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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [_]
Filed by party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-
12
FIRST INTERSTATE BANCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WELLS FARGO & COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION
[LOGO]
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
December 5, 1995
Dear First Interstate Stockholders,
As you probably know by now, Wells Fargo is offering to acquire First
Interstate in a tax-free exchange of two-thirds of a share of Wells Fargo
common stock for each share of First Interstate common stock.
First Interstate's board, which collectively owns less than 1% of the common
stock of First Interstate, has rejected that exchange offer and, by
maintaining obstacles to its completion, has refused to let you--the
stockholders of First Interstate--realize its benefits. Instead, they are
intent on pursuing a merger with First Bank System ("FBS"), even though in our
view that merger offers you considerably less value.
THE WELLS FARGO OFFER IS SUPERIOR TO THE FBS PROPOSAL
. Based on closing prices on October 18, 1995, the day Wells Fargo announced
its original proposal to acquire First Interstate, and the present
exchange ratios, the FBS proposal produces a market value of only $134.23
per First Interstate share--a full $18.44 per share lower than the
$152.67 per share produced by the Wells Fargo offer.
. At all times since that day, the Wells Fargo proposal has produced a
substantially higher market value per First Interstate share than has the
FBS proposal (a $8.73 per share premium based on closing prices on the
last trading day before the date of this letter). This is true even
though Wells Fargo believes the market has significantly discounted its
shares since October 18, 1995 due to uncertainty over whether Wells Fargo
will succeed in eliminating the obstacles to its exchange offer being
maintained by the First Interstate board, and even though the FBS common
stock appears to have been supported by an active stock repurchase
program being pursued by FBS since its merger agreement with First
Interstate was announced.
. The First Interstate board has attempted to justify its endorsement of the
lower value FBS proposal on the basis of various financial reasons which
Wells Fargo believes are subject to serious question.
. In an extraordinary and perhaps unprecedented action, one of First
Interstate's own financial advisors included in its fairness opinion
relating to the FBS proposal an additional opinion that the original
Wells Fargo proposal to merge with First Interstate (at an exchange ratio
of 0.625, or approximately $8 to $9 per share lower than the value
produced by the current Wells Fargo offer with an exchange ratio of two-
thirds) was fair from a financial point of view to First Interstate
stockholders. The other First Interstate financial advisor explicitly
qualified its fairness opinion by stating that it was not passing on the
relative merits of the competing proposals and by assuming that the
FIB/FBS Merger is of long-term strategic importance to First Interstate
solely on the basis of being so informed by the First Interstate board.
Now the First Interstate board is soliciting your vote for the FBS merger at
a meeting scheduled to be held on , 1996, despite the higher market
value of the Wells Fargo proposal and the compelling case laid out in the
attached Proxy Statement that the Wells Fargo exchange offer is superior.
PRESERVE YOUR OPPORTUNITY
TO ACCEPT THE HIGHER OFFER;
VOTE AGAINST THE FBS MERGER
Wells Fargo cannot complete its exchange offer if the First Interstate
stockholders approve the FBS merger. Thus, Wells Fargo urges you to vote
against the FBS merger and preserve your opportunity to accept the higher
value Wells Fargo offer. If stockholders vote down the FBS merger:
. We believe First Interstate's board will respect your vote, remove the
obstacles it is maintaining to the completion of the Wells Fargo exchange
offer and allow that offer to proceed. After all, as stated above, one of
<PAGE>
First Interstate's own financial advisors has already opined that the
original Wells Fargo proposal was fair from a financial point of view to
the First Interstate stockholders.
. Even if the First Interstate board remains intransigent and ignores your
views, First Interstate stockholders will still have the last word: Wells
Fargo intends (if necessary) to proceed with a solicitation of written
consents from stockholders to replace the First Interstate board with
nominees committed to removing all obstacles to the completion of the
Wells Fargo exchange offer.
. In any event, Wells Fargo will continue to pursue its current litigation
intended to force the First Interstate board to honor its fiduciary duties
and remove the obstacles it is maintaining to a combination with Wells
Fargo.
THERE IS NO TIME ADVANTAGE TO THE FBS PROPOSAL
The competing proposals are subject to obtaining virtually identical
regulatory approvals. Wells Fargo believes that it will be able to obtain the
necessary regulatory approvals for its exchange offer no later than the date
on which FBS would be able to obtain the necessary regulatory approvals for
its proposed merger. Accordingly, Wells Fargo is convinced that the FBS
proposal offers no timing advantage over the Wells Fargo exchange offer. First
Interstate stockholders should thus focus solely on the economics of the
competing proposals. On this basis, Wells Fargo believes its exchange offer is
clearly superior.
YOUR VOTE IS ESSENTIAL
IF YOU WANT THE WELLS FARGO OFFER TO SUCCEED, VOTE AGAINST THE FBS PROPOSAL
BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD TODAY.
Sincerely,
[Signature--To Come]
Paul Hazen
Chairman and Chief Executive Officer
IMPORTANT
Only stockholders of record on , 1996 are entitled to
vote.
1. If your shares are held in your own name, please sign, date and
return the enclosed WHITE proxy card in the postage-paid envelope
provided. If your shares are held in the name of a brokerage firm,
bank or other institution, please sign, date and return the WHITE
proxy card to such brokerage firm, bank or other institution in the
envelope provided by that firm.
2. Please be sure your latest dated proxy is a WHITE card voting
AGAINST the FBS proposal. If you have already voted for the FBS
proposal on First Interstate's [color] proxy card, it is not too
late to change your vote; simply sign, date and return the WHITE
proxy card. Only your latest dated proxy will be counted.
If you have any questions or require any assistance in voting your shares,
please call:
D.F. KING & CO., INC.
77 WATER STREET, 20TH FLOOR
NEW YORK, NEW YORK 10005
BANKERS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: 1-800-431-9646
<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION
DECEMBER 5, 1995
SPECIAL MEETING OF STOCKHOLDERS
OF
FIRST INTERSTATE BANCORP
----------------
RELATING TO THE PROPOSED MERGER WITH
FIRST BANK SYSTEM, INC.
----------------
PROXY STATEMENT
OF
WELLS FARGO & COMPANY
This Proxy Statement is furnished by Wells Fargo & Company ("Wells Fargo")
in connection with its solicitation of proxies to be used at a special meeting
of stockholders of First Interstate Bancorp ("First Interstate") to be held on
, 1996 at , at a.m. local time, and at any adjournments,
postponements or reschedulings thereof (the "Special Meeting"). At the Special
Meeting, the holders of shares of common stock of First Interstate (the
"Shares") of record on , 1996 ("Stockholders") will be voting on
whether to approve and adopt the Agreement and Plan of Merger, dated as of
November 5, 1995, by and among First Bank System, Inc. ("FBS"), Eleven
Acquisition Corp., a subsidiary of FBS ("FBS Sub"), and First Interstate (the
"FIB/FBS Merger Agreement") relating to a proposed merger between First
Interstate and FBS Sub (the "FIB/FBS Merger"). This Proxy Statement is first
being mailed to Stockholders on or about , 1996.
On , 1996, Wells Fargo commenced an offer (the "Wells Fargo
Offer") to exchange two-thirds of a share of Wells Fargo common stock ("Wells
Fargo Common Stock") for each Share. Wells Fargo intends, as soon as
practicable after consummation of the Wells Fargo Offer, to seek to acquire
the remaining Shares pursuant to a merger with First Interstate (the "Wells
Fargo Merger") in which each outstanding Share not acquired by Wells Fargo
pursuant to the Wells Fargo Offer would be converted into the right to receive
two-thirds of a share of Wells Fargo Common Stock. The Wells Fargo Offer by
its terms will expire on , 1996, but Wells Fargo currently
intends to extend such offer from time to time until all conditions thereto
have been satisfied or waived. The Wells Fargo Offer is being made solely
pursuant to Wells Fargo's prospectus dated , 1996 (the "Wells
Fargo Prospectus") and the related Letter of Transmittal which have been
separately mailed to Stockholders. For additional information concerning the
Wells Fargo Offer and the FIB/FBS Merger, see the Wells Fargo Prospectus.
The Board of Directors of First Interstate (the "First Interstate Board"),
which collectively owns less than 1% of the outstanding Shares, has rejected
the Wells Fargo Offer and, by maintaining obstacles to its completion, has
refused to let the First Interstate Stockholders realize its benefits.
Instead, the First Interstate Board is intent on pursuing the FIB/FBS Merger,
even though in Wells Fargo's view that merger offers Stockholders considerably
less value.
THE PURPOSE OF THE SOLICITATION MADE BY THIS PROXY STATEMENT (THE "PROXY
SOLICITATION") IS TO ENABLE FIRST INTERSTATE'S STOCKHOLDERS TO DECIDE FOR
THEMSELVES WHICH PROPOSAL IS SUPERIOR AND TO ACT ACCORDINGLY.
<PAGE>
WELLS FARGO URGES YOU TO VOTE AGAINST THE FIB/FBS MERGER AGREEMENT AND
PRESERVE YOUR OPPORTUNITY TO ACCEPT THE HIGHER VALUE WELLS FARGO OFFER. IF YOU
WANT THE WELLS FARGO OFFER TO SUCCEED, VOTE AGAINST THE FIB/FBS MERGER
AGREEMENT BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD TODAY.
IMPORTANT
Only Stockholders of record on , 1996 (the "Record Date") are
entitled to vote.
1. If your Shares are held in your own name, please sign, date and return
the enclosed WHITE proxy card in the postage-paid envelope provided. If
your shares are held in the name of a brokerage firm, bank or other
institution, please sign, date and return the WHITE proxy card to such
brokerage firm, bank or other institution in the envelope provided by
that firm.
2. Please be sure your latest dated proxy is a WHITE card voting AGAINST
the FBS proposal. If you have already voted for the FBS proposal on
First Interstate's [color] proxy card, it is not too late to change
your vote; simply sign, date and return the WHITE proxy card. Only your
latest dated proxy will be counted.
If you have any questions or require any assistance in voting your Shares,
please call:
D.F. KING & CO., INC.
77 WATER STREET, 20TH FLOOR
NEW YORK, NEW YORK 10005
BANKERS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: 1-800-431-9646
2
<PAGE>
INTRODUCTION
On , 1996, Wells Fargo commenced an offer (the Wells Fargo
Offer) to exchange two-thirds of a share of Wells Fargo Common Stock for each
Share. Wells Fargo intends, as soon as practicable after consummation of the
Wells Fargo Offer, to seek to acquire the remaining Shares pursuant to a
merger with First Interstate (the Wells Fargo Merger) in which each
outstanding Share not acquired by Wells Fargo pursuant to the Wells Fargo
Offer would be converted into the right to receive two-thirds of a share of
Wells Fargo Common Stock. The Wells Fargo Offer by its terms will expire on
, 1996, but Wells Fargo currently intends to extend such offer from time
to time until all conditions thereto have been satisfied or waived. The Wells
Fargo Offer is being made solely pursuant to the Wells Fargo Prospectus and
the related Letter of Transmittal which have been separately mailed to
Stockholders. For additional information concerning the Wells Fargo Offer and
the FIB/FBS Merger, see the Wells Fargo Prospectus.
The First Interstate Board, which collectively owns less than 1% of the
outstanding Shares, has rejected the Wells Fargo Offer and, by maintaining
obstacles to its completion, has refused to let the First Interstate
Stockholders realize its benefits. Instead, the First Interstate Board is
intent on pursuing the FIB/FBS Merger, even though in Wells Fargo's view that
merger offers Stockholders considerably less value. See "Comparison of the Two
Proposals" below.
. Based on closing prices on October 18, 1995, the day Wells Fargo
announced its original proposal to acquire First Interstate, and the
present exchange ratios, the FIB/FBS Merger proposal produces a market
value of only $134.23 per Share--a full $18.44 per Share lower than the
$152.67 per Share produced by the Wells Fargo Offer.
. At all times since that day, the Wells Fargo Offer has produced a
substantially higher market value per Share than has the FIB/FBS Merger
proposal (a $8.73 per Share premium based on closing prices on the last
trading day before the date of this preliminary proxy statement). See
"Comparison of the Two Proposals--Market Value" below. This is true even
though Wells Fargo believes the market has significantly discounted its
shares since October 18, 1995 due to uncertainty over whether Wells Fargo
will succeed in eliminating the obstacles to its exchange offer being
maintained by the First Interstate Board, and even though the FBS common
stock appears to have been supported by an active stock repurchase
program being pursued by FBS since the FIB/FBS Merger Agreement was
announced.
. The First Interstate Board has attempted to justify its endorsement of
the lower value FIB/FBS Merger proposal on the basis of various financial
reasons which Wells Fargo believes are subject to serious question. See
"Comparison of the Two Proposals--Other Considerations Affecting Value"
below.
. In an extraordinary and perhaps unprecedented action, one of First
Interstate's own financial advisors included in its fairness opinion
relating to the FIB/FBS Merger proposal an additional opinion that the
original Wells Fargo proposal to merge with First Interstate (at an
exchange ratio of 0.625, or approximately $8 to $9 per share lower than
the value produced by the current Wells Fargo Offer with an exchange
ratio of two-thirds) was fair from a financial point of view to the First
Interstate Stockholders. The other First Interstate financial advisor
explicitly qualified its fairness opinion by stating that it was not
passing on the relative merits of the competing proposals and by assuming
that the FIB/FBS Merger is of long-term strategic importance to First
Interstate solely on the basis of being so informed by the First
Interstate board.
THE PURPOSE OF THIS PROXY SOLICITATION IS TO ENABLE FIRST INTERSTATE'S
STOCKHOLDERS TO DECIDE FOR THEMSELVES WHICH PROPOSAL IS SUPERIOR AND TO ACT
ACCORDINGLY.
Wells Fargo cannot complete the Wells Fargo Offer if the First Interstate
Stockholders approve the FIB/FBS Merger Agreement. Thus, Wells Fargo urges
Stockholders to vote against the FIB/FBS Merger Agreement and preserve the
Stockholders opportunity to accept the higher value Wells Fargo Offer. If
Stockholders do not approve and adopt the FIB/FBS Merger Agreement, Wells
Fargo believes the First Interstate Board will respect
3
<PAGE>
the Stockholders' vote, remove the obstacles it is maintaining to the
completion of the Wells Fargo Offer and allow that offer to proceed. After
all, as stated above, one of First Interstate's own financial advisors has
already opined that the original Wells Fargo proposal was fair from a
financial point of view to the First Interstate Stockholders. However, if the
First Interstate Board remains intransigent and ignores the views of the
Stockholders, Wells Fargo intends (if necessary) to proceed with a
solicitation of written consents from Stockholders to replace the First
Interstate Board with nominees committed to removing all obstacles to the
completion of the Wells Fargo Offer. In any event, Wells Fargo will continue
to pursue its current litigation intended to force the First Interstate Board
to honor its fiduciary duties and remove the obstacles it is maintaining to a
combination with Wells Fargo.
The competing proposals are subject to obtaining virtually identical
regulatory approvals. Wells Fargo believes that it will be able to obtain the
necessary regulatory approvals for the Wells Fargo Offer no later than the
date on which FBS would be able to obtain the necessary regulatory approvals
for the FIB/FBS Merger. Accordingly, Wells Fargo is convinced that the FIB/FBS
Merger proposal offers no timing advantage over the Wells Fargo Offer.
Stockholders should thus focus solely on the economics of the competing
proposals. On this basis, Wells Fargo believes the Wells Fargo Offer is
clearly superior. See "Comparison of the Two Proposals" below.
4
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BACKGROUND OF THE SOLICITATION
THE ORIGINAL PROPOSAL
On September 7, 1995, Paul Hazen, Chairman and Chief Executive Officer of
Wells Fargo, met with William Siart, Chairman and Chief Executive Officer of
First Interstate, to discuss the possibility of a merger of the two companies.
No conclusions were reached, but Mr. Siart indicated that First Interstate
would probably not be prepared to consider a merger in the immediate future.
On the afternoon of October 17, 1995, Mr. Hazen telephoned Mr. Siart to inform
him that Wells Fargo intended to deliver a letter containing a new merger
proposal to First Interstate and that Mr. Hazen would like to meet with Mr.
Siart later that day to deliver the letter in person and to discuss the
proposal. Mr. Siart asked for some time to consider the request, but called
Mr. Hazen back shortly thereafter to say that he saw no reason for the two of
them to meet. Wells Fargo's letter was then delivered to First Interstate.
On October 18, 1995, First Interstate and, shortly thereafter, Wells Fargo
publicly announced that Wells Fargo had made a proposal (the "Original
Proposal") to First Interstate for a tax-free merger in which First
Interstate's Stockholders would receive 0.625 of a share of Wells Fargo Common
Stock for each Share. The market reacted favorably to the announcement, with
the Wells Fargo Common Stock closing on that date at $229 per share, an
increase of $15.375 (7.2%) from its closing price the day before. Based on
that market price, the Original Proposal represented a $37.13 per Share, or
35%, premium to the closing price per First Interstate Share on the preceding
day.
On October 26, 1995, Mr. Siart and Mr. Hazen met again. At that meeting, Mr.
Siart acknowledged that a merger of First Interstate and Wells Fargo would
enhance stockholder value. Mr. Hazen explained the cost savings estimates
being used by Wells Fargo and offered to have the individuals at Wells Fargo
who had prepared those estimates meet with their counterparts at First
Interstate in order to demonstrate that the expected cost savings were
achievable. After discussion, Mr. Siart declined that offer and stated that
First Interstate agreed with Wells Fargo's cost savings estimates. Mr. Hazen
then offered to raise the exchange ratio in Wells Fargo's proposal to 0.65 of
a share of Wells Fargo Common Stock for each Share if First Interstate would
enter into a merger agreement with Wells Fargo. Mr. Siart rejected this
increased offer but indicated that First Interstate might accept a merger with
a 0.70 exchange ratio. Mr. Hazen stated that Wells Fargo was unwilling to
raise its bid any further at that time.
On October 31, 1995, Mr. Siart and Mr. Hazen again met. Mr. Hazen again
offered to have the individuals at Wells Fargo who had prepared the cost
savings estimates meet with their counterparts at First Interstate in order to
demonstrate that the expected cost savings were achievable. Mr. Siart again
declined that offer and stated that First Interstate agreed with Wells Fargo's
cost savings estimates. Mr. Siart indicated that he would be prepared to
recommend a merger with Wells Fargo if Wells Fargo would increase the exchange
ratio in its proposal to a 0.68 exchange ratio. Mr. Hazen replied that he
believed that an exchange ratio of 0.65 was a bid that was fair to the
stockholders of First Interstate and Wells Fargo.
On November 1, 1995, Messrs. Siart and Hazen talked again, this time by
telephone, but made no further progress towards an agreement. Mr. Hazen
attempted to reach Mr. Siart on November 2nd and November 3rd by telephone,
but his calls were not returned.
THE FIB/FBS MERGER AGREEMENT
On November 5, 1995, First Interstate, FBS and FBS Sub entered into the
FIB/FBS Merger Agreement pursuant to which FBS Sub and First Interstate would
effect the FIB/FBS Merger and each Share would be converted into the right to
receive 2.60 shares of FBS common stock. The FIB/FBS Merger is subject to a
number of conditions which are identical in all material respects to the
conditions of the Wells Fargo Offer, including among others that all
regulatory and stockholder approvals be obtained, although it is also subject
to an additional condition which is not a condition to the Wells Fargo Offer,
namely that each of First Interstate and FBS shall have received a letter from
its accountants to the effect that the FIB/FBS Merger will qualify for
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pooling of interests accounting treatment. BASED ON DISCUSSIONS WITH ITS
ADVISORS, WELLS FARGO BELIEVES THERE IS A SIGNIFICANT QUESTION AS TO WHETHER
THE FIB/FBS MERGER WILL QUALIFY FOR POOLING OF INTERESTS ACCOUNTING TREATMENT
IN LIGHT OF (I) THE INCREASED SHARE REPURCHASE PROGRAM FBS ANNOUNCED IN
CONNECTION WITH THE FIB/FBS MERGER, AND (II) THE NUMBER OF TAINTED SHARES THAT
ARE, BASED ON STATEMENTS MADE BY FBS, EXPECTED TO BE OUTSTANDING AT THE TIME
OF THE CLOSING OF THE FIB/FBS MERGER, WHICH SHARES, FOLLOWING THEIR EXCHANGE
FOR FBS COMMON STOCK, WOULD ALONE EXCEED 10% OF THE FBS COMMON STOCK
OUTSTANDING PRIOR TO THE CLOSING OF THE FIB/FBS MERGER.
As a further condition to the execution and delivery of the FIB/FBS Merger
Agreement, FBS and First Interstate executed reciprocal transaction
termination fee letter agreements providing for the payment of "break-up" fees
in certain circumstances (the "Reciprocal Fee Letters") and reciprocal stock
option agreements providing for the grant of options to purchase each other's
common stock in certain circumstances (the "Reciprocal Stock Option
Agreements").
For a more detailed description of the FIB/FBS Merger Agreement, see
"Background of the Offer--FIB/FBS Merger Agreement" in the Wells Fargo
Prospectus.
First Interstate entered into the FIB/FBS Merger Agreement and certain break
up fee and stock option agreements pursuant to the Reciprocal Fee Letters and
Reciprocal Stock Option Agreements (commonly referred to as "lock-up"
arrangements) despite the fact that, based on the last available closing
prices per share prior to doing so, the FIB/FBS Merger produced a value (at
the 2.60 exchange ratio) of $132.28 per Share while the then current Wells
Fargo proposal produced a value (at the 0.65 exchange ratio) of $137.96 per
Share, or $5.68 per Share higher. In fact, based on the averages of the
closing prices per share on the 15 trading days (which 15 trading day period
encompasses the announcements of both proposals) prior to entering into the
FIB/FBS Merger Agreement, the FIB/FBS Merger produced a value of $132.15 per
Share while the then current Wells Fargo proposal produced a value of $139.41
per Share, or $7.26 per Share higher. Moreover, according to First
Interstate's statement on Schedule 14D-9 filed with the Securities and
Exchange Commission (the "Commission") on November 20, 1995 (as amended, the
"FIB Schedule 14D-9"), First Interstate entered into the FIB/FBS Merger
Agreement (and certain "lock-up" arrangements) despite the finding by one of
its financial advisors (Morgan Stanley & Co. Incorporated) that Wells Fargo's
Original Proposal (at a 0.625 exchange ratio, or 6.3% below the exchange ratio
being offered pursuant to the Wells Fargo Offer) was also fair from a
financial point of view to the Stockholders.
According to the FIB Schedule 14D-9, FBS and certain other potential merger
candidates were afforded an opportunity to discuss with First Interstate's
financial advisors a possible business combination with First Interstate.
Wells Fargo was not contacted by First Interstate's financial advisors and was
not afforded an opportunity to conduct due diligence on First Interstate or to
receive any confidential information. First Interstate has also amended its
"poison pill" rights plan and taken certain other actions to accommodate the
FIB/FBS Merger, but has not taken any similar action with respect to any Wells
Fargo proposal.
THE WELLS FARGO OFFER AND RELATED ACTIONS
On November 13, 1995, Wells Fargo announced its intention to offer to
exchange two-thirds of a share of Wells Fargo Common Stock for each Share. In
a publicly released letter setting forth the Wells Fargo Offer, Mr. Hazen
again stated that Wells Fargo would be prepared to enter into a merger
agreement with First Interstate providing for the same consideration as the
Wells Fargo Offer. In the event that First Interstate did not elect to
terminate the FIB/FBS Merger Agreement, Wells Fargo offered to agree to a
process pursuant to which both FBS and Wells Fargo would each have 10 days to
submit their best and final merger proposals, which proposals would together
be presented to First Interstate's Stockholders who could decide for
themselves which proposal was in their best interest. This latter proposal was
designed to reduce the time and expense involved in a prolonged contest, and
the resultant disruption to First Interstate, but neither First Interstate's
management nor the First Interstate Board responded to the proposal.
As part of the November 13, 1995 announcement, Wells Fargo also stated that
it anticipated filing (a) this Proxy Statement and (b) preliminary consent
solicitation materials with the Commission for use in soliciting
6
<PAGE>
written consents from Stockholders of First Interstate to replace the current
members of the First Interstate Board with nominees who are committed to
removing any obstacles to the Wells Fargo Merger. THIS PROXY STATEMENT DOES
NOT CONSTITUTE A SOLICITATION OF CONSENTS FROM STOCKHOLDERS. ANY SUCH
SOLICITATION WILL BE MADE ONLY PURSUANT TO SEPARATE CONSENT SOLICITATION
MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
Wells Fargo also announced on November 13, 1995 the filing of a complaint
against First Interstate, the First Interstate Board, FBS and FBS Sub in the
Delaware Chancery Court which, among other things, seeks to invalidate the
FIB/FBS Merger Agreement and the "lock-up" arrangements granted to FBS
pursuant to the Reciprocal Fee Letters and the Reciprocal Stock Option
Agreements and seeks injunctive relief requiring the First Interstate Board to
redeem the "poison pill" rights associated with the Shares and to prevent
First Interstate from using anti-takeover devices or taking other actions
intended to impede or delay the acquisition of First Interstate by Wells
Fargo. On November 30, 1995, Wells Fargo filed an amended complaint in this
litigation alleging, among other things, that immediately after the public
announcement of the FIB/FBS Merger Agreement, FBS repurchased on the open
market more than $125 million of its common stock, thereby artificially
inflating the price of FBS common stock and denying First Interstate's
Stockholders the ability to assess accurately the market value of the FIB/FBS
Merger proposal or to compare it to the Wells Fargo Offer. The amended
complaint seeks, among other things, to compel the public disclosure of
information regarding FBS's stock repurchases and to prohibit FBS from
continuing to repurchase its common stock while the Wells Fargo Offer is being
considered. For a further description of this litigation as well as certain
class action litigation brought against First Interstate, the First Interstate
Board and FBS alleging, among other things, breach of fiduciary duty, abuse of
control and manipulation of the trading price of the FBS common stock, see
"Background of the Offer--Litigation" in the Wells Fargo Prospectus.
On November 13, 1995, Wells Fargo also filed an application with the Federal
Reserve Bank of San Francisco seeking approval of, among other things, the
Wells Fargo Offer and the Wells Fargo Merger. Wells Fargo subsequently filed
additional applications and notices with various governmental authorities
seeking all approvals required to permit consummation of the Wells Fargo Offer
and the Wells Fargo Merger. Wells Fargo anticipates that it will obtain
regulatory approvals on a timely basis and believes that the regulators will
consider Wells Fargo's applications for approval of the Wells Fargo Offer and
the Wells Fargo Merger in a time frame substantially identical to that of the
FBS applications for approval of the FIB/FBS Merger. See "The Offer--
Regulatory Approval Condition" in the Wells Fargo Prospectus. In this regard,
the FIB Schedule 14D-9 states that the First Interstate Board determined "it
was likely that each of First Bank System and Wells would ultimately receive
all [regulatory] approvals."
On November 20, 1995, the FIB Schedule 14D-9 was filed with the Commission
stating, among other things, that the First Interstate Board was committed to
completing the FIB/FBS Merger and recommending that First Interstate's
Stockholders not tender their Shares in the Wells Fargo Offer. Wells Fargo
believes that most of the reasons cited in the FIB Schedule 14D-9 for
selecting the FIB/FBS Merger proposal over the Wells Fargo Offer are subject
to serious question, and that these reasons do not justify the rejection of
the Wells Fargo Offer with its substantially higher market value. See
"Comparison of the Two Proposals--Other Considerations Affecting Value" below.
7
<PAGE>
COMPARISON OF THE TWO PROPOSALS
Wells Fargo is convinced that the Wells Fargo Offer provides demonstrably
superior value when compared to the FBS proposal, in both the short and the
long term, for the First Interstate Stockholders.
MARKET VALUE
It is beyond question that the Wells Fargo Offer has produced a substantially
higher market value per Share (both historically and recently) than has the
FIB/FBS Merger proposal.
<TABLE>
<CAPTION>
MARKET VALUE PER SHARE PRODUCED BY
WELLS FARGO OFFER AND FIB/FBS MERGER*
---------------------------------------
WELLS FARGO
OFFER AT A FIB/FBS MERGER
TWO-THIRDS AT A 2.60
EXCHANGE EXCHANGE
BASED ON CLOSING PRICES ON RATIO RATIO DIFFERENTIAL
- -------------------------- ----------- -------------- ------------
<S> <C> <C> <C>
October 18, 1995....................... $152.67 $134.23 $18.44
(day of announcement of Original
Proposal)
December 4, 1995....................... 144.58 135.85 8.73
(last trading day before the date of
this preliminary proxy
statement)
Average of indicated number of trading
days preceding
December 4, 1995:
30 Trading Days....................... 141.45 133.73 7.72
60 Trading Days....................... 135.97 129.53 6.44
90 Trading Days....................... 131.16 124.95 6.21
120 Trading Days...................... 128.78 120.92 7.86
</TABLE>
- --------
* Based on the closing price per share of the common stock of Wells Fargo or
FBS, as the case may be, for the indicated dates or periods.
Moreover, the indicated differentials in market value between the competing
proposals were realized even though Wells Fargo believes the market has
significantly discounted its shares since October 18, 1995 due to uncertainty
over whether Wells Fargo will succeed in eliminating the obstacles to its
exchange offer being maintained by the First Interstate Board, and even though
the FBS common stock appears to have been supported by an active stock
repurchase program being pursued by FBS since the FIB/FBS Merger Agreement was
announced.
IN THE ABSENCE OF THESE ARTIFICIAL FACTORS DISTORTING THE COMPARISON, WELLS
FARGO BELIEVES THAT THE MARKET VALUE DIFFERENTIAL BETWEEN THE COMPETING
PROPOSALS WOULD BE AT OR MUCH CLOSER TO THE $18.44 PER SHARE DIFFERENTIAL
CALCULATED AS SET FORTH ABOVE.
OTHER CONSIDERATIONS AFFECTING VALUE
In the FIB Schedule 14D-9, First Interstate included a list of reasons for
selecting the FIB/FBS Merger proposal over the Wells Fargo Offer. Wells Fargo
believes that most of these reasons are subject to serious question, and that
these reasons do not justify the rejection of Wells Fargo's proposal with its
substantially higher market value. A discussion of such reasons and Wells
Fargo's responses follows.
<TABLE>
<CAPTION>
FIRST INTERSTATE'S
LISTED REASON WELLS FARGO'S RESPONSE
------------------ ----------------------
<C> <S>
An FBS merger produces a top three Five of those states have a combined
ranking (in terms of deposits) in ten population of less than 4.5 million
states, or six more states than a people. A Wells Fargo merger (unlike
Wells Fargo merger. an FBS merger) produces a top three
ranking in California; the population
of the states where a Wells Fargo
merger produces a top three ranking is
40 million while the population of the
states where an FBS merger produces a
top three ranking is only 21 million.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FIRST INTERSTATE'S
LISTED REASON WELLS FARGO'S RESPONSE
------------------ ----------------------
<C> <S>
A Wells Fargo merger would produce Four out of First Interstate's five
greater concentration in California most recent significant acquisitions
assets, specifically California real (based on asset size as set forth on
estate loans, which "is inconsistent page 32 of First Interstate's 1994
with the First Interstate Board's Annual Report) have been in
longstanding desire to achieve greater California. Further, First Interstate
geographic diversification." has sold its operations in Oklahoma
and part of its operations in New
Mexico. Between 1993 and 1994 First
Interstate increased its total
California real estate loans by 151%
and its California commercial real
estate loans by 78%.
A FBS merger would provide further First Interstate's serious financial
geographic diversification of assets problems in the early 1990's were
outside California and thereby reduce widely attributed to credit quality
credit risk. and other problems in its units
outside California, primarily Arizona
and Texas.
A Wells Fargo merger presents a First Interstate's stated philosophy
"materially increased exposure to real notwithstanding, between 1993 and 1994
estate lending, which exposure is First Interstate's total real estate
inconsistent with First Interstate's loans increased by 61% and its
credit philosophy." commercial real estate loans increased
by 33%.
Anticipated cost savings from an FBS When measured against a comparable
merger as compared to a Wells Fargo expense base, Wells Fargo's estimate
merger. of cost savings from a Wells Fargo
merger is $500 million higher than
FBS's estimate of cost savings from an
FBS merger. Moreover, Wells Fargo is
convinced that its estimate is
conservative while the FBS estimate is
unrealistic--the FBS estimate (as a
percentage of operating expense base)
is two to three times those projected
in comparable transactions, while the
Wells Fargo estimate is consistent
with those projected in comparable
transactions.
Wells Fargo's cost savings would be The statement is internally
accompanied by substantial revenue inconsistent, and the former claim is
losses, while FBS's cost savings would inconsistent with statements by both
not. First Interstate and FBS for their own
in-market acquisitions and
inconsistent with projections in other
bank mergers.
Wells Fargo would lose substantial Even at the highest divestiture levels
revenues through divestitures. estimated in preliminary proxy
materials filed with the Commission by
First Interstate, Wells Fargo is
convinced net revenue loss would be
minimal.
Wells Fargo would lose substantial Wells Fargo's experience in the
revenues through "significant" deposit Crocker National merger (an in-market
attrition. merger with a company that, at the
time of acquisition, represented 70%
of Wells Fargo's assets) demonstrates
that deposits can grow, even given a
substantial reduction in branches, if
that reduction is properly managed.
FBS would have no significant revenue FBS's presentations to analysts show
reductions as a result of cost savings 32% of their projected cost savings
because its cost savings would be coming from line operations.
primarily derived from consolidation
of back office and operating systems
(as opposed to line operations).
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FIRST INTERSTATE'S
LISTED REASON WELLS FARGO'S RESPONSE
------------------ ----------------------
<C> <S>
FBS has a proven record of achieving An FBS acquisition of First Interstate
cost savings and efficiencies in ac- and another pending FBS acquisition
quisitions; Wells Fargo has not con- would require integration of
summated the acquisition of a signifi- institutions with assets aggregating
cant bank since 1988. over 178% of FBS's total assets, while
a Wells Fargo acquisition of First
Interstate would require integration
of an institution with assets
aggregating 110% of Wells Fargo's
total assets. The current FBS
management has never consummated an
acquisition comparable to Wells
Fargo's acquisition of Crocker
National, which represented 70% of
Wells Fargo's assets at the time, and
none of FBS's recent acquisitions
represented more than 30% of FBS's
total assets at the time of
announcement. Wells Fargo's 1990
acquisition of Great American's assets
and deposits, was larger (in terms of
deposits) than any acquisition by
First Interstate and larger than all
but one of FBS's acquisitions since
that time.
A Wells Fargo merger would provide Wells Fargo sees substantial revenue
fewer product lines and revenue growth growth opportunities in a merger with
opportunities. First Interstate, in supermarket
branches and banking centers, small
business lending, consumer lending,
direct distribution, commercial
lending, trust and investment
management. The revenue to assets
ratio for Wells Fargo is higher than
that of either First Interstate or FBS
(which are approximately the same);
this indicates higher potential for
revenue growth in a Wells Fargo/First
Interstate combination.
First Interstate Stockholders could This conclusion can be reached only if
achieve higher cash earnings per share FBS is assumed to achieve cost savings
from an FBS merger than a Wells Fargo two to three times the level projected
merger. in other major market extension
mergers in the banking industry and
Wells Fargo is assumed to suffer
revenue loss greater than projected
and far above industry norms. If cost
savings and revenue reductions are
more in line with Wells Fargo
projections and industry norms, a
Wells Fargo merger would produce
substantially higher cash earnings per
share.
Although First Interstate acknowledges Wells Fargo has already made
that it is "likely that Wells would substantial divestiture commitments to
ultimately receive all [regulatory] eliminate this concern. Wells Fargo
approvals," Wells could require a believes that it will be able to
longer period of time because of anti- obtain its necessary regulatory
trust concerns. approvals no later than the date on
which FBS would be able to obtain its
necessary regulatory approvals.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
FIRST INTERSTATE'S
LISTED REASON WELLS FARGO'S RESPONSE
------------------ ----------------------
<C> <S>
Fairness opinions of First Inter- In an extraordinary and perhaps
state's financial advisors. unprecedented action, one of First
Interstate's own financial advisors
felt compelled to include in its
fairness opinion an additional opinion
that Wells Fargo's Original Proposal
to merge with First Interstate (at an
exchange ratio of 0.625, or
approximately $8 to $9 per Share lower
than the value produced by the Wells
Fargo Offer with an exchange ratio of
two-thirds) was fair from a financial
point of view to the First Interstate
Stockholders. The other First
Interstate financial advisor
explicitly qualified its fairness
opinion by stating that it was not
passing on the relative merits of the
competing proposals and by assuming
that the FIB/FBS Merger is of long-
term strategic importance to First
Interstate solely on the basis of
being so informed by the First
Interstate Board.
First Interstate and FBS "share common Wells Fargo also has a number of
information systems which should systems in common with First
greatly facilitate the integration of Interstate. Wells Fargo believes that
the two companies' operations;" "[i]n these common systems between FBS and
contrast, Wells utilizes First Interstate and Wells Fargo and
a system which is incompatible with First Interstate would merely simplify
First initial customer conversions and do
Interstate's." not impact overall systems efficiency
(which depends on interactions between
systems and systems architecture).
Wells Fargo believes that its systems
architecture (which is based on an
open network and distributed
computing) provides it with a
substantial systems advantage with
respect to new product development and
ongoing operating efficiency.
The trading price of Wells Fargo's The same point also applies to FBS's
common stock in relation to book value common stock.
and earnings is among the highest in
the banking industry.
Concerns that the Wells proposal, but Wells Fargo believes there is no
not the FBS proposal, would be ac- meaningful difference between purchase
counted for as a purchase rather than accounting and pooling of interests
a pooling of interests. accounting. Wells Fargo notes that, in
the twelve acquisitions announced by
First Interstate since 1991, ten were
accounted for as purchases and only
two were accounted for as poolings of
interests, and in the eleven
acquisitions announced by FBS since
1991 for which information is
available, ten were accounted for as
purchases and only one was accounted
for as a pooling of interests. In
addition, based on discussions with
its advisors, Wells Fargo believes
there is a significant question as to
whether the FBS transaction will
qualify for pooling of interests
accounting treatment (in light of both
the share repurchase program announced
by FBS in connection with the FIB/FBS
Merger Agreement and the number of
tainted First Interstate Shares).
A risk that the market value of Wells The market value of Wells Fargo's
Fargo's common stock would decline if common stock increased by $15.375 on
the market rejected Wells Fargo's view the day of the announcement of Wells
that the combined company should be Fargo's Original Proposal to acquire
valued with an emphasis on cash flow. First Interstate using purchase
accounting.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
FIRST INTERSTATE'S
LISTED REASON WELLS FARGO'S RESPONSE
------------------ ----------------------
<C> <S>
The combined FBS-First Interstate en- The combined Wells Fargo-First
tity would be the ninth largest bank- Interstate entity would rank seventh
ing institution in the country in largest in terms of assets and fourth
terms of total assets and fifth larg- largest in terms of market value.
est in terms of market value.
The expectation that the FBS merger Wells Fargo also expects that its
will be tax free. proposal will be tax free.
</TABLE>
In addition, the FIB Schedule 14D-9 refers generally and vaguely to such
issues as FBS's compatible and complementary corporate philosophy and Wells
Fargo's "very different" strategies and "significantly different
characteristics." Wells Fargo was never, however, given a sufficient
opportunity to address any of these concerns with First Interstate. Likewise,
the FIB Schedule 14D-9 refers repeatedly to presentations by First
Interstate's financial advisors on various issues and to such financial
advisors' roles in assisting First Interstate to find a potential merger
partner, but Wells Fargo, unlike FBS and certain other potential merger
partners, was never given an opportunity to meet or discuss any of these
issues with First Interstate's financial advisors.
Moreover, in its November 6, 1995 press release announcing the FIB/FBS
Merger Agreement, First Interstate listed "the hostile nature of the Wells
approach" as one of its reasons for selecting the FIB/FBS Merger proposal over
the Wells Fargo Offer. This reason, however, is not relevant to a
determination of which proposal provides greater value for the First
Interstate Stockholders. In any event, this reason is particularly
uncompelling in light of the fact that Wells Fargo made its offer directly to
Stockholders only after several attempts to arrange a negotiated transaction
with First Interstate were rejected by First Interstate's management and the
First Interstate Board.
VALUE OF FRANCHISE
At the base of every banking institution's operations is the institution's
relationship with its present and prospective customers, individuals and
corporations doing business as borrowers and depositors or obtaining other
services from the institution. A banking institution's opportunities for the
future necessarily depend on the economic base and economic potential of the
territory it serves, which can be measured in terms such as population and
population growth, retail sales, households, industrial production and
employment, as well as the institution's market share in the territory it
serves. Wells Fargo has a history of success with individual and small
business customers. Wells Fargo is also known for its expertise in the area of
alternative delivery as it conducts business with many of its customers via
phone, ATMs, supermarket locations and electronically through the Internet.
Wells Fargo currently ranks as the second largest California based bank with
total deposits of approximately $37 billion and with a market presence that is
geographically broad based as Wells Fargo operates throughout the entire
state.
With the proposed combination with First Interstate, Wells Fargo will
solidify its position in California with deposits of approximately $58
billion. Additionally, through the presence of First Interstate in other
western states, the new company will rank number one, two, or three in terms
of deposits in four states (California, Oregon, Arizona and Nevada). The
population of California (approximately 31 million), coupled with the
population of First Interstate's territory outside California (approximately
43 million), represent 28% of the country's population and the states
represented are some of the fastest growing in the country. The combination of
Wells Fargo and First Interstate would benefit not only from the current
economic turnaround of California but also from the above average growth of
the other western states in which the combined entity would be doing business.
FBS's territory, by contrast, is much smaller and less populous and has
growth prospects that are lower than the geographic region in which First
Interstate operates. Thus, when viewing the two respective franchises, Wells
Fargo believes a Wells Fargo/First Interstate combination with its deeper
penetration of the populous California market coupled with the rapid growing
western states covered by First Interstate is preferable to an
12
<PAGE>
FBS/First Interstate combination with its diversification into a geographical
area which would dilute the economic growth prospects for First Interstate's
Stockholders. Put differently, a combination of Wells Fargo and First
Interstate would span fewer states than would a combination of FBS and First
Interstate, but the population of the states where Wells Fargo and First
Interstate combined would rank number one, two or three in terms of deposits
would be approximately 40 million while the population of the states where FBS
and First Interstate combined would rank number one, two or three in terms of
deposits would be only approximately 21 million.
WELLS FARGO
Wells Fargo is a bank holding company incorporated in the State of Delaware
and registered under the Bank Holding Company Act of 1956, as amended. Based
on total consolidated assets at December 31, 1994, it was the 15th largest
bank holding company in the United States, having total deposits of $42.3
billion and total assets of $53.4 billion.
Wells Fargo's principal subsidiary is Wells Fargo Bank, N.A., which is the
seventh largest bank in the United States and is the successor to the banking
portion of the business founded by Henry Wells and William G. Fargo in 1852.
The bank provides a broad range of financial products and services through
electronic and traditional channels. Customers can access accounts
electronically seven days a week, 24 hours a day. Besides serving as banker to
millions of California households, Wells Fargo provides a full range of
banking and financial services to commercial, corporate, real estate and small
business customers across the nation. Its primary lines of business are
summarized under the caption "Business of Wells Fargo" in the Wells Fargo
Prospectus.
Wells Fargo is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. The reports, proxy statements and other information filed by Wells
Fargo with the Commission may be inspected and copied at the Commission's
public reference room located at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the public reference facilities in the
Commission's regional offices in New York (Seven World Trade Center, Suite
1300, New York, New York 10048) and Chicago (Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661). Copies of such material may be
obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition such material can be inspected at the
offices of the New York Stock Exchange, Inc. (20 Broad Street, New York, New
York 10005) and the Pacific Stock Exchange (301 Pine Street, San Francisco,
California 94104), on which certain of Wells Fargo's securities, including the
Wells Fargo Common Stock, are listed.
Wells Fargo has its principal executive offices at 420 Montgomery Street,
San Francisco, California 94163, telephone number (415) 477-1000.
Certain information concerning the directors and executive officers of Wells
Fargo and other representatives of Wells Fargo who may solicit proxies from
Stockholders is set forth in Annex A hereto. Certain information concerning
the Shares held by the persons described in the preceding sentence and by
Wells Fargo, and certain transactions between any of them and First
Interstate, is set forth in Annex B hereto.
13
<PAGE>
VOTING OF PROXY CARDS
PROCEDURAL INSTRUCTIONS
The accompanying WHITE proxy card will be voted in accordance with the
Stockholder's instructions on such WHITE proxy card. Stockholders may vote
against the approval and adoption of the FIB/FBS Merger Agreement or may
withhold their votes or vote for such approval and adoption by marking the
proper box on the WHITE proxy and signing, dating and returning it promptly in
the enclosed postage-paid envelope. If a Stockholder returns a WHITE proxy
card that is signed, dated and not marked, that Stockholder will be deemed to
have voted against approval and adoption of the FIB/FBS Merger Agreement.
Only Stockholders of record on the record date are eligible to give their
proxies. Therefore, any Stockholder owning shares held in the name of a
brokerage firm, bank, or other institution should sign, date and return the
WHITE proxy card to such brokerage firm, bank or other institution in the
envelope provided by that firm.
Approval and adoption of the FIB/FBS Merger Agreement requires the
affirmative vote of a majority of Shares outstanding on the Record Date.
WELLS FARGO URGES YOU TO VOTE AGAINST THE FIB/FBS MERGER AGREEMENT AND
PRESERVE YOUR OPPORTUNITY TO ACCEPT THE HIGHER VALUE WELLS FARGO OFFER. IF YOU
WANT THE WELLS FARGO OFFER TO SUCCEED, VOTE AGAINST THE FIB/FBS MERGER
AGREEMENT BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD
TODAY.
REVOCATION OF PROXIES
An executed proxy may be revoked at any time prior to its exercise by
submitting another proxy with a later date, by appearing in person at the
Special Meeting and voting or by sending a written, signed, dated revocation
which clearly identifies the proxy being revoked to either (a) Wells Fargo in
care of D.F. King & Co., Inc. at 77 Water Street, 20th Floor, New York, New
York 10005, or (b) the principal executive offices of First Interstate at 633
West Fifth Street, Los Angeles, California 90071. A revocation may be in any
written form validly signed by the record holder as long as it clearly states
that the proxy previously given is no longer effective. Wells Fargo requests
that a copy of any revocation sent to First Interstate also be sent to Wells
Fargo in care of D.F. King & Co., Inc. at the above address so that Wells
Fargo may more accurately determine if and when proxies have been received
from the holders of record on the Record Date of a majority of the Shares then
outstanding.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE BOARD OF DIRECTORS OF FIRST
INTERSTATE, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE FIB/FBS MERGER
AGREEMENT BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD. THE
LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS.
APPRAISAL RIGHTS
According to statements made by FBS in its Registration Statement on Form S-
4 relating to the FIB/FBS Merger, Stockholders will not be entitled to any
appraisal rights in connection with the FIB/FBS Merger.
14
<PAGE>
OWNERSHIP OF SHARES
Each Share is entitled to one vote, and the Shares are the only class of
securities of First Interstate currently entitled to vote at the Special
Meeting. According to First Interstate's Form 10-K for the fiscal year ended
December 31, 1994, there were approximately 24,976 holders of record of Shares
as of February 28, 1995, and according to First Interstate's Form 10-Q for the
period ending September 30, 1995, as of October 31, 1995, there were
75,744,254 Shares outstanding.
The following table sets forth the share ownership of all persons who own
beneficially more than 5% of First Interstate's outstanding Shares to the
extent known by the persons on whose behalf the proxy solicitation is being
made. The information below with respect to such beneficial ownership is based
upon information filed with the Commission pursuant to Sections 13 (d) or 14
of the Exchange Act.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF
BENEFICIAL PERCENT OF
OWNERSHIP OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES SHARES
------------------------------------ ---------- -----------
<S> <C> <C>
DI Associates and KKR Associates................... 6,131,693(1) 8.26%
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Oppenheimer Group, Inc. ........................... 5,170,191(2) 6.78%
Oppenheimer Tower,
World Financial Center
New York, NY 10281
The Capital Group Companies, Inc. and
Capital Research Management Company............... 4,084,020(3) 5.36%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- --------
(1) According to the First Interstate Proxy Statement, dated March 20, 1995
(the "First Interstate Proxy Statement") this information is based upon a
Schedule 13D dated February 3, 1993 filed with the Commission jointly by
DI Associates and KKR Associates, which have sole voting and dispositive
power as to all of the Shares.
(2) According to the First Interstate Proxy Statement, this information is
based upon a Schedule 13G dated February 1, 1995 filed with the Commission
by Oppenheimer Group, Inc. ("Group"), as a parent holding company on
behalf of Oppenheimer & Co., L.P. and Group's subsidiary companies and/or
certain investment advisory clients or discretionary accounts of such
subsidiaries. Group does not have sole voting and dispositive power with
respect to any of the Shares, and has shared voting and dispositive power
as to all of the Shares. An investment advisory subsidiary, Oppenheimer
Capital, has shared voting and dispositive power as to 5,130,281 of such
Shares, and sole voting and dispositive power as to none of the Shares.
(3) This information is based upon a Schedule 13G dated February 8, 1995 filed
with the Commission by The Capital Group Companies, Inc. and Capital
Research Management Company. The Capital Group Companies, Inc. has sole
voting power with respect to 54,020 of the Shares and sole dispositive
power with respect to all of the Shares, while Capital Research Management
Company does not have sole voting power with respect to any of the Shares
and has sole dispositive power with respect to 4,030,000 Shares.
For information relating to the ownership of Shares by the current directors
and executive officers of First Interstate, see Annex C hereto.
15
<PAGE>
The information concerning First Interstate contained in this Proxy
Statement (including Annex C hereto) has been taken from or is based upon
documents and records on file with the Commission and other publicly available
information. Wells Fargo has no knowledge that would indicate that statements
relating to First Interstate contained in this Proxy Statement in reliance
upon publicly available information are inaccurate or incomplete. Wells Fargo,
however, has not been given access to the books and records of First
Interstate, was not involved in the preparation of such information and
statements, and is not in a position to verify, or make any representation
with respect to the accuracy of, any such information or statements.
The First Interstate Proxy Statement contains additional information
concerning the Shares, beneficial ownership of the Shares by and other
information concerning First Interstate's directors and officers, compensation
paid to executive officers, and the principal holders of Shares.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, telegraph, telex, telecopier
and advertisement and in person. Solicitation may be made by directors,
executive officers and other representatives of Wells Fargo. See Annex A
hereto for a listing of such persons.
Banks, brokerage houses and other custodians, nominees and fiduciaries will
be requested to forward the solicitation materials to the beneficial owners of
Shares for which they hold of record and Wells Fargo will reimburse them for
their reasonable out-of-pocket expenses.
In addition, Wells Fargo has retained D.F. King & Co., Inc. ("D.F. King") to
assist and to provide advisory services in connection with this Proxy
Solicitation for which D.F. King will be paid a fee of not more than $200,000
and will be reimbursed for reasonable out-of-pocket expenses. Wells Fargo will
indemnify D.F. King against certain liabilities and expenses in connection
with the Proxy Solicitation, including liabilities under the federal
securities law.
CS First Boston Corporation ("CS First Boston") and Montgomery Securities
("Montgomery Securities") are providing certain financial advisory services to
Wells Fargo in connection with its proposal to acquire First Interstate,
including, among other things, the Proxy Solicitation. For information
concerning the fees to be paid to CS First Boston and Montgomery Securities in
connection with such engagement, see "The Offer--Fees and Expenses" in the
Wells Fargo Prospectus. Wells Fargo has also agreed to reimburse each of CS
First Boston and Montgomery Securities for its reasonable out-of-pocket
expenses, including the fees and expenses of its legal counsel, incurred in
connection with its engagement, and has agreed to indemnify each of CS First
Boston and Montgomery Securities and certain related persons and entities
against certain liabilities and expenses in connection with its engagement,
including certain liabilities under the federal securities laws. In connection
with CS First Boston's and Montgomery Securities' engagement as financial
advisors, Wells Fargo anticipates that certain employees of each of CS First
Boston and Montgomery Securities may communicate in person, by telephone or
otherwise with a limited number of institutions, brokers or other persons who
are Stockholders for the purpose of assisting in the Proxy Solicitation. CS
First Boston and Montgomery Securities will not receive any fee for or in
connection with such solicitation activities by their respective employees
apart from the fees they are otherwise entitled to receive as described above.
In addition to the fees to be received by CS First Boston in connection with
its engagement as financial advisor to Wells Fargo, since January 1, 1993, CS
First Boston has rendered various investment banking and financial advisory
services for Wells Fargo for which it has received customary compensation.
The expenses related to the Proxy Solicitation will be borne by Wells Fargo.
Wells Fargo does not intend to seek reimbursement of its expenses related to
the Proxy Solicitation from First Interstate whether or not the Proxy
Solicitation is successful.
16
<PAGE>
If you have any questions concerning this Proxy Solicitation or the
procedures to be followed to execute and deliver a proxy, please contact D.F.
King & Co., Inc. at the address or phone number specified below.
YOUR PROXY AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
PROXY BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD TODAY.
Wells Fargo & Company
December , 1995
- -------------------------------------------------------------------------------
D.F. KING & CO., INC.
77 Water Street, 20th Floor
New York, New York 10005
Bankers and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: 1-800-431-9646
- -------------------------------------------------------------------------------
17
<PAGE>
ANNEX A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF WELLS FARGO AND OTHER REPRESENTATIVES OF
WELLS FARGO WHO MAY SOLICIT PROXIES
The following tables set forth the name, business address and the present
principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which such employment is
carried on, of the directors and executive officers of Wells Fargo and other
representatives of Wells Fargo who may solicit proxies from Stockholders of
First Interstate.
DIRECTORS AND EXECUTIVE OFFICERS OF WELLS FARGO
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS* PRINCIPAL OCCUPATION OR EMPLOYMENT
- ----------------------------------- -------------------------------------------
<S> <C>
H. Jesse Arnelle................... Director; Senior Partner of Arnelle,
Arnelle, Hastie, McGee, Willis & Hastie, McGee, Willis & Greene
Greene
1 Market Plaza
Spear Street Tower, 39th Floor
San Francisco, California 94105
William R. Breuner................. Director; Retired Chairman of the Board of
The Moraga Professional Center the John Breuner Company
1042 Country Club Drive, Suite 2C
Moraga, California 94556
William S. Davila.................. Director; President Emeritus of The Vons
The Vons Companies, Inc. Companies, Inc.
618 Michillinda Avenue
Arcadia, California 91007
Rayburn S. Dezember................ Director; Retired Chairman of the Board of
5401 California Avenue Central Pacific Corp.
Bakersfield, California 93309
Paul Hazen......................... Chairman of the Board and Chief Executive
Officer
Robert K. Jaedicke................. Director; Professor (Emeritus) of
Graduate School of Business, Room Accounting and Former Dean of the Graduate
289 School of Business, Stanford University
Stanford University
Stanford, California 94305
Ellen M. Newman.................... Director; President, Ellen Newman
Ellen Newman Associates Associates
323 Geary Street, Suite 507
San Francisco, California 94102
Philip J. Quigley.................. Director; Chairman, President and Chief
Pacific Telesis Group Executive Officer of Pacific Telesis Group
130 Kearney Street, 37th Floor
San Francisco, California 94108
Carl E. Reichardt.................. Director; Retired Chairman of the Board
Donald B. Rice..................... Director; President and Chief Operating
Teledyne, Inc. Officer of Teledyne, Inc.
2049 Century Park East, 15th Floor
Los Angeles, California 90067
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS* PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---------------------------------- -------------------------------------------
<S> <C>
Susan G. Swenson.................. Director; President and Chief Executive
Cellular One Officer of Cellular One
651 Gateway Boulevard, Suite 1500
South San Francisco, California
94080
Chang-Lin Tien.................... Director; Chancellor of the University of
Office of the Chancellor California, Berkeley
200 California Hall
University of California
Berkeley, California 94720
John A. Young..................... Director; Retired President and Chief
Hewlett-Packard Company Executive Officer of Hewlett-Packard
3200 Hillview Avenue Company
Palo Alto, California 94304
William F. Zuendt................. Director; President and Chief Operating
Officer
Michael J. Gillfillan............. Vice Chairman
Charles M. Johnson................ Vice Chairman
2030 Main Street, Suite 900
Irvine, California 92714
Clyde W. Ostler................... Vice Chairman
Rodney L. Jacobs.................. Vice Chairman and Chief Financial Officer
Leslie L. Altick.................. Executive Vice President and Director of
343 Sansome Street Corporate Communications
San Francisco, California 94104
Patricia R. Callahan.............. Executive Vice President and Personnel
Director
Frank A. Moeslein................. Executive Vice President and Controller
343 Sansome Street
San Francisco, California 94104
Guy Rounsaville, Jr............... Executive Vice President, Chief Counsel and
Secretary
Ross J. Kari...................... Executive Vice President and General
Auditor
Eric D. Shand..................... Executive Vice President and Chief Loan
111 Sutter Street Examiner
San Francisco, California 94104
</TABLE>
- --------
* Unless otherwise indicated, the principal business address of each director
and executive officer is Wells Fargo & Company, 420 Montgomery Street, San
Francisco, California 94104.
A-2
<PAGE>
OTHER REPRESENTATIVES OF WELLS FARGO WHO MAY SOLICIT PROXIES
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER
BUSINESS ADDRESS* PRINCIPAL OCCUPATION OR EMPLOYMENT
------------------ -----------------------------------------------
<S> <C>
Richard E. Thornburgh........ Chief Financial Officer, CS First Boston
Michael E. Martin............ Managing Director, CS First Boston
Mark S. Maron................ Managing Director, CS First Boston
Olivier P. Sarkozy........... Vice President, CS First Boston
Andrew C. Rosenburgh......... Associate, CS First Boston
J. Richard Fredericks........ Senior Managing Director, Montgomery Securities
James C. Hale................ Managing Director, Montgomery Securities
</TABLE>
- --------
* The principal business address of each representative of CS First Boston is
CS First Boston Corporation, Park Avenue Plaza, 55 East 52nd Street, New
York, New York 10055, and the principal business address of each
representative of Montgomery Securities is 600 Montgomery Street, San
Francisco, California 94111.
A-3
<PAGE>
ANNEX B
SHARES HELD BY WELLS FARGO, ITS DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN
EMPLOYEES AND OTHER REPRESENTATIVES OF WELLS FARGO WHO MAY ALSO SOLICIT
PROXIES, AND CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND FIRST INTERSTATE
Wells Fargo purchased 100 Shares on November 1, 1995 for $124 5/8 per share
(excluding mark-ups or commissions). As of December 5, 1995, Wells Fargo owned
beneficially 100 Shares. Additionally, as of October 20, 1995, Wells Fargo
held 1,961,095 Shares (or approximately 2.6% of the outstanding Shares) in a
fiduciary capacity. Wells Fargo disclaims beneficial ownership of the Shares
owned in such fiduciary capacity and any other Shares held by any pension plan
of Wells Fargo or any affiliates of Wells Fargo.
Philip J. Quigley beneficially owns 500 Shares through the Philip J. Quigley
Trust.
As of November 1, 1995, Rayburn S. Dezember had outstanding a loan from
First Interstate in a principal amount of $365,000.
As the Chancellor of the University of California, Berkeley, Chang-Lin Tien
is an officer of the Regents of the University of California (the "Regents"),
the legal entity which encompasses the University of California. The Regents'
business relationships with First Interstate Bank of California ("FICAL"), a
subsidiary of First Interstate, include: (i) FICAL's acting as trustee under
$1.9 billion in debt issued by the Regents (for which the Regents paid FICAL
$231,800 in trustee fees from the period from January 1, 1994, through
September 30, 1995), (ii) FICAL's acting as lender of certain construction and
other loans made to the Regents (for which there was $122 million outstanding
as of September 30, 1995), and (iii) the maintenance of two deposit accounts
with FICAL (for which the Regents incurred $671,000 in service fees and other
charges from January 1, 1994, through September 30, 1995).
Each of CS First Boston and Montgomery Securities engages in a full range of
investment banking, securities trading, market-making and brokerage services
for institutional and individual clients. In the ordinary course of their
business, CS First Boston and Montgomery Securities may actively trade the
securities of First Interstate for their own account and the accounts of their
customers and, accordingly, may at any time hold a long or short position in
such securities. As of December 1, 1995, CS First Boston held a net long
position of approximately 5,893 Shares, and Montgomery Securities held no
Shares. Neither CS First Boston nor Montgomery Securities admit that they or
any of their directors, officers, employees or affiliates are a "participant,"
as defined in Schedule 14A promulgated under the Exchange Act by the
Commission, in the solicitation to which this Proxy Statement relates or that
such Schedule 14A requires the disclosure in this Proxy Statement of certain
information concerning CS First Boston and Montgomery Securities.
Except as disclosed in this Proxy Statement, to the best knowledge of Wells
Fargo, none of Wells Fargo, its directors and executive officers or other
representatives of Wells Fargo named in Annex A hereto has any interest direct
or indirect, by security holdings or otherwise, in First Interstate.
B-1
<PAGE>
ANNEX C
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS OF FIRST INTERSTATE
The following table sets forth as of February 21, 1995 (with the exception
of shares held in the Employee Savings Plan, which are reported as of December
31, 1994) the number of Shares beneficially owned by each director, the chief
executive officer and each of the four other most highly compensated executive
officers (and by all directors and executive officers as a group) of First
Interstate. The information contained in the table is derived from information
contained in the First Interstate Proxy Statement.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
OWNERSHIP OF OUTSTANDING
NAME OF BENEFICIAL OWNER(1) SHARES(2)(3) SHARES
--------------------------- ----------------- -----------
<S> <C> <C>
John E. Bryson(4)(5).............................. 7,640 *
Edward M. Carson(4)(6)............................ 255,394 *
Dr. Jewel Plummer Cobb............................ 8,290 *
James J. Curran(6)(7)............................. 86,641 *
Ralph P. Davidson................................. 9,500 *
Myron Du Bain(4).................................. 36,939 *
Don C. Frisbee.................................... 3,872 *
Mary M. Gates(8).................................. 8,335 *
George M. Keller(4)............................... 10,896 *
William F. Kieschnick(4).......................... 8,100 *
Thomas L. Lee..................................... 6,300 *
Dr. William F. Miller(4).......................... 10,310 *
J.J. Pinola(4).................................... 8,842 *
William S. Randall(5)(6).......................... 115,940 *
Dr. Steven B. Sample.............................. 7,000 *
Forrest N. Shumway(4)............................. 10,000 *
William E. B. Siart(6)............................ 215,004 *
Richard J. Stegemeier(4).......................... 7,800 *
Daniel M. Tellep.................................. 7,500 *
Bruce G. Willison(5)(6)(7)........................ 115,504 *
All directors and executive officers as a group
(30 persons) (4)(5)(6)(7)(8)(9)(10)(11).......... 1,292,066 1.69%
</TABLE>
- --------
* Represents less than 1% of the outstanding Shares.
(1) Subject to applicable community property and similar statutes, the persons
listed as beneficial owners of the Shares have sole voting and investment
power with respect to such shares except as noted.
(2) Fractional Shares resulting from participation in the Dividend
Reinvestment and Stock Purchase Plan and the Employee Savings Plan of First
Interstate Bancorp have been rounded to the nearest whole share.
(3) Includes the number of Shares that could be purchased by exercise of
options presently exercisable, or exercisable within 60 days from February
21, 1995, under First Interstate's stock option plans.
(4) Includes the following Shares held by a living or family trust formed by
the named individual in which voting or investment power may be shared: Mr.
Bryson, 500 Shares; Mr. Carson, 30,482 Shares; Mr. Du Bain, 23,839 Shares;
Mr. Keller, 5,896 Shares; Mr. Kieschnick, 7,100 Shares; Dr. Miller, 2,310
Shares; Mr. Pinola, 8,842 Shares; Mr. Shumway, 2,000 Shares; and Mr.
Stegemeier, 4,800 Shares. Also includes 4,000 Shares held in an Individual
Retirement Account by Mr. Du Bain.
(5) Includes Shares held jointly, or in other capacities, as to which in some
cases beneficial ownership may be disclaimed.
C-1
<PAGE>
(6) Includes the following shares held by the Trustee of the Employee Savings
Plan in the accounts of the named individuals as of December 31, 1994:
<TABLE>
<S> <C>
Edward M. Carson................................................... 801
William E. B. Siart................................................ 16,527
William S. Randall................................................. 9,830
Bruce G. Willison.................................................. 4,972
James J. Curran.................................................... 13,338
All executive officers as a group (15 persons)..................... 56,479
</TABLE>
(7) Includes the following performance units awarded pursuant to the 1991,
1992 and 1993 annual incentive plans and issued under the 1991 Performance
Stock Plan (each performance stock unit represents a Share):
<TABLE>
<S> <C>
Mr. Willison........................................................ 1,777
Mr. Curran.......................................................... 1,543
All executive officers as a group (15 persons)...................... 7,692
</TABLE>
The performance stock units will be paid in Shares or cash upon the
occurrence of certain events, at the executive officer's election,
including the first to occur of termination of employment, retirement or a
specified date. Additional performance unit credit will be received based
on the value of dividends paid on the underlying performance stock units.
(8) Mrs. Gates' stock ownership is reported as of June 9, 1994, the date of
her death.
(9) Includes 97,213 Shares held in living or family trusts in which voting or
investment power may be shared.
(10) No directors or executive officers of First Interstate owned any shares
of Series F or Series G Preferred Stock of the Corporation.
(11) Includes shares of Restricted Stock awarded by the Compensation Committee
pursuant to the First Interstate's 1991 Performance Stock Plan.
C-2
<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION
[FORM OF PROXY CARD-WHITE]
PROXY SOLICITED BY WELLS FARGO & COMPANY
IN OPPOSITION TO THE PROXY SOLICITED BY THE BOARD OF DIRECTORS OF FIRST
INTERSTATE BANCORP
Unless otherwise specified below, the undersigned, a holder of
record of shares of Common Stock, par value $2.00 per share (the
"Shares"), of First Interstate Bancorp ("First Interstate") on
, 1996 (the "Record Date"), hereby appoints
, or , or any of them,
the proxy or proxies of the undersigned, each with full power of
substitution, to attend the Special Meeting of Stockholders of First
Interstate to be held on , 1996 at which holders of
Shares will be voting on approval and adoption of the Agreement and
Plan of Merger, dated as of November 5, 1995, by and among First
Bank System, Inc., Eleven Acquisition Corp., and First Interstate
(the "FIB/FBS Merger Agreement"), and at any adjournments,
postponements or reschedulings thereof, and to vote as specified in
this Proxy all the Shares which the undersigned would otherwise be
entitled to vote if personally present. The undersigned hereby
revokes any previous proxies with respect to the matters covered in
this proxy:
WELLS FARGO RECOMMENDS A VOTE AGAINST APPROVAL AND ADOPTION OF THE
FIB/FBS MERGER AGREEMENT.
(IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED, THE
UNDERSIGNED WILL BE DEEMED TO HAVE VOTED AGAINST APPROVAL AND
ADOPTION OF THE FIB/FBS MERGER AGREEMENT.)
1. Approval and adoption of the FIB/FBS Merger Agreement.
[_] AGAINST [_] ABSTAIN [_] FOR
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT D.F.
KING & CO., INC. AT (800) 431-9646
Proxies can only be given by Stockholders of record on the Record
Date. Please sign your name below exactly as it appears on your
stock certificate(s) on the Record Date or on the label affixed
hereto. When Shares are held of record by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _________________ , 1996
-------------------------------
Signature (Title, if any)
-------------------------------
Signature if held jointly
PLEASE SIGN, DATE AND RETURN PROXY PROMPTLY IN THE ENCLOSED POSTAGE-
PAID ENVELOPE.
