<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1996.
REGISTRATION NO. 33-64575
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6021 13-2553920
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number)
organization) Identification No.)
</TABLE>
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
(415) 477-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
GUY ROUNSAVILLE, JR.
EXECUTIVE VICE PRESIDENT, CHIEF COUNSEL AND SECRETARY
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
(415) 477-1000
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
---------------
COPY TO:
ALAN J. SINSHEIMER
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
---------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WELLS FARGO & COMPANY
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<C> <C> <S>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.............................. Table of Contents;
Available Information;
Incorporation of Certain
Information by Reference
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.................... Prospectus Summary
4. Terms of the Transaction.......................... Prospectus Summary;
Background of the Offer;
The Offer; Description
of Wells Fargo Capital
Stock; Comparison of
Rights of Holders of
Shares and Wells Fargo
Common Stock; Market
Prices and Dividends
5. Pro Forma Financial Information................... Pro Forma Combined
Financial Data
6. Material Contacts with the Company Being
Acquired......................................... Background of the Offer;
The Offer
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters..................................... *
8. Interests of Named Experts and Counsel............ Validity of Wells Fargo
Common Stock; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... *
10. Information with Respect to S-3 Registrants....... Incorporation of Certain
Information by Reference
11. Incorporation of Certain Information
by Reference..................................... Incorporation of Certain
Information by
Reference; Description
of Wells Fargo Capital
Stock
12. Information with Respect to S-2 or
S-3 Registrants.................................. *
13. Incorporation of Certain Information
by Reference..................................... *
14. Information with Respect to Registrants Other
Than S-2 or S-3 Registrants...................... *
15. Information with Respect to S-3 Companies......... Incorporation of Certain
Information by
Reference; Background of
the Offer
16. Information with Respect to S-2 or
S-3 Companies.................................... *
17. Information with Respect to Companies Other
than S-2 or S-3 Companies........................ *
18. Information if Proxies, Consents or Authorizations
are to be Solicited.............................. *
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer.. Outside Front Cover
Page; Prospectus
Summary; The Offer;
Incorporation of Certain
Information by Reference
</TABLE>
- --------
*Indicates that Item is not applicable or answer is in the negative.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 16, 1996
PROSPECTUS
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
FOR
TWO-THIRDS OF A SHARE OF COMMON STOCK
OF
WELLS FARGO & COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON , 1996, UNLESS EXTENDED. SHARES WHICH ARE TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER.
Wells Fargo & Company, a Delaware corporation ("Wells Fargo"), hereby offers,
upon the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal (collectively, the "Offer"), to exchange two-
thirds of a share of Common Stock, par value $5.00 per share, of Wells Fargo
("Wells Fargo Common Stock") for each outstanding share of Common Stock, par
value $2.00 per share (each, a "Share" and collectively, the "Shares"), of
First Interstate Bancorp, a Delaware corporation ("First Interstate"),
including the associated common stock purchase rights (each, a "Right" and
collectively, the "Rights") issued pursuant to the Rights Agreement, dated as
of November 21, 1988, between First Interstate and First Interstate Bank of
California, as successor Rights Agent, validly tendered on or prior to the
Expiration Date and not withdrawn. Unless the context otherwise requires and
unless and until the Rights are redeemed, all references to Shares shall
include the associated Rights. On , 1996, the closing price of the Shares
on the New York Stock Exchange was $ per Share. Based on the closing price of
Wells Fargo Common Stock on the same date, the market value of the Offer was
$ per Share. The market value of the Offer will change as the market price of
the Wells Fargo Common Stock changes.
WELLS FARGO'S OBLIGATION TO EXCHANGE SHARES OF WELLS FARGO COMMON STOCK FOR
SHARES PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE
BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY WELLS
FARGO AND ITS AFFILIATES FOR THEIR OWN RESPECTIVE ACCOUNTS (CURRENTLY 100
SHARES), WILL CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (AS THOUGH ALL OPTIONS OR OTHER SECURITIES
CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR SHARES, OTHER THAN THE
RIGHTS AND THE OPTION PURPORTED TO HAVE BEEN GRANTED TO FIRST BANK SYSTEM, INC.
PURSUANT TO ONE OF THE RECIPROCAL STOCK OPTION AGREEMENTS DESCRIBED HEREIN, HAD
BEEN SO CONVERTED, EXERCISED OR EXCHANGED) AS OF THE DATE THE SHARES ARE
ACCEPTED FOR EXCHANGE BY WELLS FARGO PURSUANT TO THE OFFER (THE "MINIMUM
(Continued on following page)
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
The Dealer Managers for the Offer are:
CS FIRST BOSTON CORPORATION MONTGOMERY SECURITIES
, 1996
<PAGE>
TENDER CONDITION") (BASED ON THE NUMBER OF SHARES OUTSTANDING OR RESERVED FOR
ISSUANCE PURSUANT TO FIRST INTERSTATE'S EMPLOYEE STOCK OPTIONS AND DIVIDEND
REINVESTMENT AND STOCK PURCHASE PLANS AS OF OCTOBER 31, 1995 AS REPORTED BY
FIRST INTERSTATE AND SHARES CURRENTLY OWNED BENEFICIALLY BY WELLS FARGO AND
ITS AFFILIATES FOR THEIR OWN RESPECTIVE ACCOUNTS, WELLS FARGO BELIEVES THE
MINIMUM TENDER CONDITION WOULD HAVE BEEN SATISFIED ON OCTOBER 31, 1995 IF AT
LEAST AN AGGREGATE OF 39,938,688 SHARES, OR 52.7% OF THE SHARES OUTSTANDING AS
OF OCTOBER 31, 1995, HAD BEEN VALIDLY TENDERED PURSUANT TO THE OFFER AND NOT
WITHDRAWN), (II) APPROVAL OF THE ISSUANCE OF SHARES OF WELLS FARGO COMMON
STOCK PURSUANT TO THE OFFER AND THE MERGER (AS DEFINED HEREIN) BY THE HOLDERS
OF A MAJORITY OF THE SHARES OF WELLS FARGO COMMON STOCK VOTED AT A MEETING OF
SUCH HOLDERS AT WHICH THE TOTAL NUMBER OF VOTES CAST REPRESENTS OVER 50% IN
INTEREST OF ALL SHARES OF WELLS FARGO COMMON STOCK OUTSTANDING ON THE
APPLICABLE RECORD DATE (THE "WELLS FARGO STOCKHOLDER APPROVAL CONDITION"),
(III) THE BOARD OF DIRECTORS OF FIRST INTERSTATE HAVING REDEEMED THE RIGHTS
AND, PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW (THE
"DGCL"), APPROVED THE ACQUISITION OF SHARES PURSUANT TO THE OFFER, OR WELLS
FARGO BEING OTHERWISE SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS AND THE
PROVISIONS OF SECTION 203 RESTRICTING CERTAIN BUSINESS COMBINATIONS ARE
INVALID OR ARE NOT APPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER AND THE MERGER (THE "RIGHTS PLAN AND DGCL 203 CONDITION"), (IV) THE
STOCKHOLDERS OF FIRST INTERSTATE NOT HAVING APPROVED THE AGREEMENT AND PLAN OF
MERGER BETWEEN FIRST INTERSTATE, FIRST BANK SYSTEM, INC. AND ELEVEN
ACQUISITION CORP. (THE "FIB/FBS MERGER AGREEMENT CONDITION"), AND (V) ALL
REGULATORY APPROVALS REQUIRED TO CONSUMMATE THE OFFER AND THE MERGER HAVING
BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT, ALL STATUTORY WAITING
PERIODS IN RESPECT THEREOF HAVING EXPIRED AND NO SUCH APPROVAL CONTAINING ANY
CONDITIONS OR RESTRICTIONS WHICH THE BOARD OF DIRECTORS OF WELLS FARGO
REASONABLY DETERMINES IN GOOD FAITH WILL HAVE OR REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT (AS DEFINED HEREIN) ON WELLS FARGO, FIRST
INTERSTATE AND THEIR RESPECTIVE SUBSIDIARIES TAKEN AS A WHOLE (THE "REGULATORY
APPROVAL CONDITION").
----------------
THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A SOLICITATION OF
ANY PROXIES OR CONSENTS. ANY SUCH SOLICITATIONS WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares and the
associated Rights should either (a) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, and mail or deliver the Letter of Transmittal or
such facsimile and any other required documents to the Exchange Agent and
either deliver the certificates for such Shares and Rights to the Exchange
Agent along with the Letter of Transmittal, deliver such Shares and Rights
pursuant to the procedures for book-entry transfer set forth herein (in the
case of Rights, only if such procedures are available) or comply with the
guaranteed delivery procedures set forth below or (b) request his broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for him. A stockholder having Shares and Rights registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee
if he desires to tender such Shares and Rights.
Stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203
Condition (insofar as it relates to the Rights) has been satisfied or waived.
Unless the First Interstate Distribution Date (as defined herein) occurs, a
tender of Shares will constitute a tender of the associated Rights.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Prospectus. Requests for
additional copies of this Prospectus and the Letter of Transmittal may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... iv
Incorporation of Certain Information by Reference........................ iv
First Interstate Information.............................................. v
Prospectus Summary........................................................ 1
Background of the Offer................................................... 16
The Original Proposal.................................................... 16
The FIB/FBS Merger Agreement............................................. 17
The Offer and Related Actions............................................ 17
Comparison of the Proposals.............................................. 19
Litigation............................................................... 30
FIB/FBS Merger Agreement................................................. 31
The Offer................................................................. 39
General.................................................................. 39
Timing of the Offer...................................................... 41
Extension, Termination and Amendment..................................... 41
Exchange of Shares; Delivery of Wells Fargo Common Stock............... 42
Cash in Lieu of Fractional Shares of Wells Fargo Common Stock.......... 43
Withdrawal Rights........................................................ 43
Procedure for Tendering ................................................. 43
Certain Federal Income Tax Consequences.................................. 46
Effect of Offer on Market for Shares; Registration Under the Exchange
Act....................................................................... 49
Purpose of the Offer; the Merger......................................... 50
Minimum Tender Condition................................................. 51
Wells Fargo Stockholder Approval Condition............................... 51
Rights Plan and DGCL 203 Condition....................................... 51
FIB/FBS Merger Agreement Condition....................................... 54
Regulatory Approval Condition............................................ 54
Certain Other Conditions of the Offer.................................... 57
Relationships with First Interstate...................................... 59
Fees and Expenses........................................................ 59
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounting Treatment...................................................... 60
Stock Exchange Listing.................................................... 60
Business of Wells Fargo.................................................... 61
Pro Forma Combined Financial Information................................... 62
Description of Wells Fargo Capital Stock................................... 70
Wells Fargo Common Stock.................................................. 70
Repurchases of Wells Fargo Common Stock................................. 70
Wells Fargo Preferred Stock............................................... 70
Certain Regulatory Considerations......................................... 72
Comparison of Rights of Holders of Shares and Wells Fargo Common Stock.... 77
Special Meetings of Stockholders.......................................... 77
Number of Directors....................................................... 77
Advance Notice of Stockholder Nominations of Directors.................. 77
Stockholder Proposal Procedures........................................... 78
Indemnification........................................................... 78
Certain Voting Rights for Mergers......................................... 78
Cumulative Voting......................................................... 78
Removal of Directors; Filling Vacancies on the Board of Directors....... 78
Stockholder Action by Written Consent..................................... 79
Amendment of Bylaws....................................................... 79
Classification of Board of Directors...................................... 79
Market Prices and Dividends................................................ 80
Wells Fargo............................................................... 80
First Interstate.......................................................... 81
Validity of Wells Fargo Common Stock....................................... 81
Experts.................................................................... 81
Schedule A--Directors and Executive
Officers of Wells Fargo................................................... A-1
Schedule B--Section 203 of the Delaware General Corporation Law........... B-1
</TABLE>
iii
<PAGE>
AVAILABLE INFORMATION
Wells Fargo and First Interstate are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The reports, proxy statements and other information filed by Wells Fargo and
First Interstate with the Commission may be inspected and copied at the
Commission's public reference room located at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the public reference
facilities in the Commission's regional offices located at: 7 World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 400, 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., Washington, D.C.
20549. The Shares and the Wells Fargo Common Stock are listed on the New York
Stock Exchange (the "NYSE") and the Pacific Stock Exchange (the "PSE"). The
periodic reports, proxy statements and other information filed by Wells Fargo
and First Interstate with the Commission may be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
and at the offices of the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-4, as amended (the "Registration Statement"),
covering the Wells Fargo Common Stock offered hereby which has been filed with
the Commission, certain portions of which have been omitted pursuant to the
rules and regulations of the Commission, and to which portions reference is
hereby made for further information with respect to Wells Fargo, First
Interstate and the securities offered hereby. Statements contained herein
concerning any documents are not necessarily complete and, in each instance,
reference is made to the copies of such documents filed as exhibits to the
Registration Statement. Each such statement is qualified in its entirety by
such reference.
Not later than the date of commencement of the Offer, Wells Fargo will file
with the Commission a statement on Schedule 14D-1 pursuant to Rule 14d-3 under
the Exchange Act furnishing certain information with respect to the Offer.
Pursuant to Rules 14d-9 and 14e-2 under the Exchange Act, First Interstate
filed on November 20, 1995 a statement on Schedule 14D-9 (the "First
Interstate Schedule 14D-9") regarding its position concerning the Offer. Such
Schedules and any amendments thereto should be available for inspection and
copying as set forth above (except that such Schedules and any amendments
thereto will not be available at the regional offices of the Commission).
Pursuant to Rule 409 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 12b-21 promulgated under the Exchange
Act, Wells Fargo has requested that First Interstate and its independent
accountants, Ernst & Young LLP, provide to Wells Fargo the information
required for complete disclosure concerning the business, operations,
financial condition and management of First Interstate. Neither First
Interstate nor Ernst & Young LLP has yet provided any information in response
to such request. Wells Fargo will provide any and all information which it
receives from First Interstate or Ernst & Young LLP prior to the expiration of
the Offer and which Wells Fargo deems material, reliable and appropriate in a
subsequently prepared amendment or supplement hereto.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON REQUEST
TO SECRETARY, WELLS FARGO & COMPANY, 420 MONTGOMERY STREET, SAN FRANCISCO,
CALIFORNIA 94163. TELEPHONE REQUESTS MAY BE DIRECTED TO THE CORPORATE
SECRETARY'S DEPARTMENT AT (415) 396-4386. IN ORDER TO ENSURE TIMELY DELIVERY
OF SUCH DOCUMENTS, ANY REQUEST FOR DOCUMENTS SHOULD BE SUBMITTED NOT LATER
THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE OFFER.
The following documents filed with the Commission by Wells Fargo (File No.
1-6214) are incorporated herein by reference: (a) Wells Fargo's Annual Report
on Form 10-K for the year ended December 31, 1994 (the "1994 Wells Fargo 10-
K"); (b) the portions of Wells Fargo's Proxy Statement for the Annual Meeting
of
iv
<PAGE>
Stockholders held on April 18, 1995 that have been incorporated by reference
in the 1994 Wells Fargo 10-K; (c) Wells Fargo's Quarterly Reports on Form 10-Q
for the periods ended March 31, 1995, June 30, 1995 and September 30, 1995;
(d) Wells Fargo's Current Reports on Form 8-K dated January 17, 1995, April
18, 1995, June 21, 1995, July 18, 1995, October 17, 1995, October 18, 1995,
October 23, 1995 and January 16, 1996; (e) the description of Wells Fargo
Common Stock contained in Wells Fargo's Registration Statement on Form 8-B
filed with the Commission June 17, 1987; (f) Wells Fargo's Preliminary Proxy
Statement on Schedule 14A dated December 5, 1995; and (g) soliciting material
of Wells Fargo filed pursuant to Rule 14a-12 of the Exchange Act after
November 13, 1995 and prior to the date hereof.
The following documents filed with the Commission by First Interstate (File
No. 1-4114) are incorporated herein by reference: (a) First Interstate's
Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994
First Interstate 10-K") (excluding the report of First Interstate's
independent accountants included therein); (b) the portions of First
Interstate's Proxy Statement for the Annual Meeting of Stockholders held on
April 28, 1995 that have been incorporated by reference in the 1994 First
Interstate 10-K; (c) First Interstate's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1995, June 30, 1995 and September 30, 1995; (d) First
Interstate's Current Reports on Form 8-K or 8-K/A dated February 15, 1995,
March 24, 1995, May 1, 1995, May 26, 1995 and November 5, 1995; (e) soliciting
material of First Interstate filed pursuant to Rule 14a-12 of the Exchange Act
after November 13, 1995 and prior to the date hereof; and (f) the First
Interstate Schedule 14D-9, as amended.
All documents filed by either Wells Fargo or First Interstate pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the date the Offer is terminated or Shares are accepted
for exchange shall be deemed to be incorporated herein by reference and to be
a part hereof from the date of such filing. Any statement contained herein or
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein or in any other subsequently filed document
which also is, or is deemed to be, incorporated herein by reference modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed to constitute a part hereof, except as so modified or
superseded.
FIRST INTERSTATE INFORMATION
While Wells Fargo has included information concerning First Interstate
insofar as it is known or reasonably available to Wells Fargo, First
Interstate is not affiliated with Wells Fargo and First Interstate has not to
date permitted access by Wells Fargo to First Interstate's books and records.
Therefore, information concerning First Interstate which has not been made
public is not available to Wells Fargo. Although Wells Fargo has no knowledge
that would indicate that statements relating to First Interstate contained or
incorporated by reference in this Prospectus in reliance upon publicly
available information are inaccurate or incomplete, Wells Fargo was not
involved in the preparation of such information and statements and, for the
foregoing reasons, is not in a position to verify any such information or
statements.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WELLS FARGO OR THE DEALER MANAGERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE OFFER IS NOT BEING MADE TO,
NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SHARES IN ANY
JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, WELLS FARGO MAY, IN
ITS SOLE DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE
OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF SHARES IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF WELLS FARGO OR FIRST INTERSTATE SINCE THE
DATE AS OF WHICH INFORMATION IS FURNISHED OR THE DATE HEREOF.
v
<PAGE>
IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE
OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO
BE MADE ON BEHALF OF WELLS FARGO BY CS FIRST BOSTON CORPORATION AND MONTGOMERY
SECURITIES, AS DEALER MANAGERS, OR ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
vi
<PAGE>
PROSPECTUS SUMMARY
The information below is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus,
including the documents incorporated in this Prospectus by reference. As used
in this Prospectus, the term "Wells Fargo" refers to Wells Fargo & Company and,
unless the context otherwise requires, its subsidiaries, and the term "First
Interstate" refers to First Interstate Bancorp and, unless the context
otherwise requires, its subsidiaries.
WELLS FARGO & COMPANY
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 (the
"BHCA"). 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.
Today, Wells Fargo operates one of the largest banking businesses in the United
States. 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
"Business of Wells Fargo."
Wells Fargo has its principal executive offices at 420 Montgomery Street, San
Francisco, California 94163, telephone number (415) 477-1000.
FIRST INTERSTATE BANCORP
The following information concerning First Interstate is excerpted from the
1994 First Interstate 10-K:
"[First Interstate] was incorporated under the laws of the State of Delaware
and began operations in 1958. . . [First Interstate] is a bank holding company
registered under the [BHCA]. At December 31, 1994, it owned directly all of the
shares of capital stock of 16 banks . . . which operated approximately 1,100
banking offices in 13 states. Ranked according to assets, [First Interstate]
was the fourteenth largest commercial banking organization in the United States
at December 31, 1994, having total deposits of $48.4 billion and total assets
of $55.8 billion. . ."
First Interstate has its principal executive offices at 633 West Fifth
Street, Los Angeles, California 90071, telephone number (213) 614-3001.
BACKGROUND OF THE OFFER
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 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.
<PAGE>
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. Wells Fargo believes 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 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 estimates of cost savings
and reductions in revenue being used by Wells Fargo. Mr. Hazen also offered to
have the individuals at Wells Fargo who had prepared those estimates meet with
their counterparts at First Interstate in order to discuss potential cost
savings and reductions in revenue if there were any questions about Wells
Fargo's estimates, but Mr. Siart responded that that would not be necessary
since he agreed with the economic value of the Wells Fargo estimates. Mr. Siart
and Mr. Hazen were joined during part of this meeting by George Roberts of
Kohlberg Kravis Roberts & Co., First Interstate's largest stockholder, and
Warren Buffett of Berkshire Hathaway Inc., Wells Fargo's largest stockholder.
Mr. Buffett expressed his view that an exchange ratio of 0.625 was fair, and
Mr. Roberts and Mr. Siart expressed their view that such ratio was inadequate.
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. Roberts indicated
that an exchange ratio of 0.65 was still inadequate and indicated that it would
take an exchange ratio of 0.70 to reach agreement at that time. 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 estimates
of cost savings and reductions in revenue meet with their counterparts at First
Interstate in order to review such estimates in detail, but Mr. Siart again
declined that offer. Mr. Siart then 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.
The FIB/FBS Merger Agreement
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.
On November 5, 1995, First Interstate, First Bank System, Inc. ("FBS") and
Eleven Acquisition Corp., a subsidiary of FBS ("FBS Sub"), entered into an
Agreement and Plan of Merger (the "FIB/FBS Merger Agreement") pursuant to which
FBS Sub and First Interstate would merge (the "FIB/FBS Merger") and each Share
would be converted into the right to receive 2.60 shares of common stock, par
value $1.25 per share, of FBS (the "FBS Common Stock"). Under the terms of the
FIB/FBS Merger Agreement, following the consummation of that merger, FBS would
change its name to First Interstate Bancorp and there would be an even split of
the Board of the combined company. The FIB/FBS Merger is subject to a number of
conditions which are identical in all material respects to the conditions of
the 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 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 "pooling of interests" accounting treatment.
Based on discussions with its accountants (KPMG Peat Marwick LLP), Wells Fargo
believes there is a significant question as to whether the FIB/FBS Merger
qualifies 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
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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. See "Background of the Offer--
Comparison of the Proposals--Purchase Versus Pooling of Interests Accounting."
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, the
Reciprocal Fee Letters and the Reciprocal Stock Option Agreements, see
"Background of the Offer--FIB/FBS Merger Agreement."
First Interstate entered into the FIB/FBS Merger Agreement (as well as
certain "lock-up" arrangements set forth in the Reciprocal Fee Letters and the
Reciprocal Stock Option Agreements) 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 day trading
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 the First
Interstate Schedule 14D-9, First Interstate entered into the FIB/FBS Merger
Agreement (and "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 Offer) and the FIB/FBS Merger (at the agreed upon
2.60 exchange ratio) were both fair from a financial point of view to the
stockholders of First Interstate.
The 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 such 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 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. First
Interstate has not responded to this proposal.
As part of the November 13, 1995 announcement, Wells Fargo also stated that
it anticipated filing (a) preliminary proxy solicitation materials with the
Commission for use in soliciting proxies from stockholders of First Interstate
against approval of the FIB/FBS Merger and (b) preliminary consent solicitation
materials with the Commission for use in soliciting written consents from
stockholders of First Interstate to replace the current members of the Board of
Directors of First Interstate (the "First Interstate Board") with nominees who
are committed to removing any obstacles to the merger of First Interstate with
Wells Fargo. THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A
SOLICITATION OF ANY PROXIES OR CONSENTS FROM FIRST INTERSTATE'S STOCKHOLDERS.
ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT
SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
EXCHANGE ACT.
Wells Fargo also announced on November 13, 1995 the filing of a complaint
against First Interstate, the members of 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 break-up fees and stock option
arrangements
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(commonly referred to as "lock-up" arrangements) granted to FBS pursuant to the
Reciprocal Fee Letters (as defined herein) and the Reciprocal Stock Option
Agreements (as defined herein), respectively, and seeks injunctive relief
requiring the First Interstate Board to redeem the Rights 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. For a
further description of this litigation (including information concerning an
amended complaint alleging that FBS repurchased on the open market more than
$125 million of its common stock, thereby artificially inflating the price of
the FBS Common Stock and denying First Interstate's stockholders the ability to
assess accurately the market value of the FIB/FBS Merger proposal or compare it
to the Offer), and for a description of (a) certain class action, derivative
action and shareholder litigation brought against First Interstate, the members
of the First Interstate Board and FBS alleging, among other things, breach of
fiduciary duty to the stockholders of First Interstate, violations of federal
securities laws by making false and misleading statements and material
omissions of fact regarding the FIB/FBS Merger and the Offer, abuse of control
and tortious interference with prospective economic advantage, (b) certain
litigation brought by First Interstate and FBS against Wells Fargo alleging,
among other things, violations of federal securities laws by releasing certain
financial projections and by making allegedly false statements regarding the
FIB/FBS Merger and (c) certain counterclaims brought by Wells Fargo against
First Interstate and FBS alleging, among other things, violations of federal
securities laws by making false and misleading statements and material
omissions of fact regarding the FIB/FBS Merger and the Offer, see "Background
of the Offer--Litigation."
On November 13, 1995, Wells Fargo filed applications and notices in draft
form with the Federal Reserve Bank of San Francisco (the "FRB-SF") seeking
approval of, among other things, the Offer and the Merger (collectively, the
"Acquisition"); the applications and notices were refiled in final form on
November 17, 1995. Wells Fargo has filed additional applications and notices
with various governmental authorities seeking all approvals required to permit
consummation of the Acquisition. FBS announced that it filed an application in
final form for the FIB/FBS Merger with the Federal Reserve Bank of Minneapolis
(the "FRB-M") on November 10, 1995. On December 14, 1995, the FRB-M accepted
the FBS application and wrote that it expected a Federal Reserve Board decision
by February 12, 1996. On December 20, 1995, the FRB-SF accepted Wells Fargo's
application and wrote that it expected a Federal Reserve Board decision by
February 18, 1996. In its application filed with the FRB-SF, Wells Fargo has
committed to divest approximately $1 billion in deposits and related assets in
connection with regulatory concerns regarding possible adverse competitive
effects of the Acquisition. It is not possible to predict with certainty the
acceptability of any particular divestiture plan to governmental agencies.
However, based on discussions with Wells Fargo's counsel, Sullivan & Cromwell,
and Wells Fargo's own knowledge of and experience in the regulatory process,
Wells Fargo believes that the divestitures it has proposed in its application
filed with the FRB-SF are consistent with the competitive analysis set forth in
that application. Moreover, based on such discussions, knowledge and experience
and because Wells Fargo fully intends to make all divestitures required in
order to secure the necessary approvals, Wells Fargo is confident that, even if
a governmental agency disagreed with the competitive analysis set forth in the
Wells Fargo application and required a higher level of divestitures, Wells
Fargo would be able to reach agreement with that agency on appropriate
divestitures and obtain the regulatory approvals required for the Acquisition
on a timely basis and in a time frame substantially identical to that in which
FBS would be able to obtain the regulatory approvals required for the FIB/FBS
Merger. See "The Offer--Regulatory Approval Condition."
On November 20, 1995, the First Interstate 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 Offer.
In the First Interstate Schedule 14D-9, there is a detailed list of 16
factors considered by the First Interstate Board as material in selecting the
FBS merger proposal over Wells Fargo's merger proposal. Conspicuously absent
from that list is any consideration of the implied purchase price produced by
each of the two proposals.
AT ALL TIMES DURING THE FIRST INTERSTATE BOARD'S CONSIDERATION OF EACH WELLS
FARGO PROPOSAL AND FBS PROPOSAL, THE THEN CURRENT WELLS FARGO PROPOSAL HAS
PRODUCED A MARKET VALUE HIGHER THAN THE MARKET
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<PAGE>
VALUE PRODUCED BY THE THEN CURRENT FBS PROPOSAL. ON JANUARY 15, 1996 (THE LAST
TRADING DAY PRIOR TO THE DATE OF THIS PRELIMINARY PROSPECTUS) THE DIFFERENTIAL
AMOUNTED TO $19.35 PER SHARE, AND THE AGGREGATE MARKET VALUE OF THE OFFER
EXCEEDED THE AGGREGATE MARKET VALUE OF THE FBS PROPOSAL BY APPROXIMATELY $1.5
BILLION.
For more detailed information concerning the background of the Offer, and for
a comparison of the Offer and the FIB/FBS Merger, see "Background of the Offer"
below.
THE OFFER
Wells Fargo hereby offers, upon the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal (which together
constitute the "Offer"), to exchange two-thirds of a share of Wells Fargo
Common Stock for each outstanding Share validly tendered on or prior to the
Expiration Date and not withdrawn. The term "Expiration Date" shall mean 12:00
midnight, New York City time, on , 1996, unless and until Wells Fargo
extends the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Wells Fargo, shall expire. See "The Offer--General."
The purpose of the Offer is for Wells Fargo to acquire control of, and
ultimately the entire common equity interest in, First Interstate. Wells Fargo
intends, as soon as practicable after consummation of the Offer, to seek to
have First Interstate consummate a merger with Wells Fargo in which each
outstanding Share (except for treasury shares of First Interstate and Shares
held by Wells Fargo or any subsidiary of Wells Fargo other than in a fiduciary
capacity) would be converted into the right to receive two-thirds of a share of
Wells Fargo Common Stock (the "Merger"). See "The Offer--Purpose of the Offer;
the Merger."
Wells Fargo's obligation to exchange shares of Wells Fargo Common Stock for
Shares pursuant to the Offer is conditioned upon satisfaction of the Minimum
Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights
Plan and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition and the
Regulatory Approval Condition (in each case as defined on the cover page of
this Prospectus) and the other conditions set forth under "The Offer--Certain
Other Conditions of the Offer." The conditions to the Offer are identical in
all material respects to a number of the conditions to the competing proposal
to effect the FIB/FBS Merger, including among others that all regulatory and
stockholder approvals be obtained, although the competing proposal is also
subject to an additional condition which is not a condition to the 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 "pooling
of interests" accounting treatment. (Specifically, (a) the conditions to the
Offer relating to (i) obtaining necessary regulatory approvals and approvals of
stockholders of the acquiring company, (ii) authorization for listing on the
NYSE of the shares of the acquiring company to be issued in the transaction,
(iii) effectiveness of the registration statement relating to the transaction
under the Securities Act, (iv) absence of orders, injunctions, decrees,
statutes, rules, regulations, orders or other legal restraints or prohibitions
preventing consummation of the transaction and (v) accuracy of representations
and warranties of First Interstate in the FIB/FBS Merger Agreement are
identical in all material respects in the two proposals, (b) the Offer is
conditioned on (i) satisfaction of the Rights Plan and DGCL 203 Condition, (ii)
there being validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which, together with the Shares beneficially owned by Wells
Fargo and its affiliates for their own respective accounts, will constitute at
least a majority of the total number of outstanding Shares on the fully diluted
basis described herein (based on the number of Shares outstanding or reserved
for issuance pursuant to First Interstate's employee stock options and dividend
reinvestment and stock purchase plans as of October 31, 1995 as reported by
First Interstate and Shares currently owned beneficially by Wells Fargo and its
affiliates for their own respective accounts, Wells Fargo believes this Minimum
Tender Condition would have been satisfied on October 31, 1995 if at least an
aggregate of 39,938,688 Shares, or 52.7% of the Shares outstanding as of
October 31, 1995, had been validly tendered pursuant to the
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<PAGE>
Offer and not withdrawn) while the FIB/FBS Merger is conditioned on receiving
approval of the holders of a majority of the outstanding Shares, and (iii) the
stockholders of First Interstate not having approved the FIB/FBS Merger
Agreement and (c) the FIB/FBS Merger is subject to the additional conditions,
to which the Offer is not subject, that (i) 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 "pooling of interests" accounting treatment,
(ii) FBS shall have received an opinion of counsel that the Merger will be
treated as a reorganization for federal income tax purposes, and (iii) FBS
shall have received a certificate signed by the Chief Executive Officer or
Chief Financial Officer of First Interstate verifying that First Interstate has
performed all of its material obligations prior to closing.) Subject to the
applicable rules and regulations of the Commission, Wells Fargo expressly
reserves the right, in its sole discretion, at any time or from time to time,
to delay acceptance for exchange or, regardless of whether such Shares were
theretofore accepted for exchange, exchange of any Shares pursuant to the Offer
or to amend or terminate the Offer and not accept for exchange or exchange any
Shares not theretofore accepted for exchange, or exchanged, upon the failure of
any of the conditions of the Offer to be satisfied. Wells Fargo reserves the
absolute right to waive any defect or irregularity in the tender of any
securities and to waive any of the conditions to the Offer (other than the
Wells Fargo Stockholder Approval Condition, the Regulatory Approval Condition
and the condition relating to effectiveness of the Registration Statement).
Although Wells Fargo reserves the right to do so, Wells Fargo does not
currently intend to waive the Minimum Tender Condition or the Rights Plan and
DGCL 203 Condition (insofar as it relates to Section 203 of the DGCL) unless it
determines that doing so would not prevent it from consummating the Merger
promptly after consummating the Offer; Wells Fargo also does not currently
intend to waive the Rights Plan and DGCL 203 Condition (insofar as it relates
to the Rights) unless it determines that the dilution to Wells Fargo's
stockholders that would result from the Rights becoming exercisable as a
consequence of the Offer and the Merger would not be material in the context of
the entire transaction. See "The Offer--Minimum Tender Condition," "--Wells
Fargo Stockholder Approval Condition," "--Rights Plan and DGCL 203 Condition,"
"--FIB/FBS Merger Agreement Condition," "--Regulatory Approval Condition" and
"--Certain Other Conditions of the Offer." Waiver or amendment of any of these
conditions may require an extension of the Offer.
Stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203
Condition (insofar as it relates to the Rights) has been satisfied or waived.
Unless the First Interstate Distribution Date occurs, a tender of Shares will
constitute a tender of the associated Rights.
Timing of the Offer
The Offer is currently scheduled to expire on , 1996; however, it is
Wells Fargo's current intention to extend the Offer from time to time as
necessary until all conditions to the Offer have been satisfied or waived. See
"The Offer--Extension, Termination and Amendment." Wells Fargo expects that the
Wells Fargo Stockholder Approval Condition will be satisfied by , 1996 (the
date on which it has called a special meeting of its stockholders to approve
the issuance of shares of Wells Fargo Common Stock pursuant to the Offer and
the Merger) and that the other conditions to the Offer will be satisfied once
the Regulatory Approval Condition, the FIB/FBS Merger Agreement Condition and
the Rights Plan and DGCL 203 Condition are satisfied.
Wells Fargo is confident that it will be able to obtain the regulatory
approvals required for the Acquisition on a timely basis and in a time frame
substantially identical to that in which FBS would be able to obtain the
regulatory approvals required for the FIB/FBS Merger. See "The Offer--
Regulatory Approval Condition."
First Interstate has scheduled a special stockholders meeting to vote on the
FIB/FBS Merger Agreement on , 1996. Assuming First Interstate's
stockholders do not approve the FIB/FBS Merger Agreement, the FIB/FBS Merger
Agreement Condition will then be satisfied. Wells Fargo believes that the First
Interstate Board
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would at that point respect the vote of First Interstate's stockholders and
remove the obstacles it is maintaining to the Offer and the Merger, thereby
satisfying the Rights Plan and DGCL 203 Condition. However, if the First
Interstate Board does not do so, Wells Fargo presently intends to commence a
solicitation of written consents from First Interstate's stockholders (or
continue such a consent solicitation if it has by then already been commenced)
to replace the members of the First Interstate Board with individuals who would
(subject to their fiduciary duties) do so. Although Wells Fargo does not
currently expect to commence such a consent solicitation prior to First
Interstate's special stockholders meeting, it reserves the right to do so if
circumstances so warrant. Wells Fargo believes that commencement of such a
consent solicitation would not require regulatory approval. Any such consent
solicitation would be consummated as soon as any required approvals are
obtained (Wells Fargo has already applied for such approvals as part of its
applications to satisfy the Regulatory Approval Condition) and unrevoked and
valid consents of the holders of a majority of the outstanding Shares are
delivered to First Interstate. Wells Fargo also intends to pursue its currently
pending litigation in order to satisfy the Rights Plan and DGCL 203 Condition.
For further information about the Rights Plan and DGCL 203 Condition and Wells
Fargo's plans for satisfying it, see "The Offer--Rights Plan and DGCL 203
Condition."
Extension, Termination and Amendment
Wells Fargo expressly reserves the right, in its sole discretion, at any time
or from time to time, to extend the period of time during which the Offer is to
remain open by giving oral or written notice of such extension to the Exchange
Agent, which extension must be announced no later than 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
There can be no assurance that Wells Fargo will exercise its right to extend
the Offer. However, it is Wells Fargo's current intention to extend the Offer
until all conditions have been satisfied or waived. See "The Offer--Extension,
Termination and Amendment." During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw his Shares. See "The Offer--
Withdrawal Rights."
Exchange of Shares; Delivery of Wells Fargo Common Stock
Upon the terms and subject to the conditions of the Offer, the acceptance for
exchange and the exchange of all outstanding Shares validly tendered and not
withdrawn will be made promptly after the Expiration Date. See "The Offer--
Exchange of Shares; Delivery of Wells Fargo Common Stock."
Withdrawal Rights
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for exchange by Wells Fargo
pursuant to the Offer, may also be withdrawn at any time after , 1996. See
"The Offer--Withdrawal Rights."
Procedure for Tendering
For a stockholder validly to tender Shares pursuant to the Offer, (i) a
properly completed and duly executed Letter of Transmittal (or manually
executed facsimile thereof), together with any required signature guarantees,
or an Agent's Message (as defined herein) in connection with a book-entry
transfer, and any other required documents, must be transmitted to and received
by the Exchange Agent at one of its addresses set forth on the back cover of
this Prospectus and certificates for tendered Shares must be received by the
Exchange Agent at such address or such Shares must be tendered pursuant to the
procedures for book-entry tender set forth under "The Offer--Procedure for
Tendering" (and a confirmation of receipt of such tender received), in each
case prior to the Expiration Date, or (ii) such stockholder must comply with
the guaranteed delivery procedure set forth under "The Offer--Procedure for
Tendering." As noted above, stockholders will be required to tender one Right
for each Share tendered in order to effect a valid tender of Shares, unless the
Rights Plan and DGCL 203 Condition (insofar as it relates to the Rights) has
been satisfied or waived. Unless the First Interstate Distribution Date occurs,
a tender of Shares will constitute a tender of the associated Rights.
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THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Certain Federal Income Tax Consequences
In the opinion of Sullivan & Cromwell, counsel to Wells Fargo, exchanges of
Shares for Wells Fargo Common Stock pursuant to the Offer and the Merger will
be treated for federal income tax purposes as exchanges pursuant to a plan of
reorganization within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code"). Consequently, no gain or loss will be recognized by
holders of Shares upon such exchanges, except with respect to the receipt of
cash in lieu of fractional shares of Wells Fargo Common Stock and the surrender
of Rights that have become exercisable. This opinion is based on Sullivan &
Cromwell's view that the Offer and the Merger should be treated as a single
transaction and on certain assumptions, including that (a) the continuity of
shareholder interest requirement applicable to corporate reorganizations (which
requires a continuing equity interest in Wells Fargo by holders owning a
significant percentage of the Shares prior to the consummation of the Offer)
will be satisfied, taking into account any holders that exercise dissenters'
rights, if any, (b) Wells Fargo will continue First Interstate's historic
business or will use a significant portion of First Interstate's historic
business assets in a business and (c) the Offer and the Merger will generally
be consummated as contemplated by this Prospectus. Although there are currently
no binding agreements that would ensure that the stockholders of First
Interstate will have a continuing equity interest in Wells Fargo following the
consummation of the Acquisition, Wells Fargo believes that it is likely that
the stockholders of First Interstate will retain a sufficient amount of the
stock of Wells Fargo to satisfy the continuity of interest requirement.
In rendering their opinion, Sullivan & Cromwell have further assumed that (a)
upon consummation of the Offer, there will be no significant contingencies
preventing the prompt consummation of the Merger, (b) upon consummation of the
Offer, Wells Fargo will not have waived any of the conditions relating to its
obligation to consummate the Offer in a manner that could prevent a prompt
consummation of the Merger, (c) the Merger will in fact be consummated promptly
after the consummation of the Offer and in no event more than one year after
the consummation of the Offer and (d) either First Interstate will have, at the
time the Offer is consummated, entered into an agreement with Wells Fargo
requiring Wells Fargo to effect the Merger or the "binding commitment" test
discussed below will not apply to the Offer and the Merger. A significant delay
in the consummation of the Merger would substantially increase the risk that
the Offer will not qualify as part of a reorganization within the meaning of
Section 368(a)(1)(A) of the Code and the absence of the Merger would mean that
the Offer was not part of a reorganization.
In deciding whether two steps are part of a single transaction qualifying as
a reorganization, some courts have applied the so-called "binding commitment"
test. Under that test, two steps will be integrated only if, at the time that
the first step is consummated, there is a binding commitment to consummate the
second step. If the "binding commitment" test were applied to the Offer and the
Merger and First Interstate has not at the time the Offer is consummated
entered into an agreement with Wells Fargo requiring Wells Fargo to effect the
Merger, the Offer and the Merger would not be treated as a single transaction,
and the Offer would not qualify as part of a reorganization. Although the
matter is not free from doubt, in the opinion of Sullivan & Cromwell, the
"binding commitment" test should not be applied to determine whether the Offer
and the Merger should be treated as a single transaction.
Assuming that the Merger qualifies as a reorganization under the Code, no
gain or loss will be recognized by Wells Fargo or First Interstate as a result
of the Offer and the Merger.
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If the Offer and the Merger together qualify as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code, no gain or loss will be recognized
by a U.S. Holder (as defined under "The Offer--Certain Federal Income Tax
Consequences"), except with respect to a U.S. Holder who receives cash in lieu
of fractional shares of Wells Fargo Common Stock or surrenders Rights that have
become exercisable.
If the Merger is not consummated, or if the Merger is consummated but the
Offer is treated as a separate transaction for federal income tax purposes,
exchanges pursuant to the Offer will be taxable transactions for federal income
tax purposes. In that case, each U.S. Holder exchanging Shares for shares of
Wells Fargo Common Stock pursuant to the Offer will recognize gain or loss for
federal income tax purposes measured by the difference between such U.S.
Holder's adjusted basis in the Shares exchanged and the sum of the fair market
value of Wells Fargo Common Stock received by such U.S. Holder pursuant to the
Offer and any cash received by such U.S. Holder in lieu of fractional shares of
Wells Fargo Common Stock.
If the Offer is a taxable transaction, the Merger itself would be a
reorganization within the meaning of Section 368(a)(1)(A) of the Code if the
continuity of interest requirement is satisfied in the Merger. For advanced
ruling purposes, guidelines published by the Internal Revenue Service would
require that stockholders of First Interstate receive in the Merger stock of
Wells Fargo having a value equal to at least 50% of the value of all of the
stock of First Interstate outstanding prior to the Merger. If the Offer is
treated as a separate transaction for federal income tax purposes, however,
Wells Fargo Common Stock issued in the Offer should count towards establishing
that the Merger satisfies the continuity of interest requirement. If the
continuity of interest requirement is satisfied in the Merger, a U.S. Holder
receiving Wells Fargo Common Stock in the Merger would be subject to the rules
concerning reorganizations described above with respect to such Wells Fargo
Common Stock, but not with respect to any Wells Fargo Common Stock received by
such U.S. Holder pursuant to the Offer.
All stockholders should carefully read the discussion of the material federal
income tax consequences of the Offer under "The Offer--Certain Federal Income
Tax Consequences" and are urged to consult with their own tax advisors as to
the federal, state, local and foreign tax consequences in their particular
circumstances.
Effect of Offer on Market for Shares
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
The Shares are listed on the NYSE and the PSE. Depending on the number of
Shares acquired pursuant to the Offer, following consummation of the Offer, the
Shares may no longer meet the requirements of such exchanges for continued
listing, and the Shares may no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations, in which event the
Shares could no longer be used as collateral for margin loans made by brokers.
See "The Offer--Effect of Offer on Market for Shares; Registration Under the
Exchange Act."
For a description of the treatment of Shares and of shares of preferred stock
of First Interstate in the Merger, see "The Offer--Purpose of the Offer; the
Merger."
DESCRIPTION OF WELLS FARGO CAPITAL STOCK
The authorized capital stock of Wells Fargo consists of 150,000,000 shares of
Wells Fargo Common Stock, par value $5.00 per share, and 25,000,000 shares of
preferred stock, par value $5.00 per share. As of October 31, 1995, there were
46,966,721 shares of Wells Fargo Common Stock, 1,500,000 shares of Adjustable
Rate Cumulative Preferred Stock, Series B, 477,500 shares of 9% Preferred
Stock, Series C, and 350,000 shares of 8 7/8% Preferred Stock, Series D, issued
and outstanding.
9
<PAGE>
Holders of shares of Wells Fargo Common Stock are entitled to one vote per
share for each share held. Subject to the rights of holders of shares of Wells
Fargo's outstanding preferred stock, holders of shares of Wells Fargo Common
Stock have equal rights to participate in dividends when declared and, in the
event of liquidation, in the net assets of Wells Fargo available for
distribution to stockholders. Wells Fargo may not declare any dividends on the
Wells Fargo Common Stock unless full preferential amounts to which holders of
Wells Fargo's preferred stock are entitled have been paid or declared and set
apart for payment. Wells Fargo is also subject to certain contractual and
regulatory restrictions on the payment of dividends.
For additional information concerning the capital stock of Wells Fargo, see
"Description of Wells Fargo Capital Stock."
MARKET PRICES
The following table sets forth the market price per share of Wells Fargo
Common Stock and per Share and the equivalent market price per Share on (i)
October 17, 1995, the last trading day preceding public announcement of the
Original Proposal, (ii) October 18, 1995, the trading day of the announcement
of the Original Proposal, (iii) November 10, 1995, the last trading day
preceding public announcement of the Offer and (iv) January 15, 1996, the last
trading day prior to the date of this preliminary prospectus. The historical
market prices represent the closing prices per share on such dates on the NYSE
Composite Tape. The equivalent market prices per Share represent the closing
price per share of Wells Fargo Common Stock multiplied by two-thirds, the
fraction of a share of Wells Fargo Common Stock which is exchangeable in the
Offer for each Share. See "Market Prices and Dividends."
<TABLE>
<CAPTION>
FIRST INTERSTATE
--------------------------
EQUIVALENT AT A
WELLS FARGO TWO-THIRDS
ACTUAL ACTUAL EXCHANGE RATIO(a)
----------- ------ -----------------
<S> <C> <C> <C>
October 17, 1995......................... $213 5/8 $106 $142.42
October 18, 1995......................... 229 140 1/4 152.67
November 10, 1995........................ 215 3/8 134 3/4 143.58
January 15, 1996......................... 210 3/8 135 1/2 140.25
</TABLE>
- --------
(a) The then current exchange ratios proposed by Wells Fargo as of October 17,
October 18 and November 10, 1995 were 0.625, 0.625 and 0.65, respectively,
rather than the two-thirds ratio used in this chart, and such exchange ratios
would have produced equivalent market prices per Share of $133.52, $143.13
and $139.99, respectively.
THE EXCHANGE AGENT
has been appointed exchange agent (the "Exchange Agent") in connection
with the Offer. The Letter of Transmittal (or facsimile copies thereof) and
certificates for Shares should be sent by each tendering stockholder of Shares
or his broker, dealer, bank or other nominee to the Exchange Agent at the
addresses set forth on the back cover of this Prospectus.
REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES
Requests for information or assistance concerning the Offer may be directed
to the Dealer Managers or the Information Agent at their addresses set forth on
the back cover of this Prospectus. Requests for additional copies of this
Prospectus and the Letter of Transmittal should be directed to the Information
Agent.
10
<PAGE>
CAPITALIZATION OF WELLS FARGO & COMPANY
The following table sets forth the capitalization of Wells Fargo and its
subsidiaries as of September 30, 1995 and as adjusted to give effect to (a) the
exchange of approximately 75,727,000 Shares for shares of Wells Fargo Common
Stock pursuant to the Offer and the Merger (collectively, the "Acquisition"),
assuming that none of First Interstate's existing stock options are exercised,
and (b) the conversion of preferred stock of First Interstate into preferred
stock of Wells Fargo pursuant to the Merger.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------
ACTUAL ADJUSTED
-------- ----------
<S> <C> <C>
(IN MILLIONS)
SENIOR AND SUBORDINATED DEBT
Floating Rate Subordinated Note Due 2000................ $ 118 $ 118
8.20% Notes Due 1996.................................... 200 200
Fixed Rate Medium-Term Notes............................ 35 35
Floating Rate Medium Term Notes......................... 1,228 1,228
8.75% Subordinated Notes Due 2002....................... 199 199
8.375% Subordinated Notes Due 2002...................... 149 149
6.875% Subordinated Notes Due 2003...................... 150 150
6.125% Subordinated Notes Due 2003...................... 249 249
Floating Rate Subordinated German Mark Notes Due 1995... 210 210
Floating Rate Subordinated Notes Due 1997............... 101 101
Floating Rate Subordinated Euro Notes Due 1997.......... 100 100
Floating Rate Subordinated Capital Notes Due 1998....... 200 200
Senior and subordinated debt of First Interstate........ -- 1,368
Other................................................... 81 81
-------- ---------
TOTAL SENIOR AND SUBORDINATED DEBT........................ 3,020 4,388
-------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock
Cumulative adjustable rate preferred stock.............. 75 75
Cumulative perpetual preferred stock(1)................. 414 764
-------- ---------
Total preferred stockholders' equity...................... 489 839
-------- ---------
Common Stock
Common stock, par value $5 per share; authorized
150,000,000 shares;
issued and outstanding 47,465,721 shares (actual) and
97,950,388 (adjusted).................................. 237 489
Additional paid-in capital.............................. 1,221 11,754
Retained earnings....................................... 1,932 1,932
Other................................................... (5) (5)
-------- ---------
Total common stockholders' equity......................... 3,385 14,170
-------- ---------
TOTAL STOCKHOLDERS' EQUITY................................ 3,874 15,009
-------- ---------
TOTAL CAPITALIZATION...................................... $ 6,894 $ 19,397
======== =========
</TABLE>
- --------
(1) The adjusted amount includes $350 million of First Interstate's preferred
stock that will be converted into preferred stock of Wells Fargo pursuant
to the Merger.
11
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following table sets forth certain historical, pro forma combined and pro
forma equivalent per share financial information for the common stock of Wells
Fargo and of First Interstate. The pro forma amounts included in the table
assume completion of the Acquisition and are based on the purchase method of
accounting, a preliminary determination and allocation of the total purchase
price and the assumptions described under "Pro Forma Combined Financial
Information." The information should be read in conjunction with and is
qualified in its entirety by the consolidated financial statements and
accompanying notes of Wells Fargo and First Interstate included in the
documents described under "Incorporation of Certain Information by Reference"
(but which, in the case of First Interstate, are not covered by the report of
First Interstate's independent accountants for purposes of this Prospectus) and
the pro forma combined financial statements and accompanying discussion and
notes set forth under "Pro Forma Combined Financial Information." The pro forma
amounts in the table below are presented for informational purposes and are not
necessarily indicative of the financial position or the results of operations
of the combined company that would have actually occurred had the Acquisition
been consummated as of the dates or for the periods presented. The pro forma
amounts are also not necessarily indicative of the future financial position or
future results of operations of the combined company. In particular, Wells
Fargo expects to achieve significant operating cost savings as a result of the
Acquisition. See "Background of the Offer--Comparison of the Proposals." No
adjustment has been included in the pro forma amounts for the anticipated
operating cost savings.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
WELLS FARGO & COMPANY COMMON STOCK
EARNINGS PER COMMON SHARE:
Historical............................. $ 14.14 $14.78
Pro forma combined..................... 10.85 10.69
DIVIDENDS DECLARED PER COMMON SHARE:
Historical............................. $ 3.45 $ 4.00
Pro forma combined(1).................. 3.45 4.00
BOOK VALUE PER COMMON SHARE (AT PERIOD
END):
Historical............................. $ 71.32 $66.77
Pro forma combined(2).................. 144.67 N/A
FIRST INTERSTATE BANCORP COMMON STOCK
EARNINGS PER COMMON SHARE:
Historical............................. $ 8.36 $ 8.71
Pro forma equivalent(3)................ 7.23 7.13
DIVIDENDS DECLARED PER COMMON SHARE:
Historical............................. $ 2.30 $ 2.75
Pro forma equivalent(3)................ 2.30 2.67
BOOK VALUE PER COMMON SHARE (AT PERIOD
END):
Historical............................. $ 47.95 $41.59
Pro forma equivalent(3)................ 96.45 N/A
</TABLE>
- --------
(1) Amounts represent historical dividends per common share. For a discussion
of Wells Fargo's current and future dividend policy, see "Market Prices and
Dividends--Wells Fargo."
(2) Amount is calculated by dividing total pro forma common stockholders'
equity by the sum of total outstanding shares of Wells Fargo Common Stock
plus new shares of Wells Fargo Common Stock to be issued in the Acquisition
(based on the number of Shares outstanding at period end).
(3) Amounts are calculated by multiplying Wells Fargo's pro forma combined
amounts by the exchange ratio.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF WELLS FARGO & COMPANY
The selected consolidated financial data of Wells Fargo set forth below have
been derived from the consolidated financial statements of Wells Fargo for each
of the years in the five-year period ended December 31, 1994 and the unaudited
nine-month period ended September 30, 1995. The selected consolidated financial
data set forth below should be read in conjunction with and is qualified in its
entirety by the financial statements and accompanying notes contained in the
1994 Wells Fargo 10-K and Wells Fargo's Quarterly Report on Form 10-Q for the
period ended September 30, 1995, which are incorporated by reference herein.
See "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
NINE
MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------------------
1995 1994 1993 1992 1991 1990
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER
SHARE DATA AND
PERCENTAGES)
CONSOLIDATED SUMMARY OF
INCOME
Net interest income.... $ 1,987 $ 2,610 $ 2,657 $ 2,691 $ 2,520 $ 2,314
Provision for loan
losses................ -- 200 550 1,215 1,335 310
Noninterest income..... 890 1,200 1,093 1,059 889 909
Noninterest expense.... 1,638 2,156 2,162 2,035 2,020 1,717
Net income............. 726 841 612 283 21 712
PER COMMON SHARE
Net income............. $ 14.14 $ 14.78 $ 10.10 $ 4.44 $ 0.04 $ 13.39
Dividends declared..... 3.45 4.00 2.25 1.50 3.50 3.90
AVERAGE COMMON SHARES
OUTSTANDING............ 49.2 53.9 55.6 52.9 51.8 51.2
CONSOLIDATED PERIOD-END
BALANCE SHEET DATA
Investment securities.. $ 9,436 $11,608 $13,058 $ 9,338 $ 3,833 $ 1,387
Loans.................. 34,298 36,347 33,099 36,903 44,099 48,977
Assets................. 49,934 53,374 52,513 52,537 53,547 56,199
Deposits............... 38,948 42,332 41,644 42,244 43,719 42,685
Senior and subordinated
debt.................. 3,020 2,853 4,221 4,040 4,220 2,417
Stockholders' equity... 3,874 3,911 4,315 3,809 3,271 3,360
CONSOLIDATED AVERAGE
BALANCE SHEET DATA
Loans.................. $34,538 $34,039 $34,304 $40,406 $46,736 $44,061
Assets................. 51,306 51,849 51,110 52,497 55,022 51,109
Deposits............... 39,072 40,821 40,727 42,266 42,642 37,075
NET INTEREST MARGIN(1).. 5.72% 5.55% 5.74% 5.70% 5.18% 5.12%
CONSOLIDATED
PROFITABILITY RATIOS(2)
Net income to average
total assets (ROA).... 1.89% 1.62% 1.20% 0.54% 0.04% 1.39%
Net income applicable
to common stock to
average common
stockholders' equity
(ROE)................. 27.91 22.41 16.74 7.93 0.07 25.07
CONSOLIDATED PERIOD-END
CAPITAL RATIOS(3)
Common stockholders'
equity to assets...... 6.78% 6.41% 7.00% 6.03% 5.24% 5.26%
Stockholders' equity to
assets................ 7.76 7.33 8.22 7.25 6.11 5.98
CONSOLIDATED PERIOD-END
LOAN DATA
Allowance for loan
losses................ $ 1,872 $ 2,082 $ 2,122 $ 2,067 $ 1,646 $ 885
Allowance for loan
losses as a percentage
of total loans........ 5.46% 5.73% 6.41% 5.60% 3.73% 1.81%
Nonaccrual and
restructured loans.... $ 600 $ 582 $ 1,200 $ 2,142 $ 1,981 $ 1,013
Nonaccrual and
restructured loans as
a percentage of total
loans................. 1.8% 1.6% 3.6% 5.8% 4.5% 2.1%
CONSOLIDATED LOAN
CHARGE-OFF DATA
Net loan charge-offs... $ 210 $ 240 $ 495 $ 798 $ 572 $ 168
Net loan charge-offs as
a percentage of
average total
loans(2).............. 0.81% 0.70% 1.44% 1.97% 1.22% 0.38%
</TABLE>
- --------
(1) Net interest margin is defined as net interest income on a taxable-
equivalent basis divided by average total earning assets.
(2) Ratios for the nine months ended September 30, 1995 have been annualized.
(3) Based on the Federal Reserve Board's 1992 capital adequacy guidelines,
Wells Fargo's total risk-based capital ratio was 12.25%, 13.16%, 15.12%,
13.15%, 10.19% and 9.27% at September 30, 1995, December 31, 1994, 1993,
1992, 1991 and 1990, respectively. Wells Fargo's Tier 1 risk-based capital
ratio was 8.56%, 9.09%, 10.48%, 8.22%, 5.78% and 5.03% at September 30,
1995, December 31, 1994, 1993, 1992, 1991 and 1990, respectively.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF FIRST INTERSTATE BANCORP
The following is a summary of selected consolidated financial data of First
Interstate for each of the years in the five-year period ended December 31,
1994 and the unaudited nine-month period ended September 30, 1995. This
information is derived from the financial statements of First Interstate
contained in the 1994 First Interstate 10-K (which, for purposes of this
Prospectus, are not covered by the report of First Interstate's independent
accountants) and First Interstate's Quarterly Report on Form 10-Q for the
period ended September 30, 1995, which are incorporated by reference herein.
See "Incorporation of Certain Information by Reference." The summary should be
read in conjunction with and is qualified in its entirety by reference to such
financial statements.
<TABLE>
<CAPTION>
NINE
MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------------
1995 1994 1993 1992 1991 1990
------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER
SHARE DATA AND
PERCENTAGES)
CONSOLIDATED SUMMARY OF
INCOME
Net interest income.... $ 1,905 $ 2,327 $ 2,072 $ 2,015 $ 2,092 $ 2,303
Provision for loan
losses................ -- -- 113 314 810 499
Noninterest income..... 823 1,054 954 912 1,184 1,204
Noninterest expense.... 1,638 2,197 2,032 2,209 2,732 2,562
Income (loss) before
extraordinary items
and cumulative effect
of accounting
changes............... 670 734 562 282 (288) 439
Extraordinary items.... -- -- (25) -- -- --
Cumulative effect of
accounting changes.... -- -- 200 -- -- 30
Net income (loss)...... 670 734 737 282 (288) 469
PER COMMON SHARE
Income (loss) before
extraordinary items
and cumulative effect
of accounting
changes............... $ 8.36 $ 8.71 $ 6.68 $ 3.23 $ (5.24) $ 6.79
Net income (loss)...... 8.36 8.71 8.96 3.23 (5.24) 7.30
Dividends declared..... 2.30 2.75 1.60 1.20 1.80 3.00
AVERAGE COMMON SHARES
OUTSTANDING(1)......... 77.2 80.4 77.0 69.1 62.5 58.9
CONSOLIDATED PERIOD-END
BALANCE SHEET DATA
Investment Securities.. $ 9,432 $13,851 $16,542 $13,913 $ 8,496 $ 6,975
Loans.................. 35,967 33,222 25,988 24,201 28,182 33,007
Assets................. 55,067 55,813 51,461 50,863 48,922 51,356
Deposits............... 48,236 48,427 44,701 43,675 41,433 43,141
Senior and subordinated
debt.................. 1,368 1,388 1,533 2,702 3,108 3,178
Stockholders' equity... 3,981 3,436 3,548 3,251 2,639 2,868
CONSOLIDATED AVERAGE
BALANCE SHEET DATA
Loans.................. $35,157 $28,644 $24,128 $25,694 $30,691 $35,708
Assets................. 55,629 52,979 49,319 49,031 49,126 54,205
Deposits............... 47,792 46,313 42,540 41,196 41,051 43,982
NET INTEREST
MARGIN(2)(3)........... 5.41% 5.14% 4.91% 4.89% 5.04% 5.06%
CONSOLIDATED
PROFITABILITY RATIOS(3)
Net income (loss) to
average total assets
(ROA)................. 1.61% 1.38% 1.49% 0.57% (0.59)% 0.86%
Net income (loss)
applicable to common
stock to average
common stockholders'
equity (ROE).......... 25.40 21.56 23.24 9.63 (13.96) 19.56
CONSOLIDATED PERIOD-END
CAPITAL RATIOS(4)(5)
Common stockholders'
equity to assets...... 6.59% 5.53% 6.21% 5.18% 4.18% 4.82%
Stockholders' equity to
assets................ 7.23 6.16 6.89 6.39 5.39 5.58
CONSOLIDATED PERIOD-END
LOAN DATA
Allowance for loan
losses................ $ 847 $ 934 $ 1,001 $ 1,068 $ 1,273 $ 1,011
Allowance for loan
losses as a percentage
of total loans........ 2.35% 2.81% 3.85% 4.41% 4.52% 3.06%
Nonaccrual and
restructured loans.... $ 140 $ 186 $ 227 $ 578 $ 1,095 $ 929
Nonaccrual and
restructured loans as
a percentage of total
loans................. 0.4% 0.6% 0.9% 2.4% 3.9% 2.8%
CONSOLIDATED LOAN
CHARGE-OFF DATA
Net loan charge-offs... $ 111 $ 133 $ 218 $ 460 $ 547 $ 874
Net loan charge-offs as
a percentage of
average total
loans(3).............. 0.42% 0.46% 0.90% 1.79% 1.78% 2.45%
</TABLE>
- --------
(1) Includes dilutive effect of outstanding stock options (as determined by
application of the treasury stock method).
(2) Net interest margin is defined as net interest income on a taxable-
equivalent basis divided by average total earning assets.
(3) Ratios for the nine months ended September 30, 1995 have been annualized.
(4) Based on the Federal Reserve Board's 1992 capital adequacy guidelines,
First Interstate's total risk-based capital ratio was 10.48%, 10.22%,
13.08%, 13.87%, 10.61% and 9.40% at September 30, 1995, December 31, 1994,
1993, 1992, 1991 and 1990, respectively. First Interstate's Tier 1 risk-
based capital ratio was 7.48%, 7.20%, 9.88%, 9.40%, 6.28% and 5.63% at
September 30, 1995, December 31, 1994, 1993, 1992, 1991 and 1990,
respectively.
(5) Calculated using period-end data derived from the information incorporated
by reference to provide information comparable to that of Wells Fargo. This
information is disclosed by First Interstate in the 1994 First Interstate
10-K and First Interstate's Quarterly Report on Form 10-Q for the period
ended September 30, 1995, using average balances.
14
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth certain selected historical financial data for
Wells Fargo and First Interstate and selected pro forma combined financial
data. The pro forma amounts included in the table below assume completion of
the Acquisition and are based on the purchase method of accounting, a
preliminary determination and allocation of the total purchase price and the
assumptions described under "Pro Forma Combined Financial Information." This
information should be read in conjunction with and is qualified in its entirety
by the consolidated financial statements and accompanying notes of Wells Fargo
and First Interstate included in the documents described under "Incorporation
of Certain Information by Reference" (but which, in the case of First
Interstate, are not covered by the report of First Interstate's independent
accountants for purposes of this Prospectus) and the pro forma combined
financial statements and accompanying discussion and notes set forth under "Pro
Forma Combined Financial Information." The pro forma amounts in the table below
are presented for informational purposes and are not necessarily indicative of
the financial position or the results of operations of the combined company
that would have actually occurred had the Acquisition been consummated as of
the dates or for the periods presented. The pro forma amounts are also not
necessarily indicative of the future financial position or future results of
operations of the combined company. In particular, Wells Fargo expects to
achieve significant operating cost savings as a result of the Acquisition. See
"Background of the Offer--Comparison of the Proposals." No adjustment has been
included in the pro forma amounts for the anticipated operating cost savings.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1995 DECEMBER 31, 1994
-------------------------------------- --------------------------------------
HISTORICAL HISTORICAL
---------------------------- ----------------------------
WELLS FARGO FIRST INTERSTATE PRO FORMA WELLS FARGO FIRST INTERSTATE PRO FORMA
& COMPANY BANCORP COMBINED & COMPANY BANCORP COMBINED
----------- ---------------- --------- ----------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED SUMMARY OF INCOME
Net interest income............... $1,987 $1,905 $3,892 $2,610 $2,327 $4,937
Provision for loan losses......... -- -- -- 200 -- 200
Noninterest income................ 890 823 1,713 1,200 1,054 2,254
Noninterest expense............... 1,638 1,638 3,618 2,156 2,197 4,835
Net income........................ 726 670 1,137 841 734 1,215
PER COMMON SHARE
Net income........................ $14.14 $ 8.36 $10.85 $14.78 $ 8.71 $10.69
Dividends declared................ 3.45 2.30 3.45 4.00 2.75 4.00
AVERAGE COMMON SHARES OUTSTANDING... 49.2 77.2(1) 99.6 53.9 80.4(1) 106.5
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------------------------
HISTORICAL
---------------------------- ---------
WELLS FARGO FIRST INTERSTATE PRO FORMA
& COMPANY BANCORP COMBINED
----------- ---------------- ---------
<S> <C> <C> <C>
(IN MILLIONS)
CONSOLIDATED PERIOD-END BALANCE SHEET
DATA
Investment securities................ $ 9,436 $ 9,432 $ 18,868
Loans................................ 34,298 35,967 70,265
Assets............................... 49,934 55,067 112,155
Deposits............................. 38,948 48,236 87,184
Senior and subordinated debt......... 3,020 1,368 4,388
Stockholders' equity................. 3,874 3,981 15,009
</TABLE>
- --------
(1) Includes dilutive effect of outstanding stock options (as determined by
application of the treasury stock method) for 1.5 million shares.
15
<PAGE>
BACKGROUND OF THE OFFER
THE ORIGINAL PROPOSAL
On a number of occasions during the past several years, Wells Fargo and
First Interstate have informally discussed the possibility of a merger of the
two companies. Following several meetings between the then Chief Executive
Officers of Wells Fargo and First Interstate, on February 11, 1994, Wells
Fargo submitted to First Interstate for its consideration a tax-free merger
proposal. First Interstate rejected this 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
again. 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 its 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.
Wells Fargo believes 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 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 estimates of cost savings
and reductions in revenue being used by Wells Fargo. Mr. Hazen also offered to
have the individuals at Wells Fargo who had prepared those estimates meet with
their counterparts at First Interstate in order to discuss potential cost
savings and reductions in revenue if there were any questions about Wells
Fargo's estimates, but Mr. Siart responded that that would not be necessary
since he agreed with the economic value of the Wells Fargo estimates. Mr.
Siart and Mr. Hazen were joined during part of this meeting by George Roberts
of Kohlberg Kravis Roberts & Co., First Interstate's largest stockholder, and
Warren Buffett of Berkshire Hathaway Inc., Wells Fargo's largest stockholder.
Mr. Buffett expressed his view that an exchange ratio of 0.625 was fair, and
Mr. Roberts and Mr. Siart expressed their view that such ratio was inadequate.
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. Roberts
indicated that an exchange ratio of 0.65 was still inadequate and indicated
that it would take an exchange ratio of 0.70 to reach agreement at that time.
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 estimates
of cost savings and reductions in revenue meet with their counterparts at
First Interstate in order to review such estimates in detail, but Mr. Siart
again declined that offer. Mr. Siart then 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.
16
<PAGE>
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. Under the terms of the FIB/FBS Merger
Agreement, following the consummation of that merger, FBS would change its
name to First Interstate Bancorp and there would be an even split of the Board
of the combined company. The FIB/FBS Merger is subject to a number of
conditions which are identical in all material respects to the conditions of
the 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 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 pooling of interests accounting treatment.
Based on discussions with its accountants (KPMG Peat Marwick LLP), Wells Fargo
believes there is a significant question as to whether the FIB/FBS Merger
qualifies 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. See "--Comparison of the Proposals--Purchase
Versus Pooling of Interests Accounting." As a further condition to the
execution and delivery of the FIB/FBS Merger Agreement, FBS and First
Interstate executed the Reciprocal Fee Letters providing for the payment of
"break-up" fees in certain circumstances and the Reciprocal Stock Option
Agreements providing for the grant of options to purchase each other's common
stock in certain circumstances. The First Interstate Board is permitted to
terminate the FIB/FBS Merger Agreement in a number of circumstances, including
if there exists a Takeover Proposal (as defined herein) for First Interstate
and the First Interstate Board reasonably determines in good faith that
termination is necessary in the exercise of its fiduciary duties under
applicable law. See "--FIB/FBS Merger Agreement."
First Interstate entered into the FIB/FBS Merger Agreement (as well as the
Reciprocal Fee Letters and the Reciprocal Stock Option Agreements) 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-day trading 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 the First Interstate Schedule 14D-9, First
Interstate entered into the FIB/FBS Merger Agreement (and "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
Offer) and the FIB/FBS Merger (at the agreed upon 2.60 exchange ratio) were
both fair from a financial point of view to the stockholders of First
Interstate.
According to the First Interstate 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.
THE 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 such 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 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
17
<PAGE>
presented to First Interstate's stockholders who could decide for themselves
which proposal was in their best interest. First Interstate has not responded
to this proposal.
As part of the November 13, 1995 announcement, Wells Fargo also stated that
it anticipated filing (a) preliminary proxy solicitation materials with the
Commission for use in soliciting proxies from stockholders of First Interstate
against approval of the FIB/FBS Merger and (b) preliminary consent
solicitation materials with the Commission for use in soliciting 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 merger of First Interstate with Wells Fargo. THIS PROSPECTUS
AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A SOLICITATION OF ANY PROXIES OR
CONSENTS FROM FIRST INTERSTATE'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE
MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS
COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF 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 break-up fees and stock option arrangements
(commonly referred to as "lock-up" arrangements) granted to FBS pursuant to
the Reciprocal Fee Letters and the Reciprocal Stock Option Agreements,
respectively, and seeks injunctive relief requiring the First Interstate Board
to redeem the Rights 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. For a further description of this litigation
(including information about an amended complaint alleging that FBS
repurchased on the open market more than $125 million of its common stock,
thereby artificially inflating the price of the FBS Common Stock and denying
First Interstate's stockholders the ability to assess accurately the market
value of the FIB/FBS Merger proposal or compare it to the Offer), and for a
description of (a) certain class action, derivative action and shareholder
litigation brought against First Interstate, the members of the First
Interstate Board and FBS alleging, among other things, breach of fiduciary
duty to the stockholders of First Interstate, violations of federal securities
laws by making false and misleading statements and material omissions of fact
regarding the FIB/FBS Merger and the Offer, abuse of control and tortious
interference with prospective economic advantage, (b) certain litigation
brought by First Interstate and FBS against Wells Fargo alleging, among other
things, violations of federal securities laws by releasing certain financial
projections and by making allegedly false statements regarding the FIB/FBS
Merger and (c) certain counterclaims brought by Wells Fargo against First
Interstate and FBS alleging, among other things, violations of federal
securities laws by making false and misleading statements and material
omissions of fact regarding the FIB/FBS Merger and the Offer, see "--
Litigation."
On November 13, 1995, Wells Fargo filed applications and notices in draft
form with the FRB-SF seeking approval of, among other things, the Acquisition;
the applications and notices were refiled in final form on November 17, 1995.
Wells Fargo has filed additional applications and notices with various
governmental authorities seeking all approvals required to permit consummation
of the Acquisition. FBS announced that it filed an application in final form
for the FIB/FBS Merger with the FRB-M on November 10, 1995. On December 14,
1995, the FRB-M accepted the FBS application and wrote that it expected a
Federal Reserve Board decision by February 12, 1996. On December 20, 1995, the
FRB-SF accepted Wells Fargo's application and wrote that it expected a Federal
Reserve Board decision by February 18, 1996. In its application filed with the
FRB-SF, Wells Fargo has committed to divest approximately $1 billion in
deposits and related assets in connection with regulatory concerns regarding
possible adverse competitive effects of the Acquisition. It is not possible to
predict with certainty the acceptability of any particular divestiture plan to
governmental agencies. However, based on discussions with Wells Fargo's
counsel, Sullivan & Cromwell, and Wells Fargo's own knowledge of and
experience in the regulatory process, Wells Fargo believes that the
divestitures it has proposed in its application filed with the FRB-SF are
consistent with the competitive analysis set forth in that application.
Moreover, based on such discussions, knowledge and experience and because
Wells Fargo fully intends to make all divestitures required in order to secure
the necessary approvals, Wells Fargo is confident that, even if a governmental
agency disagreed with the competitive analysis set forth in the Wells Fargo
application and required a higher level of divestitures, Wells Fargo would be
able to reach agreement with that agency on appropriate divestitures and
18
<PAGE>
obtain the regulatory approvals required for the Acquisition on a timely basis
and in a time frame substantially identical to that in which FBS would be able
to obtain the regulatory approvals required for the FIB/FBS Merger. See "The
Offer--Regulatory Approval Condition."
On November 20, 1995, the First Interstate 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 Offer.
In the First Interstate Schedule 14D-9, there is a detailed list of 16
factors considered by the First Interstate Board as material in selecting the
FBS merger proposal over Wells Fargo's merger proposal. Conspicuously absent
from that list is any consideration of the implied purchase price produced by
each of the two proposals.
AT ALL TIMES DURING THE FIRST INTERSTATE BOARD'S CONSIDERATION OF EACH WELLS
FARGO PROPOSAL AND FBS PROPOSAL, THE THEN CURRENT WELLS FARGO PROPOSAL HAS
PRODUCED A MARKET VALUE HIGHER THAN THE MARKET VALUE PRODUCED BY THE THEN
CURRENT FBS PROPOSAL. ON JANUARY 15, 1996 (THE LAST TRADING DAY PRIOR TO THE
DATE OF THIS PRELIMINARY PROSPECTUS) THE DIFFERENTIAL AMOUNTED TO $19.35 PER
SHARE, AND THE AGGREGATE MARKET VALUE OF THE OFFER EXCEEDED THE AGGREGATE
MARKET VALUE OF THE FBS PROPOSAL BY APPROXIMATELY $1.5 BILLION. SEE "--
COMPARISON OF THE PROPOSALS--PURCHASE PRICE."
COMPARISON OF THE PROPOSALS
Because Wells Fargo believes that the timing of, and likelihood of the
satisfaction of the conditions to, the Offer and the proposed FIB/FBS Merger
are substantially similar, Wells Fargo believes that First Interstate's
stockholders, in comparing Wells Fargo's proposal to FBS's proposal, should
concentrate on the two components of value which characterize any stock for
stock transaction with a fixed exchange ratio, namely (i) the purchase price
implied by the exchange ratio and (ii) the value at which the acquiror's stock
is expected to trade when an agreement is announced or appears likely (which
value should reflect the market's assessment of the prospects of the combined
company following consummation of the transaction). Wells Fargo is convinced
that its Offer is demonstrably superior on both counts. In addition, assuming
planned stock repurchases announced by FBS, Wells Fargo believes the FBS
proposal suffers from a significant contingency not shared by the Offer
(namely, the condition relating to pooling of interests accounting treatment
referred to below), and Wells Fargo believes that many of the reasons why
First Interstate says it continues to support the FBS proposal rather than
Wells Fargo's proposal are subject to serious question.
Purchase Price
The closing price per Share on October 17, 1995 (the day before the
announcement of the Original Proposal) was $106 and the average closing price
per Share for the 20 trading days preceding October 17, 1995 was $102.59. The
Offer provides a substantial premium to stockholders in relation to those
levels, as shown by the following table.
<TABLE>
<CAPTION>
PURCHASE PRICE
PER SHARE
IMPLIED BY
WELLS FARGO'S
OFFER AT A
TWO-THIRDS
EXCHANGE RATIO*
---------------
<S> <C>
October 17, 1995 (day before announcement of Original
Proposal)..................................................... $142.42
October 18, 1995 (day of announcement of Original Proposal).... 152.67
January 15, 1996 (last trading day before the date of this pre-
liminary prospectus).......................................... 140.25
</TABLE>
- --------
* Based on the closing price per share of Wells Fargo Common Stock on the
indicated dates and an exchange ratio of two-thirds of a share of Wells
Fargo Common Stock per Share. The then current exchange ratio proposed by
Wells Fargo as of October 17 and October 18, 1995 was 0.625 rather than the
two-thirds ratio used in this chart, and such exchange ratios would have
produced implied per Share purchase prices of $133.52 and $143.13,
respectively.
At each point when the First Interstate Board considered the relative merits
of an FBS proposal against that of a Wells Fargo proposal, the then current
Wells Fargo proposal provided a premium to the then current FBS proposal, as
shown by the following table.
19
<PAGE>
<TABLE>
<CAPTION>
IMPLIED PURCHASE PRICE PER SHARE*
---------------------------------------------------
RELEVANT RELEVANT
WELLS FARGO PROPOSAL FBS PROPOSAL DIFFERENTIAL
-------------------- ----------------- ------------
<S> <C> <C> <C>
October 30, 1995 $134.14 $115 to $125 $19.14
(date of First Interstate (at a 0.65 (at an exchange to $9.14
Board meeting at which exchange ratio) ratio of 2.3
proposals from Wells to possibly 2.5
Fargo and FBS were first as then indicated
considered) by FBS)
November 3, 1995 137.96 132.28 5.68
(trading day before (at a 0.65 (at a 2.60
announcement of FIB/FBS exchange ratio) exchange ratio)
Merger Agreement)
November 17, 1995 141.17 137.80 3.37
(last trading day before (at a two-thirds (at a 2.60
First Interstate's exchange ratio) exchange ratio)
rejection of the Offer)
January 15, 1996 140.25 120.90 19.35
(last trading day before (at a two-thirds (at a 2.60
date of this preliminary exchange ratio) exchange ratio)
prospectus)
</TABLE>
- --------
* Based on the closing price per share of the common stock of Wells Fargo or
FBS, as the case may be, on the indicated dates.
Moreover, based on published reports, the market value of FBS's stock may
have been supported by an active stock repurchase program being maintained by
FBS. If so, the implied purchase price of FBS's proposal on various dates as
set forth above may be overstated and the differential between the implied
purchase price of Wells Fargo's proposal and that of the FBS proposal on
various dates as set forth above may be understated.
In addition, as shown by the following table, the exchange ratio offered by
Wells Fargo pursuant to the Offer--two-thirds of a share of Wells Fargo Common
Stock for each Share--consistently demonstrates greater value for stockholders
than the FIB/FBS Merger.
<TABLE>
<CAPTION>
IMPLIED PURCHASE PRICE PER SHARE*
-----------------------------------------
WELLS FARGO'S
OFFER AT A FIB/FBS MERGER
TWO-THIRDS AT A 2.60
BASED ON CLOSING EXCHANGE EXCHANGE
PRICES ON: RATIO RATIO DIFFERENTIAL
- ---------------- ------------- -------------- ------------
<S> <C> <C> <C>
October 17, 1995 $142.42 $135.20 $ 7.22
(trading day before announcement of
Original Proposal)
October 18, 1995 152.67 134.23 18.44
(trading day of announcement of
Original Proposal)
January 15, 1996 140.25 120.90 19.35
(last trading day before date of
this preliminary prospectus)
Average of indicated number of
trading days preceding January 15,
1996:
10 Trading Days..................... 141.31 126.69 14.62
20 Trading Days..................... 142.26 128.51 13.75
30 Trading Days..................... 143.16 130.63 12.53
</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. The then
current exchange ratio proposed by Wells Fargo before October 26, 1995 was
0.625 and the then current exchange ratio proposed by Wells Fargo from
October 26, 1995 until announcement of the Offer on November 13, 1995 was
0.65 rather than the two-thirds ratio used in this chart.
Value of Acquiror's Stock Following Acquisition
On October 18, 1995, the day that Wells Fargo publicly announced that it had
made a proposal to acquire First Interstate at an exchange ratio of 0.625 of a
share of Wells Fargo Common Stock per Share, Wells Fargo's common stock closed
at $229.00 per share, an increase of $15.375, or 7.2% over its closing price
of $213 5/8 the
20
<PAGE>
day before. Since that time, Wells Fargo Common Stock has declined, closing at
$210 3/8 per share on January 15, 1996, but Wells Fargo believes that a
significant portion of such decline is due to market uncertainty about whether
Wells Fargo will be able to overcome the obstacles to the Offer being raised
by First Interstate.
The market's reaction to Wells Fargo's October 18, 1995 announcement is in
sharp contrast to the market's reaction to FBS's announcement on November 6,
1995 that it had entered into the FIB/FBS Merger Agreement. On November 6,
1995, the FBS Common Stock closed at $49.875 per share, a decline of $1.00 per
share or 2.0% from its prior close on November 3, 1995 of $50.875.
Wells Fargo believes that the market's initial reactions to the announcement
of Wells Fargo's Original Proposal and to the FIB/FBS Merger Agreement are
indicative of the values at which the respective stocks might trade following
the consummation of a merger with First Interstate. Wells Fargo further
believes these reactions are based on a belief that an acquisition of First
Interstate by Wells Fargo (as compared to an acquisition of First Interstate
by FBS) would (i) result in significantly more cost savings (see "--Cost
Savings" below), (ii) be significantly more accretive to earnings before
amortization of intangibles ("Cash Earnings") per share (and, in 1997 and
beyond, although not in 1996, somewhat more accretive to reported earnings per
share, although Wells Fargo believes that, because it is using the purchase
method of accounting, accretion of Cash Earnings per share is most comparable
to FBS's projected accretion in earnings per share) (for estimates by Wells
Fargo of accretion to Cash Earnings per share and reported earnings per share
in 1996, 1997 and 1998, see "--Accretion Projections" below) and (iii) have a
significantly more valuable franchise going forward (see "--Value of
Franchise" below).
Cost Savings. Wells Fargo believes that if it were assumed to merge with
First Interstate on January 1, 1996, the cost to Wells Fargo in 1996 to
operate First Interstate as part of a combined entity would be approximately
$1.2 billion. Wells Fargo based that figure on a business line analysis of
First Interstate. The unit heads of Wells Fargo's business lines (in each case
an executive vice president) requested that members of their staffs look at
the corresponding business lines at First Interstate in order to estimate at
what cost such business lines could be operated as a part of Wells Fargo,
while keeping the First Interstate attributable revenues constant (the
circumstances where maintaining constant revenue was not optimal gave rise to
Wells Fargo's provision for the $100 million in potential revenue reductions
that are described below). Because First Interstate denied Wells Fargo's
requests for information about its costs, Wells Fargo used publicly available
information for its analysis. Wells Fargo's management also used its general
knowledge of the marketplace in which Wells Fargo and First Interstate
compete. With respect to each cost, Wells Fargo not only looked at First
Interstate's direct costs, but also estimated the expense of any incremental
indirect costs, such as changes in shared resources and facilities to be
required by business line. To reach the final estimate for each business line,
each unit head was instructed to consider that the budget for each business
line following the consummation of the Acquisition would be consistent with
such estimate. The table below presents Wells Fargo management's estimate of
the cost to operate First Interstate as part of a combined entity, with detail
by category of expense.
<TABLE>
<CAPTION>
COST
(IN MILLIONS)
-------------
<S> <C>
Staff/Executive........................................... $13
Data Processing........................................... 104
Operations................................................ 316
Occupancy/Furniture & Equipment........................... 224
Business Lines
Retail.................................................. 394
Payment Systems......................................... 26
Commercial Lending...................................... 76
Trust................................................... 50
------
Total................................................... $1,203
======
</TABLE>
21
<PAGE>
The difference between the assumed $2.02 billion annual adjusted noninterest
expense of First Interstate on a stand alone basis (i.e., $2,216 million in
annualized non-interest expense of First Interstate for the quarter ended June
30, 1995, adjusted to exclude $17 million in annualized restructuring charges
and $60 million in annualized amortization of intangibles for such quarter and
to reflect (i) a $90 million reduction in FDIC expense expected in 1996 and
(ii) a $28 million reduction in other expenses expected in 1996 as a result of
First Interstate's recently announced mortgage alliance) and the expected $1.2
billion cost to operate First Interstate as part of a combined entity
represents the approximately $800 million in annual cost savings that Wells
Fargo's management anticipates achieving within 18 months of a merger with
First Interstate. These savings are expected to result from (i) the
significant overlap which exists between Wells Fargo's operations and those of
First Interstate in California, (ii) the proximity of Wells Fargo's operations
in California and those of First Interstate in neighboring states, (iii) the
greater level of efficiency with which Wells Fargo runs its franchise when
compared to First Interstate (for the quarter ended September 30, 1995, First
Interstate's efficiency ratio--which First Interstate calculates as non-
interest expense, excluding restructuring and OREO expenses, divided by the
sum of net interest income (tax-equivalent basis) and non-interest income--was
57.3% while Wells Fargo's efficiency ratio--calculated using First
Interstate's methodology--was a significantly better 53.7%), and (iv)
economies of scale.
The following list consists of principal areas in which Wells Fargo believes
material cost savings can be achieved, along with an approximation of the
percentage of the aggregate cost savings which are estimated to be
attributable to each area (using FBS's estimates of the cost to operate First
Interstate in 1996 on a stand-alone basis, which results in implied cost
savings of $1 billion): (a) Staff and Executive (approximately 16% of cost
savings): Elimination of redundant executive management and central staff net
of increases in such areas as audit and loan examination; (b) Data Processing
and Operations (approximately 23% of cost savings): Consolidation of data
centers and telecommunications network; (c) Occupancy, Furniture and Equipment
(approximately 17% of cost savings): Reductions of occupancy, furniture, and
equipment by closing branches and reducing non-branch administrative space
consistent with reductions in lines of business; (d) Retail (approximately 29%
of cost savings): Closing of 85% of First Interstate's California branches and
elimination of redundant product management, regional branch management and
staff (substantial branch closures are possible due to the expansion in
California of Wells Fargo's supermarket branches and banking centers; at the
end of 1994, Wells Fargo had approximately 600 retail locations in California;
this increased to approximately 1,000 at the end of 1995 and is expected to
grow to 1,100 by the end of 1996; Wells Fargo has opened supermarket branches
and banking centers while at the same time closing traditional bank branches
and enhancing telephone and on-line banking services); (e) Payment Systems
(approximately 3% of cost savings): Consolidation of credit card management
and staff into Wells Fargo Bank (Arizona), N.A. and consolidation of cash
management business into that of Wells Fargo; (f) Commercial Lending
(approximately 9% of cost savings): Consolidation of all of First Interstate's
commercial banking offices in California into Wells Fargo's regional
commercial banking centers, retention of only the out-of-state offices in
large markets and elimination of redundant management; and (g) Trust and
Investment Management (approximately 3% of cost savings): Consolidation of
First Interstate's trust/private banking offices within California and all of
First Interstate's mutual funds into Wells Fargo, together with elimination of
redundant trust and investment management functions.
Parties to bank mergers often assert that revenue losses from consolidation
of operations will be offset by "synergies" and thus project no revenue
losses. However, as a matter of simple financial conservatism, Wells Fargo's
management has estimated a potential revenue loss of $100 million as a result
of combining the two companies. The estimated $100 million in potential
revenue loss is expected to occur principally in commercial lending, retail
and trust. Revenue decreases in these areas are expected to result,
respectively, from (i) anticipated loan run-offs; (ii) deposit attrition; and
(iii) account attrition. Management from each of Wells Fargo's business units
estimated potential revenue losses as a part of the same process by which the
cost to operate First Interstate described above was estimated. Potential
revenue losses were estimated based on expected results one year after
consummation of the Acquisition. As mentioned under "Background of the Offer--
General," Mr. Siart, Chairman and Chief Executive Officer of First Interstate,
agreed with the economic value of Wells Fargo's estimates.
22
<PAGE>
By contrast, and in spite of having virtually no geographic overlap and
little proximity with First Interstate's franchise, FBS has projected expense
savings of approximately $500 million with no concurrent revenue loss. FBS
projects being able to achieve all those cost savings within six months of
consummating a transaction (only one-third of the time estimated by Wells
Fargo). In addition, FBS has used as its starting point an estimate of the
non-interest expense it expected First Interstate to incur in 1996 on a stand-
alone basis (after adjusting for the amortization of intangibles) of $2.2
billion. Deducting FBS's projected cost savings from that figure, the cost
projected by FBS to manage First Interstate as part of a combined entity can
be estimated at approximately $1.7 billion as compared to the $1.2 billion
Wells Fargo is projecting, or a difference of approximately $500 million.
Viewed another way, the difference between the $2.2 billion estimate used by
FBS for First Interstate's 1996 stand-alone non-interest expenses and the $1.2
billion estimate used by Wells Fargo for the cost to manage First Interstate
as part of a combined entity translates into a cost savings estimate of $1
billion resulting from a Wells Fargo combination with First Interstate. It is
this $1 billion cost savings estimate which is directly comparable to the FBS
cost savings estimate of $500 million resulting from an FBS combination with
First Interstate. These cost savings estimates are before the effect of any
revenue losses. As set forth above, Wells Fargo estimates a potential revenue
loss of $100 million, whereas FBS's estimates for the FIB/FBS Merger, which
Wells Fargo believes are less conservative, do not include any provision for
revenue loss.
While both Wells Fargo and FBS have represented that their cost savings
estimates are "conservative," the degree to which cost savings impacts the
creation of stockholder value requires that First Interstate's stockholders
weigh the likelihood of each acquiror's being able to achieve its respective
cost savings estimates. Wells Fargo believes that First Interstate's
stockholders may be assisted in that analysis by the table below, which
compares these estimates to estimates in recent bank acquisitions. In making
the comparison, stockholders are cautioned, however, that the comparative
value may be limited because no two transactions are identical, the table
deals only with estimates and not actual cost savings, and each transaction
has its own unique facts and circumstances which may affect both the estimates
and the actual amounts of cost savings.
23
<PAGE>
As shown by the table below, cost savings projected by FBS, when taken as a
percentage of the combined operating expenses of First Interstate and FBS (or
of the operating expenses of the smaller company), are two to three times
greater than those projected by other acquirors in similar market extension
transactions. This discrepancy is even more pronounced in light of the six
month timetable which FBS has projected for achieving the full cost savings
(which is considerably shorter than the time which other acquirors in similar
transactions have projected as being necessary). In marked contrast, Wells
Fargo's estimated cost savings and implementation schedule are considerably
more consistent with those in similar in-market transactions.
COST SAVINGS ESTIMATES FOR BANK TRANSACTIONS ANNOUNCED IN 1995 WITH VALUES
GREATER THAN $1 BILLION(1)
<TABLE>
<CAPTION>
COST SAVINGS ESTIMATES
--------------------------------------------
AS A
PERCENTAGE
OF SMALLER
(IN TERMS AS A
OF ASSETS) PERCENTAGE TIME TO
OWNERSHIP COMPANY'S OF COMBINED ACHIEVE
SPLIT OF OPERATING OPERATING DOMESTIC 100%
ANNOUNCE- COMBINED DEAL VALUE EXPENSE EXPENSE DEPOSIT COST
MENT DATE ENTITY(2) (IN BILLIONS)(3) BASE(4) BASE(4) OVERLAP(5) SAVINGS(2)
--------- --------- ---------------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
MARKET EXTENSION TRANSACTIONS(6)
First Union/First
Fidelity............... 06/19 61/39 5.6 18 5 0.2% 24
First Chicago/NBD....... 07/12 50/50 5.1 15 6 14.2 6-12
Boatmen's/Fourth
Financial.............. 08/25 80/20 1.2 24 4 29.9 21
National City/Integra... 08/28 70/30 2.1 21 5 0.0 6
AVERAGE 20% 5% 11% 14-16MOS.(7)
FIRST BANK SYSTEM/
FIRST INTERSTATE....... 11/06 42/58 $10.3 42% 15% 2.58% 6MOS.
IN-MARKET
TRANSACTIONS(6)
Fleet Financial/Shawmut. 02/21 59/41 $ 3.6 44% 14% 77.0% 15Mos.
PNC/Midlantic........... 07/10 67/33 3.0 30 7 98.1 12
Chemical/Chase.......... 08/28 58/42 9.9 35 16 82.0 21
UJB/Summit.............. 09/11 64/36 1.1 48 12 100.0 9
CoreStates/Meridian..... 10/10 63/37 3.2 35 11 75.2 6
Bank of Boston/BayBanks. 12/12 72/28 2.0 39 13 99.8 12
AVERAGE 38% 12% 91.06% 13MOS.(7)
WELLS FARGO/FIRST
INTERSTATE............. 11/13 48/52 $10.9 37% 18% 73.3% 18MOS.
</TABLE>
- --------
(1) The NationsBank/Bank South transaction has been omitted because one party
was far larger (in terms of assets) than the other and the pro forma
ownership split was 90/10. The US Bancorp/West One and Fleet/NatWest
transactions have been omitted because the domestic deposit overlap (52.4%
for US Bancorp/West One and 64.0% for Fleet/NatWest) are relatively close
to 50% (with the consequence that these transactions share the
characteristics of both in-market transactions and market extension
transactions).
(2) Source: Investor presentations.
(3) Source: SNL Securities. The Chemical/Chase transaction excludes the
preferred stock.
(4) Cost savings estimates as a percentage of operating expense base for
UJB/Summit, CoreStates/Meridian and Bank of Boston/BayBanks (percent of
smallest expense base only) were based on investor presentations. Other
cost savings estimates as a percentage of operating expense base were
obtained by dividing cost savings estimates from investor presentations by
second quarter 1995 annualized noninterest expense base, with the
exception of Fleet Financial/Shawmut, which is based on the annualized
first quarter 1995 noninterest expense base, and First Bank System/First
Interstate, Wells Fargo/First Interstate and Bank of
24
<PAGE>
Boston/BayBanks, which are based on third quarter 1995 annualized
noninterest expense base adjusted (in the case of First Interstate) for
restructuring charges and certain other items.
(5) Based generally on deposits in the same markets (as defined by Federal
Reserve Banks), with overlap being calculated on the basis of (i) Average
Overlap (as defined in note 6 below) for banks of comparable size with
headquarters in the same markets (e.g., Fleet/Shawmut; Chemical/Chase; and
Wells Fargo/First Interstate) and (ii) overlap of the target bank with the
larger bank for banks of substantially different sizes or where banks of a
more similar size are headquartered in different markets. An overlap is
not deemed to exist in a market where one of the two banks has an
insignificant market presence both in absolute terms and relative to the
other bank or where two banks compete in different states that are part of
the same market.
(6) For purposes of this discussion, in-market transactions are defined as
transactions where: (i) if the two parties are of generally comparable
size, the average of the domestic deposit overlap of party 1 with party 2
and the deposit overlap of party 2 with party 1 (the "Average Overlap") is
50% or greater, or (ii) if one party is substantially larger than the
other, the overlap of the smaller party with the larger party in terms of
deposits is 50% or greater. All other transactions are defined as market
extension transactions. Wells Fargo believes that the two transactions
which are most directly comparable to a Wells Fargo/First Interstate
transaction are Chase/Chemical and Fleet/Shawmut because in those two
transactions the two parties were significantly closer in size than in the
other in-market transactions. Based on publicly available information, it
appears that the Average Overlap in Chase/Chemical was 82%, in
Fleet/Shawmut was 77%, and in a Wells Fargo/First Interstate transaction
would be 73%. Wells Fargo does not believe that these differences impact
cost savings because of the small amount of the difference, the fact that
First Interstate's headquarters and administrative functions are in
California and the fact that a substantial percentage of First
Interstate's deposits, approximately 31%, are in the three adjoining
states of Oregon, Nevada and Arizona.
(7) Among the transactions in the table, the larger, and therefore presumably
more complex transactions (i.e., those with a deal value in excess of $5.0
billion), average 17-19 months as the estimated time to achieve 100% cost
savings.
In addition, FBS's projections do not appear to provide for a special
assessment on Savings Association Insurance Fund ("SAIF") deposits,
notwithstanding pending legislation which would impose such an assessment on
FBS's SAIF deposits. Unlike FBS, Wells Fargo has no SAIF deposits and,
therefore, would not be affected by such legislation.
Also, the FBS estimates do not make any allowances for revenue loss despite
the fact that 32% of the cost reductions projected by FBS come directly from
business lines, where cost reductions will have a direct impact on customers.
Wells Fargo believes its estimates, in contrast, make appropriate allowances
for possible revenue loss in keeping with Wells Fargo's goal of ensuring that
its overall estimates are conservative.
First Interstate's and FBS's claim that a merger with Wells Fargo would
involve greater revenue loss than $100 million is, once again, at odds with
the projections in other bank mergers (banks have generally not projected
material revenue loss in connection with acquisitions, even where divestitures
are expected to be required) and is also at odds with First Interstate's
assertion that there would be no material revenue loss as a result of the
proposed FIB/FBS Merger. In addition, the claim is at odds with Wells Fargo's
own acquisition experience, particularly its experience with the Crocker
National acquisition described below.
Moreover, FBS has no proven track record at successfully integrating large
acquisitions. Although the acquisition of First Interstate by FBS and a
pending FBS merger with FirsTier Financial would mean that FBS would be
simultaneously integrating institutions with assets aggregating over 178% of
FBS's total assets, the largest bank acquisition which FBS has undertaken to
date represented less than 20% of its total assets at the time of announcement
(Metropolitan Financial, a thrift institution, represented 30% of total assets
at the time of announcement). By contrast, Wells Fargo's only pending
acquisition is its Offer for First Interstate, and Wells Fargo has a proven
track record of successfully completing a very large integration (in relation
to its own size) when it acquired Crocker National in 1986 (Crocker National
represented approximately 70% of Wells Fargo's total assets at that time).
Wells Fargo's two most senior executives, Paul Hazen, the Chief Executive
Officer, and Bill Zuendt, the President and Chief Operating Officer, as well
as its four Vice Chairmen, Michael Gillfillan, Rod Jacobs, Charles Johnson and
Clyde Ostler, were all senior officers at the time of, and were actively
involved in managing, the Crocker National acquisition and integration. In
addition, 31 of Wells Fargo's 40 Executive
25
<PAGE>
Vice Presidents were officers of Wells Fargo at that time. The responsibilities
of these Wells Fargo executives at the time of the Crocker National merger
included, but were not limited to, integration and consolidation of the
following: the retail branch network, check processing operations, systems and
operations, data center operations, commercial banking, back office operations,
general ledger, wholesale operations, cash management sales, and real estate
lending. Although Crocker National was located in only one state and First
Interstate is located in multiple states, Wells Fargo believes that the
similarities in the integration process are substantially greater than the
differences in view of, among other things, the following facts: (i) a
combination with First Interstate will be significantly in-market (44% of First
Interstate's deposits and First Interstate's corporate and administrative
headquarters are located in California, and approximately 45% of First
Interstate's non-interest expenses are incurred in California) and most of the
out-of-market aspects involve three adjoining states (31% of First Interstate's
deposits are located, and approximately 30% of First Interstate's non-interest
expenses are incurred, in these three adjoining states); (ii) California itself
is large geographically and has a large and diverse population and economy; and
(iii) a number of Wells Fargo's and Crocker National's businesses, such as
lending and trust activities, are conducted on a multi-state basis. The
principal differences between the two transactions are that First Interstate
maintains separate legal entities in each state and that there are not
overlapping branch facilities in states outside California. Wells Fargo does
not believe, however, that these differences create any significant integration
issues, particularly in view of First Interstate's announced efforts to achieve
greater centralization and uniformity throughout its banking system.
Accordingly, Wells Fargo believes that its success in the Crocker National
acquisition is highly relevant to an assessment of its ability to integrate a
combination with First Interstate.
FBS has claimed that Wells Fargo would experience greater revenue loss than
estimated, because deposit attrition of 15% to 40% has occurred in California
in-market acquisitions such as Wells Fargo's acquisition of Crocker National.
Wells Fargo's experience with respect to its Crocker National acquisition was
materially different than that claimed by FBS.
The following table sets forth Wells Fargo's and Crocker National's deposits
in California (excluding time deposits greater than $100,000), branches
remaining and branches closed (as a percentage of the original number of
branches of Crocker National) at March 31, 1986 and at various dates following
the May 30, 1986 acquisition of Crocker National. Demand deposits are also
shown because the usual quarter end fluctuations in these deposits (typically
with offsetting fluctuations in float) can produce variations in the trend
line. Deposits grew by 3.4% by year end 1987, despite the closure of 182
branches (a 29% reduction of all branches, or a 57% decline of branches
relative to the Crocker National totals at the time of that merger). The
deposit growth numbers are conservative because approximately $200 million of
deposits divested for antitrust reasons were not subtracted from the starting
base level of deposits. The table excludes time deposits greater than $100,000
because Crocker National had a significant amount of these deposits sourced
through their funding desk which were allowed to run off following the
acquisition. Even if these deposits over $100,000 were included, total deposits
would have experienced no significant decrease.
<TABLE>
<CAPTION>
WELLS FARGO'S AND CROCKER NATIONAL'S CALIFORNIA
DEPOSITS
--------------------------------------------------
CALIFORNIA DEPOSITS
(EXCLUDING TIME CUMULATIVE NUMBER
DEPOSITS GREATER OF BRANCHES CLOSED
THAN $100,000) AS PERCENTAGE OF
--------------------- ORIGINAL NUMBER OF
DEMAND NUMBER OF CROCKER NATIONAL
DEPOSITS OTHER TOTAL* BRANCHES BRANCHES
-------- ----- ------ --------- ------------------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C> <C>
March 31, 1986............... $6.7 $19.8 $26.5 621 --
June 30, 1986................ 7.0 19.7 26.6 619 1%
September 30, 1986........... 6.9 20.7 27.7 568 17
December 31, 1986............ 8.0 21.0 28.9 513 34
March 31, 1987............... 6.4 21.3 27.7 458 51
June 30, 1987................ 6.3 21.1 27.4 449 54
September 30, 1987........... 6.2 21.0 27.1 442 56
December 31, 1987............ 6.3 21.1 27.4 439 57
</TABLE>
- --------
* Components may not sum to total due to rounding.
26
<PAGE>
Accretion Projections. Both Wells Fargo and FBS have publicly disclosed the
pro forma impact of their respective proposed transactions on their future
earnings per share, given their base case assumptions. Because of the
different accounting treatments sought by Wells Fargo and FBS, Wells Fargo
believes that its projected accretion in Cash Earnings per share is most
comparable to FBS's projected accretion in reported earnings per share.
In its investor presentation materials dated November 6, 1995, FBS estimates
that a merger with First Interstate would result in accretion in its reported
earnings per share in 1996, 1997 and 1998 of 1%, 18% and 22%, respectively.
However, even beyond the uncertainty over the level of operating cost savings
achievable by FBS as described above, Wells Fargo believes that the
methodology used by FBS in arriving at its accretion projections is
questionable. In projecting accretion to earnings from a base (i.e. stand
alone) case, FBS and First Interstate assume no share repurchases in that base
case for 1996 and 1997, and presumably thereafter. (See pages 23-25 of FBS's
investor presentation materials dated November 6, 1995.) Wells Fargo believes
that it would be more appropriate for the base case to assume a continuation
of FBS's current buyback program. If that premise were adopted, FBS's base
earnings per share would be higher in the future and the accretion percentages
would be lower than suggested by FBS. The magnitude of the differences between
earnings per share accretion over a base case with and without the leverage of
an established share repurchase program is pronounced. FBS has suggested its
earnings per share accretion resulting from the FIB/FBS Merger will be 18% in
1997 rising to 25% in the year 2000. If, however, share repurchases were
assumed in the stand alone FBS case, the results would be markedly different.
Assuming, as Wells Fargo did in its estimates, that sufficient stock would be
repurchased to keep capital constant after a constant percentage dividend
payout ratio, the base case projected by FBS would rise and the accretion
above that base case would be lower. Wells Fargo estimates that the accretion
for FBS projected by FBS would drop to 12% and 6%, respectively, for the years
1997 and 2000, instead of the 18% and 25% FBS has claimed.
Using (i) estimates of earnings accretion from a base case which assumes a
share repurchase program and (ii) the same base revenue and expense
assumptions for First Interstate as were used by FBS, Wells Fargo estimates
that the Merger with First Interstate would result in accretion to its Cash
Earnings per share in 1996, 1997 and 1998 of 14%, 38% and 42%, respectively,
and to its reported earnings per share in 1996, 1997 and 1998 of (2)%, 18% and
23%, respectively.
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, supermarkets 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.
27
<PAGE>
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 rapidly growing
western states covered by First Interstate is preferable to an FBS/First
Interstate combination with its diversification into a geographical area which
would dilute the economic growth prospects for First Interstate 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.
Purchase Versus Pooling of Interests Accounting. Wells Fargo's and FBS's
proposals differ in that Wells Fargo contemplates using the purchase method of
accounting to account for the acquisition of First Interstate while FBS's
proposal is conditioned upon the receipt from FBS's accountants of an opinion
to the effect that the acquisition will qualify for pooling of interests
accounting treatment. Based on discussions with its accountants (KPMG Peat
Marwick LLP), 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 that FBS has
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. FBS's investor
presentation of November 6, 1995 contemplates that up to approximately 14% of
its pro forma outstanding shares will be repurchased in the 18 months that
follow the transaction. In addition, FBS has stated that approximately 8% of
the outstanding Shares will be tainted Shares (i.e., certain Shares which
First Interstate has repurchased within the preceding two years) at the
acquisition date.
Wells Fargo believes there is no meaningful economic difference between
purchase accounting and pooling of interests accounting. The pro forma levels
of tangible capital are identical, regardless of whether purchase or pooling
of interests accounting is utilized. Although under purchase accounting
goodwill and other intangibles will be recorded in the transaction and
amortized over time (with the result that reported net income will be lower),
amortization is not a cash expense and thus the true earnings power of the
institution, as represented by reported earnings before amortization of
intangibles (i.e., Cash Earnings), is completely unaffected.
Wells Fargo determined to use purchase accounting because it does not
require the reissuance of previously repurchased shares and allows greater
flexibility in repurchasing shares after completion of the transaction than
that which is available given current accounting practices under pooling of
interests accounting. Wells Fargo has historically had a share repurchase
program designed to return excess capital being generated by its operations to
stockholders. Wells Fargo believes that utilizing pooling of interests
accounting would limit its ability to continue to return excess capital to
stockholders by way of share repurchases for a significant period of time
after completion of the transaction.
Response to Certain Assertions in the First Interstate Schedule 14D-9
First Interstate has set forth in the First Interstate Schedule 14D-9 the
reasons why the First Interstate Board continues to support the FBS proposal
rather than Wells Fargo's proposal. Many of these reasons are, in Wells
Fargo's opinion, subject to serious question.
. Although First Interstate stresses that a combined FBS/First Interstate
entity would gain a top three ranking (in terms of deposits) in seven
additional states, five of these states are Montana, Nebraska, North
Dakota, South Dakota and Wyoming, which have a combined population of
less than 4.5 million. In fact, the population of the states where Wells
Fargo and First Interstate combined would have a top three ranking (in
terms of deposits) is approximately 40 million while the population of
the states where FBS and First Interstate combined would have such a
ranking is only approximately 21 million.
28
<PAGE>
. Although First Interstate maintains that diversification of assets
outside California reduces risk and therefore is an important
consideration, First Interstate's serious financial problems in the early
1990's were widely attributed to credit quality and other problems in its
units outside California, primarily Arizona and Texas.
. First Interstate claims to have had a "longstanding desire" to achieve
greater geographic diversification, but four out of its five most recent
significant acquisitions (based on asset size as set forth on page 32 of
First Interstate's 1994 Annual Report) have been in California. Further,
First Interstate has sold its operations in Oklahoma and part of its
operations in New Mexico. First Interstate expressed specific concern
about Wells Fargo's real estate loan concentration in California, but
between 1993 and 1994 First Interstate increased its total California
real estate loans by 151% and its California commercial real estate loans
by 78%.
. First Interstate expresses concern that the trading price of the Wells
Fargo Common Stock in relation to book value and earnings is among the
highest in the banking industry, but this is also true of FBS's common
stock. The price to book value and price to earnings (using 1996 earnings
estimates) ratios as set forth in First Call estimates as of December 29,
1995 for the Wells Fargo Common Stock and the FBS Common Stock and the
average of these ratios for the 25 largest bank holding companies
(excluding Wells Fargo and First Interstate) were 3.0x and 9.8x, 2.4x and
10.7x and 1.7x and 10.1x, respectively.
. First Interstate expresses concern about revenue loss in a Wells
Fargo/First Interstate combination because of significant divestiture
requirements. However, Wells Fargo is convinced that, even at the highest
divestiture levels estimated in proxy materials filed with the Commission
by First Interstate, net revenue loss from divestitures would not be
material. In fact, banks have generally not projected material revenue
loss in connection with acquisitions, even where divestitures are
expected to be required.
. First Interstate suggests that the cost savings projected for the FIB/
FBS Merger are achievable without significant revenue loss (in purported
contrast to Wells Fargo's proposal), but the comparable transactions
noted above would suggest that the level of cost savings projected by FBS
is highly ambitious and, at least recently, unprecedented for a large out
of market transaction.
. First Interstate attempts to contrast FBS's acquisition integration
record with that of Wells Fargo on the basis that Wells Fargo has not
managed the process of consummating a "significant" bank acquisition
since 1988. However, the current FBS management has never consummated an
acquisition comparable to Wells Fargo's acquisition of Crocker National,
which represented 70% of 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.
. First Interstate suggests that Wells Fargo has fewer product lines and
lower revenue growth opportunities. However, Wells Fargo funded a number
of growth initiatives in 1995 which translated into substantial revenue
growth between the second and third quarters of this year, while First
Interstate and FBS (after subtracting a non-recurring gain) had declining
revenue between such periods. The growth initiatives for Wells Fargo
included supermarket banking, small business lending, consumer lending
and direct distribution. Wells Fargo sees substantial revenue growth
opportunities in a merger with First Interstate, both in these areas and
in commercial lending, trust and investment management. In addition,
Wells Fargo notes that FBS's ratio of noninterest income (after
subtracting a non-recurring gain) to average assets (2.3% on an
annualized basis for the quarter ended September 30, 1995) is currently
lower than the comparable ratio for Wells Fargo (2.7% on an annualized
basis for the quarter ended September 30, 1995).
. First Interstate expresses concern about Wells Fargo's greater exposure
to real estate lending, which "is inconsistent with First Interstate's
credit philosophy." However, between 1993 and 1994 First Interstate's
total real estate loans increased by 61% and its commercial real estate
loans increased by 33%.
29
<PAGE>
. First Interstate claims that it shares a common deposit system with FBS,
while Wells Fargo utilizes a system which is incompatible with First
Interstate's. However, Wells Fargo also has a number of systems in common
with First Interstate. Wells Fargo believes that these common systems
between FBS and First Interstate and Wells Fargo and First Interstate
would merely simplify initial customer conversions and do 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.
LITIGATION
On November 13, 1995, Wells Fargo filed a complaint in the Delaware Court of
Chancery against First Interstate, the members of the First Interstate Board,
FBS and FBS Sub. The complaint seeks, among other things, (i) a declaration
that the First Interstate Board's approval of the FIB/FBS Merger Agreement,
the agreement to pay FBS $100 million in break-up fees pursuant to the
Reciprocal Fee Letters and the grant to FBS of a lock-up stock option with a
value of up to $100 million pursuant to the Reciprocal Stock Option Agreements
constituted breaches of the First Interstate Board's fiduciary duties and,
therefore, that the FIB/FBS Merger Agreement, break-up fees and the lock-up
stock option granted to FBS are void and unenforceable; (ii) an injunction
compelling the First Interstate Board to terminate the FIB/FBS Merger
Agreement and such fees and option and prohibiting the First Interstate Board
from including such fees and option or any similar provision in any modified
or future agreement with FBS; (iii) an injunction compelling the First
Interstate Board to declare the Offer to be a "Qualified Offer," as defined in
the Rights Agreement, or, alternatively, compelling First Interstate to redeem
the Rights or to amend the Rights to make them inapplicable to the Offer and
the Merger; (iv) an injunction against the adoption by First Interstate of any
defensive measures to thwart the Offer or the consummation of the Merger; and
(v) a declaration that the Offer and any subsequent merger are exempt from
Section 203 of the DGCL pursuant to Section 203(b)(6) of the DGCL or,
alternatively, an injunction compelling the First Interstate Board to approve
the Offer for purposes of Section 203 of the DGCL. 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 the FBS Common Stock
and denying First Interstate's stockholders the ability to assess accurately
the market value of the FIB/FBS Merger proposal or compare it to the 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 Offer is being
considered.
Certain present and former members of the First Interstate Board have been
named as defendants in several stockholder class action suits filed in
California, and certain present members of the First Interstate Board and
First Interstate have been named as defendants in several stockholder class
action suits filed in Delaware, alleging that the First Interstate Board will
breach or has breached its fiduciary duties to the stockholders of First
Interstate in responding to Wells Fargo's Original Proposal.
Five Delaware actions were filed on October 18 and 19, 1995 in Delaware
Chancery Court. On October 27, 1995, these five actions were consolidated into
a single action. On November 13, 1995, the Delaware plaintiffs sought leave to
file a Second Amended and Supplemental Class Action Complaint (the "Second
Amended Complaint"). Among other things, the proposed Second Amended Complaint
seeks to add FBS as a defendant and to assert aiding and abetting claims
against it. Among other claims, the proposed Second Amended Complaint alleges
that the First Interstate defendants breached their fiduciary duties by
failing to conduct a fair bidding contest for First Interstate. In addition,
it alleges that the defendants have implemented certain measures which may
impede any proxy solicitation or consent solicitation that Wells Fargo may
undertake. The plaintiffs seek a variety of injunctive and other relief,
including an order enjoining the FIB/FBS Merger and a declaration that the
break-up fees and the lock-up stock option granted to FBS pursuant to the
Reciprocal Fee Letters and Reciprocal Stock Option Agreements, respectively,
are null and void. In addition, a shareholder complaint has
30
<PAGE>
been filed in federal court in the United States District Court for the
District of Delaware. This complaint alleges, among other things, that First
Interstate and FBS made false and misleading statements and material omissions
of fact regarding the FIB/FBS Merger and regarding the Offer. Injunctive
relief is sought requiring, among other things, First Interstate to disclose
all material information with respect to the FIB/FBS Merger and to correct all
existing false and misleading statements.
Six class actions have been filed in the Superior Court of the State of
California, County of Los Angeles. The complaints filed in the six California
actions are similar and allege that the members of the First Interstate Board
will breach or have breached their fiduciary duty in responding to Wells
Fargo's Original Proposal and the Offer. In addition, these complaints allege
negligent breach of fiduciary duty, abuse of control and tortious interference
with prospective economic advantage. The plaintiffs in the California actions
seek declaratory relief as well as permanent and preliminary injunctive relief
enjoining the defendants from taking steps to prevent or frustrate the sale of
First Interstate to Wells Fargo. In addition, the plaintiffs seek compensatory
damages of an unspecified amount and costs including attorneys fees.
Also in California, two actions, a derivative action and a class action,
have been filed in federal court in the Central District of California. Both
cases raise essentially the same claims as those in the state court actions,
but one case also alleges violations of the federal securities laws for making
false and misleading representations and material omissions of fact regarding
the FIB/FBS Merger and the Offer.
On December 14, 1995 and December 18, 1995, respectively, FBS and First
Interstate each filed a complaint against Wells Fargo in the United States
District Court for the District of Delaware which alleges, among other things,
that Wells Fargo has violated the federal securities laws by releasing certain
financial projections and by making allegedly false statements regarding the
FIB/FBS Merger. FBS and First Interstate seek, among other things, an
injunction against Wells Fargo pursuing the Offer until certain financial
projections can be verified or disproved through the reporting of actual
earnings and compelling Wells Fargo to publicly disclose any violations of the
federal securities laws as a material fact to be considered in connection with
the Offer. Wells Fargo categorically denies that it has violated any
securities laws and believes that the allegations contained in such complaints
are baseless. On December 21, 1995, Wells Fargo answered both these complaints
and asserted counterclaims against First Interstate and FBS. The counterclaims
allege, among other things, that both First Interstate and FBS violated
federal securities laws by making false and misleading statements and material
omissions of fact regarding the FIB/FBS Merger and the Offer. Wells Fargo
seeks, among other things, an injunction compelling First Interstate and FBS
to publicly disclose any violations of the federal securities laws as a
material fact to be considered in connection with any business combination
between FBS and First Interstate and enjoining the First Interstate
stockholders meeting to consider the FIB/FBS Merger until a full and complete
corrective disclosure has been made available to the First Interstate
stockholders.
FIB/FBS MERGER AGREEMENT
The FIB/FBS Merger. According to the Current Report on Form 8-K of First
Interstate dated November 5, 1995 (the "First Interstate 8-K"), the FIB/FBS
Merger Agreement provides that FBS Sub would be merged with and into First
Interstate, with First Interstate being the surviving corporation as a wholly
owned subsidiary of FBS. The FIB/FBS Merger would become effective at the time
specified in the certificate of merger (the "Effective Time"), which must be
filed with the Secretary of State of the State of Delaware no later than two
business days after the satisfaction or waiver of the latest to occur of the
conditions summarized below under "--Conditions to the FIB/FBS Merger."
Consideration. Under the terms of the FIB/FBS Merger Agreement, each
outstanding Share (excluding Shares held in treasury by First Interstate or
directly or indirectly by FBS, First Interstate or any of their respective
subsidiaries, but including Shares (i) held directly or indirectly by FBS or
First Interstate or any of their respective subsidiaries in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity that
are beneficially owned by third parties or (ii) held by FBS or First
Interstate or any of their respective subsidiaries in respect of a debt
previously contracted), including the Rights attached thereto, would
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be converted into the right to receive 2.60 shares (the "Common Exchange
Ratio") of the FBS Common Stock, together with the number of rights (the "FBS
Rights") issued pursuant to the Rights Agreement, dated as of December 21,
1988, between FBS and Morgan Shareholder Services Trust Company, as Rights
Agent, as amended (the "FBS Rights Agreement"). In addition, pursuant to the
FIB/FBS Merger Agreement, each outstanding option granted by First Interstate
to purchase Shares would be converted into an option to purchase FBS Common
Stock in the number and at an exercise price consistent with the Common
Exchange Ratio. In addition, pursuant to the FIB/FBS Merger Agreement, each
outstanding share of 9 7/8% preferred stock, Series F, and each outstanding
share of 9.00% preferred stock, Series G, of First Interstate (collectively,
the "First Interstate Preferred Stock"), would be converted into one share of
9 7/8% preferred stock and 9.00% preferred stock, respectively, of FBS
(collectively, the "New FBS Preferred Stock") with substantially the same
terms as the corresponding series of First Interstate Preferred Stock,
provided that the New FBS Preferred Stock shall have the voting rights
necessary to ensure that FIB/FBS Merger constitutes a reorganization within
the meaning of Section 368(a) of the Code.
Representations and Warranties. The FIB/FBS Merger Agreement contains
certain representations and warranties of First Interstate including, among
other things: (a) that no consents or approvals of any governmental entity or
third party which is not a governmental entity are necessary to consummate the
FIB/FBS Merger and the other transactions contemplated by the FIB/FBS Merger
Agreement, except as disclosed in the FIB/FBS Merger Agreement or, in the case
of consents or approvals from third parties which are not governmental
entities, the failure of which to obtain will not have and would not be
reasonably expected to have a material adverse effect on First Interstate; (b)
that First Interstate and each of its subsidiaries have timely filed all
material reports, registrations and statements required to be filed since
January 1, 1993 with certain specified regulatory agencies, and that except
for normal examinations conducted by the foregoing regulatory agencies in the
regular course of First Interstate's business and except as disclosed in the
FIB/FBS Merger Agreement, no regulatory agency has initiated any proceeding or
investigation into the business or operations of First Interstate or its
subsidiaries since January 1, 1993; (c) as to brokers; (d) that there has been
no event since June 30, 1995, except as disclosed in its documents filed with
the Commission prior to the date of the FIB/FBS Merger Agreement, that has had
or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (as defined in the FIB/FBS Merger Agreement and as
used in this paragraph, a "Material Adverse Effect") on First Interstate or
the surviving corporation; (e) as to employee compensation; (f) as to actions
and proceedings pending or threatened against First Interstate; (g) as to
employee benefit plans; (h) that the documents filed by First Interstate with
the Commission since January 1, 1994 did not contain any untrue statement of
material fact and did not omit any material fact necessary to make the
statements therein not misleading; (i) as to governmental licenses and
permits, and compliance with laws, including relevant tax laws; (j) as to
material contracts; (k) as to agreements with regulatory agencies; (l) that
neither First Interstate nor any of its subsidiaries has incurred since June
30, 1995, except as disclosed in First Interstate's Quarterly Report on Form
10-Q for the period ended June 30, 1995 and for liabilities in the ordinary
course of business consistent with past practice, any liability of any nature
whatsoever that, either alone or when combined with all similar liabilities,
has had, or would reasonably be expected to have, a Material Adverse Effect on
First Interstate; (m) as to state takeover laws; (n) that the information to
be provided by First Interstate and its subsidiaries in the registration
statement and the joint proxy statement in connection with the FIB/FBS Merger
Agreement will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading;
(o) as to compliance with environmental laws and worker safety laws; and (p)
that all interest rate risk management arrangements have been entered into in
accordance with prudent banking practices and are legal, valid and binding
obligations of First Interstate or its subsidiaries and, to First Interstate's
knowledge, there are no breaches, violations or defaults or allegations
thereof by any party thereunder which would have or would be reasonably be
expected to have a Material Adverse Effect on First Interstate. In addition,
the FIB/FBS Merger Agreement contains representations and warranties by First
Interstate as to, among other things, its organization, capitalization,
ownership of its material subsidiaries and authority to enter into the FIB/FBS
Merger Agreement and the binding effect of the FIB/FBS Merger Agreement.
The FIB/FBS Merger Agreement also contains similar representations and
warranties of FBS.
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Conditions to the FIB/FBS Merger. (a) The respective obligations of each
party to effect the FIB/FBS Merger are subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(i) The FIB/FBS Merger shall have been approved by the holders of a
majority of the Shares. In addition, the issuance of FBS Common Stock
pursuant to the FIB/FBS Merger Agreement shall have been approved by the
affirmative vote of the holders of a majority of the shares of FBS Common
Stock voting at a meeting of stockholders and the amendment of the FBS
Certificate of Incorporation to (A) increase the number of authorized
shares of the FBS Common Stock to 500,000,000 and increase the number of
authorized shares of FBS Preferred Stock to 15,000,000 and (B) change the
name of FBS to First Interstate Bancorp, shall have been approved by the
affirmative vote of the holders of a majority of the outstanding shares of
FBS Common Stock.
(ii) The shares of FBS Common Stock issuable upon consummation of the
FIB/FBS Merger shall have been authorized for listing on the NYSE, subject
to official notice of issuance.
(iii) All regulatory approvals required to consummate the transactions
contemplated by the FIB/FBS Merger shall have been obtained and shall
remain in full force and effect, all statutory waiting periods in respect
thereof shall have expired and no such approval shall contain any
conditions or restrictions which the Board of Directors of either FBS or
First Interstate reasonably determines in good faith will have or
reasonably be expected to have a Material Adverse Effect on the combined
company and its subsidiaries taken as a whole. The required regulatory
approvals would be substantially the same as those required by Wells Fargo
for the Offer and the Merger. See "The Offer--Regulatory Approval
Condition."
(iv) The registration statement on Form S-4 for the FBS Common Stock
shall have become effective under the Securities Act and no stop order
suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
Commission.
(v) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the FIB/FBS Merger or any of the other transactions
contemplated by the FIB/FBS Merger Agreement shall be in effect, and no
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any governmental entity which
prohibits, restricts or makes illegal the consummation of the FIB/FBS
Merger.
(b) The obligation of FBS to effect the FIB/FBS Merger is also subject to the
satisfaction or waiver by FBS at or prior to the Effective Time of the
following conditions:
(i) The representations and warranties of First Interstate set forth in
the FIB/FBS Merger Agreement shall be true and correct in all respects (or,
in certain enumerated cases, in all material respects) as of the date of
the FIB/FBS Merger Agreement and, except to the extent such representations
and warranties speak as of an earlier date, as of the Closing Date (as
defined in the FIB/FBS Merger Agreement), provided that such
representations and warranties shall be deemed to be true and correct in
all respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect on
First Interstate and its subsidiaries taken as a whole.
(ii) First Interstate shall have performed in all material respects all
of its obligations under the FIB/FBS Merger Agreement at or prior to the
Closing Date.
(iii) The Rights shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of the Rights Agreement.
(iv) FBS shall have received a letter from Ernst & Young LLP to the
effect that the FIB/FBS Merger will qualify for "pooling of interests"
accounting treatment.
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(v) FBS shall have received an opinion of Dorsey & Whitney P.L.L.P., in
form and substance reasonably satisfactory to FBS, that the FIB/FBS Merger
will be treated for Federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code.
(c) The obligation of First Interstate to effect the FIB/FBS Merger is also
subject to the satisfaction or waiver by First Interstate at or prior to the
Effective Time of the following conditions:
(i) The representations and warranties of FBS set forth in the FIB/FBS
Merger Agreement shall be true and correct in all respects (or, in certain
enumerated cases, in all material respects) as of the date of the FIB/FBS
Merger Agreement and, except to the extent such representations and
warranties speak as of an earlier date, as of the Closing Date, provided
that such representations and warranties shall be deemed to be true and
correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or
in the aggregate, would reasonably be expected to result in a Material
Adverse Effect on FBS and its subsidiaries taken as a whole.
(ii) FBS shall have performed in all material respects all of its
obligations under the FIB/FBS Merger Agreement at or prior to the Closing
Date.
(iii) The FBS Rights shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of the FBS Rights Agreement.
(iv) First Interstate shall have received a letter from Ernst & Young LLP
to the effect that the FIB/FBS Merger will qualify for "pooling of
interests" accounting treatment.
(v) First Interstate shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom, in form and substance reasonably satisfactory to
First Interstate, that the FIB/FBS Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code.
Certain Covenants. The FIB/FBS Merger Agreement provides for certain
covenants pending the Effective Time. Generally, FBS and First Interstate
shall, and shall cause their respective subsidiaries to, (i) conduct their
businesses in the usual, regular and ordinary course consistent with past
practices, (ii) use their reasonable best efforts to maintain and preserve
intact their respective business organizations, employees and business
relationships and (iii) take no action which would reasonably be expected to
adversely affect the ability to obtain the regulatory approvals required to
consummate the transactions contemplated by the FIB/FBS Merger Agreement. The
FIB/FBS Merger Agreement also restricts, among other things, the ability of
FBS and First Interstate and their respective subsidiaries to (i) increase
dividends or redeem, repurchase or reclassify capital stock, (ii) dispose of
or encumber assets, (iii) make any material acquisitions (other than in the
ordinary course of business consistent with past practice or acquisitions of
businesses having assets not exceeding 10% of the consolidated assets on a pro
forma basis of FBS or First Interstate, as the case may be), (iv) increase
employee compensation (other than in the ordinary course of business
consistent with past practice or in an aggregate amount not exceeding $10
million), (v) settle any claim that is material to FBS or First Interstate, as
the case may be, (vi) take actions that would prevent or impede qualification
of the FIB/FBS Merger as a pooling transaction or a reorganization under
Section 368(a) of the Code, (vii) amend their respective certificates of
incorporation, bylaws and rights agreements or (viii) change their respective
investment securities portfolio policies. FBS and First Interstate have also
agreed not to, and cause their respective subsidiaries not to, authorize or
permit any of their officers, directors, employees or agents to directly or
indirectly solicit, initiate or encourage any inquiries relating to, or the
making of any proposal which constitutes, a Takeover Proposal (as defined
below), or recommend or endorse any Takeover Proposal, or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal or otherwise facilitate
any effort or attempt to make or implement a Takeover Proposal, unless (except
in the case of the solicitation, initiation or encouragement of inquiries
relating to a Takeover Proposal) the Board of Directors of FBS or First
Interstate, as the case may be, after having consulted with and considered the
advice of outside counsel, has reasonably determined in good faith that the
failure to do so would cause the members of such Board
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of Directors to breach their fiduciary duties. Each of FBS and First
Interstate shall immediately advise the other following the receipt by it of
any Takeover Proposal and the details thereof, and advise the other of any
developments with respect to such Takeover Proposal, immediately upon the
occurrence thereof. The term "Takeover Proposal," as defined in the FIB/FBS
Merger Agreement, means, with respect to any person, any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving FBS or First Interstate or any of their respective subsidiaries or
any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, FBS or First Interstate or any
of their respective subsidiaries. According to the First Interstate 8-K, First
Interstate considers the Offer to be a Takeover Proposal. Each of First
Interstate and FBS has also agreed to hold a meeting of its shareholders for
the purpose of obtaining the approvals of such shareholders required in
connection with the FIB/FBS Merger Agreement and to cause its Board of
Directors to recommend that its shareholders approve the matters to be voted
on by such shareholders in connection with the FIB/FBS Merger, except that the
Board of Directors of either party may fail to make such recommendation (or
withdraw, modify or change such recommendation in a manner adverse to the
other party) if such Board of Directors, after having consulted with and
considered the advice of outside counsel, reasonably determines in good faith
that the making of such recommendation (or the failure to so withdraw, modify
or change such recommendation) would constitute a breach of the fiduciary
duties of the members of such Board of Directors under applicable law.
Management; Board of Directors; Name. The FIB/FBS Merger Agreement provides
that at the Effective Time, Mr. Siart would become President and Chief
Operating Officer of the combined company and John F. Grundhofer, the current
Chairman, President and Chief Executive Officer of FBS, would become the
Chairman of the Board and Chief Executive Officer of the combined company. In
addition, at the Effective Time, FBS would change its name to First Interstate
Bancorp and increase the number of persons serving on its Board of Directors
to 20, ten of whom would be selected by First Interstate from among the
members of its Board of Directors immediately prior to the FIB/FBS Merger (the
"First Interstate Directors") and ten of whom would be selected by FBS from
among the members of its Board of Directors immediately prior to the FIB/FBS
Merger (the "FBS Directors"). During the three-year period following the
Effective Time, FBS, subject to the fiduciary duties of the directors, has
agreed to take such steps to assure that there will be an equal number of FBS
Directors and First Interstate Directors.
Termination; Fees and Expenses. The FIB/FBS Merger Agreement may be
terminated at any time prior to the Effective Time:
(a) by mutual consent of FBS and First Interstate in a written instrument,
if the Board of Directors of each so determines;
(b) by either the Board of Directors of FBS or the Board of Directors of
First Interstate if (i) any governmental entity which must grant a requisite
regulatory approval has denied approval of the FIB/FBS Merger and such denial
has become final and nonappealable or (ii) any governmental entity of
competent jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by the FIB/FBS Merger Agreement;
(c) by either the Board of Directors of FBS or the Board of Directors of
First Interstate if the FIB/FBS Merger shall not have been consummated on or
before December 31, 1996 (or, if at such date the FIB/FBS Merger shall not
have been consummated as a result of the existence of an order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the FIB/FBS Merger or
any of the other transactions contemplated by the FIB/FBS Merger Agreement,
the earlier of (i) the date on which such legal restraint is no longer in
effect and (ii) June 30, 1997), unless the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to terminate the
FIB/FBS Merger Agreement to perform or observe the covenants and agreements
of such party set forth therein;
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(d) by either the Board of Directors of FBS or the Board of Directors of
First Interstate (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained
in the FIB/FBS Merger Agreement) if the other party shall have breached (i)
any of the covenants or agreements made by such other party therein or (ii)
any of the representations or warranties made by such other party therein,
and in either case, such breach (x) is not cured within thirty (30) days
following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing and (y) would
entitle the non-breaching party not to consummate the transactions
contemplated by the FIB/FBS Merger Agreement;
(e) by either the Board of Directors of FBS or the Board of Directors of
First Interstate if any approval of the stockholders of FBS or First
Interstate contemplated by the FIB/FBS Merger Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment or postponement thereof;
(f) prior to the approval of (x) the FIB/FBS Merger Agreement by the
requisite vote of First Interstate's shareholders (if First Interstate is the
terminating party) or (y) the transactions contemplated by the FIB/FBS Merger
Agreement by FBS' shareholders (if FBS is the terminating party), by either
the Board of Directors of FBS or the Board of Directors of First Interstate,
if there exists at such time a Takeover Proposal for the party whose Board of
Directors is seeking to terminate the FIB/FBS Merger Agreement pursuant to
this paragraph (f) and such Board of Directors, after having consulted with
and considered the advice of outside legal counsel, reasonably determines in
good faith that such action is necessary in the exercise of its fiduciary
duties under applicable laws; or
(g) by either the Board of Directors of FBS or the Board of Directors of
First Interstate, if the Board of Directors of the other party shall have
withdrawn, modified or changed in a manner adverse to the terminating party
its approval or recommendation of the FIB/FBS Merger Agreement (in the case
of First Interstate) or the transactions contemplated thereby (in the case of
FBS).
As a further condition to the execution and delivery of the FIB/FBS Merger
Agreement, FBS and First Interstate executed the Reciprocal Fee Letters.
Pursuant to the Reciprocal Fee Letters, unless a Nullifying Event (as such
term is defined below) shall have occurred and be continuing at the time the
FIB/FBS Merger Agreement is terminated, in the event that the FIB/FBS Merger
Agreement is terminated pursuant to the foregoing provisions and prior to or
concurrently with such termination a First Trigger Event (as such term is
defined below) shall have occurred, the terminating party shall pay to the
other party a cash fee of $25 million. The terminating party shall pay an
additional cash fee of $75 million if prior to, concurrently with or within 18
months after such termination an Acquisition Event (as such term is defined
below) shall have occurred.
A "First Trigger Event" shall mean the occurrence of any of the following
events:
(i) either party's Board of Directors shall have failed to approve or
recommend the FIB/FBS Merger Agreement or the transactions contemplated
thereby, as the case may be, or shall have withdrawn or modified in a manner
adverse to the other party its approval or recommendation of such
transactions, or shall have resolved or publicly announced an intention to do
either of the foregoing;
(ii) either party or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Commission) thereof, or the Board of
Directors of such party or a Significant Subsidiary, shall have recommended
that the stockholders of such party approve any Acquisition Proposal (as such
term is defined below) or shall have entered into an agreement with respect
to, authorized, approved, proposed or publicly announced its intention to
enter into, any Acquisition Proposal;
(iii) the FIB/FBS Merger Agreement or the transactions contemplated
thereby, as the case may be, shall not have been approved at a meeting of
either party's stockholders which has been held for that purpose prior to
termination of the FIB/FBS Merger Agreement in accordance with its terms, if
prior thereto it shall have
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been publicly announced that any person (other than the other party or one of
its subsidiaries) shall have made, or disclosed an intention to make, an
Acquisition Proposal;
(iv) any person or group (other than the other party or its subsidiaries)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of 50% or more of the then outstanding shares of the stock then
entitled to vote generally in the election of directors of either FBS, First
Interstate or any Significant Subsidiary thereof; or
(v) following the making of an Acquisition Proposal, either party shall
have breached any covenant or agreement contained in the FIB/FBS Merger
Agreement such that the other party would be entitled to terminate the
FIB/FBS Merger Agreement unless such breach is promptly cured without
jeopardizing consummation of the FIB/FBS Merger pursuant to the terms of the
FIB/FBS Merger Agreement.
An "Acquisition Event" shall mean the consummation of any event described in
the definition of "Acquisition Proposal" below, except that the percentage
reference contained in clause (C) of such definition shall be 50% instead of
20%.
An "Acquisition Proposal" shall mean any (i) publicly announced proposal,
(ii) regulatory application or notice (whether in draft or final form), (iii)
agreement or understanding, (iv) disclosure of an intention to make a
proposal, or (v) amendment to any of the foregoing, made or filed on or after
the date hereof, in each case with respect to any of the following
transactions with a third party: (A) a merger or consolidation, or any similar
transaction, involving either party or any Significant Subsidiary thereof
(other than mergers, consolidations or similar transactions involving solely
one of the parties and/or one or more wholly owned subsidiaries of the parties
and other than a merger or consolidation as to which the common shareholders
of one of the parties immediately prior thereto in the aggregate own at least
70% of the common stock of the publicly held surviving or successor
corporation (or any publicly held ultimate parent company thereof) immediately
following consummation thereof); (B) a purchase, lease or other acquisition of
all or substantially all of the assets or deposits of either FBS or First
Interstate, or any Significant Subsidiary thereof; or (C) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of FBS
or First Interstate or any Significant Subsidiary thereof.
A "Nullifying Event" shall mean any of the following events occurring and
continuing at a time when FBS or First Interstate, as the case may be, is not
in material breach of any of its covenants or agreements contained in the
FIB/FBS Merger Agreement: (i) the other party shall be in breach of any of its
covenants or agreements contained in the FIB/FBS Merger Agreement such that
FBS or First Interstate, as the case may be, shall be entitled to terminate
the FIB/FBS Merger Agreement, (ii) the stockholders of the other party shall
have voted and failed to approve the transactions contemplated by the FIB/FBS
Merger Agreement at a meeting of such stockholders which has been held for the
purpose or at any adjournment or postponement thereof (unless the FIB/FBS
Merger Agreement or the transactions contemplated thereby, as the case may be,
shall not have been approved at a meeting of the stockholders of the other
party which was held on or prior to such date for the purpose of voting with
respect to the FIB/FBS Merger Agreement) or (iii) the Board of Directors of
either FBS or First Interstate, as the case may be, shall have failed to
approve or recommend the FIB/FBS Merger Agreement or the transactions
contemplated thereby or shall have withdrawn, modified or changed in any
manner adverse to the other party its approval or recommendation of the
transactions contemplated by the FIB/FBS Merger Agreement or shall have
resolved or publicly announced its intention to do any of the foregoing.
Except as provided in the Reciprocal Fee Letters and the Reciprocal Stock
Option Agreements referred to below, all costs and expenses incurred in
connection with the FIB/FBS Merger Agreement and the transactions contemplated
thereby shall be paid by the party incurring such expense, provided, however,
that (i) the costs and expenses of printing and mailing the joint proxy
statement, and all filing and other fees paid to the Commission in connection
with the FIB/FBS Merger, shall be borne equally by FBS and First Interstate
and (ii) notwithstanding anything to the contrary contained in the FIB/FBS
Merger Agreement, neither FBS nor First
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Interstate shall be relieved or released from any liabilities or damages
arising out of its willful breach of any provision of the FIB/FBS Merger
Agreement.
Stock Option Agreements. As a further condition to the execution and
delivery of the FIB/FBS Merger Agreement, FBS and First Interstate entered
into the Reciprocal Stock Option Agreements. Pursuant to the Reciprocal Stock
Option Agreements, First Interstate granted FBS an unconditional, irrevocable
option to purchase up to 15,073,106 Shares (approximately 19.9% of the
currently outstanding Shares) at a price of $127.75 per Share (the closing
price of the Shares on the NYSE on November 3, 1995) and FBS granted First
Interstate an unconditional, irrevocable option to purchase up to 25,829,983
shares of FBS Common Stock (approximately 19.9% of the currently outstanding
shares) at a price of $50.875 per share (the closing price of the FBS Common
Stock on the NYSE on November 3, 1995), in each case subject to certain
adjustments and limitations. Each option is exercisable, in whole or in part,
only upon the occurrence of certain events that create the potential for a
third party to acquire control of FBS or First Interstate. Such events include
(i) the acquisition by any person other than FBS or First Interstate, as the
case may be, of beneficial ownership of 20% or more of the outstanding Shares
or FBS Common Stock, as the case may be, and (ii) the agreement by FBS or
First Interstate to enter into certain acquisition transactions. Each option
terminates upon the earlier of (i) the Effective Time, (ii) the termination of
the FIB/FBS Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event (as
defined in the Reciprocal Stock Option Agreements), which is similar to a
First Triggering Event (defined above), (iii) the passage of 18 months after
termination of the FIB/FBS Merger Agreement if such termination is concurrent
with or follows an Initial Triggering Event and (iv) the date on which there
has been a failure to obtain the requisite stockholder votes required pursuant
to the FIB/FBS Merger Agreement. The option may not be exercised at any time
when the grantee of the option is in breach of any of its covenants or
agreements such that the other party is entitled to terminate the FIB/FBS
Merger Agreement. Notwithstanding any other provisions of the Reciprocal Stock
Option Agreements, the Total Profit (as defined therein) which either FBS or
First Interstate may, as grantee of the option issued by the other party,
respectively, realize from the option may not exceed $100 million.
Exercise of a Reciprocal Stock Option Agreement to acquire 5% or more of the
outstanding common stock of the issuer of the option would require, among
other things, receipt of the prior approval of the Federal Reserve Board under
Section 3 of the BHCA. The standards applicable to such an approval are
described generally under "The Offer--Regulatory Approval Condition" below.
The foregoing descriptions of the FIB/FBS Merger Agreement, the Reciprocal
Fee Letters and the Reciprocal Stock Option Agreements are qualified in their
entirety by reference to the texts of such Agreements, copies of which have
been filed by First Interstate as exhibits to the First Interstate 8-K and are
incorporated by reference herein.
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THE OFFER
GENERAL
Wells Fargo hereby offers, upon the terms and subject to the conditions of
the Offer, to exchange two-thirds of a share of Wells Fargo Common Stock for
each outstanding Share validly tendered on or prior to the Expiration Date and
not withdrawn. The term "Expiration Date" shall mean 12:00 midnight, New York
City time, on , 1996, unless and until Wells Fargo extends the period of
time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Wells Fargo, shall expire.
Tendering stockholders will not be obligated to pay any charges or expenses
of the Exchange Agent or any brokerage commissions. Except as set forth in the
Instructions to the Letter of Transmittal, transfer taxes on the exchange of
Shares pursuant to the Offer will be paid by or on behalf of Wells Fargo.
The purpose of the Offer is for Wells Fargo to acquire control of, and
ultimately the entire common equity interest in, First Interstate. Wells Fargo
intends, as soon as practicable after consummation of the Offer, to seek to
have First Interstate consummate the Merger with Wells Fargo in which each
outstanding Share (except for treasury shares of First Interstate and Shares
held by Wells Fargo or any subsidiary of Wells Fargo other than in a fiduciary
capacity) would be converted into the right to receive two-thirds of a share
of Wells Fargo Common Stock. See "--Purpose of the Offer; the Merger."
In the event that Wells Fargo acquires all the Shares pursuant to the Offer
and/or the Merger, former stockholders of First Interstate would own
approximately 51.8% of the outstanding shares of Wells Fargo Common Stock,
based on the number of Shares outstanding on October 31, 1995. If 51% of the
Shares are exchanged, such ownership percentage would be approximately 35%.
Wells Fargo's obligation to exchange shares of Wells Fargo Common Stock for
Shares pursuant to the Offer is conditioned upon satisfaction of the Minimum
Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights
Plan and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition and the
Regulatory Approval Condition (in each case as defined on the cover page of
this Prospectus) and the other conditions set forth under "--Certain Other
Conditions of the Offer." The conditions to the Offer are identical in all
material respects to a number of the conditions to the competing proposal to
effect the FIB/FBS Merger, although that competing proposal is also subject to
an additional condition which is not a condition to the 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 "pooling of
interests" accounting treatment. (Specifically, (a) the conditions to the
Offer relating to (i) obtaining necessary regulatory approvals of stockholders
of the acquiring company, (ii) authorization for listing on the NYSE of the
shares of the acquiring company to be issued in the transaction, (iii)
effectiveness of the registration statement relating to the transaction under
the Securities Act, (iv) absence of orders, injunctions, decrees, statutes,
rules, regulations, orders or other legal restraints or prohibitions
preventing consummation of the transaction and (v) accuracy of representations
and warranties of First Interstate in the FIB/FBS Merger Agreement are
identical in all material respects in the two proposals, (b) the Offer is
conditioned on (i) satisfaction of the Rights Plan and DGCL 203 Condition,
(ii) there being validly tendered and not withdrawn prior to the Expiration
Date a number of Shares which, together with the Shares beneficially owned by
Wells Fargo and its affiliates for their own respective accounts, will
constitute at least a majority of the total number of outstanding Shares on
the fully diluted basis described herein (based on the number of Shares
outstanding or reserved for issuance pursuant to First Interstate's employee
stock options and dividend reinvestment and stock purchase plans as of October
31, 1995 as reported by First Interstate and Shares currently owned
beneficially by Wells Fargo and its affiliates for their own respective
accounts, Wells Fargo believes this Minimum Tender Condition would have been
satisfied on October 31, 1995 if at least an aggregate of 39,938,688 Shares,
or 52.7% of the Shares outstanding as of October 31, 1995, had been validly
tendered pursuant to the Offer and not withdrawn) while the FIB/FBS Merger is
conditioned on receiving approval of the holders of a majority of the
outstanding Shares, and (iii) the stockholders of First Interstate not having
approved
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the FIB/FBS Merger Agreement, and (c) the FIB/FBS Merger is subject to the
additional conditions, to which the Offer is not subject, that (i) 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 "pooling of interests"
accounting treatment, (ii) FBS shall have received an opinion of counsel that
the Merger will be treated as a reorganization for federal income tax
purposes, and (iii) FBS shall have received a certificate signed by the Chief
Executive Officer or Chief Financial Officer of First Interstate verifying
that First Interstate has performed all of its material obligations prior to
closing.) Based on discussions with its accountants (KPMG Peat Marwick LLP),
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. See "--Rights Plan and DGCL 203 Condition," "--
Regulatory Approval Condition" and "--Certain Other Conditions of the Offer."
Rights are presently evidenced by the certificates for the Shares and the
tender by a stockholder of his Shares prior to the First Interstate
Distribution Date will also constitute a tender of the associated Rights. No
separate payment will be made by Wells Fargo for the Rights pursuant to the
Offer. Upon the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated persons (a "First Interstate
Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding Shares or (ii) 10 business days (or such later date as may be
determined by action of the First Interstate Board prior to such time as any
person becomes a First Interstate Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 20% or more of such outstanding Shares (the earlier of such dates
being called the "First Interstate Distribution Date"), separate certificates
evidencing the Rights will be mailed to holders of record of the Shares as of
the close of business on the First Interstate Distribution Date and such
separate Rights certificates alone will evidence the Rights. According to the
First Interstate Schedule 14D-9, the First Interstate Board determined to
postpone the occurrence of the First Interstate Distribution Date as a result
of the public announcement of the Offer until such later date as determined by
the First Interstate Board.
If the First Interstate Distribution Date occurs and separate certificates
representing the Rights are distributed by First Interstate or the Rights
Agent to holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, certificates representing a number of Rights equal to
the number of Shares tendered must be delivered to the Exchange Agent, or, if
available, a book-entry confirmation received by the Exchange Agent with
respect thereto, in order for such Shares to be validly tendered. If the First
Interstate Distribution Date occurs and separate certificates representing the
Rights are not distributed prior to the time Shares are tendered pursuant to
the Offer, Rights may be tendered prior to a stockholder receiving the
certificates for Rights by use of the guaranteed delivery procedure described
under "--Procedure for Tendering" below.
According to First Interstate's Quarterly Report on Form 10-Q for the period
ended September 30, 1995, as of October 31, 1995, there were 75,744,254 Shares
outstanding. As of the date of this preliminary prospectus, Wells Fargo owned
beneficially 100 Shares. Additionally, as of January 11, 1996, Wells Fargo
held 162,751 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. With
respect to Shares held in a fiduciary capacity that Wells Fargo has the power
to vote and any vote taken with respect to the FIB/FBS Merger, Wells Fargo has
either relinquished such power to vote to an unaffiliated third party or will
abstain from any such vote.
Requests will be made to First Interstate for use of First Interstate's
stockholder list and security position listings for the purpose of
communications with stockholders and disseminating the Offer to holders of
Shares. The Prospectus and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose
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names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares by
Wells Fargo following receipt of such list or listings from First Interstate.
TIMING OF THE OFFER
The Offer is currently scheduled to expire on , 1996; however, it is
Wells Fargo's current intention to extend the Offer from time to time as
necessary until all conditions to the Offer have been satisfied or waived. See
"The Offer--Extension, Termination and Amendment." Wells Fargo expects that
the Wells Fargo Stockholder Approval Condition will be satisfied by , 1996
(the date on which it has called a special meeting of its stockholders to
approve the issuance of shares of Wells Fargo Common Stock pursuant to the
Offer and the Merger) and that the other conditions to the Offer will be
satisfied once the Regulatory Approval Condition, the FIB/FBS Merger Agreement
Condition and the Rights Plan and DGCL 203 Condition are satisfied.
Wells Fargo is confident that it will be able to obtain the regulatory
approvals required for the Acquisition on a timely basis and in a time frame
substantially identical to that in which FBS would be able to obtain the
regulatory approvals required for the FIB/FBS Merger. See "--Regulatory
Approval Condition."
First Interstate has scheduled a special stockholders meeting to vote on the
FIB/FBS Merger Agreement on , 1996. Assuming First Interstate's
stockholders do not approve the FIB/FBS Merger Agreement, the FIB/FBS Merger
Agreement Condition will then be satisfied. Wells Fargo believes that the
First Interstate Board would at that point respect the vote of First
Interstate's stockholders and remove the obstacles it is maintaining to the
Offer and Merger, thereby satisfying the Rights Plan and DGCL 203 Condition.
However, if the First Interstate Board does not do so, Wells Fargo presently
intends to commence a solicitation of written consents from First Interstate's
stockholders (or continue such a consent solicitation if it has by then
already been commenced) to replace the members of the First Interstate Board
with individuals who would (subject to their fiduciary duties) do so. Although
Wells Fargo does not currently expect to commence such a consent solicitation
prior to First Interstate's special stockholders meeting, it reserves the
right to do so if circumstances so warrant. Wells Fargo believes that
commencement of such a consent solicitation would not require regulatory
approval. Any such consent solicitation would be consummated as soon as any
required approvals are obtained (Wells Fargo has already applied for such
approvals as part of its applications to satisfy the Regulatory Approval
Condition) and unrevoked and valid consents of the holders of a majority of
the outstanding Shares are delivered to First Interstate. Wells Fargo also
intends to pursue its currently pending litigation in order to satisfy the
Rights Plan and DGCL 203 Condition. For further information about the Rights
Plan and DGCL 203 Condition and Wells Fargo's plans for satisfying it, see "--
Rights Plan and DGCL 203 Condition."
EXTENSION, TERMINATION AND AMENDMENT
Wells Fargo expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is to remain open by giving oral or written notice of such extension to the
Exchange Agent, which extension must be announced no later than 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date. There can be no assurance that Wells Fargo will exercise its
right to extend the Offer. However, it is Wells Fargo's current intention to
extend the Offer until all conditions have been satisfied or waived. See "--
Extension, Termination and Amendment." During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw his Shares. See
"--Withdrawal Rights."
Subject to the applicable rules and regulations of the Commission, Wells
Fargo also reserves the right, in its sole discretion, at any time or from
time to time, (i) to delay acceptance for exchange of or, regardless of
whether such Shares were theretofore accepted for exchange, exchange of any
Shares pursuant to the Offer or to terminate the Offer and not accept for
exchange or exchange any Shares not therefore accepted for exchange, or
exchanged, upon the failure of any of the conditions of the Offer to be
satisfied and (ii) to waive any condition
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(other than the Wells Fargo Stockholder Approval Condition, the Regulatory
Approval Condition and the condition relating to the effectiveness of the
Registration Statement) or otherwise amend the Offer in any respect, by giving
oral or written notice of such delay, termination or amendment to the Exchange
Agent and by making a public announcement thereof. Any such extension,
termination, amendment or delay will be followed as promptly as practicable by
public announcement thereof, such announcement in the case of an extension to
be issued no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which requires
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which Wells Fargo may choose to
make any public announcement, Wells Fargo shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
Wells Fargo confirms that if it makes a material change in the terms of the
Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, Wells Fargo will extend the Offer to the extent
required under the Exchange Act. If, prior to the Expiration Date, Wells Fargo
shall increase or decrease the percentage of Shares being sought or the
consideration offered to holders of Shares, such increase or decrease shall be
applicable to all holders whose Shares are accepted for exchange pursuant to
the Offer, and, if at the time notice of any such increase or decrease is
first published, sent or given to holders of Shares, the Offer is scheduled to
expire at any time earlier than the tenth business day from and including the
date that such notice is first so published, sent or given, the Offer will be
extended until the expiration of such ten business-day period. For purposes of
the Offer, a "business day" means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 A.M. through 12:00
midnight, New York City time.
EXCHANGE OF SHARES; DELIVERY OF WELLS FARGO COMMON STOCK
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Wells Fargo will accept for exchange, and will exchange, Shares
validly tendered and not withdrawn as promptly as practicable after the
Expiration Date. In addition, subject to applicable rules of the Commission,
Wells Fargo expressly reserves the right to delay acceptance for exchange or
the exchange of Shares in order to comply with any applicable law. In all
cases, exchange of Shares tendered and accepted for exchange pursuant to the
Offer will be made only after timely receipt by the Exchange Agent of
certificates for such Shares (or a confirmation of a book-entry transfer of
such Shares in the Exchange Agent's account at The Depository Trust Company,
the Midwest Securities Trust Company, or the Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities")), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other required documents.
For purposes of the Offer, Wells Fargo will be deemed to have accepted for
exchange Shares validly tendered and not withdrawn as, if and when Wells Fargo
gives oral or written notice to the Exchange Agent of its acceptance of the
tenders of such Shares pursuant to the Offer. Delivery of Wells Fargo Common
Stock in exchange for Shares pursuant to the Offer and cash in lieu of
fractional shares of Wells Fargo Common Stock will be made by the Exchange
Agent as soon as practicable after receipt of such notice. The Exchange Agent
will act as agent for tendering stockholders for the purpose of receiving
Wells Fargo Common Stock and cash to be paid in lieu of fractional shares of
Wells Fargo Common Stock from Wells Fargo and transmitting such Wells Fargo
Common Stock and cash to tendering stockholders. Under no circumstances will
interest with respect to fractional shares be paid by Wells Fargo by reason of
any delay in making such exchange.
If any tendered Shares are not accepted for exchange pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unexchanged Shares
will be returned without expense to the tendering stockholder or, in the case
of Shares tendered by book-entry transfer of such Shares into the Exchange
Agent's account at a Book-Entry Transfer Facility pursuant to the procedures
set forth below under "--Procedure for Tendering," such Shares will be
credited to an account
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maintained within such Book-Entry Transfer Facility, as soon as practicable
following expiration or termination of the Offer.
CASH IN LIEU OF FRACTIONAL SHARES OF WELLS FARGO COMMON STOCK
No certificates representing fractional shares of Wells Fargo Common Stock
will be issued pursuant to the Offer. In lieu thereof, each tendering
stockholder who would otherwise be entitled to a fractional share of Wells
Fargo Common Stock will receive cash in an amount equal to such fraction
(expressed as a decimal and rounded to the nearest 0.01 of a share) times the
closing price for shares of Wells Fargo Common Stock on the NYSE Composite
Tape on the date such stockholder's Shares are accepted for exchange by Wells
Fargo.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date, and, unless theretofore accepted for exchange by Wells
Fargo pursuant to the Offer, may also be withdrawn at any time after ,
1996.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth on the back cover of this Prospectus
and must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares.
The signature(s) on the notice of withdrawal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (an "Eligible Institution") unless such
Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry tender as
set forth below under "Procedure for Tendering," any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and must otherwise comply with such
Book-Entry Transfer Facility's procedures. If certificates have been delivered
or otherwise identified to the Exchange Agent, the name of the registered
holder and the serial numbers of the particular certificates evidencing the
Shares withdrawn must also be furnished to the Exchange Agent as aforesaid
prior to the physical release of such certificates. All questions as to the
form and validity (including time of receipt) of any notice of withdrawal will
be determined by Wells Fargo, in its sole discretion, which determination
shall be final and binding. Neither Wells Fargo, the Exchange Agent, the
Information Agent, the Dealer Manager[s] nor any other person will be under
any duty to give notification of any defects or irregularities in any notice
of withdrawal or will incur any liability for failure to give any such
notification. Any Shares properly withdrawn will be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by following one of the procedures described under "--Procedure for
Tendering" at any time prior to the Expiration Date.
A withdrawal of Shares shall also constitute a withdrawal of the associated
Rights. Rights may not be withdrawn unless the associated Shares are also
withdrawn.
PROCEDURE FOR TENDERING
For a stockholder validly to tender Shares pursuant to the Offer, (i) a
properly completed and duly executed Letter of Transmittal (or manually
executed facsimile thereof), together with any required signature guarantees,
or an Agent's Message (as defined below) in connection with a book-entry
transfer, and any other required documents, must be transmitted to and
received by the Exchange Agent at one of its addresses set forth on the back
cover of this Prospectus and certificates for tendered Shares must be received
by the Exchange Agent at such address or such Shares must be tendered pursuant
to the procedures for book-entry tender set forth below
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(and a confirmation of receipt of such tender received (such confirmation, a
"Book-Entry Confirmation")), in each case prior to the Expiration Date, or
(ii) such stockholder must comply with the guaranteed delivery procedure set
forth below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part
of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares and, if applicable, Rights
which are the subject of such Book-Entry Confirmation, that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that Wells Fargo may enforce such agreement against such participant.
Stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203
Condition (insofar as it relates to the Rights) has been satisfied or waived.
Unless the First Interstate Distribution Date occurs, a tender of Shares will
constitute a tender of the associated Rights. If the First Interstate
Distribution Date occurs and separate certificates representing the Rights are
distributed by First Interstate or the Rights Agent to holders of Shares prior
to the time a holder's Shares are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of Shares tendered must be
delivered to the Exchange Agent, or, if available, a Book-Entry Confirmation
received by the Exchange Agent with respect thereto, in order for such Shares
to be validly tendered. If the First Interstate Distribution Date occurs and
separate certificates representing the Rights are not distributed prior to the
time Shares are tendered pursuant to the Offer, Rights may be tendered prior
to a stockholder receiving the certificates for Rights by use of the
guaranteed delivery procedure described below. If Rights certificates are
distributed but are not available to a stockholder prior to the time Shares
are tendered pursuant to the Offer, a tender of Shares constitutes an
agreement by the tendering stockholder to deliver to the Exchange Agent
pursuant to the guaranteed delivery procedure described below, prior to the
expiration of the period to be specified in the Notice of Guaranteed Delivery
and the related Letter of Transmittal for delivery of Rights certificates or a
Book-Entry Confirmation for Rights (the "Rights Delivery Period"), Rights
certificates representing a number of Rights equal to the number of Shares
tendered. Wells Fargo reserves the right to require that it receive such
Rights certificates (or a Book-Entry Confirmation with respect to such Rights)
prior to accepting Shares for exchange.
Nevertheless, Wells Fargo will be entitled to accept for exchange Shares
tendered by a stockholder prior to receipt of the Rights certificates required
to be tendered with such Shares or a Book-Entry Confirmation with respect to
such Rights and either (i) subject to complying with applicable rules and
regulations of the Commission, withhold payment for such Shares pending
receipt of the Rights certificates or a Book-Entry Confirmation for such
Rights or (ii) exchange Shares accepted for exchange pending receipt of the
Rights certificates or a Book-Entry Confirmation for such Rights in reliance
upon the guaranteed delivery procedure described below. In addition, after
expiration of the Rights Delivery Period, Wells Fargo may instead elect to
reject as invalid a tender of Shares with respect to which Rights certificates
or a Book-Entry Confirmation for an equal number of Rights have not been
received by the Exchange Agent. Any determination by Wells Fargo to make
payment for Shares in reliance upon such guaranteed delivery procedure or,
after expiration of the Rights Delivery Period, to reject a tender as invalid,
shall be made, subject to applicable law, in the sole and absolute discretion
of Wells Fargo.
The Exchange Agent will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of this Prospectus, and any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of the Shares by causing such Book-Entry Transfer Facility
to transfer such Shares into the Exchange Agent's account in accordance with
such Book-Entry Transfer Facility's procedure for such transfer. However,
although delivery of Shares may be effected through book-entry at the Book-
Entry Transfer Facilities, the Letter of Transmittal (or facsimile thereof),
with any required signature guarantees, or an Agent's Message in connection
with a book-entry transfer, and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at one or more of
its addresses set forth on the back cover of this Prospectus prior to the
Expiration Date, or the guaranteed delivery procedure described below must be
complied with. No assurance
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can be given, however, that book-entry delivery of Rights will be available.
If book-entry delivery is not available, a tendering stockholder will be
required to tender Rights by means of delivery of Rights certificates or
pursuant to the guaranteed delivery procedure set forth below.
Signatures on all Letters of Transmittal must be guaranteed by an Eligible
Institution, except in cases in which Shares are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution.
If the certificates for Shares or Rights (if any) are registered in the name
of a person other than the signer of the Letter of Transmittal, or if
certificates for unexchanged Shares or Rights (if any) are to be issued to a
person other than the registered holder(s), the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as
the name or names of the registered owner or owners appear on the
certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED IN LIEU OF FRACTIONAL SHARES OF WELLS FARGO COMMON STOCK, A
STOCKHOLDER MUST PROVIDE THE EXCHANGE AGENT WITH HIS CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY WHETHER SUCH STOCKHOLDER IS SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. CERTAIN STOCKHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND CERTAIN FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO
THESE BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN
INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST SUBMIT A
FORM W-8, SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S
EXEMPT STATUS.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates are not immediately available or such stockholder
cannot deliver the certificates and all other required documents to the
Exchange Agent prior to the Expiration Date or such stockholder cannot
complete the procedure for book-entry transfer on a timely basis, such Shares
may nevertheless be tendered, provided that all of the following conditions
are satisfied:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Wells Fargo, is received by the
Exchange Agent as provided below on or prior to the Expiration Date; and
(c) the certificates for all tendered Shares (or a confirmation of a book-
entry transfer of such securities into the Exchange Agent's account at a
Book-Entry Transfer Facility as described above), in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and all other
documents required by the Letter of Transmittal are received by the Exchange
Agent within three NYSE trading days after the date of execution of such
Notice of Guaranteed Delivery.
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The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
In all cases, exchanges of Shares tendered and accepted for exchange
pursuant to the Offer will be made only after timely receipt by the Exchange
Agent of certificates for Shares (or timely confirmation of a book-entry
transfer of such securities into the Exchange Agent's account at a Book-Entry
Transfer Facility as described above), properly completed and duly executed
Letter(s) of Transmittal (or facsimile(s) thereof), or an Agent's Message in
connection with a book-entry transfer, and any other required documents.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or confirmations of book-entry transfers of
such Shares are actually received by the Exchange Agent.
By executing a Letter of Transmittal as set forth above, the tendering
stockholder irrevocably appoints designees of Wells Fargo as such
stockholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for exchange by Wells
Fargo and with respect to any and all other Shares and other securities issued
or issuable in respect of the Shares on or after , 199 . Such appointment
is effective, and voting rights will be affected, when and only to the extent
that Wells Fargo deposits the shares of Wells Fargo Common Stock for Shares
tendered by such stockholder with the Exchange Agent. All such proxies shall
be considered coupled with an interest in the tendered Shares and therefore
shall not be revocable. Upon the effectiveness of such appointment, all prior
proxies given by such stockholder will be revoked, and no subsequent proxies
may be given (and, if given, will not be deemed effective). Wells Fargo's
designees will, with respect to the Shares for which the appointment is
effective, be empowered, among other things, to exercise all voting and other
rights of such stockholder as they, in their sole discretion, deem proper at
any annual, special or adjourned meeting of First Interstate's stockholders,
by written consent in lieu of any such meeting or otherwise. Wells Fargo
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Wells Fargo's exchange of such Shares, Wells Fargo
must be able to exercise full voting rights with respect to such Shares.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Shares will be
determined by Wells Fargo, in its sole discretion, which determination shall
be final and binding. Wells Fargo reserves the absolute right to reject any
and all tenders of Shares determined by it not to be in proper form or the
acceptance of or exchange for which may, in the opinion of Wells Fargo's
counsel, be unlawful. Wells Fargo also reserves the absolute right to waive
any of the conditions of the Offer, other than the Regulatory Approval
Condition, or any defect or irregularity in the tender of any Shares. No
tender of Shares will be deemed to have been validly made until all defects
and irregularities in tenders of Shares have been cured or waived. Neither
Wells Fargo, the Exchange Agent, the Information Agent, the Dealer Managers
nor any other person will be under any duty to give notification of any
defects or irregularities in the tender of any Shares or will incur any
liability for failure to give any such notification. Wells Fargo's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and instructions thereto) will be final and binding.
The tender of Shares and Rights (if any) pursuant to any of the procedures
described above will constitute a binding agreement between the tendering
stockholder and Wells Fargo upon the terms and subject to the conditions of
the Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Sullivan & Cromwell, counsel to Wells Fargo, exchanges of
Shares for Wells Fargo Common Stock pursuant to the Offer and the Merger will
be treated for federal income tax purposes as exchanges pursuant to a plan of
reorganization within the meaning of the Code. Consequently, no gain or loss
will be recognized by holders of Shares upon such exchanges, except as
described below under "Tax Consequences to Holders of Shares if the Offer and
the Merger Qualify as a Reorganization." This opinion is based on Sullivan &
Cromwell's view that the Offer and the Merger should be treated as a single
transaction and on certain assumptions, including that (a) the continuity of
shareholder interest requirement applicable to corporate
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reorganizations (which requires a continuing equity interest in Wells Fargo by
holders owning a significant percentage of the Shares prior to the
consummation of the Offer) will be satisfied, taking into account any holders
that exercise dissenters' rights, if any, (b) Wells Fargo will continue First
Interstate's historic business or will use a significant portion of First
Interstate's historic business assets in a business and (c) the Offer and the
Merger will generally be consummated as contemplated by this Prospectus.
Although there are currently no binding agreements that would ensure that the
stockholders of First Interstate will have a continuing equity interest in
Wells Fargo following the consummation of the Acquisition, Wells Fargo
believes that it is likely that the stockholders of First Interstate will
retain a sufficient amount of the stock of Wells Fargo to satisfy the
continuity of interest requirement.
In rendering their opinion, Sullivan & Cromwell have further assumed that
(a) upon consummation of the Offer, there will be no significant contingencies
preventing the prompt consummation of the Merger, (b) upon consummation of the
Offer, Wells Fargo will not have waived any of the conditions relating to its
obligation to consummate the Offer in a manner that could prevent a prompt
consummation of the Merger, (c) the Merger will in fact be consummated
promptly after the consummation of the Offer and in no event more than one
year after the consummation of the Offer and (d) either First Interstate will
have, at the time the Offer is consummated, entered into an agreement with
Wells Fargo requiring Wells Fargo to effect the Merger or the "binding
commitment" test discussed below will not apply to the Offer and the Merger. A
significant delay in the consummation of the Merger would substantially
increase the risk that the Offer will not qualify as part of a reorganization
within the meaning of Section 368(a)(1)(A) of the Code and the absence of the
Merger would mean that the Offer was not part of a reorganization. The
consequences of a failure to so qualify are discussed below under "Tax
Consequences to Holders of Shares if the Offer Does Not Qualify as Part of a
Reorganization."
In deciding whether two steps are part of a single transaction qualifying as
a reorganization, some courts have applied the so-called "binding commitment"
test. Under that test, two steps will be integrated only if, at the time that
the first step is consummated, there is a binding commitment to consummate the
second step. If the "binding commitment" test were applied to the Offer and
the Merger and First Interstate has not at the time the Offer is consummated
entered into an agreement with Wells Fargo requiring Wells Fargo to effect the
Merger, the Offer and the Merger would not be treated as a single transaction,
and the Offer would not qualify as part of a reorganization. Although the
matter is not free from doubt, in the opinion of Sullivan & Cromwell, the
"binding commitment" test should not be applied to determine whether the Offer
and the Merger should be treated as a single transaction.
Assuming that the Merger qualifies as a reorganization under the Code, no
gain or loss will be recognized by Wells Fargo or First Interstate as a result
of the Offer and the Merger.
This summary does not address any tax consequences of the Offer or the
Merger to U.S Holders who exercise dissenters' rights, if any. It may not
apply to certain classes of taxpayers, including, without limitation,
insurance companies, tax-exempt organizations, financial institutions, dealers
in securities, foreign persons, persons who acquired Shares pursuant to an
exercise of employee stock options or rights or otherwise as compensation and
persons who hold Shares as part of a straddle or conversion transaction. Also,
the summary does not address state, local or foreign tax consequences of the
Offer or the Merger. Consequently, each holder should consult such holder's
own tax advisor as to the specific tax consequences of the Offer and the
Merger to such holder.
This summary is based on current law and the opinion of Sullivan & Cromwell.
Future legislative, judicial or administrative changes or interpretations,
which may be retroactive, could alter or modify the statements set forth
herein. The opinion of Sullivan & Cromwell set forth in this summary is based,
among other things, on the assumptions set forth above, which assumptions have
been made with the consent of Wells Fargo. Wells Fargo will not request any
ruling from the Internal Revenue Service as to the United States federal
income tax consequences of the Offer and the Merger. An opinion of counsel is
not binding on the Internal Revenue Service, and the Internal Revenue Service
is not precluded from taking contrary positions.
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Tax Consequences to Holders of Shares if the Offer and the Merger Qualify as
a Reorganization
If the Offer and the Merger together qualify as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code, the material federal income tax
consequences to holders who are (a) citizens or residents of the United
States, (b) domestic corporations or (c) otherwise subject to United States
federal income tax on a net income basis in respect of the Shares ("U.S.
Holders") who hold Shares as capital assets and who exchange such Shares
pursuant to the Offer or the Merger, or both, will be as follows:
(i) no gain or loss will be recognized by a U.S. Holder on the exchange of
Shares for Wells Fargo Common Stock, except as described below with respect
to the receipt of cash in lieu of fractional shares of Wells Fargo Common
Stock, and subject to the discussion below of the surrender of Rights that
have become exercisable;
(ii) the aggregate adjusted tax basis of shares of Wells Fargo Common Stock
received by a U.S. Holder (including fractional shares of Well Fargo Common
Stock deemed received and redeemed as described below) will be the same as
the aggregate adjusted tax basis of the Shares exchanged therefor;
(iii) the holding period of shares of Wells Fargo Common Stock (including
the holding period of fractional shares of Wells Fargo Common Stock) received
by a U.S. Holder will include the holding period of the Shares exchanged
therefor; and
(iv) a U.S. Holder of Shares who receives cash in lieu of fractional shares
of Wells Fargo Common Stock will be treated as having received such
fractional shares and then as having received such cash in redemption of such
fractional shares. Under Section 302 of the Code, provided that such deemed
distribution is "substantially disproportionate" with respect to such U.S
Holder or is "not essentially equivalent to a dividend" after giving effect
to the constructive ownership rules of the Code, the U.S. Holder will
generally recognize capital gain or loss equal to the difference between the
amount of cash received and the U.S. Holder's adjusted tax basis in the
fractional share interest in Wells Fargo Common Stock. Such capital gain or
loss will be long-term capital gain or loss if the U.S. Holder's holding
period in the fractional shares is more than one year.
Sullivan & Cromwell express no opinion as to the federal income tax
consequences of the surrender pursuant to the Offer or the Merger of Rights
that have become exercisable.
Tax Consequences to Holders of Shares if the Offer Does Not Qualify as Part
of a Reorganization
If the Merger is not consummated, or if the Merger is consummated but the
Offer is treated as a separate transaction for federal income tax purposes,
exchanges pursuant to the Offer will be taxable transactions for federal
income tax purposes. In that case, each U.S. Holder exchanging Shares for
shares of Wells Fargo Common Stock pursuant to the Offer will recognize gain
or loss for federal income tax purposes measured by the difference between
such U.S. Holder's adjusted basis in the Shares exchanged and the sum of the
fair market value of Wells Fargo Common Stock received by such U.S. Holder
pursuant to the Offer and any cash received by such U.S. Holder in lieu of
fractional shares of Wells Fargo Common Stock.
If the Offer is a taxable transaction, the Merger itself would be a
reorganization within the meaning of Section 368(a)(1)(A) of the Code if the
continuity of interest requirement is satisfied in the Merger. For advanced
ruling purposes, guidelines published by the Internal Revenue Service would
require that stockholders of First Interstate receive in the Merger stock of
Wells Fargo having a value equal to at least 50% of the value of all of the
stock of First Interstate outstanding prior to the Merger. If the Offer is
treated as a separate transaction for federal income tax purposes, however,
Wells Fargo Common Stock issued in the Offer should count towards establishing
that the Merger satisfies the continuity of interest requirement. If the
continuity of interest requirement is satisfied in the Merger, a U.S. Holder
receiving Wells Fargo Common Stock in the Merger would be subject to the rules
concerning reorganizations described above with respect to such Wells Fargo
Common
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Stock, but not with respect to any Wells Fargo Common Stock received by such
U.S. Holder pursuant to the Offer.
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also listed
on the Boston Stock Exchange, Cincinnati Stock Exchange, Midwest Stock
Exchange, Philadelphia-Baltimore-Washington Stock Exchange and the PSE.
Depending upon the number of Shares acquired pursuant to the Offer, following
consummation of the Offer the Shares may no longer meet the requirements of
such exchanges for continued listing. For example, published guidelines of the
NYSE indicate that the NYSE would consider delisting the outstanding Shares
if, among other things, (i) the number of publicly held Shares (exclusive of
holdings of officers, directors and members of their immediate families and
other concentrated holdings of 10 percent or more) should fall below 600,000,
(ii) the number of record holders of 100 or more Shares should fall below
1,200 or (iii) the aggregate market value of publicly held Shares should fall
below $5 million.
According to First Interstate's Quarterly Report on Form 10-Q for the period
ended September 30, 1995, there were, as of October 31, 1995, 75,744,254
Shares outstanding, and according to the 1994 Company 10-K, there were, as of
February 28, 1995, 24,976 holders of record of Shares.
If such exchanges were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through Nasdaq or by other
sources. The extent of the public market for the Shares and the availability
of such quotations would, however, depend upon the number of holders and/or
the aggregate market value of the Shares remaining at such time, the interest
in maintaining a market in the Shares on the part of securities firms, the
possible termination of registration Shares under the Exchange Act, as
described below, and other factors.
The Shares are presently "margin securities" under the regulations of the
Federal Reserve Board, which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending on
factors similar to those described above with respect to listing and market
quotations, following consummation of the Offer the Shares may no longer
constitute "margin securities" for the purposes of the Federal Reserve Board's
margin regulations in which event the Shares would be ineligible as collateral
for margin loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated by First Interstate upon application to the
Commission if the outstanding Shares are not listed on a national securities
exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by First Interstate to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) and the related requirement
of furnishing an annual report to stockholders, no longer applicable with
respect to the Shares. Furthermore, the ability of "affiliates" of First
Interstate and persons holding "restricted securities" of First Interstate to
dispose of such securities pursuant to Rule 144 under the Securities Act, may
be impaired or eliminated. If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be eligible for Nasdaq
reporting or for continued inclusion on the Federal Reserve Board's list of
"margin securities."
The Rights currently are registered under the Exchange Act and are listed on
the NYSE and the PSE, but currently are attached to the outstanding Shares and
are not separately transferable. The Rights may become
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transferable apart from the Shares, unless previously redeemed. If the Rights
are not redeemed or invalidated and Wells Fargo waives the Rights Plan and
DGCL 203 Condition, then the foregoing discussion with respect to the effect
of the Offer on the Shares would be similarly applicable to the Rights
(although the continued listing criteria are different).
PURPOSE OF THE OFFER; THE MERGER
The purpose of the Offer is to enable Wells Fargo to acquire control of, and
the entire common equity interest in, First Interstate. The Offer, as the
first step in the acquisition of First Interstate, is intended to facilitate
the acquisition of all Shares. Wells Fargo intends, as soon as practicable
after consummation of the Offer, to seek to have First Interstate consummate
the Merger with Wells Fargo. Assuming the Minimum Tender Condition and the
Rights Plan and DGCL 203 Condition are satisfied and Wells Fargo consummates
the Offer, Wells Fargo would have sufficient voting power to effect the Merger
without the vote of any other stockholder of First Interstate.
The purpose of the Merger is to acquire all Shares not tendered and
exchanged pursuant to the Offer or otherwise. In the Merger, (a) each then
outstanding Share (except for Shares owned by Wells Fargo or any subsidiary of
Wells Fargo other than in a fiduciary capacity) would be converted into the
right to receive two-thirds of a share of Wells Fargo Common Stock and (b)
each then outstanding share of preferred stock of First Interstate would be
converted into the right to receive a substantially identical share of
preferred stock of Wells Fargo.
Holders of Shares do not have appraisal rights as a result of the Offer and,
assuming the Shares remain listed on a national securities exchange or Nasdaq
or a similar market, will not have appraisal rights as a result of the Merger.
However, in the event the Merger is consummated, and if, on the date fixed to
determine stockholders entitled to vote on the Merger, the Shares are no
longer listed on a national securities exchange or Nasdaq or a similar market
or held of record by more than 2,000 holders, holders of Shares will have
certain rights pursuant to the provisions of Section 262 of the DGCL to
dissent and to demand appraisal of their Shares. Under Section 262, dissenting
stockholders who comply with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest, if any. Any such judicial determination
of the fair value of Shares could be based upon factors other than, or in
addition to, the price per Share to be paid in the Merger or the market value
of the Shares. The value so determined could be more or less than the price
per Share to be paid in the Merger.
Rule 13e-3 of the General Rules and Regulations under the Exchange Act,
which Wells Fargo does not believe would be applicable to the Merger if the
Merger occurred within one year of consummation of the Offer, would require,
among other things, that certain financial information concerning First
Interstate, and certain information relating to the fairness of the proposed
transaction and the consideration offered to stockholders of First Interstate
therein, be filed with the Commission and disclosed to stockholders of First
Interstate prior to consummation of the Merger.
In addition, Wells Fargo reserves the right to acquire, following the
consummation or termination of the Offer, additional Shares through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer, or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less favorable than those of the Offer. Wells
Fargo and its affiliates also reserve the right to dispose of any or all
Shares acquired by them pursuant to the Offer or otherwise, upon such terms
and at such prices as they shall determine.
In connection with the Offer, Wells Fargo has reviewed, and will continue to
review, on the basis of available information, various possible business
strategies that it might consider in the event that it acquires all or
substantially all of the common equity interest in First Interstate. Upon the
completion of the Offer, Wells Fargo intends to elect nominees of its choice
to the First Interstate Board if it has not already done so. Wells
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Fargo also intends to conduct a detailed review of First Interstate and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel and consider what, if any, changes would be desirable
in light of the circumstances which then exist. Such strategies could include,
among other things, changes in First Interstate's business, corporate
structure, certificate of incorporation, bylaws, capitalization, the First
Interstate Board or management, and consideration of disposition of certain
assets or lines of business of First Interstate. See "Background of the
Offer--Comparison of the Proposals."
Except as noted herein, Wells Fargo does not have any present plans or
proposals that would result in an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, or sale or transfer of a material
amount of assets, involving First Interstate or any of its subsidiaries, or
any material changes in First Interstate's corporate structure or business or
any change in its management. However, because Wells Fargo has not had access
to First Interstate's books and records, additional changes may be made after
a full review of First Interstate's operations is completed.
MINIMUM TENDER CONDITION
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date a number of Shares
which, together with the Shares beneficially owned by Wells Fargo and its
affiliates for their own respective accounts, will constitute at least a
majority of the total number of outstanding Shares on a fully diluted basis
(as though all options or other securities convertible into or exercisable or
exchangeable for Shares, other than the Rights and the option purported to
have been granted to FBS pursuant to one of the Reciprocal Stock Option
Agreements, had been so converted, exercised or exchanged) as of the date the
Shares are accepted by Wells Fargo pursuant to the Offer. According to First
Interstate's Quarterly Report on Form 10-Q for the period ended September 30,
1995, there were 75,744,254 Shares outstanding as of October 31, 1995.
According to the First Interstate 8-K, there were 4,133,320 shares reserved
for issuance pursuant to employee stock options, First Interstate's dividend
reinvestment plan and First Interstate's stock purchase plan as of October 31,
1995 (the "Options"). Based on the foregoing, Wells Fargo believes that the
Minimum Tender Condition would have been satisfied on October 31, 1995 if, in
addition to the 100 Shares currently owned beneficially by Wells Fargo and its
affiliates for their own respective accounts, at least an aggregate of
39,938,688 Shares, or 52.7% of the Shares outstanding as of October 31, 1995,
had been validly tendered pursuant to the Offer and not withdrawn. Wells Fargo
reserves the right (but shall not be obligated), subject to the rules and
regulations of the Commission, to waive or amend the Minimum Tender Condition
and to purchase fewer than such number of Shares as would satisfy the Minimum
Tender Condition pursuant to the Offer.
WELLS FARGO STOCKHOLDER APPROVAL CONDITION
The Offer is conditioned, among other things, upon the satisfaction of the
Wells Fargo Stockholder Approval Condition. Pursuant to the rules of the NYSE
(on which the Wells Fargo Common Stock is listed), the issuance of Wells Fargo
Common Stock pursuant to the Acquisition must be approved by the holders of a
majority of the shares of Wells Fargo Common Stock voted at a meeting of such
holders at which the total number of votes cast represents over 50% in
interest of all shares of Wells Fargo Common Stock outstanding on the
applicable record date if the number of shares of Wells Fargo Common Stock to
be issued will be equal to or in excess of 20% of the shares outstanding prior
to such issuance. Wells Fargo intends to seek such approval at a special
stockholders meeting that it has called for , 1996.
RIGHTS PLAN AND DGCL 203 CONDITION
Insofar as the Rights Plan and DGCL 203 Condition relates to the Rights,
this condition may be satisfied in a number of ways, including the following:
(i) the First Interstate Board may determine that the Offer is a Qualified
Offer (as defined below) or may redeem or amend the Rights so they would not
be triggered by the Offer and the Merger, (ii) pursuant to a consent
solicitation of a type referred to under "--Timing of the Offer," Wells Fargo
could succeed in replacing the First Interstate Board with new directors who
would (subject to
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fiduciary duties) take such actions as may be necessary with respect to the
Rights so that they would not be triggered by the Offer or the Merger or (iii)
Wells Fargo could be successful in its litigation seeking, among other things,
invalidation of the Rights or an injunction requiring the First Interstate
Board to redeem the Rights. See "Background of the Offer--Litigation."
Insofar as the Rights Plan and DGCL 203 Condition relates to Section 203 of
the DGCL, this condition may be satisfied in a number of ways, including the
following: (i) the First Interstate Board may approve the Offer for purposes
of Section 203, (ii) pursuant to a consent solicitation of a type referred to
under "--Timing of the Offer," Wells Fargo could succeed in replacing the
First Interstate Board with new directors who would (subject to fiduciary
duties) approve the Offer for purposes of Section 203, or (iii) Wells Fargo
could be successful in its litigation seeking, among other things, a
declaratory judgment that the exemption afforded by Section 203(b)(6) of the
DGCL is applicable to the Offer or, alternatively, an injunction requiring the
First Interstate Board to approve the Offer for purposes of Section 203.
(Since the Offer was announced after First Interstate approved the FIB/FBS
Merger, Wells Fargo believes that such exemption is applicable to the Offer
and Merger.) See "Background of the Offer--Litigation" and Section 203, a copy
of which is attached hereto as Schedule B.
Set forth below is certain additional information concerning the Rights and
Section 203 of the DGCL:
Rights Agreement
On November 21, 1988, the First Interstate Board declared a dividend of one
common share purchase right (a "Right") for each outstanding Share, to the
holders of record on December 30, 1988 and authorized and directed the
issuance of one Right with respect to each Share that shall become outstanding
after December 30, 1988 and before the earliest to occur of (i) December 31,
1998, (ii) the date the Rights are redeemed or (iii) the Distribution Date (as
defined below).
The terms of the Rights are set forth in a Rights Agreement, dated November
21, 1988 (the "Rights Agreement"), between First Interstate and First
Interstate Bank of California, as successor Rights Agent. The following
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement. Each Right entitles the
registered holder thereof to purchase from First Interstate one Share at a
price of $170, subject to adjustment. The Rights will expire on December 31,
1998, unless such date is extended or unless such Rights are redeemed earlier,
and will not be exercisable or transferable separately from the Shares until
(i) 10 days following a public announcement that a person or group of persons
(other than First Interstate, any subsidiary of First Interstate, any employee
benefit plan of First Interstate or any subsidiary of First Interstate or any
entity holding Shares pursuant to the terms of any such plan) has become the
beneficial owner of 20% or more of the outstanding Shares (a "First Interstate
Acquiring Person"), or (ii) 10 business days (or such later date as may be
determined by action of the First Interstate Board) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
by any person or group of persons (other than First Interstate, any subsidiary
of First Interstate, any employee benefit plan of First Interstate or any
subsidiary of First Interstate or any entity holding Shares pursuant to the
terms of any such plan) the consummation of which would result in the
beneficial ownership by a person of 20% or more of such outstanding Shares
(the earlier of such dates being the "First Interstate Distribution Date").
According to the First Interstate Schedule 14D-9, the First Interstate Board
determined to postpone the occurrence of the First Interstate Distribution
Date as a result of the public announcement of the Offer until such later date
as determined by the First Interstate Board.
On November 5, 1995, First Interstate amended the Rights Agreement so that
FBS and its affiliates are excluded from the definition of Company Acquiring
Person.
At any time prior to the time a person or group of persons becomes a First
Interstate Acquiring Person, the First Interstate Board may redeem the Rights
in whole, but not in part, at a price of $.001 per Right, rounded upward for
each holder to the nearest $.01.
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In the event that (i) First Interstate is acquired in a merger or other
business combination transaction other than a merger which follows a tender or
exchange offer for all outstanding Shares at a price and on terms determined
to be adequate and otherwise in the best interests of First Interstate and its
stockholders by at least a majority of the members of the First Interstate
Board who are not officers of First Interstate (a "Qualified Offer") or (ii)
50% or more of First Interstate's consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Right, except as
otherwise provided in the Rights Agreement, will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring corporation
which at the time of such transaction will have a market value of two times
the exercise price of the Right. In the event that any person becomes a First
Interstate Acquiring Person (other than pursuant to a Qualified Offer) or
during such time as there is a First Interstate Acquiring Person, except upon
terms disclosed in a Qualified Offer, there occurs any reclassification of
securities, recapitalization, reorganization, or merger of First Interstate or
issuance of securities by First Interstate which increases by more than 1% the
proportionate share of any class of equity securities of First Interstate
beneficially owned by any First Interstate Acquiring Person, each holder of a
Right, other than Rights beneficially owned by the First Interstate Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of Shares having a market value of two times
the exercise price of the Right. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of First Interstate,
including, without limitation, the right to vote or to receive dividends.
At any time after a person or group of persons becomes a First Interstate
Acquiring Person prior to the acquisition by a First Interstate Acquiring
Person of 50% or more of the outstanding Shares, the First Interstate Board
may exchange the Rights other than Rights owned by such Company Acquiring
Person (which shall have become void), in whole or in part, at an exchange
ratio of one Share per Right (subject to adjustment).
The terms of the Rights may be amended by the First Interstate Board without
the consent of the holders of the Rights; provided, however, that from and
after such time as any person becomes a First Interstate Acquiring Person, the
terms of the Rights may not be amended in any manner which adversely affect
the interests of the holder of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group of persons that attempts to acquire
First Interstate in a manner which causes the Rights to become exercisable.
DGCL 203
Section 203 of the DGCL, in general, prohibits a Delaware corporation such
as First Interstate from engaging in a Business Combination (as defined in
Section 203) with an Interested Stockholder (as defined in Section 203) for a
period of three years following the date that such person became an Interested
Stockholder unless (a) prior to the date that such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder, (b) upon consummation of the transaction
that resulted in the stockholder becoming an Interested Stockholder, the
Interested Stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding stock
held by directors who are also officers of the corporation and employee stock
plans that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer, (c) the business combination is proposed prior to the
consummation or abandonment of and subsequent to the public announcement of a
proposed transaction which (i) constitutes a merger or consolidation of the
corporation, (ii) is with or by a person who either was not an interested
stockholder during the previous 3 years or who became an interested
stockholder with the approval of the corporation's board of directors and
(iii) is approved or not opposed by a majority of the board of directors then
in office who were directors prior to any person becoming an Interested
Stockholder during the previous three years, or (d) on or subsequent to the
date such person became an Interested Stockholder, the Business Combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote
of the holders of
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at least 66 2/3% of the outstanding voting stock of the corporation not owned
by the Interested Stockholder. A copy of Section 203 of the DGCL has been
annexed as Schedule B hereto.
FIB/FBS MERGER AGREEMENT CONDITION
The Offer is conditioned upon, among other things, the stockholders of First
Interstate not having approved the FIB/FBS Merger Agreement, which requires
the approval of the holders of a majority of the Shares. The FIB/FBS Merger
Agreement Condition shall not have been satisfied if such approval shall have
been obtained.
REGULATORY APPROVAL CONDITION
The Offer is conditioned upon, among other things, all regulatory approvals
required to consummate the Acquisition (the "Requisite Regulatory Approvals")
having been obtained and remaining in full force and effect, all statutory
waiting periods in respect thereof having expired and no such approval
containing any conditions or restrictions which the Board of Directors of
Wells Fargo reasonably determines in good faith will have or reasonably be
expected to have a Material Adverse Effect. The Regulatory Approval Condition
is virtually identical to the regulatory condition for consummating the
FIB/FBS Merger. As used in this Prospectus, the term "Material Adverse Effect"
has the same substantive meaning as given to that term in the FIB/FBS Merger
Agreement. Specifically, the term "Material Adverse Effect" means material
adverse effect on the business, results of operations or financial condition
of Wells Fargo, First Interstate and their respective subsidiaries taken as a
whole or a material adverse effect on Wells Fargo's ability to consummate the
transactions contemplated hereby; provided, however, that in determining
whether a Material Adverse Effect has occurred there shall be excluded any
effect the cause of which is (i) any change in banking and similar laws, rules
or regulations of general applicability or interpretations thereof by courts
or governmental authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting requirements applicable to banks, thrifts
or their holding companies generally, (iii) any action or omission of Wells
Fargo or any subsidiary of Wells Fargo in contemplation of the Merger, (iv)
any changes in general economic conditions affecting banks, thrifts or their
holding companies generally and (v) in the case of members of the Savings
Association Insurance Fund ("SAIF") of the FDIC, the funding of the SAIF.
Wells Fargo will use its reasonable best efforts to obtain the Requisite
Regulatory Approvals, which include approvals from the Federal Reserve Board
and various state and foreign regulatory authorities. (The obligation to use
reasonable best efforts to obtain the Requisite Regulatory Approvals is the
same obligation that FBS has agreed to under the FIB/FBS Merger Agreement.) As
described below, applications and notices seeking Requisite Regulatory
Approvals have been filed. The Offer and/or the Merger cannot proceed in the
absence of the Requisite Regulatory Approvals. Although no assurances can be
given, Wells Fargo anticipates that it will receive all regulatory approvals
on a timely basis.
As mentioned above, Wells Fargo believes that consummation of the FIB/FBS
Merger is subject to the making of substantially identical filings and the
receipt of identical regulatory approvals as the Offer and the Merger. In this
regard, on November 13, 1995, Wells Fargo filed applications and notices in
draft form with the FRB-SF seeking approval of, among other things, the Offer
and the Merger; the application was refiled in final form on November 17,
1995. Wells Fargo has filed additional applications and notices with various
governmental authorities seeking all approvals required to permit consummation
of the Offer and the Merger. FBS announced that it filed an application in
final form for the FIB/FBS Merger with the FRB-M on November 10, 1995. On
December 14, 1995, the FRB-M accepted the FBS application and wrote that it
expected a Federal Reserve Board decision by February 12, 1996. On December
20, 1995, the FRB-SF accepted Wells Fargo's application and wrote that it
expected a Federal Reserve Board decision by February 18, 1996. In its
application filed with the FRB-SF, Wells Fargo has committed to divest
approximately $1 billion in deposits and related assets in connection with
regulatory concerns regarding possible adverse competitive effects of the
Acquisition. It is not possible to predict with certainty the acceptability of
any particular divestiture plan to governmental agencies. However, based on
discussions with Wells Fargo's counsel, Sullivan & Cromwell, and Wells Fargo's
own knowledge of and experience in the regulatory process, Wells Fargo
believes that the divestitures it has proposed in its application filed with
the FRB-SF are consistent with the competitive analysis set forth in that
application.
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Moreover, based on such discussions, knowledge and experience and because
Wells Fargo fully intends to make all divestitures required in order to secure
the necessary approvals, Wells Fargo is confident that, even if a governmental
agency disagreed with the competitive analysis set forth in the Wells Fargo
application and required a higher level of divestitures, Wells Fargo would be
able to reach agreement with that agency on appropriate divestitures and
obtain the regulatory approvals required for the Acquisition on a timely basis
and in a time frame substantially identical to that in which FBS would be able
to obtain the regulatory approvals required for the FIB/FBS Merger.
The Offer and the Merger are subject to approval by the Federal Reserve
Board pursuant to Sections 3 and 4 of the BHCA. Assuming Federal Reserve Board
approval, the Offer may not be consummated until 30 days after such approval,
during which time the Department of Justice may challenge the Offer on
antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve Board and the Department of Justice,
the waiting period may be reduced to no less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes which:
(i) would result in a monopoly or which would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States; or
(ii) may have the effect in any section of the United States of
substantially lessening competition, or tending to create a monopoly, or
resulting in a restraint of trade, unless the Federal Reserve Board finds
that the anti-competitive effects of the transaction are clearly outweighed
in the public interest by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served.
In reviewing the competitive impact of the Acquisition, the Department of
Justice could analyze their effect on competition differently than the Federal
Reserve Board, and thus it is possible that the Department of Justice could
reach a different conclusion than the Federal Reserve Board regarding their
competitive effects. Wells Fargo expects that the Federal Reserve Board and
the Department of Justice will require that Wells Fargo divest certain
operations in order to alleviate what such agencies believe would be an
adverse competitive effect. In its application filed with the FRB--SF, Wells
Fargo committed to divest approximately $1 billion in deposits and related
assets in connection with regulatory concerns regarding possible adverse
competitive effects of the Acquisition. It is possible that the Federal
Reserve Board, the Department of Justice and/or a state governmental agency
will request a more substantial divestiture, but Wells Fargo believes that any
higher level of divestitures that might be required would not delay
consummation of the Offer and the Merger. Although any potential divestitures
may affect certain pro forma combined financial statement amounts, merger and
restructuring costs, cost savings and revenues, Wells Fargo believes that the
aggregate amount and financial impact of any such divestitures will not be
material and will not have a Material Adverse Effect. In addition, Wells Fargo
believes that revenue losses will be offset by cost savings and the premium
received for the divested operations. For these reasons, the pro forma
financial statements included herein do not reflect any divestitures.
The Federal Reserve Board will also consider the financial and managerial
resources of the companies and their subsidiary banks. In addition, under the
Community Reinvestment Act of 1977, as amended (the "CRA"), the Federal
Reserve Board must take into account the record of performance of each of
Wells Fargo and First Interstate in meeting the credit needs of the entire
community, including low and moderate income neighborhoods, served by each
company. As part of the review process, the Federal Reserve Board frequently
receives comments and protests from community groups and others. As of the
date hereof, a number of community groups and individuals have submitted
comments and protests with respect to the applications filed by both Wells
Fargo and FBS. Wells Fargo's principal bank, Wells Fargo Bank, N.A. (which
represents approximately 90% of Wells Fargo's consolidated assets), has
received an "Outstanding" rating, the CRA's highest rating. Eleven of First
Interstate's banks, including its California lead bank, have a "Satisfactory"
rating, and only three of First Interstate's bank subsidiaries have been
awarded an "Outstanding" CRA rating. FBS's two largest banks have received
"Outstanding" ratings, but a majority of its banks have received
"Satisfactory" ratings.
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The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Acquisition to the Office of the Comptroller of the
Currency (the "OCC"), the FDIC and the appropriate state regulatory
authorities. These agencies have 30 days to submit their views and
recommendations to the Federal Reserve Board. The Federal Reserve Board is
required to hold a public hearing in the event it receives a written
recommendation of disapproval of the application from any of these agencies
within such 30-day period. Furthermore, Federal Reserve Board regulations
require publication of notice of, and the opportunity for public comment on,
the application submitted by Wells Fargo for approval of the Acquisition and
authorize the Federal Reserve Board to hold a public hearing in connection
therewith if the Federal Reserve Board determines that such a hearing would be
appropriate. As noted above, comments have been submitted with respect to both
Wells Fargo's and FBS's applications; a number of such comments have requested
the Federal Reserve Board to hold public hearings. The Federal Reserve Board
has scheduled hearings on Wells Fargo's application on January 22, 1996; the
Federal Reserve Board has also scheduled hearings on January 23, 1996 with
respect to FBS's applications.
Under Section 4 of the BHCA and related regulations, the Federal Reserve
Board must consider whether the performance of Wells Fargo's and First
Interstate's nonbanking activities on a combined basis can reasonably be
expected to produce benefits to the public (such as greater convenience,
increased competition and gains in efficiency) that outweigh possible adverse
effects (such as undue concentration of resources, decreased or unfair
competition, conflicts of interest and unsound banking practices). This
consideration includes an evaluation of the financial and managerial resources
of Wells Fargo and First Interstate and the effect of the proposed transaction
on those resources.
In addition, in connection with the Offer, Wells Fargo has filed
applications or notices with the Minister of Finance of Canada as well as a
number of state regulatory agencies, primarily in relation to the acquisition
of control over certain subsidiaries of First Interstate that will result from
consummation of the Offer. A brief description of pending applications and
notices follows:
Alaska. Wells Fargo has requested a permit in relation to the acquisition
of First Interstate Bank of Alaska, N.A. from the Alaska Department of
Commerce and Economic Development pursuant to (S) 06.05.570(a) of the
Alaska Banking Code. An application for such a permit was filed on November
20, 1995.
Arizona. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Arizona, N.A. ("FI Arizona") from
the Arizona Superintendent of Banking pursuant to (S)(S) 6-144 and 6-322 of
the Arizona Revised Statutes. An application for such approval was filed on
November 24, 1995.
Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Insurance Company (a wholly owned
subsidiary of FI Arizona) from the Arizona Director of Insurance pursuant
to (S) 20-481.02(B) of the Arizona Revised Statutes. An application for
such approval was filed on November 29, 1995.
California. Wells Fargo has requested prior approval in connection with
the acquisition of First Interstate, First Interstate Bank of California,
First Interstate Bank, Ltd. and First Interstate Central Bank from the
California Superintendent of Banking pursuant to the California Financial
Code. An application for an exemption pursuant to (S) 708 of the California
Financial Code or an approval pursuant to (S) 701 of the California
Financial Code was filed on November 21, 1995.
Canada. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Canada from the Minister of Finance
of Canada pursuant to (S) 377 of the Bank Act (Canada). An application for
such approval was filed on December 4, 1995.
Colorado. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Denver, N.A. and First Interstate
Bank of Englewood, N.A. from the Colorado Banking Board pursuant to
(S) 11-6.4-104(10) of the Colorado Revised Statutes. An application for
such approval was filed on November 21, 1995.
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Idaho. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Idaho, N.A. from the Idaho Director
of the Department of Finance pursuant to (S) 26-2606 of the Idaho Code. An
application for such approval was filed on November 24, 1995.
Montana. Wells Fargo has in connection with the acquisition of First
Interstate Bank of Montana, N.A., submitted a copy of Wells Fargo's Federal
Reserve Application to the Montana Department of Commerce, together with a
certification that Montana State deposit limitations have not been
violated, pursuant to (S) 32-1-384 of the Montana Code. An appropriate
submission was made on November 29, 1995.
Nevada. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Nevada, N.A. from the Nevada
Commissioner of Financial Institutions pursuant to (S) 666.305 of the
Nevada Revised Statutes. An application for such approval was filed on
November 22, 1995.
New Mexico. Wells Fargo has given 90 days' prior notice to the New Mexico
Director of the Financial Institutions Division of the Regulation and
Licensing Department in connection with the acquisition of First Interstate
Bank of New Mexico, N.A. pursuant to section 58-26-5 of the New Mexico
Statutes. Such notice was filed on November 20, 1995.
Texas. Wells Fargo has in connection with the acquisition of First
Interstate Bank of Texas, N.A. provided notice and a copy of Wells Fargo's
Federal Reserve Application to the Texas Banking Commissioner pursuant to
(S) 8.301 of the Texas Banking Act. Such notice and a copy of such
Application were filed on November 22, 1995.
Vermont. Wells Fargo has in connection with the acquisition of Western
Bonding & Casualty Company, a captive insurance company subsidiary of First
Interstate, given notice to the Vermont Director of Captive Insurance
Companies. Such notice was filed on November 22, 1995.
Wyoming. Wells Fargo has requested prior approval in connection with the
acquisition of First Interstate Bank of Wyoming, N.A. from the Wyoming
Commissioner of Banking pursuant to (S) 13-9-303 of the Wyoming Statutes.
An application for such approval was filed on November 21, 1995.
Wells Fargo does not currently anticipate any significant difficulties in
obtaining any of the foregoing approvals, but if any material approval legally
required to consummate the Acquisition is not received, Wells Fargo will not
be able to consummate the Acquisition.
CERTAIN OTHER CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Wells Fargo shall not be
required to accept for exchange or exchange any Shares, may postpone the
acceptance for exchange of or exchange for tendered Shares, and may, in its
sole discretion, terminate or amend the Offer as to any Shares not then
exchanged for if at the Expiration Date, any of the Minimum Tender Condition,
the Wells Fargo Stockholder Approval Condition, the Rights Plan and DGCL 203
Condition, the FIB/FBS Merger Agreement Condition or the Regulatory Approval
Condition (in each case as defined on the cover page of this Prospectus) has
not been satisfied or, with respect to the Minimum Tender Condition and the
Rights Plan and DGCL 203 Condition, waived, or if on or after the date of this
Prospectus and at or prior to the time of exchange of any such Shares (whether
or not any Shares have theretofore been accepted for exchange or exchanged
pursuant to the Offer), any of the following events shall not have occurred:
(a) The shares of Wells Fargo Common Stock which shall be issued to the
stockholders of First Interstate in the Offer and the Merger shall have
been authorized for listing on the NYSE, subject to official notice of
issuance.
(b) The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(c) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Offer and/or the Merger or any of the other
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transactions contemplated by this Prospectus shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any court, administrative
agency or commission or other governmental authority or instrumentality
which prohibits, restricts or makes illegal the consummation of the Offer
and/or the Merger.
(d) (i) The representations and warranties of First Interstate in the
FIB/FBS Merger Agreement with respect to capitalization, authority,
financial statements, and absence of certain changes or events shall be
true and correct in all material respects as of the date of this Prospectus
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Expiration Date as though made on and as of the
Expiration Date and (ii) the representations and warranties of First
Interstate set forth in the FIB/FBS Merger Agreement other than those
specifically enumerated in clause (i) hereof shall be true and correct in
all respects as of the date of this Prospectus and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Expiration Date as though made on and as of the Expiration Date; provided,
however, that for purposes of determining the satisfaction of the condition
contained in this clause (ii), no effect shall be given to any exception in
such representations and warranties relating to materiality or a Material
Adverse Effect, and provided, further, however, that, for purposes of this
clause (ii), such representations and warranties shall be deemed to be true
and correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or
in the aggregate, results or would reasonably be expected to result in a
Material Adverse Effect on First Interstate and its subsidiaries taken as a
whole.
The foregoing conditions are for the sole benefit of Wells Fargo and may be
asserted by Wells Fargo regardless of the circumstances giving rise to any
such conditions (including any action or inaction by Wells Fargo) or may be
waived by Wells Fargo in whole or in part (other than the Wells Fargo
Stockholder Approval Condition, the Regulatory Approval Condition and the
condition relating to effectiveness of the Registration Statement). Although
Wells Fargo reserves the right to do so, Wells Fargo does not currently intend
to waive the Minimum Tender Condition or the Rights Plan and DGCL 203
Condition (insofar as it relates to Section 203 of the DGCL) unless it
determines that doing so would not prevent it from consummating the Merger
promptly after consummating the Offer; Wells Fargo also does not currently
intend to waive the Rights Plan and DGCL 203 Condition (insofar as it relates
to the Rights) unless it determines that the dilution to Wells Fargo's
stockholders that would result from the Rights becoming exercisable as a
consequence of the Offer and the Merger would not be material in the context
of the entire transaction. The determination as to whether any condition has
been satisfied shall be in the sole judgment of Wells Fargo and will be final
and binding on all parties. The failure by Wells Fargo at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed a continuing right which may be asserted at
any time and from time to time. Notwithstanding the fact that Wells Fargo
reserves the right to assert the failure of a condition following acceptance
for payment but prior to payment in order to delay payment or cancel its
obligation to exchange properly tendered Shares, Wells Fargo will either
promptly exchange such Shares or promptly return such Shares.
The conditions to the Offer set forth herein are identical in all material
respects to the conditions of FBS to effect the FIB/FBS Merger, except that:
(a) FBS does not have to effect the FIB/FBS Merger unless FBS receives a
letter from its accountants to the effect that the FIB/FBS Merger will
qualify for "pooling of interests" accounting treatment.
(b) FBS does not have to effect the FIB/FBS Merger unless it receives an
opinion of its counsel to the effect that the FIB/FBS Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly no gain or loss
will be recognized by FBS or First Interstate as a result of the FIB/FBS
Merger and no gain or loss will be recognized by the stockholders of First
Interstate who exchange their Shares solely for FBS Common Stock pursuant
to the FIB/FBS Merger.
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(c) FBS does not have to effect the FIB/FBS Merger unless First
Interstate has performed in all material respects its obligations required
to be performed by it under the FIB/FBS Merger Agreement at or prior to the
closing of the FIB/FBS Merger, and FBS shall have received a certificate
signed on behalf of First Interstate by the Chief Executive Officer and the
Chief Financial Officer to such effect.
(d) Wells Fargo does not have to accept for exchange or exchange any
Shares pursuant to the Offer and can terminate or amend the Offer if the
stockholders of First Interstate have approved the FIB/FBS Merger Agreement
or the Rights Plan and DGCL 203 Condition is not satisfied.
(e) Wells Fargo does not have to accept for exchange or exchange any
Shares pursuant to the Offer and can terminate or amend the Offer if the
Minimum Tender Condition is not met (based on the number of Shares
outstanding or reserved for issuance pursuant to First Interstate's
employee stock options and dividend reinvestment and stock purchase plans
as of October 31, 1995 as reported by First Interstate and Shares currently
owned by Wells Fargo and its affiliates for their own respective accounts,
Wells Fargo believes the Minimum Tender Condition would have been satisfied
on October 31, 1995 if at least an aggregate of 39,938,688 Shares, or 52.7%
of the Shares outstanding as of October 31, 1995, had been validly tendered
pursuant to the Offer and not withdrawn), while the FIB/FBS Merger is
conditioned on receiving approval of the holders of a majority of the
outstanding Shares.
RELATIONSHIPS WITH FIRST INTERSTATE
On November 1, 1995, Wells Fargo acquired 100 Shares at a price of $124 5/8
per Share (excluding mark-ups or commissions) in an open market purchase.
Additionally, as of January 11, 1996, Wells Fargo held 162,751 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. With respect to Shares held
in a fiduciary capacity that Wells Fargo has the power to vote and any vote
taken with respect to the FIB/FBS Merger, Wells Fargo has either relinquished
such power to vote to an unaffiliated third party or will abstain from any
such vote. Except as set forth herein, and except for Philip J. Quigley, a
member of the Board of Directors of Wells Fargo, who beneficially owns 500
Shares, neither Wells Fargo nor, to the best of its knowledge, any of the
persons listed in Schedule A hereto nor any associate or majority-owned
subsidiary of any of the foregoing, beneficially owns or has a right to
acquire any equity securities of First Interstate. Except as set forth above,
neither Wells Fargo nor, to the best of its knowledge, any of the persons or
entities referred to above, nor any director, executive officer or subsidiary
of any of the foregoing, has effected any transaction in such equity
securities during the past 60 days.
Except as set forth herein, neither Wells Fargo nor, to the best of its
knowledge, any of the persons listed in Schedule A hereto has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of First Interstate, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer
or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as described herein, there have
been no contacts, negotiations or transactions since November 1, 1995, between
Wells Fargo or, to the best of its knowledge, any of the persons listed in
Schedule A hereto, on the one hand, and First Interstate or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors, or a sale
or other transfer of a material amount of assets. Neither Wells Fargo, nor, to
the best of its knowledge, any of the persons listed in Schedule A hereto, has
since November 1, 1995 had any transaction with First Interstate or any of its
executive officers, directors or affiliates that would require disclosure
under the rules and regulations of the Commission applicable to the Offer.
FEES AND EXPENSES
CS First Boston Corporation ("CS First Boston") and Montgomery Securities
("Montgomery") are acting as Dealer Managers in connection with the Offer.
Pursuant to the respective terms of CS First Boston's and
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Montgomery's engagement, Wells Fargo has agreed to pay each of CS First Boston
and Montgomery for its financial advisory services (including services as
Dealer Manager) in connection with the Acquisition an aggregate financial
advisory fee of $10 million, payable as follows: (i) in the case of CS First
Boston, $1 million upon execution of the engagement letter, (ii) $500,000 upon
the effectiveness of a registration statement with respect to the Offer, (iii)
$2 million upon the signing of a definitive agreement providing for the Merger
(against which the fee described in (ii) above, to the extent previously paid,
will be credited), (iv) $500,000 upon the mailing of a proxy statement to
Wells Fargo's stockholders with respect to the Acquisition, and (v) the
balance upon Wells Fargo's acquisition of more than 50% of the Shares. In
addition, Wells Fargo has agreed to reimburse each of CS First Boston and
Montgomery for its reasonable out-of-pocket expenses, including the fees and
expenses of its legal counsel, in connection with the Acquisition, and has
agreed to indemnify each of CS First Boston and Montgomery against certain
liabilities and expenses in connection with the Acquisition, including
liabilities under the federal securities laws. In the ordinary course of
business, CS First Boston and Montgomery may actively trade the equity and
debt securities of Wells Fargo and First Interstate for their own account and
for the account of customers and, accordingly, may at any time hold a long or
short position in such securities.
Wells Fargo has also retained D.F. King & Co., Inc. to act as Information
Agent in connection with the Offer. The Information Agent may contact holders
of Shares by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward the Offer
materials to beneficial owners of Shares. The Information Agent will receive a
fee estimated not to exceed $200,000 for such services, plus reimbursement of
out-of-pocket expenses and Wells Fargo will indemnify the Information Agent
against certain liabilities and expenses in connection with the Offer,
including liabilities under federal securities laws.
Wells Fargo will pay the Exchange Agent reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Exchange Agent against
certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by Wells Fargo for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
ACCOUNTING TREATMENT
Upon consummation of the Offer, Wells Fargo will account for the acquisition
of the Shares using the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations," as
amended. See "Background of the Offer--Comparison of the Proposals--Purchase
Versus Pooling of Interests Accounting." Accordingly, the purchase price will
be allocated to assets acquired and liabilities assumed based on their
estimated fair values at the consummation date. Income (or loss) of First
Interstate prior to the consummation date will not be included in income of
the combined company.
STOCK EXCHANGE LISTING
The Wells Fargo Common Stock is listed on the NYSE, the PSE, the London
Stock Exchange and the Frankfurt Stock Exchange. Application will be made to
list the shares of Wells Fargo Common Stock to be issued pursuant to the Offer
on the NYSE.
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BUSINESS OF WELLS FARGO
Wells Fargo is a bank holding company incorporated under the laws of the
State of Delaware and registered under the BHCA. 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.
Today, Wells Fargo operates one of the largest banking businesses in the
United States. Wells Fargo 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
highlighted below.
The Retail Distribution Group sells and services a complete line of retail
financial products for consumers and small businesses. It encompasses a branch
network (including supermarket branches and banking centers), the 24-hour
Customer Sales and Service Centers (telephone banking), the ATM network and
Wells Fargo ON-LINE, Wells Fargo's personal computer banking service. In
addition, Retail Distribution includes product management for the consumer
checking business, which primarily uses the branches as a source of new
customers.
As part of the ongoing effort to provide higher-convenience, lower-cost
service to customers, Wells Fargo has opened supermarket branches, which are a
more efficient delivery channel for a full line of retail banking services,
and banking centers throughout California. The supermarket banking centers
(modularly-designed kiosks equipped with ATMs and a customer service telephone
and staffed by a banking officer) are capable of providing substantially all
consumer services.
The Business Banking Group provides a full range of financial services to
small businesses, including credit, deposits, investments, payroll services,
retirement programs and credit and debit card services. Business Banking
customers include small businesses with annual sales up to $10 million in
which the owner of the business is also the principal financial decision
maker.
The Investment Group is responsible for the sales and management of savings
and investment products, investment management and brokerage services,
including the Stagecoach and Overland Express Funds and personal trust,
employee benefit trust and agency assets. It also includes product management
for market rate accounts, savings deposits, Individual Retirement Accounts and
time deposits.
Real Estate products and services include construction loans for commercial
and residential development, land acquisition and development loans, secured
and unsecured lines of credit, interim financing arrangements for completed
buildings, rehabilitation loans, affordable housing loans and letters of
credit. Secondary market services are provided through the Real Estate Capital
Markets Group, whose business includes purchases of distressed loans at a
discount, mezzanine financing, acquisition financing, origination of permanent
loans for securitization, syndications, commercial real estate loan servicing
and real estate pension fund advisory services.
The Wholesale Products Group includes the Commercial Banking Group, which
serves businesses with annual sales of $5 million to $250 million, and the
Corporate Banking Group, which maintains relationships with major corporations
throughout the United States. The group is responsible for soliciting and
maintaining credit and noncredit relationships with businesses by offering a
variety of products and services including traditional commercial loans and
lines of credit, letters of credit, trade facilities and cash management.
Consumer Lending offers a full array of consumer loan products ranging from
credit card loans and auto financing and leases to other installment loans and
lines of credit.
61
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma combined financial statements were
prepared in connection with Wells Fargo's Offer to exchange each outstanding
Share for two-thirds of a share of Wells Fargo Common Stock and give effect to
the purchase accounting adjustments and other assumptions described in the
accompanying notes. The unaudited pro forma combined balance sheet is based
upon the unaudited consolidated balance sheets of Wells Fargo and First
Interstate as of September 30, 1995. The unaudited pro forma combined
statements of income are based on the consolidated statements of income of
Wells Fargo and First Interstate for the nine-month period ended September 30,
1995 (unaudited) and the year ended December 31, 1994. Certain information was
derived from the audited consolidated financial statements of First Interstate
contained in the 1994 First Interstate 10-K that, for purposes of this
Prospectus, are not covered by reports of First Interstate's independent
accountants. The pro forma combined financial statements do not give effect to
the anticipated cost savings, the disposition of certain yet-to-be identified
assets or the effects of any required regulatory divestitures. Divestitures
may affect certain pro forma combined financial statement amounts, but the net
effect of any required divestitures is not expected to be material. In its
application filed with the FRB-SF, Wells Fargo has committed to divest
approximately $1 billion in deposits and related assets in connection with
regulatory concerns regarding possible adverse competitive effects of the
Acquisition. See "The Offer--Regulatory Approval Condition."
The resolution of the pending matters pertaining to the assets and
liabilities of First Interstate described above, as well as the operations of
First Interstate subsequent to September 30, 1995, will affect the allocation
of the purchase price. In addition, changes to the adjustments already
included in the unaudited pro forma combined financial statements are expected
as valuations of assets and liabilities are completed and as additional
information becomes available. An increase in the unallocated portion of the
purchase price remaining after fair value adjustments will result in a greater
final allocation to goodwill which will have a corresponding impact on
amortization expense and will reduce tangible common equity. A decrease in the
unallocated portion of the purchase price remaining after fair value
adjustments will have the opposite effects. Accordingly, the final pro forma
combined amounts will differ from those set forth in the unaudited pro forma
combined financial statements.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Wells Fargo and First
Interstate, including the respective notes thereto, which are incorporated by
reference in this Prospectus (but which, in the case of First Interstate, are
not covered by the report of First Interstate's independent accountants for
purposes of this Prospectus) and the unaudited pro forma combined per share
financial information which appear elsewhere in this Prospectus. The pro forma
data are presented for comparative purposes only and are not necessarily
indicative of the combined financial position or results of operations in the
future. The pro forma data are also not necessarily indicative of the combined
financial position or results of operations which would have been realized had
the Acquisition been consummated during the periods or as of the dates for
which the pro forma financial statements are presented.
62
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1995(A)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
PRO FORMA
WELLS FARGO FIRST INTERSTATE ADJUSTMENTS PRO FORMA
& COMPANY BANCORP (B,C) COMBINED
----------- ---------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks..... $ 3,183 $ 5,916 $ -- $ 9,099
Investment securities....... 9,436 9,432 -- 18,868
Loans....................... 34,298 35,967 -- 70,265
Allowance for loan losses... 1,872 847 -- 2,719
------- ------- ------ --------
Net loans................. 32,426 35,120 -- 67,546
------- ------- ------ --------
Goodwill.................... 391 697 5,679(D) 6,767
Other assets................ 4,498 3,902 1,475(E) 9,875
------- ------- ------ --------
Total assets.............. $49,934 $55,067 $7,154 $112,155
======= ======= ====== ========
LIABILITIES
Noninterest-bearing depos-
its........................ $ 9,627 $17,044 $ -- $ 26,671
Interest-bearing deposits... 29,321 31,192 -- 60,513
------- ------- ------ --------
Total deposits.............. 38,948 48,236 -- 87,184
Federal funds purchased and
securities sold under re-
purchase agreements........ 2,554 -- (1) -- 2,554
Senior and subordinated
debt....................... 3,020 1,368 -- 4,388
Other liabilities........... 1,538 1,482 -- 3,020
------- ------- ------ --------
Total liabilities......... 46,060 51,086 -- 97,146
------- ------- ------ --------
STOCKHOLDERS' EQUITY
Preferred stock............. 489 350 -- 839
Common stock................ 237 169 83 489
Additional paid-in capital.. 1,221 1,667 8,866 11,754
Retained earnings........... 1,932 2,436 (2,436) 1,932
Other....................... (5) 1 (1) (5)
Less: Treasury stock........ -- (642) 642 --
------- ------- ------ --------
Total stockholders' equi-
ty....................... 3,874 3,981 7,154(F) 15,009
------- ------- ------ --------
Total liabilities and
stockholders' equity..... $49,934 $55,067 $7,154 $112,155
======= ======= ====== ========
</TABLE>
- --------
(1) The balance of federal funds purchased and securities sold under
repurchase agreements at September 30, 1995, if any, is presumed to be
included in other liabilities.
See Notes to Pro Forma Combined Financial Statements.
63
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995(A)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
WELLS FARGO FIRST INTERSTATE PRO FORMA PRO FORMA
& COMPANY BANCORP ADJUSTMENTS COMBINED
----------- ---------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
INTEREST INCOME
Investment securities...... $ 460 $ 480 $ -- $ 940
Loans...................... 2,536 2,283 -- 4,819
Other...................... 78 26 -- 104
------ ------ ----- ------
Total interest income.... 3,074 2,789 -- 5,863
------ ------ ----- ------
INTEREST EXPENSE
Deposits................... 750 722 -- 1,472
Federal funds purchased and
securities sold under
repurchase agreements..... 160 -- -- 160
Senior and subordinated
debt...................... 152 90 -- 242
Other...................... 25 72 -- 97
------ ------ ----- ------
Total interest expense... 1,087 884 -- 1,971
------ ------ ----- ------
NET INTEREST INCOME........ 1,987 1,905 -- 3,892
Provision for loan losses.. -- -- -- --
------ ------ ----- ------
Net interest income after
provision for loan
losses.................... 1,987 1,905 -- 3,892
------ ------ ----- ------
NONINTEREST INCOME
Service charges on deposit
accounts.................. 357 446 -- 803
Fees and commissions....... 316 151 -- 467
Trust and investment
services income........... 176 123 -- 299
Other...................... 41 103 -- 144
------ ------ ----- ------
Total noninterest
income.................. 890 823 -- 1,713
------ ------ ----- ------
NONINTEREST EXPENSE
Salaries and employee
benefits.................. 765 804 -- 1,569
Net occupancy.............. 159 294 -- 453
Equipment.................. 139 -- (1) -- 139
Federal deposit insurance.. 47 58 -- 105
Other...................... 528 482 342 (G) 1,352
------ ------ ----- ------
Total noninterest
expense................. 1,638 1,638 342 3,618
------ ------ ----- ------
INCOME BEFORE INCOME
TAXES..................... 1,239 1,090 (342) 1,987
Income tax expense......... 513 420 (83)(G) 850
------ ------ ----- ------
NET INCOME................. $ 726 $ 670 $(259) $1,137
====== ====== ===== ======
NET INCOME APPLICABLE TO
COMMON STOCK.............. $ 695 $ 645 $(259) $1,081
====== ====== ===== ======
PER COMMON SHARE
Net income................. $14.14 $10.85
====== ======
Dividends declared......... $ 3.45 $ 3.45
====== ======
Average common shares
outstanding............... 49.2 50.4 99.6
====== ===== ======
</TABLE>
- --------
(1) Equipment expense for First Interstate is included in net occupancy.
See Notes to Pro Forma Combined Financial Statements.
64
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994(A)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
WELLS FARGO FIRST INTERSTATE PRO FORMA PRO FORMA
& COMPANY BANCORP ADJUSTMENTS COMBINED
----------- ---------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
INTEREST INCOME
Investment securities...... $ 740 $ 844 $ -- $1,584
Loans...................... 3,015 2,304 -- 5,319
Other...................... 10 44 -- 54
------ ------ ----- ------
Total interest income.... 3,765 3,192 -- 6,957
------ ------ ----- ------
INTEREST EXPENSE
Deposits................... 854 725 -- 1,579
Federal funds purchased and
securities sold under
repurchase agreements..... 99 -- -- 99
Senior and subordinated
debt...................... 192 106 -- 298
Other...................... 10 34 -- 44
------ ------ ----- ------
Total interest expense... 1,155 865 -- 2,020
------ ------ ----- ------
NET INTEREST INCOME........ 2,610 2,327 -- 4,937
Provision for loan losses.. 200 -- -- 200
------ ------ ----- ------
Net interest income after
provision for loan
losses.................... 2,410 2,327 -- 4,737
------ ------ ----- ------
NONINTEREST INCOME
Service charges on deposit
accounts.................. 473 562 -- 1,035
Fees and commissions....... 387 172 -- 559
Trust and investment
services income........... 203 193 -- 396
Other...................... 137 127 -- 264
------ ------ ----- ------
Total noninterest
income.................. 1,200 1,054 -- 2,254
------ ------ ----- ------
NONINTEREST EXPENSE
Salaries and employee
benefits.................. 1,027 1,080 -- 2,107
Net occupancy.............. 215 228 -- 443
Equipment.................. 174 128 -- 302
Federal deposit insurance.. 101 103 -- 204
Other...................... 639 658 482(G) 1,779
------ ------ ----- ------
Total noninterest
expense................. 2,156 2,197 482 4,835
------ ------ ----- ------
INCOME BEFORE INCOME
TAXES..................... 1,454 1,184 (482) 2,156
Income tax expense......... 613 450 (122)(G) 941
------ ------ ----- ------
NET INCOME................. $ 841 $ 734 $(360) $1,215
====== ====== ===== ======
NET INCOME APPLICABLE TO
COMMON STOCK.............. $ 798 $ 701 $(360) $1,139
====== ====== ===== ======
PER COMMON SHARE
Net income............... $14.78 $10.69
====== ======
Dividends declared....... $ 4.00 $ 4.00
====== ======
Average common shares
outstanding............... 53.9 52.6 106.5
====== ===== ======
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
65
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A: BASIS OF PRESENTATION
The unaudited pro forma combined balance sheet combines the historical
consolidated balance sheets of Wells Fargo and First Interstate as if the
Acquisition had been effective on September 30, 1995. The pro forma combined
statements of income for the nine-month period ended September 30, 1995 and
the year ended December 31, 1994 combine the historical consolidated
statements of income of Wells Fargo and First Interstate as if the Acquisition
had been effective on January 1, 1994. Certain amounts in the historical
financial statements of First Interstate have been reclassified in the
unaudited pro forma combined financial statements to conform to Wells Fargo's
historical financial statements.
The Acquisition is accounted for as a purchase. Under this method of
accounting, assets and liabilities of First Interstate are adjusted to their
estimated fair value and combined with the recorded values of the assets and
liabilities of Wells Fargo. Applicable income tax effects of such adjustments
are included as a component of Wells Fargo's net deferred tax asset. Certain
transactions conducted in the ordinary course of business between Wells Fargo
and First Interstate are immaterial and, accordingly, have not been
eliminated.
Wells Fargo has not had access to First Interstate's records in order to
make a determination of the fair value of its assets and liabilities. For
purposes of the pro forma financial statements, it has been assumed that the
net book value of First Interstate's assets (excluding intangibles) minus
liabilities approximates fair value.
Following the Acquisition, Wells Fargo intends to combine the operations of
and, subject to regulatory approvals, to merge the California subsidiary banks
of both institutions as well as certain other operations. In its application
with the FRB-SF, Wells Fargo has committed to divest approximately $1 billion
in deposits and related assets in connection with regulatory concerns
regarding possible adverse competitive effects of the Acquisition. See "The
Offer--Regulatory Approval Condition." As of the date of this statement, no
final determination with respect to such matters has been made. The impact of
any required divestitures is not expected to be material. Wells Fargo expects
to achieve significant operating cost savings as a result of the Acquisition.
See "Background of the Offer--Comparison of the Proposals." No adjustment has
been included in the unaudited pro forma combined financial statements for the
anticipated operating cost savings.
No adjustment has been included in the unaudited pro forma combined
financial statements for the effect of a potential $200 million purportedly
payable to FBS pursuant to the Reciprocal Stock Option Agreement and the
Reciprocal Fee Letter. Wells Fargo believes that the Reciprocal Stock Option
Agreement and the Reciprocal Fee Letter are not permissible and should be
invalidated, although the Offer and the Merger are not conditioned on such
invalidation. See "Background of the Offer--Litigation."
NOTE B: PURCHASE PRICE
The purchase price is based on exchanging two-thirds of a share of Wells
Fargo Common Stock for each outstanding Share at the closing price per share
of Wells Fargo Common Stock on October 17, 1995, the last full business day
before announcement of the Original Proposal. Exercise of First Interstate's
stock options are not included in the number of outstanding Shares of First
Interstate on the assumption that all options will become equivalent options
to purchase Wells Fargo Common Stock. In addition, the number of the Shares
used in calculating the total market value of Wells Fargo Common Stock to be
issued in connection with the Offer reflects an exchange of Wells Fargo Common
Stock for the outstanding Shares, exclusive of First Interstate's common stock
equivalents.
66
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
The total market value of the Wells Fargo Common Stock to be issued in
connection with the Acquisition is calculated as follows:
<TABLE>
<S> <C>
First Interstate's common shares outstanding on September 30, 1995
(in thousands).................................................... 75,727
Exchange ratio..................................................... 2/3
--------
Wells Fargo Common Stock to be issued (in thousands)............... 50,485
Market price per share of Wells Fargo Common Stock at October 17,
1995.............................................................. $213.625
--------
Total market value of Wells Fargo Common Stock to be issued (in
millions)....................................................... $ 10,785
========
</TABLE>
In addition to the total market value of the Wells Fargo Common Stock to be
issued, the total purchase price will include other direct acquisition costs,
such as investment banking, legal, accounting and other professional fees;
printing and mailing costs; advertising costs; and other miscellaneous
expenses. These costs, which are not expected to be material to the
transaction and are preliminarily expected to be approximately $30 million,
have not been included in the unaudited pro forma combined financial
statements.
NOTE C: ALLOCATION OF PURCHASE PRICE
Certain matters are still pending that will have an effect on the ultimate
allocation of the purchase price. Accordingly, the allocation of the purchase
price has not been finalized and the portion of the purchase price allocated
to goodwill and the identifiable intangibles (discussed below) is subject to
change.
The purchase price has been allocated as described in the table below:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
Net assets applicable to First Interstate's common stock at
September 30, 1995........................................ $ 3,631
Increase to First Interstate's net asset value at September
30, 1995 as a result of estimated fair value adjustments,
net of applicable income tax effects:
Purchased Credit Card Relationships*..................... $ 100
Purchased Mortgage Servicing Rights*..................... 50
Core Deposit Intangibles*................................ 1,350
------
Total estimated fair value adjustments................. 1,500
Elimination of First Interstate's existing goodwill and
identifiable intangibles.................................. (722)
-------
Total preliminary allocation of purchase price......... 4,409
Goodwill due to the Acquisition............................ 6,376
-------
Total purchase price................................... $10,785
=======
</TABLE>
- --------
* Amounts are adjusted to a net-of-tax basis using an estimated marginal tax
rate of 42.4%.
67
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
It is expected that about $700 million of costs related to premises,
severance and other restructuring charges will be incurred in connection with
the Acquisition. Of this amount, approximately $400 million of costs relate to
First Interstate's premises, employees and operations and will affect the
final amount of goodwill as of the consummation of the Acquisition. The
remaining amount of approximately $300 million of costs relate to Wells
Fargo's premises, employees and operations as well as all costs relating to
systems conversions and other indirect integration costs and will be expensed,
either upon consummation of the Acquisition or as incurred. The estimated
restructuring charges are expected to be incurred as set forth in the
following table:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Total owned premises.................................................... $130
Total leased premises................................................... 230
Severance............................................................... 270
Other restructuring..................................................... 70
----
Total restructuring..................................................... $700
====
</TABLE>
The foregoing estimates are based on the assumption that 85% of First
Interstate's California branches will be closed following consummation of the
Acquisition. In addition, the charges for total owned premises and total
leased premises assume that the relationship between leased and owned premises
is in a similar proportion for First Interstate to such proportion for Wells
Fargo. With respect to timing, it is assumed that the integration would be
complete and that such costs would be incurred not later than 18 months after
the closing of the Acquisition.
Wells Fargo's estimate of $700 million in restructuring charges is in the
range of restructuring charges announced in connection with other similar
transactions and is based on the assumption that Wells Fargo's experience in
integrating First Interstate's organization and operations will be similar to
comparable transactions in the past.
In addition, goodwill does not include the effect of a potential $200
million purportedly payable to FBS pursuant to the Reciprocal Stock Option
Agreement and the Reciprocal Fee Letter. As stated in Note A above, Wells
Fargo believes that the Reciprocal Stock Option Agreement and the Reciprocal
Fee Letter are not enforceable and should be invalidated, although the Offer
and the Merger are not conditioned on such invalidation. See "Background of
the Offer--Litigation."
NOTE D: CALCULATION OF GOODWILL ADJUSTMENT AND TOTAL GOODWILL DUE TO
ACQUISITION
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Purchase price...................................................... $10,785
First Interstate total common stockholders' equity.................. (3,631)
Net-of-tax identifiable intangibles................................. (1,500)
First Interstate net-of-tax existing identifiable intangibles....... 25
-------
Goodwill adjustment................................................. 5,679
First Interstate existing goodwill.................................. 697
-------
Total goodwill due to Acquisition................................... $ 6,376
=======
</TABLE>
For purposes of the pro forma combined balance sheet, it has been assumed
that the net book value of First Interstate's assets (excluding intangibles)
minus liabilities approximates fair value.
NOTE E: OTHER ASSETS
This amount includes an adjustment for identifiable intangibles of $2,562
million less a reduction in Wells Fargo's net deferred tax asset of $1,087
million. The identifiable intangible adjustment represents a gross
identifiable intangibles balance of $2,605 million less First Interstate's
existing intangibles balance of $43
68
<PAGE>
WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
million. The net deferred tax asset adjustment represents the deferred tax
liability related to the gross identifiable intangibles of $1,105 million
partially offset by the reversal of First Interstate's deferred tax liability
of $18 million related to existing identifiable intangibles.
The net-of-tax identifiable intangibles of $1,500 million are amortized over
their estimated period of benefit (not exceeding 15 years) on an accelerated
basis.
NOTE F: STOCKHOLDERS' EQUITY
The purchase price of $10,785 million is reduced by First Interstate's
common stockholders' equity of $3,631 million. Under the Offer, Wells Fargo
will issue two-thirds of a share of Wells Fargo's common stock in exchange for
each of the 75,727,000 shares of First Interstate's outstanding common stock
(based on the number of Shares outstanding as of September 30, 1995). The
price of Wells Fargo's stock on October 17, 1995 was $213 5/8; total par value
of new common stock of Wells Fargo is $252 million. The remaining $10,533
million represents additional paid-in capital. First Interstate's preferred
stock will be converted into Wells Fargo's preferred stock and First
Interstate's treasury stock will be eliminated.
Adjustments to stockholders' equity are as follows:
<TABLE>
<CAPTION>
FIRST
PURCHASE INTERSTATE
PRICE COMMON EQUITY ADJUSTMENT
-------- ------------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock.............................. $ 252 $ (169) $ 83
Additional paid-in capital................ 10,533 (1,667) 8,866
Retained earnings......................... (2,436) (2,436)
Treasury stock............................ 642 642
Net unrealized (gains) losses on avail-
able-for-sale securities................. (1) (1)
------- ------- -------
Total common stockholders' equity......... $10,785 $(3,631) $ 7,154
======= ======= =======
</TABLE>
NOTE G: PURCHASE ACCOUNTING ADJUSTMENTS
Adjustments are made to reflect the recording of intangibles as well as to
eliminate any intangible balances previously recorded by First Interstate in
accordance with the purchase method of accounting. It has been assumed that
the net book value of First Interstate's assets (excluding intangibles) minus
liabilities approximates fair value. The following purchase accounting
adjustments are based on the best available information and are subject to
change as new information becomes available. Purchase accounting adjustments
will be booked on a gross basis with related adjustments to Wells Fargo's net
deferred tax asset as follows:
<TABLE>
<CAPTION>
AMORTIZATION
------------------
9 MONTHS YEAR
ENDED ENDED
NET OF TAX GROSS 9/30/95* 12/31/94*
---------- ------- -------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DEBIT (CREDIT)
Goodwill and identifiable intangibles of
First Interstate....................... $ (722) $ (740) $(45) $ (60)
Goodwill due to the Acquisition......... 6,376 6,376 191 255
Identifiable intangibles due to the Ac-
quisition.............................. 1,500 2,605 196 287
------ ------- ---- -----
7,154 8,241 342 482
Adjustment to Wells Fargo net deferred
tax asset related to purchase account-
ing adjustments........................ -- (1,087) (83) (122)
------ ------- ---- -----
Total................................... $7,154 $ 7,154 $259 $ 360
====== ======= ==== =====
</TABLE>
- --------
* Goodwill due to the Acquisition is amortized on a straight-line basis over
25 years. Identifiable intangibles due to the Acquisition are amortized over
their estimated period of benefit (not exceeding 15 years) on an accelerated
basis.
69
<PAGE>
DESCRIPTION OF WELLS FARGO CAPITAL STOCK
WELLS FARGO COMMON STOCK
The Restated Certificate of Incorporation of Wells Fargo (the "Wells Fargo
Certificate") provides that Wells Fargo has authority to issue 150,000,000
shares of Wells Fargo Common Stock. On October 31, 1995, Wells Fargo had
46,966,721 shares of Wells Fargo Common Stock issued and outstanding. In 1995,
Wells Fargo authorized the continuation of certain stock repurchase programs.
For a full description of these programs see "--Repurchases of Wells Fargo
Common Stock."
Holders of shares of Wells Fargo Common Stock are entitled to one vote per
share for each share held. Subject to the rights of holders of shares of Wells
Fargo's outstanding preferred stock (the "Wells Fargo Preferred Stock") (as
described below), holders of shares of Wells Fargo Common Stock have equal
rights to participate in dividends when declared and, in the event of
liquidation, in the net assets of Wells Fargo available for distribution to
stockholders. Wells Fargo may not declare any dividends on the Wells Fargo
Common Stock unless full preferential amounts to which holders of Wells Fargo
Preferred Stock are entitled have been paid or declared and set apart for
payment upon all outstanding shares of Wells Fargo Preferred Stock. Wells
Fargo is also subject to certain contractual and regulatory restrictions on
the payment of dividends. See "Certain Regulatory Considerations."
The holders of shares of Wells Fargo Common Stock do not have preemptive
rights or preferential rights of subscription for any shares of Wells Fargo
Common Stock or other securities of Wells Fargo. Outstanding shares of Wells
Fargo Common Stock are, and shares to be issued pursuant to the Offer will be,
validly issued, fully paid and nonassessable.
First Chicago Trust Company of New York is the transfer agent and registrar
for the Wells Fargo Common Stock.
REPURCHASES OF WELLS FARGO COMMON STOCK
In April, 1995, the Wells Fargo Board of Directors authorized the repurchase
of up to 4,957,991 shares of Wells Fargo Common Stock, representing 10 percent
of Wells Fargo's outstanding Common Stock as of March 31, 1995. This
authorization continues a repurchase program which Wells Fargo began in 1994,
and is supplemental to the shares of Wells Fargo Common Stock Wells Fargo
routinely buys to offset stock issued or expected to be issued under its
employee benefit and dividend reinvestment plans. There is no scheduled date
for completion of the repurchase program and it is expected that Wells Fargo
will purchase shares from time to time, subject to market conditions. Wells
Fargo does not anticipate that completion of the Acquisition will have any
impact on its ability to continue to repurchase stock.
During the nine months ended September 30, 1995, Wells Fargo repurchased
3,785,927 shares (net of issuances of 720,627 shares) of Wells Fargo Common
Stock. For the year ended December 31, 1994, Wells Fargo repurchased 4,560,944
shares (net of issuances of 561,653 shares) of Wells Fargo Common Stock.
WELLS FARGO PREFERRED STOCK
The Wells Fargo Certificate provides that Wells Fargo is authorized to issue
25,000,000 shares of Wells Fargo Preferred Stock. The Wells Fargo Preferred
Stock may be issued from time to time in one or more series and the Wells
Fargo Board is authorized to determine or alter the powers, preferences and
rights, and the qualifications, limitations or restrictions to be granted to
or imposed upon the Wells Fargo Preferred Stock or any series thereof with
respect to any wholly unissued class or series of Wells Fargo Preferred Stock,
and to fix the number of shares constituting any such series and the
designation thereof, or any of them. Thus, the Wells Fargo Board is authorized
to establish, designate and fix with respect to each series of Wells Fargo
Preferred Stock the specific designation of that series, the number of shares,
the dividend rate, right of redemption and the price, terms and manner of
redemption, special and relative rights on liquidation, sinking fund
provisions, conversion rights and voting rights, all without further action by
the holders of Wells Fargo Common Stock.
70
<PAGE>
Because Wells Fargo is a holding company, its rights, the rights of its
creditors and of its stockholders, including the holders of the shares of the
Wells Fargo Preferred Stock, to participate in any distribution of the assets
of any subsidiary upon the latter's liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors, except to the
extent that Wells Fargo may itself be a creditor with recognized claims
against the subsidiary. The principal source of Wells Fargo's revenues are
dividends received from its banking and other subsidiaries. Various statutory
provisions limit the amount of dividends its bank subsidiaries and certain
nonbank subsidiaries can pay without regulatory approval, and various
regulations can also restrict the payment of dividends. In addition, federal
statutes limit the ability of its bank subsidiaries to make loans to Wells
Fargo. See "--Certain Regulatory Considerations."
The following is a brief description of certain terms of the outstanding
series of Wells Fargo Preferred Stock. This description does not purport to be
complete and is qualified in its entirety by reference to the Wells Fargo
Certificate, including the certificate of designations with respect to each
such series.
The shares of Wells Fargo Preferred Stock now outstanding have preference
over Wells Fargo Common Stock with respect to the payment of dividends and the
distribution of assets in the event of liquidation, winding up or dissolution
of Wells Fargo. Each of such series ranks on a parity with one another as to
dividends and the distribution of assets upon liquidation, winding up or
dissolution.
Generally, the holders of each series of Wells Fargo Preferred Stock have no
voting rights. However, if the equivalent of six quarterly dividends payable
on a series of Wells Fargo Preferred Stock are in default, the number of
directors of Wells Fargo will be increased by two and the holders of such
outstanding series of Wells Fargo Preferred Stock together with the holders of
shares of every other series of Wells Fargo Preferred Stock similarly entitled
to vote for the election of two directors, acting together as a single class,
will be entitled to elect two of the authorized number of members of the Wells
Fargo Board at the next annual meeting and at each subsequent annual meeting
of stockholders to serve until all dividends accumulated have been fully paid
or set apart for payment. Each series of Wells Fargo Preferred Stock is listed
on the NYSE.
Wells Fargo Series B Preferred Stock. As of November 15, 1995, there were
issued and outstanding 1,500,000 shares of Adjustable Rate Cumulative
Preferred Stock, Series B, par value $5.00 per share (the "Wells Fargo Series
B Preferred Stock"). The Wells Fargo Series B Preferred Stock is redeemable at
the option of Wells Fargo, in whole or in part, through May 14, 1996 at a
price of $51.50 per share and, thereafter, at $50 per share, plus accrued and
unpaid dividends to the redemption date.
Dividends on the Wells Fargo Series B Preferred Stock are cumulative and
payable quarterly on the fifteenth day of February, May, August and November
of each year at the rate of 76% of the highest of the three-month Treasury
Bill discount rate, 10-year constant maturity Treasury security yield or 20-
year constant maturity Treasury security yield, but in no event shall be less
than 5.5% per annum or greater than 10.5% per annum. The average dividend rate
was 5.7%, 5.6% and 6.2% during 1994, 1993 and 1992, respectively.
Wells Fargo Series C Preferred Stock. As of November 15, 1995, there were
issued and outstanding 477,500 shares of 9% Preferred Stock, Series C, par
value $5.00 per share (the "Wells Fargo Series C Preferred Stock"), evidenced
by 9,550,000 depositary shares, each representing a one-twentieth interest in
a share of Wells Fargo Series C Preferred Stock. The Wells Fargo Series C
Preferred Stock is redeemable at the option of Wells Fargo, in whole or in
part, on and after October 24, 1996 at a price of $500 per share (equivalent
to $25 per depositary share) plus accrued and unpaid dividends to the
redemption date.
Dividends on the Wells Fargo Series C Preferred Stock of $11.25 per share
(9% annualized rate) are cumulative and are paid quarterly on the last day of
each March, June, September and December (equivalent to $0.56 per annum per
depositary share).
Wells Fargo Series D Preferred Stock. As of November 15, 1995, there were
issued and outstanding 350,000 shares of 8 7/8% Preferred Stock, Series D, par
value $5.00 per share (the "Wells Fargo Series D
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Preferred Stock"), evidenced by 7,000,000 depositary shares, each representing
a one-twentieth interest in a share of Wells Fargo Series D Preferred Stock.
The Wells Fargo Series D Preferred Stock is redeemable at the option of Wells
Fargo, in whole or in part, on and after March 5, 1997 at a price of $500 per
share (equivalent to $25 per depositary share) plus accrued and unpaid
dividends to the redemption date.
Dividends on the Wells Fargo Series D Preferred Stock of $11.09 per share (8
7/8% annualized rate) are cumulative and are paid quarterly on the last day of
each March, June, September and December (equivalent to $0.55 per annum per
depositary share).
CERTAIN REGULATORY CONSIDERATIONS
SUPERVISION AND REGULATION. The following discussion addresses the
regulatory framework applicable to bank holding companies and their
subsidiaries, and provides certain specific information relevant to Wells
Fargo. Regulation of financial institutions such as Wells Fargo and its
subsidiaries is intended primarily for the protection of depositors, the
deposit insurance funds of the FDIC and the banking system as a whole, and
generally is not intended for the protection of stockholders or other
investors.
The following is a summary of certain statutes and regulations that apply to
the operation of banking institutions. Changes in the applicable laws, and in
their application by regulatory agencies, cannot necessarily be predicted, but
they may have a material effect on the business and results of banking
organizations, including Wells Fargo.
As a bank holding company, Wells Fargo is subject to regulation, supervision
and examination by the Federal Reserve Board under the BHCA. Under the BHCA,
bank holding companies may not, in general, directly or indirectly acquire
ownership or control of more than 5% of the voting shares of any company,
including a bank or bank holding company, without the prior approval of the
Federal Reserve Board. In addition, bank holding companies are generally
prohibited from engaging in nonbanking (i.e., commercial or industrial)
activities, subject to certain exceptions under the BHCA.
Wells Fargo's banking subsidiaries, as national banking associations, are
subject to regulation, supervision and examination by the OCC.
Depository institutions are also affected by various state and federal laws,
including those relating to consumer protection and similar matters, as well
as by the fiscal and monetary policies of the Federal government and its
agencies, including the Federal Reserve Board. An important purpose of these
policies is to curb inflation and control recessions through control of the
supply of money and credit. The Federal Reserve Board uses its powers to
establish reserve requirements of depository institutions and to conduct open
market operations in United States government securities so as to influence
the supply of money and credit. These policies have a direct effect on the
availability of bank loans and deposits and on interest rates charged on loans
and paid on deposits, with the result that Federal policies have a material
effect on the earnings of the banking subsidiaries, and, hence, Wells Fargo.
Wells Fargo also has other financial services subsidiaries that are subject
to regulation, supervision and examination by the Federal Reserve Board, as
well as other applicable state and Federal regulatory agencies. For example,
Wells Fargo's discount brokerage and asset management subsidiaries are subject
to supervision and regulation by the Commission, the National Association of
Securities Dealers, Inc. and state securities regulators; and Wells Fargo's
insurance subsidiaries are subject to regulation by the insurance regulatory
authorities of the various states. Other nonbank subsidiaries of Wells Fargo
are subject to other laws and regulations of both the Federal government and
the various states in which they are authorized to do business.
DIVIDEND RESTRICTIONS. Wells Fargo is a legal entity separate and distinct
from its banking and other subsidiaries. The principal source of cash flow of
Wells Fargo, including cash flow to pay dividends on Wells
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Fargo's common and preferred stock and debt service on Wells Fargo's debt, is
dividends from its banking and other subsidiaries. Various federal and state
statutes and regulations limit the amount of dividends that may be paid to
Wells Fargo by its banking subsidiaries without regulatory approval.
The approval of the OCC is required for the payment of any dividend by a
national bank if the total of all dividends declared by the board of directors
of such bank in any calendar year would exceed the total of (i) the bank's
retained net profits (as defined and interpreted by regulation) for the
current year plus (ii) the retained net profits (as defined and interpreted by
regulation) for the preceding two years, less any required transfer to surplus
or a fund for the retirement of any preferred stock. In addition, a national
bank can pay dividends only to the extent that retained net profits (including
the portion transferred to surplus) exceed bad debts (as defined and
interpreted by regulation).
In addition, if, in the opinion of the applicable Federal banking agency, a
depository institution under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the institution, could include the payment of dividends) the
agency may require, after notice and hearing, that such institution cease and
desist from such practice. The OCC has indicated that paying dividends that
would deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound practice. Moreover, under the Federal Deposit
Insurance Act (the "FDI Act"), an insured depository institution may not pay
any dividend if payment would cause it to become undercapitalized or once it
is undercapitalized. See "--Regulatory Capital Standards and Related Matters."
Also, the Federal bank regulatory agencies have issued policy statements which
provide that FDIC-insured depository institutions and their holding companies
should generally pay dividends only out of current operating earnings.
HOLDING COMPANY STRUCTURE. Transactions Involving Banking
Subsidiaries. Wells Fargo's banking subsidiaries are subject to Federal
Reserve Act restrictions which limit the transfer of funds or other items of
value from such subsidiaries to Wells Fargo and (with certain exceptions) to
Wells Fargo's nonbanking subsidiaries (together, "affiliates") in so-called
"covered transactions." In general, covered transactions include loans and
other extensions of credit, investments and asset purchases, as well as other
transactions involving the transfer of value from a banking subsidiary to an
affiliate or for the benefit of an affiliate. Unless an exemption applies,
covered transactions by a banking subsidiary with any one of its affiliates is
limited in amount to 10% of that banking subsidiary's capital and surplus (as
defined and interpreted by regulation) and, with respect to covered
transactions with all affiliates, in the aggregate, to 20% of that banking
subsidiary's capital and surplus. Furthermore, loans and extensions of credit
to affiliates generally are required to be secured in specified amounts.
Source of Strength Doctrine. Under Federal Reserve Board policy, a bank
holding company is expected to serve as a source of financial and managerial
strength to each of its subsidiary banks and, under appropriate circumstances,
to commit resources to support each such subsidiary bank. This support may be
required by the Federal Reserve Board at times when Wells Fargo may not have
the resources to provide it or, for other reasons, would not otherwise be
inclined to provide it. Certain loans by a bank holding company to any of its
subsidiary banks are subordinate in right of payment to deposits in, and
certain other indebtedness of, the subsidiary bank. In addition, in the event
of a bank holding company's bankruptcy, any commitment by a bank holding
company to a Federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Depositor Preference. The FDI Act provides that, in the event of the
"liquidation or other resolution" of an insured depository institution, the
claims of depositors of such institution (including claims by the FDIC as
subrogee of insured depositors) and certain claims for administrative expenses
of the FDIC as a receiver would be afforded a priority over other general
unsecured claims against such an institution. If an insured depository
institution fails, insured and uninsured depositors, along with the FDIC, will
be placed ahead of unsecured, nondeposit creditors, including a parent holding
company such as Wells Fargo, in order of priority of payment.
Liability of Commonly Controlled Institutions. Under the FDI Act, an insured
depository institution that is under common control with another insured
depository institution is generally liable for any loss incurred, or
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reasonably anticipated to be incurred, by the FDIC in connection with the
default of such commonly controlled institution, or any assistance provided by
the FDIC to any such commonly controlled institution that is in danger of
default. The term "default" is defined generally to mean the appointment of a
conservator or receiver and the term "in danger of default" is defined
generally as the existence of certain conditions indicating that a "default"
is likely to occur in the absence of regulatory assistance.
REGULATORY CAPITAL STANDARDS AND RELATED MATTERS. Capital Guidelines. The
Federal Reserve Board, the FDIC and the OCC have adopted substantially similar
risk-based and leverage capital guidelines for United States banking
organizations. The guidelines establish a systematic, analytical framework
that makes regulatory capital requirements sensitive to differences in risk
profiles among banking organizations, takes off-balance sheet exposure into
account in assessing capital adequacy and reduces disincentives to holding
liquid, low-risk assets. The risk-based capital ratio is determined by
classifying assets and specified off-balance sheet financial instruments into
weighted categories with higher levels of capital being required for
categories perceived as representing greater risk. The Federal bank regulatory
agencies have indicated that in assessing the capital adequacy of a banking
organization they will consider, among other things, interest rate risk, and
are each considering a proposal to incorporate an explicit mechanism by which
interest rate risk would be incorporated into the risk-based capital
standards. Federal Reserve Board policy also provides that banking
organizations generally, and, in particular, those that are experiencing
internal growth or actively making acquisitions, are expected to maintain
capital positions that are substantially above the minimum supervisory levels,
without significant reliance on intangible assets.
Under these risk-based capital standards, the minimum consolidated ratio of
total capital to risk-adjusted assets (including certain off-balance sheet
items, such as standby letters of credit) required by the Federal Reserve
Board for bank holding companies, such as Wells Fargo, is currently 8%. At
least one-half of the total capital must be comprised of common equity,
retained earnings, qualifying noncumulative perpetual preferred stock, a
limited amount of qualifying cumulative perpetual preferred stock and minority
interests in the equity accounts of consolidated subsidiaries, less certain
items such as goodwill and certain other intangible assets ("Tier I capital").
The remainder may consist of qualifying hybrid capital instruments, perpetual
debt, mandatory convertible debt securities, a limited amount of subordinated
debt, preferred stock that does not qualify as Tier I capital and a limited
amount of loan and lease loss reserves ("Tier II capital"). As of September
30, 1995, Wells Fargo's Tier I and total capital to risk-adjusted assets
ratios were 8.56% and 12.25%, respectively. At September 30, 1995, on a pro
forma combined basis after giving effect to the Acquisition on a purchase
accounting basis, Wells Fargo's estimated consolidated Tier I capital and
total capital to risk-adjusted assets ratios would be 7.90% and 11.24%,
respectively.
In addition to the risk-based standard, Wells Fargo is subject to minimum
leverage ratio guidelines. The leverage ratio is defined to be the ratio of a
bank holding company's Tier I capital to its total consolidated quarterly
average assets less goodwill and certain other intangible assets (the
"Leverage Ratio"). These guidelines provide for a minimum Leverage Ratio of 3%
for bank holding companies that have the highest supervisory rating. All other
bank holding companies must maintain a minimum Leverage Ratio of at least 4%
to 5%. Neither Wells Fargo nor any of its banking subsidiaries has been
advised by the appropriate Federal banking regulator of any specific Leverage
Ratio applicable to it. As of September 30, 1995, Wells Fargo's Leverage Ratio
was 6.93%. At September 30, 1995, on a pro forma combined basis after giving
effect to the Acquisition on a purchase accounting basis, Wells Fargo's
estimated consolidated Leverage Ratio would be 6.56%.
The reductions in Wells Fargo's pro forma combined capital ratios are due to
the effect of First Interstate's capital ratios, which are lower than Wells
Fargo's.
Wells Fargo's banking subsidiaries are also subject to capital requirements
substantially similar to those imposed by the Federal Reserve Board on bank
holding companies. As of September 30, 1995, each of Wells Fargo's banking
subsidiaries had capital in excess of the foregoing minimum regulatory ratio
requirements.
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Prompt Corrective Action. The FDI Act requires the federal banking agencies
to take "prompt corrective action" in respect of FDIC-insured depository
institutions that do not meet minimum capital requirements. A depository
institution's treatment for purposes of the prompt corrective action
provisions will depend upon how its capital levels compare to various relevant
capital measures and certain other factors, as established by regulation.
The OCC has adopted regulations establishing relevant capital measures and
relevant capital levels. The relevant capital measures are the total capital
ratio, Tier 1 capital ratio and the Leverage Ratio. Under the regulations, a
national bank will be: (i) "well capitalized" if it has a total capital ratio
of 10% or greater, a Tier 1 capital ratio of 6% or greater and a Leverage
Ratio of 5% or greater and is not subject to any order or written directive by
any such regulatory authority to meet and maintain a specific capital level
for any capital measure; (ii) "adequately capitalized" if it has a total
capital ratio of 8% or greater, a Tier 1 capital ratio of 4% or greater and a
Leverage Ratio of 4% or greater (3% in certain circumstances) and is not "well
capitalized," (iii) "undercapitalized" if it has a total capital ratio of less
than 8%, a Tier 1 capital ratio of less than 4% or a Leverage Ratio of less
than 4% (3% in certain circumstances); (iv) "significantly undercapitalized"
if it has a total capital ratio of less than 6%, a Tier 1 capital ratio of
less than 3% or a Leverage Ratio of less than 3%; and (v) "critically
undercapitalized" if its tangible equity is equal to or less than 2% of
average quarterly tangible assets. In addition, a bank's primary federal
banking agency is authorized to downgrade the bank's capital category to the
next lower category upon a determination that the bank is in an unsafe or
unsound condition or is engaged in an unsafe or unsound practice. An unsafe or
unsound practice can include receipt by the institution of a less than
satisfactory rating on its most recent examination with respect to its asset
quality, management, earnings or liquidity. As of September 30, 1995, all of
Wells Fargo's subsidiary banks had capital levels that qualify them as "well
capitalized" under such regulations.
The FDI Act generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
therefore be "undercapitalized." "Undercapitalized" depository institutions
are subject to limitations on, among other things, asset growth; acquisitions;
branching; new business lines; acceptance of brokered deposits; and borrowings
from the Federal Reserve System and are required to submit a capital
restoration plan. The federal banking agencies may not accept a capital plan
without determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository institution's
capital. In addition, for a capital restoration plan to be acceptable, the
depository institution's parent holding company must guarantee that the
institution will comply with such capital restoration plan. The aggregate
liability of the parent holding company is limited to the lesser of (i) an
amount equal to 5% of the depository institution's total assets at the time it
became "undercapitalized," and (ii) the amount which is necessary (or would
have been necessary) to bring the institution into compliance with all capital
standards applicable with respect to such institution as of the time it fails
to comply with the plan. If a depository institution fails to submit an
acceptable plan, it is treated as if it is "significantly undercapitalized."
"Significantly undercapitalized" depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become "adequately capitalized," requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
"Critically undercapitalized" institutions are subject to the appointment of a
receiver or conservator.
FDIC Insurance. On August 8, 1995, the FDIC amended its regulations on
insurance assessments to establish an assessment rate schedule that ranged
from 4 to 31 cents per $100 of insured deposits in replacement of the previous
schedule of 23 to 31 cents (based on each institution's assigned risk
classification) per $100 of insured deposits for institutions whose deposits
are subject to assessment by the Bank Insurance Fund ("BIF"). All of Wells
Fargo's insured deposits are subject to assessments payable to BIF. This BIF
schedule became effective on June 1, 1995, the first day of the month after
the month in which BIF reached its "designated reserve ratio" of 1.25% of
total estimated insured deposits. Assessments collected under the previous
assessment schedule in excess of the amount due under the new schedule were
refunded, with interest, from the effective date of the new schedule. Wells
Fargo's subsidiary banks received an aggregate refund of approximately $23
million. An institution's risk classification is based on an assignment of the
institution by the FDIC to one of
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three capital groups and to one of three supervisory subgroups. The capital
groups are "well capitalized," "adequately capitalized" and
"undercapitalized." The three supervisory subgroups are Group "A" (for
financially solid institutions with only a few minor weaknesses), Group "B"
(for those institutions with weaknesses which, if uncorrected, could cause
substantial deterioration of the institution and increase the risk to the
deposit insurance fund) and Group "C" (for those institutions with a
substantial probability of loss to the fund absent effective corrective
action).
On November 14, 1995, the Board of Directors of the FDIC approved a further
reduction in the assessment schedule for BIF deposits. Effective January 1,
1996, the assessment schedule now ranges from 0 to 27 cents per $100 of
deposits subject to BIF assessments, based on each institution's risk
classification.
Various legislative proposals regarding the future of BIF and the SAIF have
recently been reported, which generally provide for a special assessment on
SAIF deposits. While the ultimate outcome of the legislative process cannot be
predicted, Wells Fargo does not expect these proposals to have an effect on
its financial condition. Wells Fargo's bank subsidiaries currently hold no
deposits subject to assessments payable to SAIF.
As part of the currently pending Budget Reconciliation Act for fiscal year
1996, the House-Senate Conference Committee has proposed an assessment on all
FDIC-insured depository institutions to provide funds for payment of interest
on Financing Corporation debt when due. If enacted, this proposal would result
in minimum BIF insurance premiums which are expected to be approximately 2.5
cents on each $100 in deposits subject to BIF assessments.
INTERSTATE BANKING AND OTHER RECENT LEGISLATION. Under the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate
Act"), which became effective on September 29, 1995, bank holding companies
are permitted to acquire banks located in any state regardless of the state
law in effect at the time. The Interstate Act also provides for the nationwide
interstate branching of banks. Under the Interstate Act, both national and
state-chartered banks will be permitted to merge across state lines (and
thereby create interstate branches) commencing on June 1, 1997. States are
permitted to "opt-out" of the interstate branching authority by taking action
prior to the commencement date. States may also "opt-in" early (i.e., prior to
June 1, 1997) to the interstate branching provisions.
In addition to the matters discussed above, there have been proposed a
number of legislative and regulatory proposals designed to strengthen the
Federal deposit insurance system and to improve the overall financial
stability of the U.S. banking system, and to provide for other changes in the
bank regulatory structure, including proposals to reduce regulatory burdens on
banking organizations and to expand the nature of products and services banks
and bank holding companies may offer. It is impossible to predict whether or
in what form these proposals may be adopted in the future, and, if adopted,
what their effect will be on Wells Fargo.
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COMPARISON OF RIGHTS OF HOLDERS OF SHARES AND WELLS FARGO COMMON STOCK
Pursuant to the Offer, stockholders of First Interstate who elect to receive
Wells Fargo Common Stock in exchange for Shares will become stockholders of
Wells Fargo. The following is a summary of certain similarities and all
material differences between the rights of holders of Shares and the rights of
holders of Wells Fargo Common Stock. As each of First Interstate and Wells
Fargo is organized under the laws of Delaware, these differences arise solely
from various provisions of the certificate of incorporation and by-laws of
each of First Interstate and Wells Fargo and the Rights Agreement.
The following summary does not purport to be a complete statement of the
rights of stockholders under First Interstate's Composite Certificate of
Incorporation (the "First Interstate Certificate"), the Bylaws of First
Interstate (the "First Interstate Bylaws") and the Rights Agreement as
compared with the rights of Wells Fargo's stockholders under the Wells Fargo
Certificate and the Bylaws of Wells Fargo, as amended April 18, 1995 (the
"Wells Fargo Bylaws"), or a complete description of the specific provisions
referred to herein. The summary is qualified in its entirety by reference to
the governing corporate instruments of First Interstate and Wells Fargo, to
which stockholders are referred.
SPECIAL MEETINGS OF STOCKHOLDERS
Under Delaware law, special meetings of the stockholders may be called by
the board of directors or such other persons as may be authorized by the
certificate of incorporation or bylaws. The First Interstate Bylaws provide
that a special meeting may also be called by the Chairman of the Board, or in
his absence or when the office of Chairman of the Board is vacant, by the
President, and shall be called by the Chairman of the Board, or in his absence
or when the office of Chairman of the Board is vacant, by the President, or
the Secretary, at the request in writing of stockholders owning a majority of
the outstanding capital stock entitled to vote. The Wells Fargo Bylaws provide
that a special meeting may also be called by the Chairman of the Board, the
President, the Chief Executive Officer (if other than the Chairman of the
Board or the President), or one or more stockholders holding not less than 10%
of the voting power of the corporation.
NUMBER OF DIRECTORS
Under Delaware law, the number of directors shall be fixed by or in the
manner provided in the bylaws, unless the certificate of incorporation fixes
the number of directors, in which case a change in the number of directors
shall be made only by amendment to the certificate. The First Interstate
Bylaws provide that the First Interstate Board is to consist of not less than
three nor more than 26 directors, as shall be determined by resolution of the
Board. The Wells Fargo Bylaws provide that the Wells Fargo Board of Directors
is to consist of not less than ten nor more than 20 directors, the exact
number to be fixed from time to time by a bylaw adopted by the stockholders or
by the Board of Directors, but until some other number is so fixed, the number
of directors shall be 14.
ADVANCE NOTICE OF STOCKHOLDER NOMINATIONS OF DIRECTORS
Under the First Interstate Bylaws, nominations of persons for election to
the First Interstate Board may be made at a meeting of stockholders by any
stockholder, provided that the Secretary of First Interstate receives written
notice not less than 30 days nor more than 60 days prior to the meeting. If
less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made by First Interstate to stockholders, the notice of a
nomination must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was
mailed or public disclosure was made. Notices of nominations, among other
things, must state the nominee's name, age, business and residential address
and principal occupation and employment, as well as the class and number of
Shares of First Interstate beneficially owned by such nominee and any other
information about the nominee required to be disclosed in solicitations for
proxies for the election of directors pursuant to Rule 14a of the Exchange
Act. In addition, the notice must state the
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name and record address of the nominating stockholder and the class and number
of shares of First Interstate beneficially owned by the stockholder. The Wells
Fargo Bylaws do not contain any similar advance notice provisions for the
nomination of directors.
STOCKHOLDER PROPOSAL PROCEDURES
Under the First Interstate Bylaws, business is properly brought before an
annual meeting if the Secretary of First Interstate receives written notice
not less than 30 days nor more than 60 days prior to the annual meeting. If
less than 40 days' notice or prior public disclosure of the date of the annual
meeting is given or made by First Interstate to stockholders, notice by the
stockholder must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting
was mailed or public disclosure was made. Stockholder notices must state,
among other things, a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, the name and record address of the stockholder proposing the
business, the class and number of shares of First Interstate beneficially
owned by the stockholder and any material interest in such business. The Wells
Fargo Bylaws do not contain any similar advance notice provisions for
stockholder proposals.
INDEMNIFICATION
Both the First Interstate Bylaws and the Wells Fargo Bylaws provide for the
indemnification of directors, officers and persons serving at the request of
the respective corporations as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise to the fullest extent authorized by the DGCL. The Wells Fargo
Bylaws also mandatorily extend this right to indemnification to all employees
of Wells Fargo, whereas the First Interstate Bylaws provide that this right to
indemnification may only be extended to employees and agents by action of the
First Interstate Board.
CERTAIN VOTING RIGHTS FOR MERGERS
Under Delaware law, any merger, consolidation or sale of all or
substantially all of the assets of a corporation requires the approval of the
holders of a majority (unless the certificate of incorporation requires a
higher percentage) of the outstanding shares of such corporation entitled to
vote thereon. Neither the First Interstate Certificate nor the Wells Fargo
Certificate requires a higher percentage.
CUMULATIVE VOTING
Under Delaware law, stockholders of a corporation are not entitled to
cumulate their votes in the election of directors unless the corporation's
certificate of incorporation so provides. Neither the First Interstate
Certificate nor the Wells Fargo Certificate provides for cumulative voting.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law, any or all directors of a corporation which does not
have cumulative voting or a classified board may be removed, with or without
cause, by the holders of a majority of the shares entitled to vote at an
election of directors, unless such corporation's certificate of incorporation
provides otherwise. Neither the First Interstate Certificate nor the Wells
Fargo certificate provides otherwise.
Under Delaware law, vacancies and newly-created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors in office. Under both the First Interstate Bylaws and the
Wells Fargo Bylaws, such vacancies and newly-created directorships may also be
filled by the stockholders of the respective corporations.
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STOCKHOLDER ACTION BY WRITTEN CONSENT
Under Delaware law, unless otherwise provided in the certificate of
incorporation, any action which may be taken at any annual or special meeting
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Neither the First Interstate
Certificate nor the Wells Fargo Certificate contains provisions to the
contrary.
AMENDMENT OF BYLAWS
Under Delaware law, the power to adopt, amend or repeal bylaws is vested in
the stockholders unless the certificate of incorporation confers the power to
adopt, amend or repeal bylaws upon the directors as well. Both the First
Interstate Certificate and the Wells Fargo Certificate confer such power on
their respective boards of directors.
CLASSIFICATION OF BOARD OF DIRECTORS
Delaware law permits (but does not require) a certificate of incorporation
to provide that a board of directors be divided into classes, with each class
having a term of office longer than one year but not longer than three years.
Neither the First Interstate Certificate nor the Wells Fargo Certificate
provides for classes of directors.
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MARKET PRICES AND DIVIDENDS
WELLS FARGO
The Wells Fargo Common Stock is listed and principally traded on the NYSE
and is also listed on the PSE, London Stock Exchange and Frankfurt Stock
Exchange. The following table sets forth the range of high and low sales
prices as reported on the NYSE Composite Tape, together with the per share
dividends declared by Wells Fargo, during the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
-----------------
QUARTER HIGH LOW DIVIDENDS
- ------- -------- -------- ---------
<S> <C> <C> <C>
1993:
First............................................. $109 1/2 $ 75 1/2 $0.50
Second............................................ 120 95 3/4 0.50
Third............................................. 127 3/8 107 1/4 0.50
Fourth............................................ 133 105 7/8 0.75
1994:
First............................................. $147 1/2 $127 5/8 $1.00
Second............................................ 159 1/2 136 5/8 1.00
Third............................................. 160 3/8 145 1/8 1.00
Fourth............................................ 149 5/8 141 1.00
1995:
First............................................. $160 5/8 $143 3/8 $1.15
Second............................................ 185 7/8 157 1.15
Third............................................. 189 177 3/4 1.15
Fourth............................................ 229 190 1.15
1996:
January 1 to January 15, 1996..................... 218 3/4 203 1/8 --
</TABLE>
On October 17, 1995, the last trading day prior to public announcement of
the Original Proposal, the closing sales price per share of Wells Fargo Common
Stock was $213 5/8. On October 18, 1995, the trading day of the announcement
of the Original Proposal, such price was $229. On November 10, 1995, the last
trading day prior to announcement of the Offer, such price was $215 3/8. On
January 15, 1996, the last trading day prior to the date of this preliminary
prospectus, such price was $210 3/8 Past price performance is not necessarily
indicative of likely future price performance. Holders of Shares are urged to
obtain current market quotations for shares of Wells Fargo Common Stock.
In January 1995, Wells Fargo increased the quarterly dividend on the Wells
Fargo Common Stock to $1.15 per share.
Holders of Wells Fargo Common Stock are entitled to receive dividends from
funds legally available therefor when, as and if declared by the Board of
Directors of Wells Fargo. Although the Board of Directors of Wells Fargo
presently intends to continue the policy of paying quarterly cash dividends,
future dividends of Wells Fargo will depend upon the earnings of Wells Fargo
and its subsidiaries, their financial condition and other factors including
applicable governmental regulations and policies. See "Description Of Wells
Fargo Capital Stock--Certain Regulatory Considerations." The Board of
Directors will continue to determine dividends by considering the factors
listed above and expects that dividends will continue to be paid in amounts
consistent with prior levels. As the factors used to determine dividends
necessarily involve a number of future contingencies to which all companies
are subject, there can be no certainty that dividends of the combined entity
will equal Wells Fargo's current dividend rate per share.
80
<PAGE>
FIRST INTERSTATE
The Shares are listed and principally traded on the NYSE and are also listed
on the Boston Stock Exchange, Cincinnati Stock Exchange, Midwest Stock
Exchange, Philadelphia-Baltimore-Washington Stock Exchange and the PSE. The
following table sets forth the range of high and low sales prices as reported
on the NYSE Composite Tape, together with the per Share dividends declared by
First Interstate, during the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
-----------------
QUARTER HIGH LOW DIVIDENDS
- ------- -------- -------- ---------
<S> <C> <C> <C>
1993:
First............................................. $ 58 7/8 $ 44 1/2 $0.30
Second............................................ 64 1/2 52 1/2 0.40
Third............................................. 67 58 3/8 0.40
Fourth............................................ 68 53 1/2 0.50
1994:
First............................................. $ 79 1/8 $ 62 3/8 $0.50
Second............................................ 85 71 3/4 0.75
Third............................................. 84 1/8 72 0.75
Fourth............................................ 81 1/2 66 7/8 0.75
1995:
First............................................. $ 82 1/8 $ 68 5/8 $0.75
Second............................................ 88 1/4 75 1/8 0.75
Third............................................. 103 79 3/4 0.80
Fourth............................................ 141 100 3/4 0.80
1996:
139
January 1 to January 15, 1996..................... 1/8 130 --
</TABLE>
On October 17, 1995, the last trading day prior to public announcement of
the Original Proposal, the closing sales price was $106 per Share. On October
18, 1995, the trading day of the announcement of the Original Proposal, such
price was $140 1/4. On November 10, 1995, the last trading day prior to the
announcement of the Offer, such price was $134 3/4. On January 15, 1996, the
last trading day prior to the date of this preliminary prospectus, such price
was $135 1/2. Past price performance is not necessarily indicative of likely
future price performance. Holders of Shares are urged to obtain current market
quotations for Shares.
In July 1995, First Interstate increased the quarterly dividend on the
Shares to $0.80 per Share.
Holders of Shares are entitled to receive dividends from funds legally
available therefor when, as and if declared by the First Interstate Board.
Future dividends of First Interstate will depend upon the earnings of First
Interstate and its subsidiaries, their financial condition and other factors
including applicable governmental regulations and policies.
The Rights are listed on the NYSE, but are currently attached to all
outstanding Shares and may not be traded separately. As a result, the sales
prices per Share set forth above are also the high and low sales prices per
Share and associated Right during such periods. Upon occurrence of the First
Interstate Distribution Date, the Rights are to trade separately from the
Shares. According to the First Interstate Schedule 14D-9, the First Interstate
Board determined to postpone the occurrence of the First Interstate
Distribution Date as a result of the public announcement of the Offer until
such later date as determined by the First Interstate Board.
VALIDITY OF WELLS FARGO COMMON STOCK
The validity of the shares of Wells Fargo Common Stock offered hereby will
be passed upon for Wells Fargo by Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004.
EXPERTS
The consolidated financial statements of Wells Fargo & Company as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
81
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF WELLS FARGO
The following table sets 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.
DIRECTORS AND EXECUTIVE OFFICERS OF WELLS FARGO
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL OCCUPATION
BUSINESS ADDRESS* OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- --------------------------------- --------------------------------------------
<S> <C>
H. Jesse Arnelle................. Director; Senior Partner of Arnelle, Hastie,
Arnelle, Hastie, McGee, Willis & McGee, Willis & Greene, a corporate law firm
Greene in San Francisco, since 1994, and prior
1 Market Plaza thereto senior partner in Arnelle & Hastie,
Spear Street Tower, 39th Floor a predecessor firm, since 1985.
San Francisco, California 94105
William R. Breuner............... Director; Retired in 1986 as Chairman of
The Moraga Professional Center the Board and Chief Executive Officer of
1042 Country Club Drive, Suite the John Breuner Company, retail and rental
2C home and office furnishers.
Moraga, California 94556
William S. Davila................ Director; President Emeritus of The Vons
The Vons Companies, Inc. Companies, Inc., a Los Angeles-based chain
618 Michillinda Avenue of supermarkets; Retired in 1992 as
Arcadia, California 91007 President thereof, a position he had held
since 1985.
Rayburn S. Dezember.............. Director; Retired in 1990 as Chairman of
5401 California Avenue the Board and Chief Executive Officer of
Bakersfield, California 93309 Central Pacific Corporation, a bank holding
company.
Paul Hazen....................... Director, Chairman of the Board and Chief
Executive Officer. Chairman of the Board of
Wells Fargo and Wells Fargo Bank, National
Association, since 1995 and prior thereto
President of Wells Fargo and Wells Fargo
Bank, National Association, since 1984.
Robert K. Jaedicke............... Director; Professor (Emeritus) of
Graduate School of Business, Accounting and Former Dean of the Graduate
Room 289 School of Business, Stanford University;
Stanford University Retired since 1990.
Stanford, California 94305
Ellen M. Newman.................. Director; President, Ellen Newman
Ellen Newman Associates Associates, consumer relations consultants,
323 Geary Street, Suite 507 since 1974.
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 a telephone holding company, since 1994 and
San Francisco, California 94108 prior thereto President and Chief Executive
Officer since 1987 of Pacific Bell, a
telephone operating company.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL OCCUPATION
BUSINESS ADDRESS* OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ---------------------------------- --------------------------------------------
<S> <C>
Carl E. Reichardt................. Director; Retired in 1994 as Chairman of
the Board and Chief Executive Officer of
Wells Fargo and Wells Fargo Bank, National
Association, positions he had held since
1983.
Donald B. Rice.................... Director; President and Chief Operating
Teledyne, Inc. Officer of Teledyne, Inc., a diversified
2049 Century Park East, 15th manufacturing company, since 1993 and prior
Floor thereto Secretary of the Air Force since
Los Angeles, California 90067 1989.
Susan G. Swenson.................. Director; President and Chief Executive
Cellular One Officer of Cellular One, a cellular
651 Gateway Boulevard, Suite 1500 telecommunications company, since 1994;
South San Francisco, California Prior thereto Ms. Swenson was Vice
94080 President of Pacific Bell since 1993 and
President and Chief Operating Officer of
PacTel Cellular from 1990 to 1993.
Chang-Lin Tien.................... Director; Chancellor of the University of
Office of the Chancellor 200 California, Berkeley, since 1990.
California Hall
University of California
Berkeley, California 94720
John A. Young..................... Director; Retired in 1992 as Chief
Hewlett-Packard Company Executive Officer of Hewlett-Packard
3200 Hillview Avenue Company, a computer manufacturing concern,
Palo Alto, California 94304 a position he had held since 1978.
William F. Zuendt................. Director; President and Chief Operating
Officer; President of Wells Fargo and Wells
Fargo Bank, National Association, since
1995 and prior thereto Vice Chairman of
Wells Fargo and Wells Fargo Bank, National
Association, since 1986.
Michael J. Gillfillan............. Vice Chairman of Wells Fargo and Wells
Fargo Bank, National Association, since
1992 and prior thereto Executive Vice
President of Wells Fargo Bank, National
Association, since 1986.
Charles M. Johnson................ Vice Chairman of Wells Fargo and Wells
2030 Main Street, Suite 900 Fargo Bank, National Association, since
Irvine, California 92714 1992 and prior thereto Executive Vice
President of Wells Fargo Bank, National
Association, since 1985.
Clyde W. Ostler................... Vice Chairman of Wells Fargo and Wells
Fargo Bank, National Association, since
1990.
Rodney L. Jacobs.................. Vice Chairman and Chief Financial Officer
of Wells Fargo and Wells Fargo Bank,
National Association, since 1990.
Leslie L. Altick.................. Executive Vice President and Director of
343 Sansome Street Corporate Communications of Wells Fargo and
San Francisco, California 94163 Wells Fargo Bank, National Association,
since 1995 and prior thereto Senior Vice
President of Wells Fargo and Wells Fargo
Bank, National Association, since 1988.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL OCCUPATION
BUSINESS ADDRESS* OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------
<S> <C>
Patricia R. Callahan............... Executive Vice President and Personnel
Director of Wells Fargo and Wells Fargo
Bank, National Association, since 1993 and
prior thereto Senior Vice President of
Wells Fargo Bank, National Association,
since 1986.
Ross J. Kari....................... Executive Vice President and General
Auditor of Wells Fargo and Wells Fargo
Bank, National Association, since September
1995; Prior thereto Senior Vice President
and General Auditor of Wells Fargo and
Wells Fargo Bank, National Association,
since January 1995 and prior thereto Senior
Vice President of Wells Fargo Bank,
National Association, since 1990.
Frank A. Moeslein.................. Executive Vice President and Controller of
343 Sansome Street Wells Fargo and Wells Fargo Bank, National
San Francisco, California 94163 Association, since 1990.
Guy Rounsaville, Jr................ Executive Vice President, Chief Counsel and
Secretary of Wells Fargo and Wells Fargo
Bank, National Association, since 1985.
Eric D. Shand...................... Executive Vice President and Chief Loan
111 Sutter Street Examiner of Wells Fargo and Wells Fargo
San Francisco, California 94163 Bank, National Association, since 1995;
Prior thereto Senior Vice President of
Wells Fargo Bank, National Association,
since 1993; Prior thereto San Francisco
Regional Director of the Office of Thrift
Supervision since 1987.
</TABLE>
- --------
* Unless otherwise indicated, the principal business address of each director
and executive officer is Wells Fargo & Company, 420 Montgomery Street, San
Francisco, California 94163.
A-3
<PAGE>
SCHEDULE B
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
(a) Notwithstanding any other provisions of this chapter, a corporation shall
not engage in any business combination with any interested stockholder for a
period of 3 years following the time that such stockholder became an
interested stockholder, unless:
(1) prior to such time the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, or
(2) upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (i) by persons who are directors and
also officers and (ii) employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer, or
(3) At or subsequent to such time the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
(b) The restrictions contained in this section shall not apply if:
(1) the corporation's original certificate of incorporation contains a
provision expressly electing not be governed by this section;
(2) the corporation, by action of its board of directors, adopts an
amendment to its bylaws within 90 days of the effective date of this section,
expressly electing not to be governed by this section, which amendment shall
not be further amended by the board of directors;
(3) the corporation, by action of its stockholders, adopts an amendment to
its certificate of incorporation or bylaws expressly electing not to be
governed by this section, provided that, in addition to any other vote
required by law, such amendment to the certificate of incorporation or bylaws
must be approved by the affirmative vote of a majority of the shares entitled
to vote. An amendment adopted pursuant to this paragraph shall be effective
immediately in the case of a corporation that both (i) has never had a class
of voting stock that falls within any of the three categories set out in
subsection (b)(4) hereof, and (ii) has not elected by a provision in its
original certificate of incorporation or any amendment thereto to be governed
by this section. In all other cases, an amendment adopted pursuant to this
paragraph shall not be effective until 12 months after the adoption of such
amendment and shall not apply to any business combination between such
corporation and any person who became an interested stockholder of such
corporation on or prior to such adoption. A bylaw amendment adopted pursuant
to this paragraph shall not be further amended by the board of directors;
(4) the corporation does not have a class of voting stock that is (i) listed
on a national securities exchange, (ii) authorized for quotation on The NASDAQ
Stock Market or (iii) held of record by more than 2,000 stockholders, unless
any of the foregoing results from action taken, directly or indirectly, by an
interested stockholder or from a transaction in which a person becomes an
interested stockholder;
(5) a stockholder becomes an interested stockholder inadvertently and (i) as
soon as practicable divests itself of ownership of sufficient shares so that
the stockholder ceases to be an interested stockholder and (ii) would not, at
any time within the 3 year period immediately prior to a business combination
between the corporation and such stockholder, have been an interested
stockholder but for the inadvertent acquisition of ownership;
B-1
<PAGE>
(6) the business combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or the
notice required hereunder of a proposed transaction which (i) constitutes one
of the transactions described in the second sentence of this paragraph; (ii)
is with or by a person who either was not an interested stockholder during the
previous 3 years or who became an interested stockholder with the approval of
the corporation's board of directors or during the period described in
paragraph (7) of this subsection (b); and (iii) is approved or not opposed by
a majority of the members of the board of directors then in office (but not
less than 1) who were directors prior to any person becoming an interested
stockholder during the previous 3 years or were recommended for election or
elected to succeed such directors by a majority of such directors. The
proposed transactions referred to in the preceding sentence are limited to (x)
a merger or consolidation of the corporation (except for a merger in respect
of which, pursuant to section 251(f) of the chapter, no vote of the
stockholders of the corporation is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a
series of transactions), whether as a part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation (other than to any direct or indirect wholly-
owned subsidiary or to the corporation) having an aggregate market value equal
to 50% or more of either that aggregate market value of all of the assets of
the corporation determined on a consolidated basis or the aggregate market
value of all the outstanding stock of the corporation; or (z) a proposed
tender or exchange offer for 50% or more of the outstanding voting stock of
the corporation. The corporation shall give not less than 20 days notice to
all interested stockholders prior to the consummation of any of the
transactions described in clauses (x) or (y) of the second sentence of this
paragraph; or
(7) The business combination is with an interested stockholder who became an
interested stockholder at a time when the restrictions contained in this
section did not apply by reason of any paragraphs (1) through (4) of this
subsection (b), provided, however, that this paragraph (7) shall not apply if,
at the time such interested stockholder became an interested stockholder, the
corporation's certificate of incorporation contained a provision authorized by
the last sentence of this subsection (b).
Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a
corporation may elect by a provision of its original certificate of
incorporation or any amendment thereto to be governed by this section;
provided that any such amendment to the certificate of incorporation shall not
apply to restrict a business combination between the corporation and an
interested stockholder of the corporation if the interested stockholder became
such prior to the effective date of the amendment.
(c) As used in this section only, the term:
(1) "affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls, or in controlled by, or is under common control
with, another person.
(2) "associate," when used to indicate a relationship with any person, means
(i) any corporation, partnership, unincorporated association or other entity
of which such person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock, (ii) any
trust or other estate in which such person has at least a 20% beneficial
interest or as to which such person serves as trustee or in a similar
fiduciary capacity, and (iii) any relative or spouse of such person, or any
relative of such spouse, who has the same residence as such person.
(3) "business combination," when used in reference to any corporation and
any interested stockholder of such corporation, means:
(i) any merger or consolidation of the corporation or any direct or
indirect majority-owned subsidiary of the corporation with (A) the
interested stockholder, or (B) with any other corporation, partnership,
unincorporated association or other entity if the merger or consolidation
is caused by the interested stockholder and as a result of such merger or
consolidation subsection (a) of this section is not applicable to the
surviving entity;
B-2
<PAGE>
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), except
proportionately as a stockholder of such corporation, to or with the
interested stockholder, whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or indirect majority-owned
subsidiary of the corporation which assets have an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets
of the corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation;
(iii) any transaction which results in the issuance or transfer by the
corporation or by any direct or indirect majority-owned subsidiary of the
corporation of any stock of the corporation or of such subsidiary to the
interested stockholder, except (A) pursuant to the exercise, exchange or
conversion of securities exercisable for, exchangeable for or convertible
into stock of such corporation or any such subsidiary which securities were
outstanding prior to the time that the interested stockholder became such,
(B) pursuant to a merger under Section 251(g) of this title; (C) pursuant
to a dividend to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for or
convertible into stock of such corporation or any such subsidiary which
security is distributed, pro rata to all holders of a class or series of
stock of such corporation subsequent to the time the interested stockholder
became such, (D) pursuant to an exchange offer by the corporation to
purchase stock made on the same terms to all holders of said stock, or (E)
any issuance or transfer of stock by the corporation, provided however,
that in no case under (C)-(E) above shall there be an increase in the
interested stockholder's proportionate share of the stock of any class or
series of the corporation or of the voting stock of the corporation;
(iv) any transaction involving the corporation or any direct or indirect
majority-owned subsidiary of the corporation which has the effect, directly
or indirectly, of increasing the proportionate share of the stock of any
class or series, or securities convertible into the stock of any class or
series, of the corporation or of any such subsidiary which is owned by the
interested stockholder, except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption
of any shares of stock not caused, directly or indirectly, by the
interested stockholder; or
(v) any receipt by the interested stockholder of the benefit, directly or
indirectly (except proportionately as a stockholder of such corporation) of
any loans, advances, guarantees, pledges, or other financial benefits
(other than those expressly permitted in subparagraphs (i)-(iv) above)
provided by or through the corporation or any direct or indirect majority
owned subsidiary.
(4) "control," including the term "controlling," "controlled by" and "under
common control with," means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting stock, by contract, or
otherwise. A person who is the owner of 20% or more of the outstanding voting
stock of any corporation, partnership, unincorporated association or other
entity shall be presumed to have control of such entity, in the absence of
proof by a preponderance of the evidence to the contrary. Notwithstanding the
foregoing, a presumption of control shall not apply where such person holds
voting stock, in good faith and not for the purpose of circumventing this
section, as an agent, bank, broker, nominee, custodian or trustee for one or
more owners who do not individually or as a group have control of such entity.
(5) "interested stockholder" means any person (other than the corporation
and any direct or indirect majority-owned subsidiary of the corporation) that
(i) is the owner of 15% or more of the outstanding voting stock of the
corporation, or (ii) is an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the 3-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder; and
the affiliates and associates of such person; provided, however, that the term
"interested stockholder" shall not include (x) any person who (A) owned shares
in excess of the 15% limitation set forth herein as of, or acquired such
shares pursuant to a tender offer commenced prior to, December 23, 1987, or
pursuant to an exchange offer announced prior to the aforesaid date and
commenced within 90 days thereafter and either (I) continued to own shares in
B-3
<PAGE>
excess of such 15% limitation or would have but for action by the corporation
or (II) is an affiliate or associate of the corporation and so continued (or
so would have continued but for action by the corporation) to be the owner of
15% or more of the outstanding voting stock of the corporation at any time
within the 3-year period immediately prior to the date on which it is sought
to be determined whether such a person is an interested stockholder or (B)
acquired said shares from a person described in (A) above by gift, inheritance
or in a transaction in which no consideration was exchanged; or (y) any person
whose ownership of shares in excess of the 15% limitation set forth herein in
the result of action taken solely by the corporation provided that such person
shall be an interested stockholder if thereafter such person acquires
additional shares of voting stock of the corporation, except as a result of
further corporate action not caused, directly or indirectly, by such person.
For the purpose of determining whether a person is an interested stockholder,
the voting stock of the corporation deemed to be outstanding shall include
stock deemed to be owned by the person through application of paragraph (8) of
this subsection but shall not include any other unissued stock of such
corporation which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
(6) "person" means any individual, corporation, partnership, unincorporated
association or other entity.
(7) "Stock" means, with respect to any corporation, capital stock and, with
respect to any other entity, any equity interest.
(8) "Voting stock" means, with respect to any corporation, stock of any
class or series entitled to vote generally in the election of directors and,
with respect to any entity that is not a corporation, any equity interest
entitled to vote generally in the election of the governing body of such
entity.
(9) "owner" including the terms "own" and "owned" when used with respect to
any stock means a person that individually or with or through any of its
affiliates or associates:
(i) beneficially owns such stock, directly or indirectly; or
(ii) has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; provided,
however, that a person shall not be deemed the owner of stock tendered
pursuant to a tender or exchange offer made by such person or any of such
person's affiliates or associates until such tendered stock is accepted for
purchase or exchange; or (B) the right to vote such stock pursuant to any
agreement, arrangement or understanding; provided, however, that a person
shall not be deemed the owner of any stock because of such person's right
to vote such stock if the agreement, arrangement or understanding to vote
such stock arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made to 10 or more persons; or
(iii) has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent as described in item (B) of clause (ii) of this paragraph), or
disposing of such stock with any other person that beneficially owns, or
whose affiliates or associates beneficially own, directly or indirectly,
such stock.
(d) No provision of a certificate of incorporation or bylaw shall require, for
any vote of stockholders required by this section a greater vote of
stockholders than that specified in this section.
(e) The Court of Chancery is hereby vested with exclusive jurisdiction to hear
and determine all matters with respect to this section. (Last amended by Ch.
79, L. '95, eff. 7-1-95.)
B-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and Rights and
any other required documents should be sent or delivered by each stockholder
of First Interstate or his broker, dealer, commercial bank, trust company or
other nominee to the Exchange Agent at one of its addresses set forth below.
THE EXCHANGE AGENT:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or Overnight
(for Eligible Institutions only): Delivery:
Tenders & Exchanges Fax: (201) 222-4720 or 4721 Tenders & Exchanges
Suite 4660 Suite 4680-FIB
P.O.Box 2563 Confirm Facsimile Transmission 14 Wall Street
Jersey City, NJ 07303-2563 by Telephone: 8th Floor
(201) 222-4707 New York, New York 10005
</TABLE>
Any questions or requests for assistance or additional copies of the
Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Managers at their
respective telephone numbers and locations listed below. You may also contact
your local broker, commercial bank, trust company or nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
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
The Dealer Managers for the Offer are:
CS FIRST BOSTON CORPORATION MONTGOMERY SECURITIES
Park Avenue Plaza 600 Montgomery Street
55 East 52nd Street San Francisco, California 94111
New York, New York 10055 1-800-438-6571
1-800-704- 8076
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102(b)(7) of the DGCL, Article Fifth of the Wells
Fargo Certificate (Exhibit 3.1 hereto) eliminates the monetary liability of a
director to the corporation or its stockholders for breach of fiduciary duty
as a director, with the following exceptions, as required by Delaware law: (i)
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) payment of
unlawful dividends or the making of unlawful stock purchases or redemptions;
or (iv) any transaction from which the director derived an improper personal
benefit.
In addition, under Section 145 of the DGCL, a corporation may indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any threatened,
pending or completed Proceeding (other than an action by or in the right of
the corporation) if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In the case of an action brought by or in
the right of the corporation, the corporation may indemnify a director,
officer, employee or agent of the corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of any threatened, pending or completed action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that a court determines upon application that,
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
Article IV of the Wells Fargo By-laws (Exhibit 3.2 hereto) provides for
indemnification of its directors, officers, employees, and other agents to the
fullest extent permitted by the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant dated March 3,
1987 (filed as Exhibit 3(a) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993).*
3.2 Bylaws of the Registrant, as amended April 18, 1995 (filed as Exhibit
3(ii) to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993).*
3.3 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and the
Qualifications, Limitations or Restrictions Thereof, Which Have Not
Been Set Forth in the Certificate of Incorporation or in Any Amendment
Thereto, of the Adjustable Rate Cumulative Preferred Stock, Series B
(filed as Exhibit 3(c) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993).*
3.4 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and the
Qualifications, Limitations or Restrictions Thereof, Which Have Not
Been Set Forth in the Certificate of Incorporation or in Any Amendment
Thereto, of the 9% Preferred Stock, Series C (filed as Exhibit 3 to
the Registrant's Current Report on Form 8-K dated October 24, 1991).*
3.5 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and the
Qualifications, Limitations or Restrictions Thereof, Which Have Not
Been Set Forth in the Certificate of Incorporation or in Any Amendment
Thereto, of the 8 7/8% Preferred Stock, Series D (filed as Exhibit 3
to the Registrant's Current Report on Form 8-K dated March 5, 1992).*
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
5.1 Opinion of Sullivan & Cromwell.**
8.1 Tax opinion of Sullivan & Cromwell.**
21.1 Subsidiaries of the Registrant (filed as Exhibits 21 and 22 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994).*
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1).**
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1).**
23.4 Consent of Sullivan & Cromwell.
24.1 Powers of Attorney.***
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
99.4 Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
99.5 Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
99.6 Form of Summary Advertisement.**
</TABLE>
- --------
* Incorporated by reference.
** To be filed by amendment.
*** Previously filed.
ITEM 22. UNDERTAKINGS
The Undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
II-2
<PAGE>
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City and County of San Francisco, State of California on January 16, 1996.
WELLS FARGO & COMPANY
/s/ Rodney L. Jacobs
By---------------------------------------
Rodney L. Jacobs Vice Chairman and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
Chairman of the Board, Chief January 16, 1996
______________________________________ Executive Officer and Director
Paul Hazen (Principal Executive Officer)
/s/ Rodney L. Jacobs
Vice Chairman and Chief January 16, 1996
______________________________________ Financial Officer (Principal
Rodney L. Jacobs Financial Officer)
*
Executive Vice President and January 16, 1996
______________________________________ Controller (Principal
Frank A. Moeslein Accounting Officer)
*
______________________________________ Director January 16, 1996
H. Jesse Arnelle
*
______________________________________ Director January 16, 1996
William R. Breuner
*
______________________________________ Director January 16, 1996
William S. Davila
*
______________________________________ Director January 16, 1996
Rayburn S. Dezember
*
______________________________________ Director January 16, 1996
Robert K. Jaedicke
*
______________________________________ Director January 16, 1996
Ellen M. Newman
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
______________________________________ Director January 16, 1996
Philip J. Quigley
*
______________________________________ Director January 16, 1996
Carl E. Reichardt
*
______________________________________ Director January 16, 1996
Donald B. Rice
*
______________________________________ Director January 16, 1996
Susan G. Swenson
*
______________________________________ Director January 16, 1996
Chang-Lin Tien
*
______________________________________ Director January 16, 1996
John A. Young
*
______________________________________ Director January 16, 1996
William F. Zuendt
/s/ Rodney L. Jacobs
*By __________________________________
(Rodney L. Jacobs as
Attorney-in-Fact for each
of the persons indicated)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
3.1 Restated Certificate of Incorporation of the Registrant dated
March 3, 1987 (filed as Exhibit 3(a) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993).*
3.2 Bylaws of the Registrant, as amended April 18, 1995 (filed as
Exhibit 3(ii) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993).*
3.3 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and
the Qualifications, Limitations or Restrictions Thereof, Which
Have Not Been Set Forth in the Certificate of Incorporation or
in Any Amendment Thereto, of the Adjustable Rate Cumulative
Preferred Stock, Series B (filed as Exhibit 3(c) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993).*
3.4 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and
the Qualifications, Limitations or Restrictions Thereof, Which
Have Not Been Set Forth in the Certificate of Incorporation or
in Any Amendment Thereto, of the 9% Preferred Stock, Series C
(filed as Exhibit 3 to the Registrant's Current Report on Form
8-K dated October 24, 1991).*
3.5 Certificate of the Voting Powers, Designation, Preferences and
Relative Participating, Optional or Other Special Rights, and
the Qualifications, Limitations or Restrictions Thereof, Which
Have Not Been Set Forth in the Certificate of Incorporation or
in Any Amendment Thereto, of the 8 7/8% Preferred Stock, Series
D (filed as Exhibit 3 to the Registrant's Current Report on
Form 8-K dated March 5, 1992).*
5.1 Opinion of Sullivan & Cromwell.**
8.1 Tax opinion of Sullivan & Cromwell.**
21.1 Subsidiaries of the Registrant (filed as Exhibits 21 and 22 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).*
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1).**
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1).**
23.4 Consent of Sullivan & Cromwell.
24.1 Powers of Attorney.***
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.4 Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
99.5 Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form
W-9.
99.6 Form of Summary Advertisement.**
</TABLE>
- --------
* Incorporated by reference.
** To be filed by amendment.
*** Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Wells Fargo & Company:
We consent to the incorporation by reference in the Registration Statement on
Form S-4 (No. 33-64575) of Wells Fargo & Company of our report dated January
17, 1995, incorporated by reference in the Annual Report on Form 10-K of Wells
Fargo & Company for the year ended December 31, 1994 and to the references to
our firm under the headings "Experts," "Prospectus Summary--Background of the
Offer--The FIB/FBS Merger Agreement," "Background of the Offer--The FIB/FBS
Merger Agreement," "Background of the Offer--Comparison of the Proposals" and
"The Offer--General" in the Prospectus.
/s/ KPMG Peat Marwick LLP
San Francisco, CA
January 16, 1996
<PAGE>
EXHIBIT 23.4
[LETTERHEAD OF SULLIVAN & CROMWELL]
January 15, 1996
Wells Fargo & Company,
420 Montgomery Street,
San Francisco, California 94163.
RE: REGISTRATION STATEMENT ON FORM S-4 (NO. 33-64575) OF WELLS FARGO &
COMPANY
Dear Sirs:
We hereby consent to the reference to our firm under the captions
"Prospectus Summary--Background of the Offer--The Offer and Related Actions,"
"Background of the Offer--The Offer and Related Actions" and "The Offer--
Regulatory Approval Condition" in the above-mentioned Registration Statement.
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933.
Very truly yours,
Sullivan & Cromwell
<PAGE>
LETTER OF TRANSMITTAL
TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
FOR
TWO-THIRDS OF A SHARE OF COMMON STOCK
OF
WELLS FARGO & COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON , 1996, UNLESS THE OFFER IS EXTENDED. SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION OF THE OFFER.
The Exchange Agent for the Offer is:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By Facsimile Transmission By Hand or
By Mail: (for Eligible Institutions only): Overnight Delivery:
TENDERS & EXCHANGES FAX: (201) 222-4720 OR 4721
SUITE 4660 TENDERS & EXCHANGES
P.O. BOX 2563 Confirm by telephone: SUITE 4680-FIB
JERSEY CITY, NJ 14 WALL STREET
07303-2563 (201) 222-4707 8TH FLOOR
NEW YORK, NEW YORK
10005
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders if
certificates for Shares (including the Rights) (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in the
Prospectus) is utilized, if delivery of Shares are to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository
Trust Company ("DTC"), Midwest Securities Trust Company ("MSTC") or the
Philadelphia Depository Trust Company ("PDTC") (DTC, MSTC and PDTC,
collectively, the "Book-Entry Transfer Facilities"), pursuant to the
procedures set forth under "The Offer--Procedure for Tendering" in the
Prospectus. STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE
TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES, UNLESS THE RIGHTS PLAN
AND DGCL 203 CONDITION (AS DEFINED IN THE PROSPECTUS) (INSOFAR AS IT RELATES
TO THE RIGHTS) HAS BEEN SATISFIED OR WAIVED. UNLESS THE FIRST INTERSTATE
DISTRIBUTION DATE (AS DEFINED IN THE PROSPECTUS) OCCURS, A TENDER OF SHARES
WILL CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. Stockholders who tender
Shares by book-entry transfer are referred to herein as "Book-Entry
Stockholders" and other stockholders are referred to herein as "Certificate
Stockholders." Stockholders whose certificates are not immediately available
or who cannot deliver their certificates and all other documents required
hereby to the Exchange Agent on or prior to the Expiration Date (as defined in
the Prospectus), or who cannot comply with the book-entry transfer procedures
on a timely basis, may nevertheless tender their Shares according to the
guaranteed delivery procedure set forth under "The Offer--Procedure for
Tendering" in the Prospectus. See Instruction 2. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT FOR THIS OFFER (AS DEFINED HEREIN).
<PAGE>
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Check Box of Applicable Book-Entry Transfer Facility
[_] DTC [_] MSTC [_] PDTC (check one)
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If Delivery by Book Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility:
[_] DTC [_] MSTC [_] PDTC (check one)
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN IF BLANK EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------- ----------------------------------------
<S> <C>
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE EVIDENCED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------- -------------- ----------
----------- -------------- ----------
----------- -------------- ----------
----------- -------------- ----------
----------- -------------- ----------
----------- -------------- ----------
TOTAL SHARES
</TABLE>
- ----------
* Need not be completed by stockholders delivering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificate(s) delivered to the Exchange Agent are being tendered. See
Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby delivers to Wells Fargo & Company, a Delaware
corporation ("Wells Fargo"), the above-described shares of Common Stock, par
value $2.00 per share (the "Shares"), of First Interstate Bancorp, a Delaware
corporation ("First Interstate"), including the associated common stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated
as of November 21, 1988, between First Interstate and First Interstate Bank of
California, as successor Rights Agent, pursuant to Wells Fargo's offer to
exchange two-thirds of a share of Common Stock, par value $5.00 per share, of
Wells Fargo (the "Wells Fargo Common Stock") for each outstanding Share, upon
the terms and subject to the conditions set forth in the Prospectus dated
January , 1996 (the "Prospectus"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which together with the Prospectus
constitute the "Offer"). Unless the context otherwise requires and unless and
until the Rights are redeemed, all references to Shares shall include the
associated Rights.
<PAGE>
Upon the terms and subject to the conditions of the Offer, subject to, and
effective upon, acceptance of the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, Wells Fargo, all right, title and interest in and to
all of the Shares that are being tendered hereby and any and all Shares and
other securities issued or issuable in respect thereof on or after January ,
1996 (collectively, "Distributions"), and appoints the Exchange Agent the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and any Distributions), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver such Share Certificates (as defined herein) (and any
Distributions) or transfer ownership of such Shares (and any Distributions) on
the account books maintained by a Book-Entry Transfer Facility, together in
either such case with all accompanying evidences of transfer and authenticity,
to or upon the order of Wells Fargo, (b) present such Shares (and any
Distributions) for transfer on the books of First Interstate and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and the
conditions of the Offer.
THE UNDERSIGNED UNDERSTANDS THAT STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE
RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SHARES,
UNLESS THE RIGHTS PLAN AND DGCL 203 CONDITION (AS DEFINED IN THE PROSPECTUS)
(INSOFAR AS IT RELATES TO THE RIGHTS) HAS BEEN SATISFIED OR WAIVED. UNLESS THE
FIRST INTERSTATE DISTRIBUTION DATE (AS DEFINED IN THE PROSPECTUS) OCCURS, A
TENDER OF SHARES WILL CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. SEE
INSTRUCTION 10.
The undersigned hereby irrevocably appoints the designees of Wells Fargo,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or any substitute thereof shall deem proper in the sole discretion
of such attorney-in-fact and proxy or such substitute, and otherwise act
(including pursuant to written consent) with respect to all of the Shares
tendered hereby (and any Distributions) which have been accepted by Wells
Fargo prior to the time of such vote or action, which the undersigned is
entitled to vote at any meeting of stockholders (whether annual or special and
whether or not an adjourned meeting), of First Interstate or otherwise. This
proxy and power of attorney is coupled with an interest in the Shares and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance of such Shares (and any Distributions) by Wells Fargo in accordance
with the terms of the Offer. Such acceptance for exchange shall revoke any
other proxy granted by the undersigned at any time with respect to such Shares
(and any Distributions) and no subsequent proxies will be given (or, if given,
will not be deemed effective) with respect thereto by the undersigned. The
undersigned understands that in order for Shares to be deemed validly
tendered, immediately upon Wells Fargo's acceptance of such Shares (and any
Distributions) for exchange Wells Fargo or its designee must be able to
exercise full voting rights with respect to such Shares (and any
Distributions).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and that when the same are accepted for
exchange by Wells Fargo, Wells Fargo will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or Wells Fargo to be necessary or desirable to
complete the sale, assignment, and transfer of the Shares (and any
Distributions) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Exchange Agent for the account of Wells Fargo any
and all Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Subject
to the withdrawal rights set forth under "The Offer--Withdrawal Rights" in the
Prospectus, the tender of Shares hereby made is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described under "The Offer--Procedure for Tendering" in the
Prospectus and in the instructions hereto and acceptance of such Shares will
constitute a binding agreement between the undersigned and Wells Fargo upon
the terms and subject to the conditions set forth in the Offer.
<PAGE>
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the shares of Wells Fargo Common Stock and/or return any
certificates for Shares not tendered or not accepted for exchange in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the Wells Fargo Common Stock and cash in lieu of
fractional shares of Wells Fargo Common Stock and/or return any certificates
for Shares not tendered or not accepted for exchange (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
Special Delivery Instructions and the Special Issuance Instructions are
completed, please issue the Wells Fargo Common Stock and/or issue any
certificates for Shares not so tendered or accepted in the name of, and
deliver said certificates and/or return such certificates to, the person or
persons so indicated. The undersigned recognizes that Wells Fargo has no
obligation, pursuant to the Special Payment Instructions, to transfer any
Shares from the name of the registered holder thereof if Wells Fargo does not
accept any of the Shares so tendered.
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7) (SEE INSTRUCTIONS 1, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cate(s) for Shares not tendered cate(s) for Shares not tendered
or not accepted and/or the Wells or not accepted and/or the Wells
Fargo Common Stock are to be is- Fargo Common Stock are to be sent
sued in the name of someone other to someone other than the under-
than the undersigned. signed, or to the undersigned at
an address other than that shown
above.
Issue Wells Fargo Common Stock
and/or certificate(s) to:
Mail Wells Fargo Common Stock
Name _____________________________ and/or certificate(s) to:
(PLEASE TYPE OR PRINT) Name _____________________________
Address __________________________ (PLEASE TYPE OR PRINT)
__________________________________ Address __________________________
(INCLUDE ZIP CODE) __________________________________
__________________________________ (INCLUDE ZIP CODE)
(TAX IDENTIFICATION OR SOCIAL __________________________________
SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON (TAX IDENTIFICATION OR SOCIAL
REVERSE SIDE) SECURITY NO.)
[_] CREDIT SHARES DELIVERED BY (SEE SUBSTITUTE FORM W-9 ON
BOOK-ENTRY TRANSFER THAT ARE NOT REVERSE SIDE)
ACCEPTED TO THE BOOK-ENTRY TRANS-
FER FACILITY ACCOUNT SET FORTH
BELOW.
CHECK APPROPRIATE BOX:
[_] DTC [_] MSTC [_] PDTC
__________________________________
(ACCOUNT NUMBER)
<PAGE>
IMPORTANT
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Signature(s) of Stockholders(s) _____________________________________________
-----------------------------------------------------------------------------
Dated: , 1996
---------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
Name(s) _____________________________________________________________________
-----------------------------------------------------------------------------
(Please Print)
Capacity (Full Title) _______________________________________________________
Address _____________________________________________________________________
-----------------------------------------------------------------------------
(Include Zip Code)
-------------------------------------- ----------------------------------
(Area Code and Telephone Number) (Tax Identification or Social
Security No.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ________________________________________________________
Name ________________________________________________________________________
(Please Type or Print)
Address _____________________________________________________________________
(Include Zip Code)
Name of Firm ________________________________________________________________
Dated: , 1996
--------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). Signatures on this
Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal
is signed by the registered holder(s) of the Shares (which term, for purposes
of this document, shall include any participant in one of the Book-Entry
Transfer Facilities whose name appears on a security position listing as the
owner of Shares) tendered herewith and such holder(s) have not completed the
instruction entitled "Special Issuance Instructions" on this Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or, unless an Agent's Message is utilized, if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in "The Offer--Procedure for Tendering" in the Prospectus.
Certificates for all physically tendered Shares ("Share Certificates"), or
confirmation of any book-entry transfer into the Exchange Agent's account at
one of the Book-Entry Transfer Facilities of Shares tendered by book-entry
transfer, as well as this Letter of Transmittal or facsimile thereof, properly
completed and duly executed with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus).
Stockholders whose certificates are not immediately available or who cannot
deliver their certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis may nevertheless tender their Shares
by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth under "The Offer--
Procedure for Tendering" in the Prospectus. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form made available by Wells Fargo must be received by
the Exchange Agent on or prior to the Expiration Date; and (iii) the Share
Certificates for all tendered Shares (or a confirmation of a book-entry
transfer of such securities into the Exchange Agent's account at a Book-Entry
Transfer Facility of Shares tendered by book-entry transfer), in proper form
for transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees (or,
in the case of a book-entry delivery, an Agent's Message) and all other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent within three New York Stock Exchange, Inc. trading days after
the date of execution of such Notice of Guaranteed Delivery.
IF SHARE CERTIFICATES ARE FORWARDED SEPARATELY TO THE EXCHANGE AGENT, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL MUST ACCOMPANY EACH
SUCH DELIVERY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be accepted. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for exchange.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in
the box entitled "Number of Shares Tendered." In such cases, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after
the Expiration Date. All Shares represented by certificates delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Wells Fargo of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless Wells Fargo Common Stock or
certificates for Shares not tendered or accepted are to be issued in the name
of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear on the
certificates(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Wells Fargo will pay or cause to be paid any stock
transfer taxes with respect to the transfer and sale of Shares to it or its
order pursuant to the Offer. If, however, delivery of the consideration in
respect of the Offer is to be made to, or (in the circumstances permitted
hereby) if certificates for Shares not tendered or accepted are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the tendering holder must
provide satisfactory evidence of the payment of any applicable transfer taxes
(whether imposed on the registered holder or such person) payable on account
of the transfer to such person prior to the delivery of the consideration
pursuant to the Offer.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If certificates for Wells
Fargo Common Stock and/or certificates for Shares not tendered or not accepted
for exchange are to be issued in the name of a person other than the signer of
this Letter of Transmittal or if certificates for Wells Fargo Common Stock and
cash in lieu of fractional shares of Wells Fargo Common Stock and/or
certificates for Shares not tendered or not accepted for exchange are to be
mailed to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not accepted pursuant to the Offer be
credited to such account maintained at a Book-Entry Transfer Facility as such
stockholder may designate hereon. If no such instructions are given, such
Shares not accepted will be returned by crediting the account at the Book-
Entry Transfer Facility designated herein.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to, or additional copies of the Prospectus, this
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent or the Dealer
Managers at their respective addresses set forth below or from your broker,
dealer, commercial bank or trust company.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Exchange Agent with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9 below. If a stockholder fails to provide a TIN
to the Exchange Agent, such stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments of cash in lieu
of fractional shares of Wells Fargo Common Stock that are made to such
stockholder with respect to Shares accepted pursuant to the Offer may be
subject to backup withholding of 31%. The box in Part 3 of the form may be
checked if the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future. If the box
in Part 3 is checked and the Exchange Agent is not provided with a
<PAGE>
TIN within 60 days, the Exchange Agent will withhold 31% of all payments of
cash thereafter until a TIN is provided to the Exchange Agent. The stockholder
is required to give the Exchange Agent the social security number or employer
identification number of the record owner of the Shares or of the last
transferee appearing on the stock powers attached to, or endorsed on, the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
10. TENDER OF RIGHTS AFTER FIRST INTERSTATE'S DISTRIBUTION DATE. If the
First Interstate Distribution Date occurs and separate certificates
representing the Rights are distributed by First Interstate or the Rights
Agent to holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, certificates representing a number of Rights equal to
the number of Shares tendered must be delivered to the Exchange Agent, or, if
available, a Book-Entry Confirmation received by the Exchange Agent with
respect thereto, in order for such Shares to be validly tendered. If the First
Interstate Distribution Date occurs and separate certificates representing the
Rights are not distributed prior to the time Shares are tendered pursuant to
the Offer, Rights may be tendered prior to a stockholder receiving the
certificates for Rights by use of the guaranteed delivery procedure described
under "The Offer--Procedure for Tendering" in the Prospectus. If Rights
certificates are distributed but are not available to a stockholder prior to
the time Shares are tendered pursuant to the Offer, a tender of Shares
constitutes an agreement by the tendering stockholder to deliver to the
Exchange Agent pursuant to such guaranteed delivery procedures, prior to the
expiration of the period to be specified in the Notice of Guaranteed Delivery
and the related Letter of Transmittal for delivery of Rights certificates or a
Book-Entry Confirmation for Rights (the "Rights Delivery Period"), Rights
certificates representing a number of Rights equal to the number of Shares
tendered. Wells Fargo reserves the right to require that it receive such
Rights certificates (or a Book-Entry Confirmation with respect to such Rights)
prior to accepting Shares for exchange.
Nevertheless, Wells Fargo will be entitled to accept for exchange Shares
tendered by a stockholder prior to receipt of the Rights certificates required
to be tendered with such Shares or a Book-Entry Confirmation with respect to
such Rights and either (i) subject to complying with applicable rules and
regulations of the Securities and Exchange Commission, withhold payment for
such Shares pending receipt of the Rights certificates or a Book-Entry
Confirmation for such Rights or (ii) exchange Shares accepted for exchange
pending receipt of the Rights certificates or a Book-Entry Confirmation for
such Rights in reliance upon the guaranteed delivery procedures. In addition,
after expiration of the Rights Delivery Period, Wells Fargo may instead elect
to reject as invalid a tender of Shares with respect to which Rights
certificates or a Book-Entry Confirmation for an equal number of Rights have
not been received by the Exchange Agent. Any determination by Wells Fargo to
make payment for Shares in reliance upon such guaranteed delivery procedure
or, after expiration of the Rights Delivery Period, to reject a tender as
invalid, shall be made, subject to applicable law, in the sole and absolute
discretion of Wells Fargo.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY HEREOF (TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding. In order for a
foreign individual to qualify as an exempt recipient, that stockholder must
submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME:
- -------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR ----------------------
SUBSTITUTE TIN IN THE BOX AT RIGHT AND SOCIAL SECURITY NUMBER
FORM W-9 CERTIFY BY SIGNING AND OR ___________________
DATING BELOW. EMPLOYER IDENTIFICATION
NUMBER
--------------------------------------------------------
PART 2--CERTIFICATES--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
DEPARTMENT OF THE
TREASURY INTERNAL (1) The number shown on this form is my correct
REVENUE SERVICE Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
PAYER'S REQUEST FOR Certification Instructions--You must
TAXPAYER IDENTIFICATION cross out item (2) in Part 2 above if
NUMBER (TIN) you have been notified by the IRS
that you are subject to backup with-
holding because of under-reporting
interest or dividends on your tax re-
turn. However, if after being noti-
fied by the IRS that you were subject
to backup withholding you received
another notification from the IRS
stating that you are no longer sub-
ject to backup withholding, do not
cross out item(2).
---------------------------------------
SIGNATURE ____________________________
PART 3 --
DATE _______
NAME (Please Print) __________________ AWAITING
TIN [_]
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number within
60 days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
-------------------------------------- -----------------------------------
Signature Date
--------------------------------------
Name (Please Print)
<PAGE>
The Information Agent for the Offer is:
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
The Dealer Managers for the Offer are:
CS FIRST BOSTON CORPORATION MONTGOMERY SECURITIES
Park Avenue Plaza 600 Montgomery Street
55 East 52nd Street San Francisco, California 94111
New York, New York 10055 1-800-438-6571 (Toll Free)
1-800-704-8076 (Toll Free)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK
PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
TO
WELLS FARGO & COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth under "The Offer--Procedure for Tendering" in the Prospectus,
dated January , 1996 (the "Prospectus"), this form or one substantially
equivalent hereto must be used to accept the Offer (as defined below) if
certificates for shares of Common Stock, par value $2.00 per share (the
"Shares"), of First Interstate Bancorp, a Delaware corporation ("First
Interstate"), including the associated common stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of November 21,
1988, between First Interstate and First Interstate Bank of California, as
successor Rights Agent, are not immediately available, if the certificates and
all other required documents cannot be delivered to the Exchange Agent prior
to the Expiration Date (as defined in the Prospectus), or if the procedure for
book-entry transfer cannot be completed on a timely basis. Such form may be
delivered by hand or transmitted by telegram, facsimile transmission or mail
to the Exchange Agent, and must include a guarantee by an Eligible Institution
(as defined in the Prospectus). See "The Offer--Procedure for Tendering" in
the Prospectus.
The Exchange Agent for the Offer is:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By Mail: By Facsimile Transmission By Hand or Overnight
(for EligibleInstitutions only): Delivery:
Tenders & Exchanges Fax: (201) 222-4720 or 4721 Tenders & Exchanges
Suite 4660 Suite 4680-FIB
Confirm Facsimile Transmission
P.O. Box 2563 by Telephone: 14 Wall Street
Jersey City, NJ 07303-2563 8th Floor
(201) 222-4707 New York, New York 10005
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Wells Fargo & Company, a Delaware
corporation, upon the terms and subject to the conditions set forth in the
Prospectus dated January , 1996 and in the related Letter of Transmittal
(which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares shown in the Box below pursuant to the
guaranteed delivery procedures set forth under "The Offer--Procedure for
Tendering" in the Prospectus.
Shares
----------
Certificate Nos. Name(s) of Record Holder(s)
for Shares _____________________________________
(if available) ______________________
_____________________________________
_____________________________________ (PLEASE TYPE OR PRINT)
Address(es) _________________________
_____________________________________
(ZIP CODE)
CHECK ONE BOX IF SHARES Area Code and Tel. No(s). ___________
WILL BE TENDERED BY BOOK-ENTRY
TRANSFER: _____________________________________
[_] The Depository Trust Company Signature(s) ________________________
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust _____________________________________
Company
Dated _________________________, 1996
Account Number ______________________
THE GUARANTEE BELOW MUST BE COMPLETED.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution which is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program,
guarantees (a) that the above named person(s) has (have) a "net long position"
in the Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, and (b) to deliver to the
Exchange Agent, at one of its addresses set forth above, certificates
representing the Shares tendered hereby, in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Exchange Agent's
accounts at The Depository Trust Company, the Midwest Securities Trust Company
or the Philadelphia Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or a facsimile
copy thereof), or an Agent's Message (as defined in the Prospectus) in the
case of book-entry transfer, and any other documents required by the Letter of
Transmittal, within three New York Stock Exchange, Inc. trading days of the
date hereof.
Name of Firm ________________________ _____________________________________
(AUTHORIZED SIGNATURE)
Address _____________________________ Title _______________________________
_____________________________________ Name ________________________________
(ZIP CODE) (PLEASE TYPE OR PRINT)
Area Code and Tel. No. ______________ Dated ________________________ , 1996
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
CS FIRST BOSTON CORPORATION MONTGOMERY SECURITIES
Park Avenue Plaza 600 Montgomery Street
55 East 52nd Street San Francisco, California 94111
New York, New York 10055 1-800-438-6571 (Toll Free)
1-800-704-8076 (Toll Free)
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
FOR
TWO-THIRDS OF A SHARE OF COMMON STOCK
OF
WELLS FARGO & COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON , 1996, UNLESS THE OFFER IS EXTENDED. SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION OF THE OFFER.
January , 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Wells Fargo & Company, a Delaware corporation
("Wells Fargo"), to act as Dealer Managers in connection with Wells Fargo's
offer to exchange two-thirds of a share of common stock, par value $5.00 per
share, of Wells Fargo (the "Wells Fargo Common Stock") for each outstanding
share of Common Stock, par value $2.00 per share (each, a "Share" and
collectively, the "Shares"), of First Interstate Bancorp, a Delaware
corporation ("First Interstate"), including the associated common stock
purchase rights (each, a "Right" and collectively, the "Rights") issued
pursuant to the Rights Agreement, dated as of November 21, 1988, between First
Interstate and First Interstate Bank of California, as successor Rights Agent,
upon the terms and subject to the conditions set forth in the Prospectus,
dated January , 1996 (the "Prospectus"), and in the related Letter of
Transmittal (which together constitute the "Offer"), enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE MINIMUM TENDER
CONDITION, THE WELLS FARGO STOCKHOLDER APPROVAL CONDITION, THE RIGHTS PLAN AND
DGCL 203 CONDITION, THE FIB/FBS MERGER AGREEMENT CONDITION AND THE REGULATORY
APPROVAL CONDITION (IN EACH CASE AS DEFINED IN THE PROSPECTUS). SEE "THE
OFFER--MINIMUM TENDER CONDITION," "--WELLS FARGO STOCKHOLDER APPROVAL
CONDITION," "--RIGHTS PLAN AND DGCL 203 CONDITION," "--FIB/FBS MERGER
AGREEMENT CONDITION," "--REGULATORY APPROVAL CONDITION" AND "--CERTAIN OTHER
CONDITIONS OF THE OFFER" IN THE PROSPECTUS.
Stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203
Condition (insofar as it relates to the Rights) has
<PAGE>
been satisfied or waived. Unless the First Interstate Distribution Date (as
defined in the Prospectus) occurs, a tender of Shares will constitute a tender
of the associated Rights. See "The Offer--Procedure for Tendering" in the
Prospectus.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominees, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. Prospectus dated January , 1996;
2. Letter of Transmittal (together with accompanying Substitute Form W-9)
to be used by holders of Shares in accepting the Offer and tendering
Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, if time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined in the Prospectus) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Exchange Agent.
Wells Fargo will not pay any fees or commissions to any broker or dealer or
any other person (other than the fees of the Dealer Managers and the
Information Agent as described in the Prospectus) in connection with the
solicitation of tenders of Shares and Rights pursuant to the Offer. Wells
Fargo will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding the enclosed materials to your
clients. Wells Fargo will pay or cause to be paid any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON , 1996, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, should be sent to the Exchange
Agent, and certificates evidencing the tendered Shares should be delivered or
such Shares should be tendered by book-entry transfer, all in accordance with
the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their certificates or other required documents prior to the
Expiration Date, a tender may be effected by following the guaranteed delivery
procedures specified under "The Offer--Procedure for Tendering" in the
Prospectus.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Managers or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Prospectus.
2
<PAGE>
Additional copies of the enclosed materials may be obtained from the
undersigned, at CS First Boston Corporation, telephone 1-800-704-8076 (Toll
Free) or Montgomery Securities, telephone 1-800-438-6571 (Toll Free) or by
calling the Information Agent, D.F. King & Co., Inc. at 1-800-697-6974 (Toll
Free), or from brokers, dealers, commercial banks or trust companies.
Very truly yours,
CS First Boston Corporation
Montgomery Securities
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF WELLS FARGO, THE DEALER MANAGERS, THE
EXCHANGE AGENT OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
3
<PAGE>
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
FOR
TWO-THIRDS OF A SHARE OF COMMON STOCK
OF
WELLS FARGO & COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON , 1996, UNLESS THE OFFER IS EXTENDED. SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION OF THE OFFER.
To Our Clients:
Enclosed for your consideration are the Prospectus dated January , 1996
(the "Prospectus") and the related Letter of Transmittal (which together
constitute the "Offer") in connection with the offer by Wells Fargo & Company,
a Delaware corporation ("Wells Fargo"), to exchange two-thirds of a share of
common stock, par value $5.00 per share, of Wells Fargo (the "Wells Fargo
Common Stock") for each outstanding share of Common Stock, par value $2.00 per
share (each, a "Share" and collectively, the "Shares"), of First Interstate
Bancorp, a Delaware corporation ("First Interstate"), including the associated
common stock purchase rights (each, a "Right" and collectively, the "Rights")
issued pursuant to the Rights Agreement, dated as of November 21, 1988,
between First Interstate and First Interstate Bank of California, as successor
Rights Agent (the "Shares"), upon the terms and subject to the conditions set
forth in the Offer.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required by the Letter of Transmittal to the Exchange
Agent prior to the Expiration Date (as defined in the Prospectus) or who
cannot complete the procedure for delivery by book-entry transfer to the
Exchange Agent's account at a Book-Entry Transfer Facility (as defined in "The
Offer--Exchange of Shares; Delivery of Wells Fargo Common Stock" in the
Prospectus) on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in "The Offer--
Procedure for Tendering" in the Prospectus. See Instruction 2 of the Letter of
Transmittal. Delivery of documents to a Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Exchange Agent.
THIS MATERIAL IS BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF SHARES
HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER
OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN
BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account,
upon the terms and subject to the conditions set forth in the Offer.
<PAGE>
Please note the following:
1. Wells Fargo is offering to acquire each outstanding Share in exchange
for two-thirds of a share of Wells Fargo Common Stock.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on , 1996, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, the Minimum Tender
Condition, the Wells Fargo Stockholder Approval Condition, the Rights Plan
and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition and the
Regulatory Approval Condition (in each case as defined in the Prospectus).
See "The Offer--Minimum Tender Condition," "--Wells Fargo Stockholder
Approval Condition," "--Rights Plan and DGCL 203 Condition," "--FIB/FBS
Merger Agreement Condition," "--Regulatory Approval Condition" and "--
Certain Other Conditions of the Offer" in the Prospectus.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
The Offer is made solely by the Prospectus dated January , 1996 and the
related Letter of Transmittal and any amendments or supplements thereto and is
being made to all holders of Shares. The Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, Wells Fargo may, in
its sole discretion, take such action as it may deem necessary to make the
Offer in any such jurisdiction and extend the Offer to holders of Shares in
such jurisdiction. In any jurisdiction where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of Wells Fargo by CS First Boston
Corporation or Montgomery Securities, as Dealer Managers, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE
TO ALLOW US AMPLE TIME TO TENDER SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
FIRST INTERSTATE BANCORP
FOR
TWO-THIRDS OF A SHARE OF COMMON STOCK
OF
WELLS FARGO & COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus, dated January , 1996 (the "Prospectus"), and the related Letter
of Transmittal (which together constitute the "Offer") relating to the offer
by Wells Fargo & Company, a Delaware corporation ("Wells Fargo"), to exchange
two-thirds of a share of Common Stock, par value $5.00 per share, of Wells
Fargo for each outstanding share of Common Stock, par value $2.00 per share
(collectively, the "Shares"), of First Interstate Bancorp, a Delaware
corporation.
You are instructed to tender to Wells Fargo the number of Shares indicated
below (or, if no number is indicated below, all Shares) that are held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to be tendered* SIGN HERE
Shares _____________________________________
----------
Account Number: _____________________ _____________________________________
Signature(s)
Dated:_________________________, 1996 _____________________________________
_____________________________________
Please Print Name(s) and Address(es)
Here
_____________________________________
_____________________________________
Area Code and Telephone Number(s)
_____________________________________
Tax Identification or Social
Security Number(s)
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------- ----------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
5. Sole proprietorship The owner(3)
account
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------- ------------------
<S> <C>
6. Sole proprietorship The owner
account
7. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(4)
8. Corporate account The corporation
9. Partnership account The partnership
held in the name of the
business
10. Association, club, The organization
religious, charitable,
or other tax-exempt
organization
11. A broker or registered The broker or
nominee nominee
12. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
- ----------------------------------- -----------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. The name of the business or the "doing
business as" name may also be entered. Either the social security number
or the employer identification number may be used.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all dividend and
interest payments and on broker transactions include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file the Substitute Form W-9 to avoid
possible erroneous backup withholding. Complete the Substitute Form W-9 as
follows:
ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ACROSS THE FACE OF
THE FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A and 6050N and the regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of tax returns. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS.--If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
