Norwest Corporation and Subsidiaries - Page 73

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          FIA's assets.  The proposal contemplated a purchase price premium           
          of $2 to $5 million above FIA's net asset value44 which, at the             
          time, was approximately $17.5 million. The proposal also stated             
          that NLI would pay FIA's $15 million intercompany debt to Federal.          
               By early February 1989, petitioner had decided it was willing          
          to pay only a $1 million premium above book value for FIA's                 
          assets.  Petitioner thereafter negotiated an additional price               
          reduction of $400,000 due to fluctuations in the bond market                
          (which increased the cost of funding the acquisition).                      
               Finally, on March 31, 1989, Norwest Financial Resources                
          (NFR), another of petitioner's affiliates, entered into a purchase          
          agreement (the March Agreement) with FIA and Commercial in which            
          it agreed to acquire substantially all of FIA's receivables and             
          assets.45  NFR specifically agreed to acquire FIA's approximately           

               44   The term "net asset value" refers to the book value or            
          stockholders' equity of a company that appears on its balance               
          sheet.  Net asset value is a reference for determining how much a           
          potential buyer might be willing to pay for assets on a going-              
          concern basis.                                                              
               45   The March Agreement defines "Receivables" and "Assets"            
          as follows:                                                                 
               The term "Receivables" shall mean the operating leases                 
               and the underlying equipment or other property subject                 
               to such operating leases owned by the Company on the                   
               Closing Date; the leasing receivables (including                       
               leases, fair market value leases and direct finance                    
               leases), conditional sale contracts, secured loans and                 
               other commercial finance receivables of the Company on                 
                                                             (continued...)           






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