Neither Xxxxx Fargo nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees other than in the ordinary course of
business consistent with past practice, (ii) which, upon the consummation or
stockholder approval of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Xxxxx
Fargo, Norwest, the Surviving Corporation, or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not been filed or
incorporated by reference in the Xxxxx Fargo Reports, (iv) which materially
restricts the conduct of any line of business by Xxxxx Fargo or upon
consummation of the Merger will materially restrict the ability of the Surviving
Corporation to engage in any line of business in which a bank holding company
may lawfully engage, (v) with or to a labor union or guild (including any
collective bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any stockholder approval or the
consummation of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Xxxxx Fargo has previously made
available to Norwest true and correct copies of all employment and deferred
compensation agreements which are in writing and to which Xxxxx Fargo is a
party. Each contract, arrangement, commitment or understanding of the type
described in this Section 4.14(a), whether or not set forth in the Xxxxx Fargo
Disclosure Schedule, is referred to herein as a "Xxxxx Fargo Contract", and
neither Xxxxx Fargo nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above
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by any of the other parties thereto which will have, individually or in the
aggregate, a Material Adverse Effect on Xxxxx Fargo.
(b) (i) Each Xxxxx Fargo Contract is valid and binding on Xxxxx Fargo
or any of its Subsidiaries, as applicable, and in full force and effect, (ii)
Xxxxx Fargo and each of its Subsidiaries has in all material respects performed
all obligations required to be performed by it to date under each Xxxxx Fargo
Contract, except where such noncompliance, either individually or in the
aggregate, will not have a Material Adverse Effect on Xxxxx Fargo, and (iii) no
event or condition exists which constitutes or, after notice or lapse of time or
both, will constitute, a material default on the part of Xxxxx Fargo or any of
its Subsidiaries under any such Xxxxx Fargo Contract, except where such default,
either individually or in the aggregate, will not have a Material Adverse Effect
on Xxxxx Fargo.
4.15 Agreements with Regulatory Agencies. Neither Xxxxx Fargo nor any
of its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Xxxxx Fargo Disclosure Schedule, a "Xxxxx Fargo
Regulatory Agreement"), nor has Xxxxx Fargo or any of its Subsidiaries been
advised since January 1, 1996, by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any such Regulatory
Agreement.
4.16 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Xxxxx Fargo or
for the account of a customer of Xxxxx Fargo or one of its Subsidiaries, were
entered into in the ordinary course of business and, to Xxxxx Fargo's knowledge,
in accordance with prudent banking practice and applicable rules, regulations
and policies of any Regulatory Authority and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
of Xxxxx Fargo or one of its Subsidiaries enforceable in accordance with their
terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the
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availability of equitable remedies), and are in full force and effect. Xxxxx
Fargo and each of its Subsidiaries have duly performed in all material respects
all of their material obligations thereunder to the extent that such obligations
to perform have accrued; and to Xxxxx Fargo's knowledge, there are no material
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
4.17 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of Xxxxx
Fargo included in the Xxxxx Fargo March 31, 1998 Form 10-Q and for liabilities
incurred in the ordinary course of business consistent with past practice, since
March 31, 1998, neither Xxxxx Fargo nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or will have, a Material Adverse Effect on Xxxxx Fargo.
4.18 Insurance. Xxxxx Fargo and its Subsidiaries have in effect
insurance coverage with reputable insurers or are self-insured, which in respect
of amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by bank holding companies
and their subsidiaries comparable in size and operations to Xxxxx Fargo and its
Subsidiaries.
4.19 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that reasonably could result
in the imposition, on Xxxxx Fargo of any liability or obligation arising under
common law or under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, CERCLA, pending or
threatened against Xxxxx Fargo, which liability or obligation will have, either
individually or in the aggregate, a Material Adverse Effect on Xxxxx Fargo. To
the knowledge of Xxxxx Fargo, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose any
liability or obligation that will have, either individually or in the aggregate,
a Material Adverse Effect on Xxxxx Fargo. Xxxxx Fargo is not subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any liability
or obligation with respect to the foregoing that will have, either individually
or in the aggregate, a Material Adverse Effect on Xxxxx Fargo.
4.20 State Takeover Laws. (a) The Board of Directors of Xxxxx Fargo
has approved the transactions contemplated by this
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Agreement and the Option Agreements for purposes of Section 203(a)(1) of the
DGCL such that the provisions of Section 203 of the DGCL will not apply to this
Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
4.21 Year 2000. None of Xxxxx Fargo or any of the Xxxxx Fargo
Subsidiaries has received, or reasonably expects to receive, a Year 2000
Deficiency Notification Letter. Xxxxx Fargo has disclosed to Norwest a complete
and accurate copy of Xxxxx Fargo's plan, including an estimate of the
anticipated associated costs, for addressing Year 2000 Issues as such issues
affect Xxxxx Fargo and its Subsidiaries. Between the date of this Agreement and
the Effective Time, Xxxxx Fargo shall use commercially practicable efforts to
implement such plan.
4.22 Reorganization; Pooling of Interests. As of the date of this
Agreement, Xxxxx Fargo has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement (including the Norwest
Disclosure Schedule and the Xxxxx Fargo Disclosure Schedule) or the Option
Agreements, each of Xxxxx Fargo and Norwest shall, and shall cause each of their
respective Subsidiaries to, (a) conduct its business in the ordinary course, (b)
use reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay the ability of either Xxxxx Fargo or Norwest to
obtain any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the Option Agreements or to
consummate the transactions contemplated hereby or thereby.
5.2 Forbearances. During the period from the date of this Agreement to
the Effective Time, except as set forth in the Xxxxx Fargo Disclosure Schedule
or the Norwest Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, neither
Xxxxx Fargo nor Norwest shall, and neither Xxxxx Fargo
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nor Norwest shall permit any of their respective Subsidiaries to, without the
prior written consent of the other party to this Agreement:
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness
incurred to refinance short-term indebtedness and indebtedness of
Norwest or any of its wholly-owned Subsidiaries to Norwest or any of
its Subsidiaries, on the one hand, or of Xxxxx Fargo or any of its
Subsidiaries to Xxxxx Fargo or any of its wholly-owned Subsidiaries, on
the other hand), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance
(it being understood and agreed that incurrence of indebtedness in the
ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of Federal funds, sales of
certificates of deposit and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible
(whether currently convertible or convertible only after
the passage of time or the occurrence of certain events)
into or exchangeable for any shares of its capital stock
(except (A) in the case of Norwest, for regular quarterly
cash dividends at a rate not in excess of $.19 per share
of Norwest Common Stock and regular quarterly cash
dividends on the Norwest Preferred Stock outstanding as
of the date hereof at the rates required by the terms
thereof, (B) in the case of Xxxxx Fargo, for regular
quarterly cash dividends on Xxxxx Fargo Common Stock at a
rate not in excess of $1.30 per share of Xxxxx Fargo
Common Stock and regular quarterly cash dividends on the
Xxxxx Fargo Preferred Stock outstanding as of the date
hereof at the rates required by the terms thereof, and
(C) dividends paid by any of the Subsidiaries of each of
Xxxxx Fargo and Norwest to Xxxxx Fargo or Norwest or any
of their Subsidiaries, respectively, and dividends paid
in the ordinary course
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of business consistent with past practice by any
subsidiaries (whether or not wholly owned) of each of
Xxxxx Fargo and Norwest);
(iii) grant any stock appreciation rights or grant any
individual, corporation or other entity any right to
acquire any shares of its capital stock, other than (A)
pursuant to the Norwest Rights Agreement, (B) pursuant to
the Norwest Stock Plans or the Xxxxx Fargo Stock Plans,
as the case may be, in the ordinary course of business,
or (C) the conversion of employee or director stock
options pursuant to the consummation of the Pending
Norwest Acquisitions, the Permitted Norwest Acquisitions
or the Permitted Xxxxx Fargo Acquisitions; or
(iv) issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options,
convertible preferred stock, convertible debt or warrants
outstanding as of the date hereof or issued in compliance
with Section 5.2(b)(iii), (B) the Option Agreements, (C)
the Norwest Rights Agreement, or any renewal or
replacement thereof, (D) in the ordinary course of
business and consistent with past practice in connection
with the Norwest DRIP, the Norwest Stock Plans, the Xxxxx
Fargo DRIP and the Xxxxx Fargo ESPP, (E) in connection
with the Pending Norwest Acquisitions in an amount not to
exceed 19,800,000 shares of Norwest Common Stock in the
aggregate and in connection with acquisitions by Norwest
initiated after the date hereof, provided that the shares
of Norwest Common Stock that are issued or become
issuable in connection therewith shall not exceed
40,000,000 in the aggregate (the "Permitted Norwest
Acquisitions") and (F) in connection with acquisitions by
Xxxxx Fargo initiated after the date hereof, provided
that the shares of Xxxxx Fargo Common Stock that are
issued or become issuable in connection therewith shall
not exceed 4,000,000 in the aggregate and that such
acquisitions shall not, either individually or in the
aggregate, have a Material Adverse Effect on Xxxxx Fargo
(the "Permitted Xxxxx Fargo Acquisitions");
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(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties or assets to any individual, corporation or
other entity other than a Subsidiary, or cancel, release or assign any
indebtedness to any such person or any claims held by any such person,
except in the ordinary course of business or pursuant to contracts or
agreements in force at the date of this Agreement;
(d) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or
permitted by this Agreement, make any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than a Subsidiary
thereof;
(e) except for transactions in the ordinary course of business,
terminate, or waive any material provision of, any Norwest Contract or
Xxxxx Fargo Contract, as the case may be, or make any change in any
instrument or agreement governing the terms of any of its securities,
or material lease or contract, other than normal renewals of contracts
and leases without material adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of
any of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees or
become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than in the
ordinary course of business, or accelerate the vesting of, or the
lapsing of restrictions with respect to, any stock options or other
stock-based compensation;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from
any third party or enter into any negotiations, discussions or
agreement in respect of, or provide or cause to be provided any
confidential information in connection with, any inquiries or proposals
relating to the disposition of all or substantially all of its business
or assets, or the acquisition of its voting securities, or the merger
of it or any of its Subsidiaries with any corporation or other entity,
other than as provided by this Agreement (and each party shall promptly
notify the other of all of the relevant
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details relating to all inquiries and proposals which it may receive
relating to any of such matters);
(h) settle any material claim, action or proceeding involving
money damages, except in the ordinary course of business;
(i) knowingly take any action that would prevent or impede the
Merger from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of Section 368
of the Code; provided, however, that nothing contained herein shall
limit the ability of Xxxxx Fargo or Norwest to exercise its rights
under the Norwest Option Agreement or the Xxxxx Fargo Option Agreement,
as the case may be;
(j) amend its certificate of incorporation or its bylaws;
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise,
or the manner in which the portfolio is classified or reported;
(l) take any action that is intended or expected to result in any
of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable
law;
(m) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or
regulatory guidelines; or
(n) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Xxxxx Fargo and Norwest shall promptly
prepare and file with the SEC the Joint Proxy Statement and Norwest shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of Xxxxx Fargo and Norwest
shall
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use their reasonable best efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and Xxxxx Fargo and
Norwest shall thereafter mail or deliver the Joint Proxy Statement to their
respective stockholders. Norwest shall also use its reasonable best efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement, and Xxxxx
Fargo shall furnish all information concerning Xxxxx Fargo and the holders of
Xxxxx Fargo Capital Stock as may be reasonably requested in connection with any
such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger) and the Option Agreements,
and to comply with the terms and conditions of all such permits, consents,
approvals and authorizations of all such Governmental Entities. Xxxxx Fargo and
Norwest shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
Norwest or Xxxxx Fargo, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and the Option Agreements and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) Xxxxx Fargo and Norwest shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Xxxxx Fargo,
Norwest or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
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(d) Xxxxx Fargo and Norwest shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement or the Option Agreements that causes such party to believe that there
is a reasonable likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Xxxxx Fargo and
Norwest, for the purposes of verifying the representations and warranties of the
other and preparing for the Merger and the other matters contemplated by this
Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Xxxxx Fargo and Norwest
shall, and shall cause their respective Subsidiaries to, make available to the
other party (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws (other
than reports or documents which Xxxxx Fargo or Norwest, as the case may be, is
not permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such party may reasonably
request. Neither Xxxxx Fargo nor Norwest nor any of their respective
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of Xxxxx
Fargo's or Norwest's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Each of Xxxxx Fargo and Norwest shall hold all information
furnished by or on behalf of the other party or any of such party's Subsidiaries
or representatives pursuant to Section 6.2(a) in confidence to the extent
required by, and in accordance with, the provisions of the confidentiality
agreement, dated June 1, 1998, between Xxxxx Fargo and Norwest (the
"Confidentiality Agreement").
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(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 Stockholders' Approvals. Each of Xxxxx Fargo and Norwest shall
call a meeting of its stockholders to be held as soon as reasonably practicable
for the purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement and the Merger, and each shall use its reasonable
best efforts to cause such meetings to occur as soon as reasonably practicable
and on the same date. The Board of Directors of each of Norwest and Xxxxx Fargo
shall use its reasonable best efforts to obtain from the stockholders of Norwest
and Xxxxx Fargo, as the case may be, the vote in favor of the adoption of this
Agreement required by the DGCL and, as applicable, the rules of the NYSE, to
consummate the transactions contemplated hereby.
6.4 Legal Conditions to Merger. Each of Xxxxx Fargo and Norwest shall,
and shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to cooperate with the other party to obtain)
any material consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by Norwest or Xxxxx Fargo or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each of
Xxxxx Fargo and Norwest shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders' meetings called by Xxxxx Fargo and
Norwest to approve this Agreement, a written agreement, in the form of Exhibit
5.5(a)(1) or (2), as applicable, hereto, providing that such person will not
sell, pledge, transfer or otherwise dispose of any shares of Xxxxx Fargo Capital
Stock, or Norwest Capital Stock held by such "affiliate" and, in the case of the
"affiliates" of Xxxxx Fargo, the shares of Norwest Capital Stock to be received
by such "affiliate" in the Merger.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event
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later than 90 days after the end of the first month after the Effective Time in
which there are at least 30 days of post-Merger combined operations (which month
may be the month in which the Effective Time occurs), combined sales and net
income figures as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Norwest shall cause the shares of Norwest
Common Stock and the Norwest Series B Adjustable Preferred to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective Time,
unless otherwise mutually determined, the Norwest Benefit Plans and Xxxxx Fargo
Benefit Plans in effect as of the date of this Agreement shall remain in effect
with respect to employees of Norwest or Xxxxx Fargo (or their Subsidiaries),
respectively, covered by such plans at the Effective Time until such time as the
Surviving Corporation shall, subject to applicable law, the terms of this
Agreement and the terms of such plans, adopt new benefit plans with respect to
employees of the Surviving Corporation and its Subsidiaries (the "New Benefit
Plans"). Prior to the Closing Date, Norwest and Xxxxx Fargo shall cooperate in
reviewing, evaluating and analyzing the Xxxxx Fargo Benefit Plans and Norwest
Benefit Plans with a view towards developing appropriate New Benefit Plans for
the employees covered thereby.
(b) The foregoing notwithstanding, the Surviving Corporation agrees to
honor in accordance with their terms all benefits vested as of the date hereof
under the Xxxxx Fargo Benefit Plans or the Norwest Benefit Plans or under other
contracts, arrangements, commitments, or understandings described in the Xxxxx
Fargo Disclosure Schedule and the Norwest Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any Xxxxx Fargo
Benefit Plans, Norwest Benefit Plans, or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.
(d) It is the intention of Norwest and Xxxxx Fargo, during the period
shortly following the execution of the Merger Agreement, to coordinate efforts
towards establishing a retention and severance program, consistent with the
strategy for the Merger, in an effort to retain and provide incentives to key
personnel for the benefit of the Surviving Corporation in a manner that provides
for equitable treatment of similarly situated employees of Norwest and Xxxxx
Fargo.
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6.8 Indemnification; Directors' and Officers' Insurance. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Xxxxx Fargo or any of its Subsidiaries, including any entity
specified in the Xxxxx Fargo Disclosure Schedule (the "Indemnified Parties"),
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or
was a director, officer or employee of Xxxxx Fargo or any of its Subsidiaries or
any entity specified in the Xxxxx Fargo Disclosure Schedule or any of their
respective predecessors or (ii) this Agreement, the Option Agreements or any of
the transactions contemplated hereby or thereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto. It
is understood and agreed that after the Effective Time, Norwest shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation.
(b) Norwest shall use its reasonable best efforts to cause the
individuals serving as officers and directors of Xxxxx Fargo, its Subsidiaries
or any entity specified in the Xxxxx Fargo Disclosure Schedule immediately prior
to the Effective Time to be covered for a period of six (6) years from the
Effective Time (or the period of the applicable statute of limitations, if
longer) by the directors' and officers' liability insurance policy maintained by
Xxxxx Fargo (provided that Norwest may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in
their capacity as such.
(c) In the event Norwest or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any
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person, then, and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of Norwest assume the
obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the Effective Time
and are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Norwest, on the one hand, and a Subsidiary of Xxxxx Fargo, on the other) or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Norwest.
6.10 Advice of Changes. Xxxxx Fargo and Norwest shall each promptly
advise the other party of any change or event (i) having a Material Adverse
Effect on it or (ii) which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of Xxxxx Fargo
and Norwest shall coordinate with the other the declaration of any dividends in
respect of Xxxxx Fargo Common Stock and Norwest Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of Xxxxx Fargo Common Stock shall not receive two dividends,
or fail to receive one dividend, for any quarter with respect to their shares of
Xxxxx Fargo Common Stock and any shares of Norwest Common Stock any such holder
receives in exchange therefor in the Merger.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
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(a) Stockholder Approval. This Agreement (including the
amendment of the Norwest Certificate contemplated by Section 1.7) shall
have been adopted by the respective requisite affirmative votes of the
holders of Norwest Common Stock and Xxxxx Fargo Common Stock entitled
to vote thereon.
(b) NYSE Listing. The shares of Norwest Common Stock and
Norwest Series B Adjustable Preferred which shall be issued to the
stockholders of Xxxxx Fargo upon consummation of the Merger shall have
been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being referred
to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits, materially restricts or makes illegal consummation of
the Merger.
(f) Federal Tax Opinion. The parties hereto shall have
received the opinions of Wachtell, Lipton, Xxxxx & Xxxx, and Xxxxxxxx &
Xxxxxxxx, in form and substance reasonably satisfactory to Xxxxx Fargo
and Norwest, as the case may be, dated the Closing Date, substantially
to the effect that, on the basis of facts, representations and
assumptions set forth in each such opinion which are consistent with
the state of facts existing at the Effective Time:
(i) The Merger will constitute a reorganization under
Section 368(a) of the Code and Xxxxx Fargo and Norwest will
each be a party to the reorganization;
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(ii) No gain or loss will be recognized by Xxxxx
Fargo or Norwest as a result of the Merger; and
(iii) No gain or loss will be recognized by
stockholders of Xxxxx Fargo who exchange their Xxxxx Fargo
Common Stock solely for Norwest Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a
fractional share interest in Norwest Common Stock).
In rendering such opinions, counsel may require and rely upon
representations contained in certificates of officers of Xxxxx Fargo,
Norwest and others.
(g) Pooling of Interests. Xxxxx Fargo and Norwest shall each
have received a letter from their respective independent accountants
addressed to Norwest or Xxxxx Fargo, as the case may be, to the effect
that the Merger will qualify for "pooling of interests" accounting
treatment.
7.2 Conditions to Obligations of Xxxxx Fargo. The obligation of Xxxxx
Fargo to effect the Merger is also subject to the satisfaction, or waiver by
Xxxxx Fargo, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Norwest set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date; provided, however, that for purposes of this
paragraph, such representations and warranties (other than the
representation set forth in the last sentence of Section 3.2(a)) shall
be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to any
qualification as to materiality set forth in such representations or
warranties, will have a Material Adverse Effect on Norwest or the
Surviving Corporation. Xxxxx Fargo shall have received a certificate
signed on behalf of Norwest by the Chief Executive Officer and the
Chief Financial Officer of Norwest to the foregoing effect.
(b) Performance of Obligations of Norwest. Norwest shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Xxxxx Fargo shall have received a certificate signed on behalf of
Norwest by
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the Chief Executive Officer and the Chief Financial Officer
of Norwest to such effect.
7.3 Conditions to Obligations of Norwest. The obligation of Norwest to
effect the Merger is also subject to the satisfaction or waiver by Norwest at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Xxxxx Fargo set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date, provided, however, that for purposes of this paragraph,
such representations and warranties (other than the representation set
forth in the last sentence of Section 4.2(a)) shall be deemed to be
true and correct unless the failure or failures of such representations
and warranties to be so true and correct, either individually or in the
aggregate, and without giving effect to any qualification as to
materiality set forth in such representations or warranties, will have
a Material Adverse Effect on Xxxxx Fargo. Norwest shall have received a
certificate signed on behalf of Xxxxx Fargo by the Chief Executive
Officer and the Chief Financial Officer of Xxxxx Fargo to the foregoing
effect.
(b) Performance of Obligations of Xxxxx Fargo. Xxxxx Fargo
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and Norwest shall have received a certificate signed on behalf of
Xxxxx Fargo by the Chief Executive Officer and the Chief Financial
Officer of Xxxxx Fargo to such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Xxxxx Fargo or Norwest:
(a) by mutual consent of Xxxxx Fargo and Norwest in a written
instrument, if the Board of Directors of each so determines by a vote
of a majority of the members of its entire Board;
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(b) by either the Board of Directors of Xxxxx Fargo or the
Board of Directors of Norwest if any Governmental Entity that must
grant a Requisite Regulatory Approval has denied approval of the Merger
and such denial has become final and nonappealable or any Governmental
Entity of competent jurisdiction shall have issued a final
nonappealable order permanently enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
(c) by either the Board of Directors of Xxxxx Fargo or the
Board of Directors of Norwest if the Merger shall not have been
consummated on or before the first anniversary of the date of this
Agreement, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such
party set forth herein; or
(d) by either the Board of Directors of Xxxxx Fargo or the
Board of Directors of Norwest (provided that the terminating party is
not then in breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a breach of any of
the covenants or agreements or any of the representations or warranties
set forth in this Agreement on the part of Norwest, in the case of a
termination by Xxxxx Fargo, or Xxxxx Fargo, in the case of a
termination by Norwest, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the Closing
Date, the failure of the conditions set forth in Section 7.2 or 7.3, as
the case may be, and which is not cured within 45 days following
written notice to the party committing such breach or by its nature or
timing cannot be cured prior to the Closing Date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Xxxxx Fargo or Norwest as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of Xxxxx
Fargo, Norwest, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Xxxxx Fargo nor Norwest shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision
of this Agreement.
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8.3 Amendment. Subject to compliance with applicable law and Section
1.1(b), this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with Merger by the stockholders
of Xxxxx Fargo and Norwest; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective stockholders of
Xxxxx Fargo or Norwest, there may not be, without further approval of such
stockholders, any amendment of this Agreement that changes the amount or the
form of the consideration to be delivered hereunder to the holders of Xxxxx
Fargo Common Stock, other than as contemplated by this Agreement. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the respective stockholders of Xxxxx Fargo or Norwest, there may not be, without
further approval of such stockholders, any extension or waiver of this Agreement
or any portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of Xxxxx Fargo Common Stock
hereunder, other than as contemplated by this Agreement. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on a
date and at a place to be specified by the parties, which shall be no later than
five business days after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article VII
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hereof, unless extended by mutual agreement of the parties (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall terminate in
accordance with terms) shall survive the Effective Time, except for Section 6.8
and for those other covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by Xxxxx
Fargo and Norwest.
9.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Xxxxx Fargo, to:
Xxxxx Fargo & Company
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxxxxxx, Xx.
General Counsel
Telecopier: (000) 000-0000
and
(b) if to Norwest, to:
Norwest Corporation
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
General Counsel
Telecopier: (000) 000-0000
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference
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shall be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
9.6 Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law principles.
9.9 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, neither Xxxxx Fargo nor Norwest shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of Norwest, in the case of a proposed announcement or statement by
Xxxxx Fargo, or Xxxxx Fargo, in the case of a proposed announcement or statement
by Norwest, which consent shall not be unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.8, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, Xxxxx Fargo and Norwest have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
NORWEST CORPORATION
By: /s/Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxxx
Chairman and Chief Executive
Officer
XXXXX FARGO & COMPANY
By: /s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx
Chairman and Chief Executive
Officer
[Agreement and Plan of Merger]
