SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
FIRST INTERSTATE BANCORP
(Name of Subject Company)
FIRST INTERSTATE BANCORP
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $2.00 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
320548100
(CUSIP Number of Class of Securities)
WILLIAM J. BOGAARD, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
FIRST INTERSTATE BANCORP
633 WEST FIFTH STREET
LOS ANGELES, CA 90071
(213) 614-3001
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
FRED B. WHITE III, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
First Interstate Bancorp ("First Interstate") hereby
amends and supplements its statement on Schedule 14D-9
initially filed with the Securities and Exchange
Commission on November 20, 1995, as amended by Amendment
No. 1 and Amendment No. 2 thereto (the "Schedule 14D-9").
Unless otherwise indicated herein, each capitalized term
used but not defined herein shall have the meaning
assigned to such term in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information set forth in the "Litigation"
subsection of Item (8) of the Schedule 14D-9 is hereby
amended and supplemented by the following information:
On November 30, 1995, Wells filed a First Amended
Verified Complaint for Preliminary and Permanent
Injunctive Relief (the "Amended Wells Action"). The
Amended Wells Action adds two counts to the original
Wells Action, both of which allege various breaches of
fiduciary duty with respect to alleged purchases by FBS
of its own common stock after November 6, 1995. For
example, Wells alleges that large block repurchases of
FBS stock by FBS after November 6, 1995 have had the
effect of artificially raising the price of FBS stock,
thereby denying First Interstate's stockholders an
accurate reading of the market value of the Merger; that
the First Interstate directors knew or should have known
that the price of FBS stock was and is being inflated by
FBS; that the First Interstate directors failed to (a)
require as a condition to the Merger that FBS refrain
from conducting any buy-backs that influence the price of
its purchasing its stock, (b) inquire whether FBS was
repurchasing its stock and if so, to ask FBS to cease
such repurchases, and (c) reveal to First Interstate
stockholders all pertinent information regarding the
purchases of FBS stock. With respect to these claims,
Wells seeks injunctive relief requiring the First
Interstate defendants to disclose that FBS has been
repurchasing its own stock and such repurchases have
inflated the price of FBS stock.
Wells has also alleged that the First Interstate
directors did not consider the differences in the imputed
market value of the Merger and the Wells Offer. Wells
seeks injunctive relief requiring the First Interstate
directors to consider the alleged differences in the
imputed values of the Merger and the Offer.
Wells has alleged that FBS has aided and abetted
these alleged breaches of fiduciary duty.
In addition, on November 16, 1995 another action,
entitled Hook v. Carson, et al., Del. Ch., C.A. No.
14704, was filed, which alleges claims which are
substantially similar to the other Delaware shareholder
actions which have been consolidated into the previously
disclosed Delaware Consolidated Action.
The defendants intend to defend vigorously against
all the aforementioned allegations.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 43: Complaint in Hook v. Carson, et al.
(Delaware Chancery Court).
Exhibit 44: First Amended Verified Complaint in Wells
Fargo & Company v. First Interstate
Bancorp, et al. (Delaware Chancery Court).
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this statement is true, complete
and correct.
FIRST INTERSTATE BANCORP
By: /s/ William J. Bogaard
___________________________
William J. Bogaard
Executive Vice President
and General Counsel
Dated: December 4, 1995
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
---------------------------------------X
IRVING S. HOOK, :
:
Plaintiff, :
:
v. : C.A. No. 14704
:
EDWARD M. CARSON, WILLIAM E. SIART, :
WILLIAM F. RANDALL, JOHN E. BRYSON, :
JEWEL PLUMMER COBB, RALPH P. DAVIDSON, :
MYRON DUBAIN, DON C. FRISBEE, GEORGE M. :
KELLER, THOMAS L. LEE, WILLIAM F. :
MILLER, FORREST M. SHUMWAY, STEVEN B. :
SAMPLE, RICHARD N. STEGEMEIER, DANIEL :
L. TELLEP, FIRST INTERSTATE BANCORP., :
FRIST BANK SYSTEM, INC. AND ELEVEN :
ACQUISITION CORPORATION. :
:
Defendants. :
---------------------------------------X
CLASS ACTION COMPLAINT Plaintiff alleges upon
information and belief except as to paragraph 1, which is
alleged on knowledge, as follows:
THE PARTIES
1. Plaintiff is and has been at all relevant
times, the owners of shares of the common stock of First
Interstate Bancorp ("First Interstate" or the "Company").
2. First Interstate is a bank holding company
organized and existing under the laws of the State of
Delaware. First Interstate operates approximately 1,000
offices in 13 states. It has approximately 76 million
shares of common stock issued and outstanding, held by
approximately 25,000 shareholders of record. Its shares
are traded on various stock exchanges, including the New
York Stock Exchange.
3. (a) Defendant Edward M. Carson ("Carson")
is and was at all relevant times Chairman of the Board of
Directors of First Interstate.
(b) Defendant William S. Randall
("Randall") is and was at all relevant times a Director
and Executive Vice President and Chief Operating Officer
of First Interstate.
(c) Defendant William E.B. Siart
("Siart") is and was at all relevant times a Director and
President and Chief Executive Officer of First
Interstate.
(d) Defendants John E. Bryson ("Bryson"),
Jewel Plummer Cobb ("Cobb"), Ralph P. Davidson
("Davidson"), Myron Du Bain ("Du Bain"), Don C. Frisbee
("Frisbee"), George M. Keller ("Keller"), Thomas L. Lee
("Lee"), William F. Miller ("Miller"), Steven B. Sample
("Sample"), Forrest N. Shumway ("Shumway"), Richard J.
Stegemeier ("Stegemeier") and Daniel M. Tellep ("Tellep")
(together with defendants Carson, Randall and Siart "the
Individual Defendants") are and were at all relevant
times directors of the Company.
4. The Individual Defendants are in a
fiduciary relationship with plaintiff and the other
public stockholders of First Interstate and owe to
plaintiff and other members of the class (as hereinafter
defined) the highest obligations of good faith, fair
dealing and full and candid disclosure.
5. Defendant First Bank System, Inc. ("First
Bank") is a Delaware bank holding corporation
headquartered in Minneapolis, Minnesota. First Bank is
named herein as an aider and abettor to the breaches of
fiduciary duty alleged herein.
6. Defendant Eleven Acquisition Corporation
is a Delaware corporation formed by First Bank for the
purpose of effecting the First Bank Merger (defined
below).
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this case on his own
behalf and as a class action, pursuant to Rule 23 of the
Rules of the Court of Chancery, on behalf of all public
stockholders of First Interstate, and their successors in
interest, who are or will be threatened with injury
arising from defendants' actions as more fully described
herein. Excluded from the class are defendants herein
and any person, firm, trust, corporation, or other entity
related to or affiliated with any of the defendants.
8. This action is properly maintainable as a
class action.
9. The class is so numerous that joinder of
all members is impracticable. There are approximately
25,000 stockholders of record located throughout the
United States.
10. There are questions of law and fact which
are common to the class and which predominate over
questions affecting any individual class member,
including whether the Individual Defendants have breached
their fiduciary duties owed to plaintiff and other
members of the class.
11. Plaintiff is committed to prosecuting this
action and has retained competent counsel experienced in
litigation of this nature. The claims of plaintiff is
typical of the claims of other members of the class and
plaintiff has the same interests as the other members of
the class. Accordingly, plaintiff is an adequate
representative of the class and will fairly and
adequately protect the interests of the class.
12. The prosecution of separate actions by
individual members of the class would create the risk of
inconsistent or varying adjudications with respect to
individual members of the class which would establish
incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the
class which would as a practical matter be dispositive of
the interests of the other members not parties to the
adjudications or substantially impair or impede their
ability to protect their interests.
13. The defendants have acted, or refused to
act, on grounds generally applicable to, and causing
injury to, the class and, therefore, preliminary and
final injunctive relief on behalf of the class as a whole
is appropriate.
BACKGROUND AND CLAIM FOR RELIEF
The Original Wells Fargo Proposal
14. Wells Fargo & Company ("Wells Fargo") is a
Delaware corporation with executive offices at 420
Montgomery Street, San Francisco, California. Wells
Fargo is a bank holding company with subsidiaries that
perform commercial banking operations, investment
advisory services, international and mortgage banking
services, credit card services and other related
financial activities.
15. Wells Fargo has long been interested in
acquiring First Interstate. In February 1994, Wells
Fargo offered to purchase the Company, which offer was
rebuffed by First Interstate. However, Paul Hazen,
Chairman of Wells Fargo, met with defendant Siart in or
around the first two weeks of October, 1995 to discuss a
possible transaction, and was once again rebuffed.
16. On or about October 18, 1995, Wells Fargo
announced in a press release that it had submitted an
unsolicited merger proposal to First Interstate to
acquire 100 percent of the Company's common stock (the
"original WF proposal"). Pursuant to the terms of the
original WF proposal, First Interstate shareholders would
receive .625 of a share of Wells Fargo, representing a
value of $133.50 for each First Interstate share based on
the then-current trading price of Wells Fargo stock. The
transaction, valued at approximately $10 billion,
contemplated a merger of First Interstate and Wells Fargo
into a new company.
17. The reaction of the investment community
to the original WF proposal was positive. Analysts noted
that the proposal was nearly three times First
Interstate's book value, and that most recent bank
mergers were priced closer to 2 to 2-1/2 times book
value. Analysts referred to the proposal as "a knockout
bid" (Bert Ely, an Alexandria, Virginia banking
consultant); an "excellent" potential combination (Jeff
Simons of Mackay Shields Financial Corp., which owns 1.4
million Company shares); and a "super deal" (Paul McKey
of Dean Witter Reynolds). It was further reported that
Kohlberg Kravis Roberts & Co., which owns approximately
9% of the Company's stock, supported the original WF proposal.
18. In response to Wells Fargo's announcement
on October 18, 1995, the Company's stock price soared
from $106 per share to over $140 per share.
Additionally, the price of Wells Fargo stock increased
immediately after the announcement of the original WF
proposal approximately 7%, to $229 per share.
First Interstate's Response and The First Bank Merger
19. In contrast to the positive reaction of
the investment community, the Company promptly reacted
negatively to the original WF proposal. On October 18,
1995, defendant Siart stated "I am deeply disappointed
that Wells Fargo would take this uninvited action."
Siart reportedly also stated that it was in First
Interstate's best interest to take six months to consider
the Company's other options.
20. Moreover, in response to Wells Fargo's
offer to increase its proposal to .65 shares of Wells
Fargo stock per First Interstate share, the First
Interstate Board initiated an active bidding process
seeking to sell First Interstate. First Interstate met
and shared confidential information with at least three
banks, including First Bank, Norwest Corporation and Banc
One Corporation. However, in breach of fiduciary duties
to First Interstate's public shareholders, the First
Interstate Board wrongfully failed duly to explore,
consider and evaluate the available alternatives, and to
proceed in good faith to negotiate with respect to the
alternatives to obtain the best transaction reasonably
available for First Interstate shareholders.
21. Nevertheless, less than three weeks later,
on or about November 6, 1995, First Interstate announced
that it had agreed to be acquired by First Bank ("First
Bank Merger") in a transaction which would give the First
Interstate stockholders lower consideration than in the
original WF proposal. Pursuant to the terms of the First
Bank Merger, First Bank will exchange 2.6 shares of its
common stock for each First Interstate share of common
stock, valuing the Company's stock at $129.68 per share,
for a total value of $10.05 billion.
22. Prior to November 6, 1995, Wells Fargo had
offered to increase its offer to .65 shares of Wells
Fargo common stock per First Interstate share. Based on
the closing price of Wells Fargo common stock on November
3, 1995, the last trading date prior to announcement of
the First Bank Merger, the .65 shares of Wells Fargo
stock had an implied value of $137.96 per First
Interstate share.
23. In connection with the First Bank Merger,
First Interstate and First Bank agreed to a $100 million
termination fee in the event a third party offer were
accepted by First Interstate. Moreover, as a condition
to the First Bank Merger, First Interstate and First Bank
entered into reciprocal stock option agreements as of
November 5, 1995 pursuant to which First Interstate
granted First Bank an option to purchase up to 15,073,106
shares of the Company's common stock at a price of
$127.75 per share and First Bank granted First Interstate
an option to purchase up to 25,829,983 shares of First
Bank common stock at a price of $50.875 per share. First
Bank could reap profits of as much as $100,000,000 from
the option granted to it. As a consequence of the
termination fee and option agreement, Wells Fargo or any
other interested bidder might have to pay First Bank as
much as $200,000,000 if the First Bank Merger were
terminated
24. As a special enticement to the Individual
Defendants to accept the First Bank Merger, First Bank
agreed that the combined company would be called First
Interstate and, although it would maintain principal
offices in Minneapolis, its "core businesses" would be
run from California, an obvious effort to placate First
Interstate executives. Thus, the First Bank Merger
assures that defendant Siart (who will be second in
command in the combined company) and other First
Interstate executives will maintain their positions and
the valuable perquisites which flow therefrom. In
addition, the Board of Directors of the combined entity
will be evenly divided between First Bank and First
Interstate directors. Not surprisingly, as a result, one
analyst labeled the First Bank Merger as "a senior
management job preservation act" for First Interstate
executives.
25. In addition, the Individual Defendants, in
agreeing to the First Bank Merger, failed to effectively
conduct a fair bidding contest for the sale of the
Company. Indeed, they agreed to the First Bank Merger to
thwart spirited bidding by Wells Fargo or anyone other
than First Bank desirous of acquiring First Interstate in
a value maximizing transaction. The Individual
Defendants failed to take all steps to ensure that First
Interstate's shareholders had the benefit of the most
advantageous transaction, including but not limited to,
failing to negotiate for Wells Fargo's highest and best
offer. Moreover, it has been reported that other
potential First Interstate bidders, including Norwest
Corp. or Banc One Corp., might have offered a higher bid,
but did not because of Siart's and the other Individual
Defendant's requirements that First Interstate keep its
name and California headquarters.
26. In response to the announcement of the
First Bank Merger, the prices of the common stock of both
First Bank and First Interstate both declined.
27. Executives at First Bank and First
Interstate quickly sought to justify the attractiveness
of the deal, asserting that the companies would be able
to save $500 million in expense reductions through
overlapping operations. However, the only overlap
between the companies is in Montana, Colorado and
Wyoming. If the First Bank Merger were consummated,
elimination of this redundancy would generate a mere one-
time $80 million in savings. In contrast, a merger
between Wells Fargo and First Interstate would create
dozens of duplicate branches, which, when eliminated,
would contribute substantially to the $800 million cost
cuts forecast by Wells Fargo.
28. As announced, the consideration offered by
the First Bank Merger on its face is lower than that
offered even in the original WF proposal.
26. Evidencing the fact that the Individual
Defendants acted precipitously and recklessly in agreeing
to the First Bank Merger with knowledge that other and
higher bids were available, on or about November 13,
1995, Wells Fargo announced that it would commence a
tender offer for First Interstate stock. Pursuant to the
terms of its tender offer Wells Fargo will give First
Interstate stockholders two-thirds of a share of Wells
Fargo common stock for each First Interstate share.
Based upon the closing price of Wells Fargo on November
10, 1995, the value of the exchange offer is $143.58 per
First Interstate share, or approximately $10.9 billion in
total.
29. In addition, Wells Fargo announced that it
intends to file preliminary proxy materials with the SEC
in connection with the solicitation of First Interstate
shareholders to vote against approval of the First Bank
Merger, and announced that it will file with the SEC
preliminary materials to solicit written consents from
First Interstate stockholders to remove the First
Interstate board and replace it with Wells Fargo nominees
who are committed to removing any impediments to the
consummation of the acquisition of First Interstate by
Wells Fargo. Moreover, on November 13, 1995, Wells Fargo
filed suit in this Court seeking declaratory and
injunctive relief against First Interstate and its Board,
and First Bank and Eleven Acquisition Corporation.
27. First Interstate also has in place a
shareholder rights plan (commonly known as a "poison
pill") which makes an unwelcome takeover of the Company
prohibitively expensive. The poison pill is triggered by
the acquisition of 20% or more of First Interstate's
common stock by a group or persons unfavored by First
Interstate's management. The poison pills effects a
fundamental shift of power from the shareholders of First
Interstate to the Individual Defendants. The poison pill
permits the Individual defendants to act as the prime
negotiators of -- and, in effect, totally to preclude --
any and all acquisition offers which they disfavor
through their power to redeem or to refuse to redeem the
rights.
30. Further, By-law 4(b) of First Interstate's
By-laws require that notice of a nomination of a
candidate for director "delivered to or mailed and
received at the principal executive offices of the
Corporation not less than thirty days nor more than sixty
days prior to the meeting...". The By-law further states
that "[o]nly persons who are nominated in accordance with
[such] procedures shall be eligible for election as
directors of [First Interstate]." The By-law wrongfully
purports to restrict the power of First Interstate
stockholders to act by written consent to elect or remove
directors.
28. This fundamental shift of control of the
Company's destiny from the hands of its shareholders to
the hands of the Individual Defendants results in a
heightened fiduciary duty on the part to consider, in
good faith, a third-party bid, and further requires the
Individual Defendants to pursue a third-party's interest
in acquiring the Company and to negotiate in good faith
on behalf of the Company's shareholders with a bidder
such as Wells Fargo. In violation of their heightened
fiduciary duties, the Individual Defendants have used the
poison pill to favor one bidder -- First Bank -- over
another -- Wells Fargo. The First Bank Merger is exempt
from the poison pill, whereas the poison pill still bars
Wells Fargo from proceeding with its superior offer
without the consent of the Individual Defendants.
CLAIM FOR RELIEF
29. The Individual Defendants are obligated to
carefully consider, in a timely fashion and on an
informed basis, bona fide proposals from third parties to
engage in transactions which will maximize value for
First Interstate shareholders; not to place their own
self-interests and personal considerations ahead of the
interests of the public stockholders; and to make
corporate decisions in good faith.
30. The Individual Defendants' fiduciary
obligations require them to:
(a) undertake an appropriate evaluation
of all bona fide offers, and take appropriate steps to
consider all potential bids for the Company or its assets
or explore strategic alternatives, in order to maximize
shareholder value;
(b) act independently, including
appointing a disinterested committee so that the
interests of First Interstate's public stockholders will
be protected;
(c) adequately ensure that no conflicts
of interest exist between the Individual Defendants' own
interests and their fiduciary obligations to the public
stockholders of First Interstate;
(d) utilize the poison pill in a manner
designed to maximize shareholder value; and
(e) avoid implementing any procedures
which would impede the maximum bona fide offer for First
Interstate.
31. In effect, the Individual Defendants have
initiated a process which has placed the Company up for
sale, including initiating an active bidding contest
seeking to sell the Company, obligating them to maximize
shareholder value. Nevertheless, the Individual
Defendants necessarily and inherently suffer from a
conflict of interest between their own personal desires
to retain their offices in First Interstate, with the
emoluments and prestige which accompany those offices,
and their fiduciary obligation to maximize shareholder
value in a transaction. Because of such conflict of
interest, the Individual Defendants have been and remain
unable to represent the interests of First Interstate's
public stockholders with the impartiality that their
fiduciary duties require, nor have they been able to
ensure that their conflicts of interest will be resolved
in the best interests of First Interstate's public
stockholders.
32. By virtue of the acts and conduct alleged
herein, the Individual Defendants have breached their
fiduciary duties owed to plaintiff and other class
members by carrying out a preconceived plan and scheme to
entrench themselves in office and to protect and advance
their own parochial interests at the expense of First
Interstate's public shareholders. The Individual
Defendants have not exercised and are not exercising
independent business judgment and have acted and are
acting to the detriment of the class. The Individual
Defendants' negative response to Wells Fargo, the hasty
acceptance of the First Bank Merger which provides less
consideration than the WF initial and amended proposals,
and their failure to adequately consider other offers,
was an uninformed knee-jerk reaction designed to advance
their own interests and was made without adequate
information as to what a third party would be prepared to
offer in a fully negotiated transaction.
33. The Individual Defendants have refused to
take the steps necessary to ensure that the Company's
public shareholders will receive maximum value for their
shares of First Interstate common stock. The Individual
Defendants' agreement to the inferior First Bank merger
rather than meaningfully responding to Wells Fargo's
proposals or pursuing a value maximizing transaction with
other bona fide companies is clearly the result of a
desire by the Individual Defendants to protect their own
substantial salaries, perquisites and positions with the
Company.
34. As a result of the foregoing, the
Individual Defendants have breached their fiduciary
duties owed to First Interstate's stockholders.
35. Defendants First Bank and Eleven
Acquisition Corporation have knowingly and substantially
participated in and are benefiting by breaches of
fiduciary duties by the Individual Defendants and,
therefore, are liable as aided and abettors thereof.
Indeed, the First Bank Merger could not proceed without
the willing and active participation of First Bank and
Eleven Acquisition Corporation.
36. Unless enjoined by this Court, defendants
will continue to breach their fiduciary duties owed to
plaintiff and the other members of the Class and/or aid
and abet such breaches in order to benefit themselves at
the expense and to the irreparable harm of the Class.
37. Plaintiff and the other members of the
Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as
follows:
1. declaring this to be a proper class
action;
2. enjoining the First Bank Merger until all
value maximizing alternatives are fully explored;
3. in the event the First Bank Merger is
consummated, rescinding it or awarding rescissory damages
to the class;
4. declaring null and void the termination
fee and stock option agreements in the First Bank Merger
agreement and bylaw 4(b) to the extent it obstructs
shareholders action by written consent;
5. ordering the Individual Defendants to
carry out their fiduciary duties to plaintiff and the
other members of the Class by:
(a) cooperating fully with any person or
entity having a bona fide interest in proposing a
transaction which would maximize shareholder value;
(b) undertaking an appropriate evaluation
of First Interstate's worth as a merger/acquisition
candidate;
(c) taking all appropriate steps to
enhance First Interstate's value and attractiveness as a
merger/acquisition candidate;
(d) taking all appropriate steps to
effectively expose First Interstate to the marketplace in
an effort to create an active auction for First
Interstate;
(e) acting independently so that the
interests of First Interstate's public stockholders will
be protected; and
(f) adequately ensuring that no conflicts
of interest exist between the Individual Defendants' own
interests and their fiduciary obligation to maximize
stockholder value or, if such conflicts exist, ensuring
that all conflicts are resolved in the best interests of
First Interstate's public stockholders;
6. ordering defendants, jointly and
severally, to account to plaintiff and the other members
of the Class for all damages suffered and to be suffered
by them as a result of the wrongs complained of herein;
7. directing the Individual Defendants to
employ the poison pill in a manner consistent with
maximizing shareholder value;
8. awarding plaintiff the costs and
disbursements of this action, including a reasonable
allowance for plaintiff's attorneys' and experts' fees;
and
9. granting such other and further relief as
this Court may deem to be just and proper.
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
____________________
Joseph A. Rosenthal
First Federal Plaza, Suite 214
Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorney for Plaintiff
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD &
SELINGER, P.C.
747 Third Avenue
New York, NY 10017
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
x
:
WELLS FARGO & COMPANY, a Delaware
corporation, :
C.A. No. 14696
Plaintiff, :
-against- :
FIRST INTERSTATE BANCORP, a Delaware :
corporation, FIRST BANK SYSTEM, INC., a
Delaware corporation, ELEVEN :
ACQUISITION CORPORATION, a Delaware
corporation, JOHN E. BRYSON, EDWARD M. :
CARSON, JEWEL PLUMMER COBB, RALPH P.
DAVIDSON, MYRON DU BAIN, DON C. :
FRISBEE, GEORGE M. KELLER, THOMAS L.
LEE, WILLIAM F. MILLER, WILLIAM S. :
RANDALL, STEPHEN B. SAMPLE, FORREST N.
SHUMWAY, WILLIAM E. B. SIART, :
RICHARD J. STEGEMEIER, AND DANIEL M.
TELLEP, :
Defendants. :
x
FIRST AMENDED VERIFIED COMPLAINT FOR PRELIMINARY
AND PERMANENT INJUNCTIVE RELIEF
AND DECLARATORY JUDGMENT
Wells Fargo & Company ("Wells Fargo"), as and for
its complaint, alleges upon knowledge with respect to itself
and its own acts, and upon information and belief as to all
other matters, as follows:
Nature of the Action
1. Plaintiff brings this action for injunctive
and/or declaratory relief:
(a) to prevent First Interstate Bancorp ("First
Interstate") and its directors from breaching their
fiduciary duties to their stockholders by entering
into or consummating an unfair, inadequate and unlawful
proposed merger (the "First Bank Proposed Merger") with
First Bank System, Inc. ("First Bank") and to prevent
First Bank from aiding and abetting that breach;
(b) to prevent the anti-takeover devices of
defendant First Interstate from being utilized to
impede or delay Wells Fargo's proxy solicitation to
solicit proxies in opposition to the First Bank Pro-
posed Merger, its proposed exchange offer which is
considerably more favorable to First Interstate's
stockholders than the First Bank Proposed Merger, and
Wells Fargo's consent solicitation, which is designed
to elect new directors to the First Interstate Board of
Directors, in violation of the fiduciary duties of
First Interstate's Board of Directors;
(c) to prevent First Interstate from otherwise
taking actions that impede or delay Wells Fargo's
higher exchange offer, its proposed proxy solicitation
and consent solicitation, all of which will be made in
compliance with all applicable laws, obligations and
agreements; and
(d) to prevent First Interstate and its defendant
directors from breaching their fiduciary duties to
First Interstate's stockholders by ignoring publicly
available information that immediately after the public
announcement of the First Bank Proposed Merger, First
Bank repurchased more than $125 million worth of its
own stock, or, in the alternative, to prevent First
Interstate from actively encouraging such a repurchase
program thereby artificially inflating the price of
that stock and denying First Interstate's stockholders
the ability accurately to assess the market value of
the First Bank Proposed Merger or to compare it to the
Wells Fargo Exchange Offer (as defined below).
The Parties
2. Plaintiff Wells Fargo is a Delaware corpora-
tion with its principal place of business in California.
Wells Fargo is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended. Based on
assets as of December 31, 1994, it was the 15th largest bank
holding company in the United States. Wells Fargo's subsid-
iary banks provide a full range of banking services to
commercial, agribusiness, real estate and small business
customers and consumers. It is one of the nation's leading
managers of personal trust accounts, corporate 401(k) plans
and mutual funds. Wells Fargo is the beneficial owner for
its own account of 100 shares of common stock of First
Interstate.
3. Defendant First Interstate is a Delaware
corporation with its principal place of business in Califor-
nia. First Interstate is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended. Its
subsidiary banks accept checking, savings and other time
deposit accounts and employ those funds principally by
making consumer, real estate and commercial loans and in-
vesting in securities and other interest-bearing assets.
First Interstate also provides banking-related financial
services and products both through non-bank subsidiaries and
through its bank subsidiary and the bank subsidiary's sub-
sidiaries.
4. Defendant First Bank is a Delaware corporation
with its principal place of business in Minnesota. First
Bank is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended.
5. Defendant Eleven Acquisition Corporation is a
Delaware corporation. Eleven Acquisition Corporation is a
corporation created by First Bank solely for the purposes of
effecting the Proposed Merger. For the purposes of this
Complaint, all references to defendant First Bank include
Eleven Acquisition Corporation.
6. Defendant William E. B. Siart is Chairman of
the Board of Directors, President and Chief Executive Offi-
cer of First Interstate. Defendant William S. Randall is
Executive Vice President, Chief Operating Officer and a
director of First Interstate. Edward M. Carson, John E.
Bryson, Dan C. Frisbee, Steven B. Sample, George M. Keller,
Forrest N. Shumway, Jewel Plummer Cobb, Ralph P. Davidson,
Thomas L. Lee, Richard J. Stegemeier, Myron Du Bain, William
F. Miller, and Daniel M. Tellep are all directors of First
Interstate. The foregoing individual directors of First
Interstate (collectively the "defendant directors"), owe
fiduciary duties to First Interstate and its stockholders.
Factual Background
7. On October 17, 1995, Wells Fargo delivered a
letter to First Interstate submitting for its consideration
a proposal for a tax-free merger (the "letter") in which
each First Interstate stockholder would receive 0.625 shares
of Wells Fargo common stock for each share of First Inter-
state common stock. Based on the price of Wells Fargo's
common stock at the time the letter was delivered, that
exchange ratio represented a price of $133.50 for each First
Interstate share, a 26% premium over the market value of
First Interstate common stock at the time of the letter.
8. Despite the immediate premium to the stock-
holders of First Interstate and the extraordinary long-term
economic benefits to the stockholders of both companies that
would accrue under the merger described in the letter, Siart
asked for approximately six months to consider the Wells
Fargo proposal. Siart also publicly responded negatively,
saying that he was "deeply disappointed" by Wells Fargo's
unsolicited proposal.
9. Following Wells Fargo's letter, Siart
actively solicited other offers from, and shared First
Interstate's confidential information with, other suitors.
During the same time, First Interstate conducted merger
negotiations with three large regional bank holding compa-
nies, including First Bank. The press reported that First
Interstate invited Bank One Corporation and Norwest Corpora-
tion to review its loan and financial books.
10. On October 26, 1995, Siart met with Paul
Hazen, the Chief Executive Officer and Chairman of the Board
of Wells Fargo. At that meeting, Siart acknowledged that a
merger of First Interstate and Wells Fargo would enhance
stockholder value. Hazen explained the cost savings esti-
mates being used by Wells Fargo and offered to have the
individuals at Wells Fargo who had prepared those estimates
meet with their counterparts at First Interstate in order to
demonstrate that the expected cost savings were achievable.
After discussion, Siart declined that offer and stated that
First Interstate agreed with Wells Fargo's cost savings
estimates. 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 First Interstate share if First Inter-
state would enter into a merger agreement with Wells Fargo.
Based on the closing price of Wells Fargo common stock on
November 3, 1995, the last trading day prior to announcement
of the First Bank Proposed Merger, that bid increased the
value of the Wells Fargo proposal to $137.96 per share of
First Interstate common stock. Siart rejected the increased
offer, but indicated that First Interstate might accept a
merger with a .70 exchange ratio.
11. On October 31, 1995, Siart and Hazen again
met. Hazen again offered to have the individuals at Wells
Fargo who had prepared the cost savings estimates meet with
their counterparts at First Interstate in order to demon-
strate that the expected cost savings were achievable.
Siart again declined that offer and stated that First Inter-
state agreed with the Wells Fargo cost savings estimates.
Siart indicated that he would be prepared to recommend a
merger with Wells Fargo if Wells Fargo would increase the
exchange ratio in its proposal to a 0.68 exchange ratio.
12. On November 1, 1995, Siart and Hazen talked
again, this time by telephone, but made no further progress
towards an agreement. Hazen attempted to reach Siart on
November 2nd and November 3rd by telephone, but his calls
were not returned.
13. On November 6, 1985, First Interstate an-
nounced that it had entered into an agreement with First
Bank to merge the two corporations. First Bank agreed to
exchange 2.6 shares of its common stock for each share of
First Interstate's common stock. Based on the closing price
of First Bank stock on November 3, 1995, the last trading
day prior to announcement of the Proposed Merger, that
exchange ratio represented a price of $132.28 per share of
First Interstate stock, considerably less than Wells Fargo's
offer. First Interstate also agreed to pay a break-up fee
of $100 million and granted First Bank a lock-up stock
option to purchase First Interstate stock that would yield
it a profit of up to $100 million in the event the First
Bank merger agreement was not consummated.
14. The market reacted negatively to the news
of the Proposed Merger. Public reactions by analysts and
stockholders were negative. The deal has been called "a
senior management job preservation act" for First Interstate
executives and Siart has been accused of failing to "show"[]
a lot of interest in the shareholder."
15. By meeting and sharing confidential infor-
mation with at least three banks (First Bank, Norwest Corpo-
ration and Banc One Corporation) in response to the letter
from Wells Fargo and Wells Fargo's subsequent offer to
improve its bid, by conducting merger negotiations with at
least three large regional bank holding companies and by
encouraging Wells Fargo to increase its offer to an exchange
ratio of .70, and later to .68, and by indicating that such
an increased offer would lead to Siart's recommendation for
a merger of Wells Fargo and First Interstate, First
Interstate's directors initiated an active bidding process
seeking to sell the company.
16. As a result, the defendant directors had
the duty (a) to be diligent and vigilant in examining criti-
cally all alternative offers; (b) to act in good faith; (c)
to obtain, and act with due care on all material information
reasonably available, including information necessary to
compare all offers to determine which of them would provide
the best value reasonably available to the stockholders; and
(d) to negotiate actively and in good faith with all bidders
to that end.
17. The fiduciary duties of the defendant
directors require them to assess whether each anti-takeover
device or contractual provision (separately and in the
aggregate) under the facts and circumstances prevailing at
the time (a) adversely affects the value provided to First
Interstate stockholders; (b) inhibits or encourages alterna-
tive bids; (c) is an enforceable contractual obligation in
light of the directors' fiduciary duties; and (d) in the end
would advance or retard the First Interstate directors'
obligation to secure for the First Interstate stockholders
the best value reasonably available under the circumstances.
To the extent such devices or provisions are inconsistent
with the defendant directors' fiduciary duties, as they are
here, they are invalid and unenforceable.
18. On November 13, 1995, Wells Fargo announced
that it intended to commence an exchange offer for all
outstanding shares of common stock of First Interstate
Bancorp (the "Exchange Offer") and on November 27, 1995,
Wells Fargo filed with the Securities and Exchange Commis-
sion a Form S-4 Registration Statement and Preliminary
Prospectus for its Exchange Offer. Pursuant to that Ex-
change Offer, Wells Fargo will offer to exchange two-thirds
of a share of Wells Fargo common stock for each outstanding
share of First Interstate common stock. Based on the clos-
ing price of Wells Fargo common stock on November 10, 1995,
the last trading day before the announcement of the Exchange
Offer, the value of the Exchange Offer was $143.58 per
share of First Interstate common stock. First Interstate
has approximately 76 million shares outstanding, giving the
transaction a total equity value of approximately $11 bil-
lion. Wells Fargo's offer is therefore considerably higher
than the current value of the consideration offered to First
Interstate's stockholders in the First Bank Proposed Merger.
19. Also on November 13, 1995, Wells Fargo
announced that it intends to file preliminary proxy materi-
als with the Securities and Exchange Commission ("SEC") for
use in connection with the solicitation of First Interstate
stockholders to vote against the approval of a merger with
First Bank at any meeting of stockholders of First Inter-
state to be called to consider the First Bank Proposed
Merger (the "Proxy Solicitation").
20. Concurrently, Wells Fargo announced that it
will file with the SEC preliminary materials for the solici-
tation of written consents from stockholders of First Inter-
state to remove First Interstate's current board of direc-
tors and to replace them with nominees of Wells Fargo who
are committed to removing any impediments to the consumma-
tion of the acquisition of First Interstate by Wells Fargo
(the "Consent Solicitation").
21. On November 20, 1995, First Interstate filed
a Schedule 14D-9 (the "Schedule 14D-9") with the Securities
and Exchange Commission. In that document, First Interstate
stated that its Board is committed to completing the First
Bank Proposed Merger and recommends that First Interstate's
stockholders not tender their shares in response to Wells
Fargo's Exchange Offer. First Interstate also lists 16
factors that were considered "material" by First
Interstate's Board in selecting the First Bank Proposed
Merger over a business combination with Wells Fargo. Con-
spicuously absent from that list is any consideration of the
implied purchase price produced by each of the two propos-
als. Notwithstanding that at all times during First
Interstate's consideration of each Wells Fargo offer and
First Bank offer, the then current Wells Fargo offer has
produced an implied purchase price significantly higher than
the implied purchase price produced by the then current
First Bank offer, the First Interstate Board did not consid-
er that to be a material fact in deciding to recommend the
lower First Bank Proposed Merger.
22. In addition, many of the factors considered
by the First Interstate Board are of dubious validity:
(a) the Schedule 14D-9 states that a business
combination of First Interstate and Wells Fargo would lead
to substantially greater concentration in the California
market, which would be inconsistent with First Interstate's
longstanding desire to diversify geographically; any claim
to such a "longstanding desire" by First Interstate is
flatly contradicted, however, by the following facts: four
of First Interstate's five most recent acquisitions have
been in California; between 1993 and 1994 First Interstate
increased its California real estate loans by 151 percent;
and in 1987 First Interstate attempted to merge with Bank
America Corporation, a bank holding company with a large
California presence;
(b) the Schedule 14D-9 states that the First
Interstate Board was concerned that the current ratios of
price to earnings and price to book value of Wells Fargo
common stock are high, and may not be sustained, yet the
Board failed to consider the fact that the price of the
First Bank common stock was inflated by First Bank's stock
repurchases, and could not be sustained once First Bank is
ordered to cease those repurchases.
(c) the Schedule 14D-9 states that the Board
favored the First Bank Proposed Merger's pooling of inter-
ests accounting scheme over Wells Fargo's offer to account
for the transaction as a purchase, but the board failed to
consider the significant likelihood that First Bank will be
unable to utilize pooling of interests accounting in light
of First Interstate's historical stock repurchases and First
Bank's intended repurchase program following consummation of
the First Bank Proposed Merger.
23. Wells Fargo's Exchange Offer clearly will
be in the best interests of First Interstate's stockholders.
It will be available to all First Interstate stockholders
for all outstanding shares. It will not be "front-end
loaded" or otherwise coercive in nature. Moreover, the
Exchange Offer will provide First Interstate's stockholders
with the opportunity to realize a substantial premium over
the market price of their shares immediately prior to the
public announcement of Wells Fargo's October 17 letter. The
closing price of First Interstate's common stock on October
17, 1995, the last full trading day prior to the public
announcement of that letter, was $106 per share and the
average closing price of First Interstate's common stock for
the 20 consecutive trading days immediately preceding Octo-
ber 17, 1995, was $102.59 per share.
24. In addition to the greater immediate finan-
cial value of the Wells Fargo Exchange Offer, a combination
of Wells Fargo and First Interstate also will result in
greater savings than can be realized through the First Bank
Proposed Merger. Despite having overlapping operations only
in Colorado, Montana and Wyoming, First Bank claims that
$500 million in savings will result from the First Bank
Proposed Merger. Due to the greater geographical overlap
between Wells Fargo and First Interstate, a merger of the
two companies would result in an estimated $700 million in
net cost savings, approximately $30 per share based on the
present value of the projected future savings.
25. The Exchange Offer will give First Inter-
state stockholders an opportunity to participate in the
future performance of the combined company, and to benefit
from the synergies expected to result from the combination
of the two companies, through the equity interest in the
combined company that would continue to be held by such
stockholders.
26. The Exchange Offer will not pose any threat
to the interests of First Interstate's stockholders or to
First Interstate's corporate policy and effectiveness.
27. The Exchange Offer, Proxy Solicitation and
Consent Solicitation will comply with all applicable laws,
obligations and agreements including, without limitation,
the securities laws and all other legal obligations to which
plaintiff is subject, including any contractual and common
law obligations that may be owed by plaintiff to First
Interstate. The Exchange Offer, Proxy Solicitation and
Consent Solicitation will not constitute tortious interfer-
ence with, or any other business-related tort in connection
with, the First Bank Proposed Merger. The Exchange Offer,
Proxy Solicitation and Consent Solicitation materials will
fully disclose all required information in compliance with
plaintiff's obligations under the securities laws.
28. Unless modified, First Interstate's
antitakeover devices will interfere with the Exchange Offer
and may have the effect of preventing or impeding the con-
summation of the Proxy Solicitation and the Consent Solici-
tation. Given the nature of the Exchange Offer and its
benefits to First Interstate stockholders, First Interstate
should not be permitted to erect impediments to it. Nor
should First Interstate be permitted to impede or delay
plaintiff's, efforts to conduct its Proxy Solicitation and
Consent Solicitation, activities to which plaintiff has a
right under Delaware law.
29. First Interstate's anti-takeover devices
and other defensive measures will adversely affect the value
available to First Interstate stockholders, will inhibit
alternative bids to the First Bank Proposed Merger, are (in
the case of the break-up fee and lock-up stock option grant-
ed to First Bank and described infra) not enforceable con-
tractual obligations in light of the breach of the defendant
directors' fiduciary duties, and will retard the defendant
directors in carrying out their obligation to secure for the
First Interstate stockholders the best value reasonably
available under the circumstances. First Interstate's anti-
takeover devices and other defensive measures are therefore
invalid and unenforceable.
First Interstate's Anti-Takeover Devices
and Other Defensive Measures
Break-Up Fee and Lock-Up Stock Option
30. As a stated inducement to First Bank to
enter into the First Bank Proposed Merger agreement, First
Bank is to be paid a $100 Million fee (the "Break-up Fee")
and First Bank was granted an option to purchase up to
15,073,106 shares of First Interstate stock at a price of
$127.75 per share, a price that will yield it a profit of up
to $100 million in the event the Proposed merger is not
consummated (the "Lock-Up Stock Option").
31. The Break-Up Fee and the Lock-Up Stock
Option were designed not to induce a higher bid, but to
compel First Interstate stockholders to accept a lower bid
for their stock. First Interstate's Board had, at the time
the Break-Up Fee and the Lock-Up Stock Option were agreed
to, already received and rejected a bid from Wells Fargo
that would have been worth at least $200 million more to the
stockholders of First Interstate than the offer made by
First Bank.
32. The Break-Up Fee and Lock-Up Stock Option
thus signal the Board's support for, and increase the ex-
pense of offering alternatives to, the First Bank Proposed
Merger, which will serve the interests of the entrenched
management of First Interstate over those of the company's
stockholders.
33. The Break-Up Fee and Lock-Up Stock
Option violate the fiduciary duties owed to First Interstate
stockholders because they promote the self-interest of First
Interstate's directors at the expense of its stockholders,
and are intended to coerce First Interstate's stockholders
into approving the Proposed Merger.
34. To the extent that First Interstate modi-
fies the First Bank Proposed Merger in response to the Wells
Fargo Exchange Offer or enters into any modified or future
agreement with First Bank, the defendant directors will have
a duty to eliminate the Break-Up Fee, the Look-Up Stock
Option and any similar provision in order to fulfill their
obligation to seek the best value reasonably available on
the stockholders' behalf and in order to avoid further
breaching their fiduciary duties.
Poison Pill
35. On November 21, 1988, First Interstate's
Board adopted a stockholder rights plan (the "Poison Pill")
that allows the Board to prevent the consummation of any
tender or exchange offer, even one providing substantial
benefits to First Interstate's stockholders. The Board
declared a dividend of one common stock purchase right (a
"Right"), payable to each of First Interstate's stockholders
of record as of December 30, 1988. Each Right entitles the
holder to purchase one share of First Interstate common
stock at a price of $170.00 per share (the "exercise
price"), subject to adjustment.
36. Until the earlier to occur of (a) 10 days
following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 20% or more of the out-
standing common stock, or (b) 10 business days (or such
later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Ac-
quiring Person) following the commencement of, or announce-
ment of an intention to make, a tender offer or exchange
offer the consummation of which would result in the benefi-
cial ownership by a person or group of 20% or more of such
outstanding common stock (the earlier of such dates, being
called the "Distribution Date"), the Rights are evidenced by
the common stock certificates. Although the First Inter-
state Board, at its November 19, 1995, meeting, voted to
postpone the occurrence of a Distribution Date as a result
of the public announcement of Wells Fargo's offer, the First
Interstate Board could decide at any time to cause the
Distribution Date to occur, resulting in the distribution of
separately tradeable and exercisable Rights certificates.
37. In the event that any person becomes an
Acquiring Person (other than pursuant to a Qualified Offer
(as defined below)), each holder of a Right (other than
Rights beneficially owned by the Acquiring Person (which
will thereafter be void)) will thereafter have the right to
receive upon exercise a number of shares of First Interstate
common stock having a market value of two times the exercise
price of the Right.
38. A "Qualified Offer" is defined as a
tender offer or exchange offer for all outstanding common
stock that is determined by the non-management directors to
be adequate and otherwise in the best interests of the
Company and its stockholders.
39. First Interstate's Board can redeem the
Rights at a redemption price of $.001 per Right or can amend
the Poison Pill to make the Rights inapplicable to the Wells
Fargo Exchange Offer.
40. Due to the prohibitive costs the Poison
Pill imposes on an Acquiring Person, any tender offer or
exchange offer (such as the Wells Fargo Exchange Offer) that
would trigger the Rights cannot practically be consummated
unless First Interstate's Board redeems or amends the Pill
or declares the offer to be a Qualified Offer. Accordingly,
First Interstate's Board can block any proposed tender or
exchange offer regardless of the interests of First
Interstate's stockholders. The triggering of the Poison
Pill would be particularly unjustified in this case given
the non-coercive nature of Wells Fargo's Exchange Offer and
the substantial benefits it would generate.
41. In light of the nature and value of Wells
Fargo's Exchange Offer, the First Interstate Board should
declare that the Offer is "Qualified". Alternatively, the
Board should redeem the Rights under the Poison Pill or
amend it to make it inapplicable to Wells Fargo's Exchange
Offer and the second-step merger with Wells Fargo or a
subsidiary that would be expected to be consummated follow-
ing the successful completion of the Wells Fargo Exchange
Offer. Only when the Exchange Offer is deemed to be a
Qualified Offer or the Poison Pill has been redeemed, amend-
ed or invalidated so that it is inapplicable to the Exchange
Offer will First Interstate's stockholders be able to bene-
fit from the Exchange Offer.
42. The failure of First Interstate's Board to
declare Wells Fargo's Exchange Offer a "Qualified Offer" or
to redeem or amend the Poison Pill violates the fiduciary
duties owed to plaintiff because it will deny plaintiff
meaningful access to or control over the assets of First
Interstate and will hinder or prevent plaintiff from exer-
cising its fundamental stockholder rights under Delaware
law. Plaintiff will suffer irreparable injury as a result
of the loss of the unique opportunity to acquire control of
First Interstate.
Amendments to the Poison Pill
43. First Interstate's current Board could
frustrate the power of any future Board, such as one that
might be elected pursuant to the Consent Solicitation, to
redeem the Poison Pill by, for example, adding a "Dead Hand"
provision. Under a "Dead Hand" provision, if a company's
board is replaced pursuant to a stockholder consent solici-
tation, the power to redeem a pill is exercisable only by
the former directors. Accordingly, the newly-elected board
would be powerless to redeem a poison pill, even if it
believed that it was in the best interests of the stockhold-
ers to do so. Similarly, First Interstate's Board might
attempt to amend the Poison Pill to make it non-redeemable
by anyone.
44. Because any such amendment would purport to
prevent future directors from exercising certain corporate
powers and to limit the ability of future directors to
direct the management of the business and affairs of the
corporation, any such amendment would violate Delaware law.
45. The adoption of any such amendment would
violate First Interstate's Board's fiduciary duties because
it would be designed to prevent future directors from acting
in the best interests of the company and its stockholders.
Any such provision or amendment would represent an inten-
tional effort by the current Board to nullify the effective-
ness of a stockholder vote pursuant to the Consent Solicita-
tion, thereby preventing plaintiff from exercising its
fundamental stockholder rights under Delaware law.
Bylaw 4(b)--the "Nominating Restriction"
46. First Interstate's Bylaws require that
notice of a nomination of a candidate for director be "de-
livered to or mailed and received at the principal executive
offices of the Corporation not less than thirty days nor
more than sixty days prior to the meeting . . ." (the "Nomi-
nating Restriction"). The Nominating Restriction further
states that "[o]nly persons who are nominated in accordance
with [these] procedures shall be eligible for election as
Directors of [First Interstate]". As there is no meeting in
the consent solicitation context, the Nominating Restric-
tion, if applied to a consent solicitation, would effective-
ly prohibit the election of directors by written consent.
47. The Nominating Restriction, if applied to a
consent solicitation, would impose an arbitrary restraint on
stockholders that would frustrate their ability to exercise
effectively the consent solicitation power given to them
under Delaware law. 8 Del. C. SECTION 228. The requirement of
prior notification is clearly inconsistent with Section
228 in that, among other things, Section 228 expressly
permits stockholder action without prior notice. According-
ly, the Nominating Restriction cannot lawfully be applied to
election of directors by consent solicitation.
Delaware Business Combination Statute, Section 203
48. Section 203, entitled "Business Combina-
tions with Interested Stockholders" (8 Del. C. SECTION 203),
applies to any Delaware corporation that has not opted out
of the statute's coverage. First Interstate has not opted
out of the statute's coverage.
49. Section 203 was designed to impede coercive
and inadequate tender offers. Section 203 provides that if
a person acquires 15% or more of a corporation's voting
stock (thereby becoming an "interested stockholder"), such
interested stockholder may not engage in a "business combi-
nation" (defined to include a merger or consolidation) with
the corporation for three years after the interested stock-
holder becomes such, unless: (i) prior to the 15% acquisi-
tion, the Board of Directors has approved either the acqui-
sition or the business combination, (ii) the interested
stockholder acquires 85% of the corporation's voting stock
in the same transaction in which it crosses the 15% thresh-
old or (iii) on or subsequent to the date of the 15% acqui-
sition, 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
that is not owned by the interested stockholder. Section
203 does not apply if the business combination is proposed
prior to the consummation or abandonment of and subsequent
to the announcement of a proposed merger with another party.
50. Plaintiff anticipates that First Interstate
will assert that Section 203 would apply to block any merger
between Wells Fargo and First Interstate. Section 203
should not be applicable because Wells Fargo's Exchange
Offer and the second-step merger with Wells Fargo or a
subsidiary that would be expected to be consummated follow-
ing successful completion of the Exchange Offer has been
proposed subsequent to announcement of the First Bank Pro-
posed Merger, but before consummation or abandonment of the
First Bank Proposed Merger, and is thus exempt from the
section's restrictions under Section 203(b)(6).
51. Even if a merger between First Interstate
and Wells Fargo is found not to fall within the Section
203(b)(6) exemption, the Court should conclude that under
the circumstances, Section 203 should not be applied to
this transaction. Should the Court decline to do so, First
Interstate's Board's fiduciary duties require the Board to
approve the Wells Fargo Exchange Offer under Section
203(a)(1).
First Bank's Stock Repurchase
52. Numerous press reports have indicated that
since November 7, 1995, the day following the announcement
of the First Bank Proposed Merger, First Bank, acting
through its broker, Donaldson, Lufkin & Jenrette ("DLJ"),
has been purchasing large blocks of its own stock. See,
e.g., Timothy L. O'Brien and Steven Lipin, First Bank Chal-
lenges Wells Fargo's Numbers, But Its Key Figure is Raising
Some Questions, Wall Street Journal, November 20, 1995, at
C2. First Bank has refused to deny allegations that it
began repurchasing its own stock in large volumes as soon as
the Proposed Merger was announced, commenting only that "if
and when we are in the market, it would be under our previ-
ously announced share repurchase program."
53. According to press reports, DLJ is running
First Bank's repurchase program. Since November 7, 1995,
the day after First Bank and First Interstate announced the
First Bank Proposed Merger, DLJ has been actively purchasing
large blocks of First Bank stock. From September 28, 1995,
through November 6, 1995, DLJ made infrequent and signifi-
cantly smaller purchases of First Bank stock during that
greater than five week period. Then, on November 7, 1995,
DLJ began aggressively purchasing First Bank stock, buying
850,000 shares, 60.9% of the total volume of First Bank
shares traded that day. DLJ purchases accounted for over
48% of the total volume in First Bank stock on five of the
twelve trading days between November 7 and November 22.
According to publicly available Autex reports, in which
brokers may voluntarily list block trades (but not the
identity of the real purchasers), from November 7, 1995,
until November 22, 1995, DLJ purchases accounted for 41.5%
of the total volume of First Bank shares traded during that
period.
54. The following chart illustrates the relation-
ships between First Bank's stock repurchases and the total
volume of First Bank stock trades during the relevant peri-
od:
[The hardcopy complaint filed with the Court con-
tains a bar graph entitled "Donaldson, Lufkin &
Jenrette Purchases of First Bank Stock." Each bar
is dual-shaded to indicate both the total volume
of First Bank stock purchases on a given trading
day during the period November 7, 1995 through
November 27, 1995 and the amount of that total
volume corresponding to DLJ purchases. Because
the document for which this Complaint is an Exhib-
it has been filed with the Securities and Exchange
commission by electronic transmission, this graph
is not contained herein.]
55. The size of those purchases has had the
effect of supporting the price of the First Bank stock, thus
making the First Bank Proposed Merger appear to be more
attractive than it would have in the absence of those large
block purchases by First Bank itself. For example, on
November 9, 1995, when DLJ's purchases accounted for 60.7%
of the total volume traded, First Bank stock rose $1.125 to
$52.375. Due to First Bank's repurchase program, the price
of First Bank Stock reached its highest closing price for
the year at 53 1/8 on November 10, 1995. Analysts have
indicated that by repurchasing its own shares First Bank is
denying investors a "true read" on what the market thinks of
the First Bank Proposed merger.
56. The following chart illustrates the effect of
the repurchases on the price of First Bank stock:
[The hardcopy Complaint filed with the Court con-
tains a line graph showing the closing stock price
for First Bank for the period September 15, 1995
thorugh November 22, 1995. Because the document
for which this Complaint is an Exhibit has been
filed with the Securities and Exchange Commission
by electronic transmission, this graph is not
contained herein. The following information sum-
marizes the First Bank closing stock price, plot-
ted along the graphs vertical axis, for the end-
point dates indicated on the horizontal axis of
the graph for four other highlighted dates, in-
cluding October 18, 1995 ("Wells Fargo Offer An
nounced"), November 6, 1995 ("First Inter-
state/First Bank Merger Announced"), November 7,
1995 ("DLJ Begins November Purchase of First Bank
Stock") and November 10, 1995 ("1995 High")
Date Stock Closing Price
September 15, 1995 46 1/2
October 18, 1995 51 5/8
November 6, 1995 49 7/8
November 7, 1995 50 5/8
November 10, 1995 53 1/8
November 22, 1995 51 5/8]
Declaratory Relief
57. The Court may grant the declaratory relief
sought herein pursuant to 10 Del, C. SECTION 6501. First
Interstate's Board's rejection of Wells Fargo's offers and
its hasty decision to accept the First Bank Proposed Merger
clearly demonstrate that there is a substantial controversy
between the parties. The adverse legal interests of the
parties are real and immediate in light of First
Interstate's announced deal with First Bank. Moreover,
First Interstate's unreasonable anti-takeover devices and
other defensive measures will interfere with plaintiff's
Proxy Solicitation, Exchange Offer and Consent Solicitation.
58. The granting of the requested declaratory
relief will serve the public interest by affording relief
from uncertainty and by avoiding delay and will conserve
judicial resources by avoiding piecemeal litigation.
Irreparable Injury
59. First Interstate's agreement to pay a
Break-Up Fee to First Bank and to grant the Lock-Up Stock
Option to First Bank will inhibit future bids to acquire or
merge with First Interstate and will deny First Interstate's
stockholders their right to receive maximum value for their
stock. First Interstate's use of or reliance upon its
antitakeover devices and other defensive measures to ob-
struct plaintiff's Exchange Offer, Proxy Solicitation and
Consent Solicitation will hinder and prevent plaintiff from
exercising its fundamental stockholder rights under Delaware
law including, but not limited to, the right to conduct a
proxy solicitation and consent solicitation. First
Interstate's failure and that of the defendant directors
even to consider as material, much less to act upon, the
differences in the imputed market value between the Wells
Fargo Exchange Offer and the First Bank Proposed Merger
makes it impossible for the First Interstate stockholders to
have an accurate assessment from the defendants as to the
true value of the Wells Fargo Exchange Offer. Moreover,
First Interstate's failure to inform its stockholders that
the price of First Bank stock has been inflated through
large block repurchases by First Bank itself and its failure
to ask First Bank to cease those block repurchases has
prevented and will continue to prevent stockholders from
getting a "true read" on the market value of the First Bank
Proposed Merger and will frustrate the stockholders's at-
tempts to compare the First Bank Proposed Merger with Wells
Fargo's Exchange Offer. Plaintiff's resulting injury will
not be compensable in money damages and plaintiff has no
adequate remedy at law.
COUNT ONE
(INJUNCTIVE AND DECLARATORY RELIEF AGAINST
FIRST INTERSTATE AND DEFENDANT DIRECTORS: THE, FIRST BANK
PROPOSED MERGER, THE BREAK-UP FEE AND THE LOCK-UP STOCK
OPTION ARE VOID AND UNENFORCEABLE)
60. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 59
hereof.
61. Wells Fargo's Exchange Offer is substan-
tially superior to the First Bank Proposed Merger. Wells
Fargo's Exchange Offer will give First Interstate's stock-
holders considerably more for their shares than they would
receive under the First Bank Proposed Merger. In addition,
a combination of wells Fargo and First Interstate will
result in greater combined savings than the First Bank
Proposed Merger, and thus will provide greater long-term
value to First Interstate stockholders.
62. First Interstate's decision to enter into
the First Bank Proposed Merger was unreasonable and was in
breach of the fiduciary duties owed to the First Interstate
stockholders. In addition, First Interstate's decision to
agree to pay First Bank a Break-Up Fee and to grant to First
Bank a Lock-Up Stock Option was also unreasonable under
the circumstances. Neither the Break-Up Fee nor the Look-Up
Stock Option was granted in order to induce higher bidding.
Rather, the Break-Up Fee and Lock-Up Stock Option were
intended to compel First Interstate's stockholders to accept
an inferior price for their shares so that current manage-
ment could be entrenched. Accordingly, the Break-Up Fee and
Lock-Up Stock Option granted to First Bank are a breach of
the fiduciary duties owed to First Interstate's stockhold-
ers.
63. Plaintiff seeks declaratory relief declar-
ing the First Bank Proposed Merger, the Break-Up Fee and the
Lock-Up Stock Option to be void and unenforceable and in-
junctive relief enjoining the consummation of the First Bank
Proposed Merger, the payment of any such Break-Up Fee and
the issuance of First Interstate stock (or any payment of
money) to First Bank pursuant to the Lock- Up Stock Option.
In the alternative, plaintiff seeks an injunction compelling
the defendant directors to terminate the First Bank Proposed
Merger and invalidating the Break-Up Fee and Lock-Up Stock
Option.
64. Plaintiff has no adequate remedy at law.
COUNT TWO
(INJUNCTIVE RELIEF AGAINST FIRST INTERSTATE AND THE DEFEN-
DANT DIRECTORS: CONTINUING VIOLATION OF FIDUCIARY DUTIES)
65. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 64
hereof.
66. If First Interstate modifies the First Bank
Proposed Merger, considers any future merger or enters into
any future agreement with First Bank, the First Interstate
defendant directors will have the duty to eliminate the
Break-up Fee, the Lock-Up Stock Option and any similar
provision from such agreement in order to fulfill their
obligation to seek the best value reasonably available on
the stockholders' behalf.
67. The retention of the Break-Up Fee and-the
Lock-Up Stock Option in any modified agreement or future
agreement with First Bank would constitute an additional
violation of the First Interstate Board's fiduciary duties.
68. Plaintiff therefore seeks injunctive relief
enjoining First Interstate and the defendant directors from,
including the Break-Up Fee, the Lock-Up Stock Option or any
similar provision in any modified or future agreement with
First Bank.
69. Plaintiff has no adequate remedy at law.
COUNT THREE
(INJUNCTIVE RELIEF AGAINST FIRST INTERSTATE
AND THE DEFENDANT DIRECTORS; REDEEM THE POISON PILL)
70. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 69
hereof.
71. Wells Fargo's Exchange Offer is non-
coercive and non-discriminatory; it is fair to First Inter-
state stockholders; and it represents a substantial premium
over the market price of First Interstate shares prior to
the public announcement of the Wells Fargo October 17 letter
and the First Bank Proposed Merger.
72. The Poison Pill is not proportionate to any
threat posed by, or within the range of reasonable responses
to, the Exchange Offer. In addition, the Board's failure
to determine that plaintiff's Exchange Offer is fair and in
the best interests of First Interstate and its stockholders
will constitute a violation of its fiduciary duties to First
Interstate stockholders.
73. Plaintiff seeks injunctive relief compel-
ling First Interstate and the defendant directors to declare
Wells Fargo's Exchange Offer to be a "Qualified Offer," to
redeem the Rights under the Poison Pill, or otherwise to
amend the Poison Pill to make it inapplicable to the Ex-
change Offer or to any follow-on merger.
74. Plaintiff has no adequate remedy at law.
COUNT FOUR
(INJUNCTIVE AND DECLARATORY RELIEF AGAINST FIRST INTERSTATE
AND DEFENDANT DIRECTORS:
INFLATED VALUE OF FIRST BANK STOCK)
75. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 74 here-
of.
76. The large block repurchases of First Bank
stock by First Bank after November 6, 1995, have had the
effect of artificially raising the price of First Bank
stock, thereby denying First Interstate's stockholders an
accurate reading of the market value of the First Bank
Proposed Merger. The defendant directors knew or should
have known that the price of First Bank stock was and is
being inflated by First Bank. In light of the numerous
press reports, the defendant directors knew or should have
known that First Bank was responsible for those block repur-
chases of its own stock. The defendant directors had a
fiduciary duty to insure that the First Interstate stock-
holders were given an opportunity to benefit from the most
favorable transaction. In contrast, the defendant directors
failed, among other things: (a) to require as a condition
of the First Bank Proposed Merger that First Bank refrain
from conducting any buy-backs that would influence the price
of its stock and deny First Interstate stockholders an
accurate reading of the market value of First Bank stock;
(b) to inquire whether First Bank was responsible for the
large block purchases of its stock and, if so, to ask First
Bank to cease all such purchases; and (c) to reveal to First
Interstate stockholders all pertinent information regarding
the block purchases of First Bank stock. First Interstate
and the defendant directors have a continuing duty to report
to First Interstate stockholders that the price of First
Bank stock is being inflated by large block repurchases by
First Bank.
77. By ignoring the large block repurchases of
First Bank stock and failing to inform First Interstate's
stockholders about the inflated value of First Bank stock,
or, in the alternative, by knowing about such repurchases
and failing to inform the First Interstate stockholders
about their effect on the price of the First Bank stock, the
defendant directors breached their fiduciary duties of care
and loyalty.
78. Those breaches of fiduciary duties have
injured plaintiff and all other First Interstate stockhold-
ers by denying them an accurate reading of the market value
of the First Bank Proposed Merger and by impairing the
stockholders' ability accurately to compare the First Bank
Proposed Merger with Wells Fargo's Exchange Offer.
79. Plaintiff seeks injunctive relief requiring
First Interstate and the defendant directors to disclose to
the First Interstate stockholders that First Bank has been
repurchasing its own stock since the First Bank Proposed
Merger was announced and that such repurchases have artifi-
cially inflated the price of the First Bank stock, and
requiring First Interstate and the defendant directors to
make all other pertinent information regarding First Bank
stock immediately and publicly available to First
Interstate's stockholders.
80. Plaintiff has no adequate remedy at law.
COUNT FIVE
(INJUNCTIVE RELIEF AGAINST FIRST INTERSTATE
AND DEFENDANT DIRECTORS: FAILURE TO
CONSIDER MATERIAL INFORMATION)
81. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 80 here-
of.
82. First Interstate's Schedule 14D-9 details the
defendant directors' reasons for recommending the First Bank
Proposed Merger to the First Interstate stockholders and the
factors they considered as material in reaching the decision
to do so. Remarkably and indeed inexplicably, the defendant
directors did not even consider, much less comment upon, the
most obvious factor, the differences in the imputed market
value of the First Bank Proposed Merger and the higher Wells
Fargo Exchange Offer. The defendant directors' failure to
do so and to report to the stockholders the result of that
consideration constitutes a breach of their fiduciary duties
to First Interstate's stockholders.
83. In failing to consider the differences in
imputed market values, the defendant directors injured
plaintiff and all other First Interstate stockholders by
denying them a full and fair evaluation of all significant
and material factors prior to recommending the First Bank
Proposed Merger.
84. Plaintiff seeks injunctive relief requiring
the defendant directors to consider the differences in the
imputed values of the First Bank Proposed Merger and the
Wells Fargo Exchange Offer in making their recommendation to
stockholders and to report to them the result of that recon-
sideration.
85. Plaintiff has no adequate remedy at law.
COUNT SIX
(INJUNCTIVE RELIEF AGAINST FIRST INTERSTATE AND DEFENDANT
DIRECTORS: NO DEFENSIVE MEASURES)
86. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 85
hereof.
87. Wells Fargo's Exchange Offer is fair to
First Interstate stockholders and it represents a substan-
tial premium over the market price of First Interstate
shares prior to the public announcement of Wells Fargo's
October 17 letter and the First Bank Proposed Merger.
88. The Exchange Offer complies with all appli-
cable laws, obligations and agreements including, without
limitation, the securities laws, and all other legal obliga-
tions to which plaintiff is subject, including any contrac-
tual and common law obligations that may be owed by plain-
tiff to First Interstate.
89. The Exchange Offer poses no threat to the
interests of First Interstate's stockholders or to First
Interstate's corporate policy and effectiveness.
90. Adoption of any provision or amendment of
the Poison Pill (by a "Dead Hand" amendment or otherwise) or
any other defensive measure against the Exchange Offer,
Proxy Solicitation or Consent Solicitation that would have
the effect of impeding that offer or solicitation or that
would prevent a future Board of Directors from exercising
its fiduciary duties would itself be a violation of the
current Board's fiduciary duties to First Interstate stock-
holders.
91. Plaintiff seeks injunctive relief against
any such defensive measure by First Interstate and the
defendant directors to thwart the Exchange Offer, Proxy
Solicitation or Consent Solicitation or the consummation of
any subsequent merger in violation of their fiduciary du-
ties.
92. Plaintiff has no adequate remedy at law.
COUNT SEVEN
(INJUNCTIVE AND DECLARATORY RELIEF AGAINST FIRST INTERSTATE
AND DEFENDANT DIRECTORS: DELAWARE BUSINESS COMBINATION
STATUTE, SECTION 203)
93. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 92
hereof.
94. The Delaware Business Combination Statute,
Section 203, if sought to be enforced against a merger
between Wells Fargo and First Interstate, should be found
inapplicable because any such merger would fall within the
Section 203(b)(6) exemption.
95. Plaintiff seeks a declaratory judgment that
any merger between Wells Fargo and First Interstate would
fall within the Section 203(b)(6) exemption, or if it does
not, that under the circumstances, Section 203 should not
be applied to prohibit such a merger.
96. Alternatively, plaintiff seeks injunctive
relief to require First Interstate and the defendant direc-
tors to approve Wells Fargo's becoming an interested stock-
holder pursuant to the Exchange Offer or to approve any
merger between Wells Fargo and First Interstate that is
found not to fall within the 203(b)(6) exemption.
97. Plaintiff has no adequate remedy at law.
COUNT EIGHT
(INJUNCTIVE AND DECLARATORY RELIEF AGAINST FIRST INTERSTATE
AND DEFENDANT DIRECTORS: THE NOMINATING RESTRICTION)
98. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 97
hereof.
99. The Nominating Restriction in First
Interstate's Bylaws, if applied to consent solicitations,
effectively prohibits First Interstate stockholders from
exercising their right to elect directors by written consent
or though a consent solicitation.
100. The Nominating Restriction can be applied
lawfully only to the nomination of directors prior to a
stockholders' meeting and, as a matter of law, cannot be
applied to the election of directors pursuant to plaintiff's
Consent Solicitation.
101. Plaintiff is entitled to a declaration
that the Nominating Restriction violates Delaware law if
applied to consent solicitations and is, to that extent,
void. Alternatively, plaintiff is entitled to a declaration
that the Nominating Restriction does not apply to
plaintiff's Consent Solicitation.
102. Plaintiff seeks injunctive relief against
any attempt by First Interstate or the defendant directors
to apply the Nominating Restriction to the Consent Solicita-
tion.
103. Plaintiff has no adequate remedy at law.
COUNT NINE
(INJUNCTIVE RELIEF AGAINST FIRST INTERSTATE AND DEFENDANT
DIRECTORS: DUTY TO CONDUCT SALE ON A LEVEL PLAYING FIELD)
104. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 103
hereof.
105. By meeting and sharing confidential infor-
mation with at least three banks (First Bank, Norwest Corpo-
ration and Banc One Corporation) in response to the letter
from Wells Fargo offering a bid for First Interstate, by
conducting merger negotiation with at least three large
regional bank holding companies and by encouraging Wells
Fargo to increase its offer to an exchange ratio of .70, and
later to .68, and by indicating that such an increased offer
would lead to Siart's recommendation for a merger of Wells
Fargo and First Interstate, First Interstate's directors
initiated an active bidding process seeking to sell the
company. Moreover, given the size of the proposed combina-
tion of First Interstate and First Bank, that combination,
unless enjoined, would be the last practical opportunity for
the First Interstate stockholders to obtain a control premi-
um for their stock. Under those circumstances, the defen-
dant directors had the duty (a) to be diligent and vigilant
in examining critically the First Bank Proposed Merger and
all alternative offers; (b) to act in good faith; (c) to
obtain, and act with due care on, all material information
reasonably available, including information necessary to
compare all offers to determine which of the transactions
would provide the best value reasonably available to the
stockholders; and (d) to negotiate actively and in good
faith with Wells Fargo to that end.
106. By refusing to share the same confidential
information with plaintiff that it shared with First Bank
and other suitors, by entering into the First Bank Proposed
Merger, by granting the Break-Up Fee and the Lock-Up Stock
Option to First Bank, by adopting and/or refusing to redeem
or amend the Poison Pill or to declare the Exchange Offer to
be a Qualified Offer and by applying the Nominating Restric-
tion to the Consent Solicitation, the defendant directors
will breach or have already wilfully breached their fiducia-
ry duties as fair and neutral stewards of First Interstate.
107. Those breaches of fiduciary duties have
injured plaintiff and all other First Interstate stockhold-
ers and will continue to injure then by depriving them of
the benefits of a fair and evenhanded bidding process and
have put the sale of the company on an uneven playing field.
108. Plaintiff seeks injunctive relief enjoin-
ing the consummation of the First Bank Proposed Merger and
the payment of any such Break-Up Fee or the issuance of
First Interstate stock (or any payment of money) to First
Bank pursuant to the Lock-Up Stock Option. In the alterna-
tive, plaintiff seeks an injunction compelling the defendant
directors to terminate the First Bank Proposed Merger and
invalidating the Break-Up Fee and Lock-Up Stock Option.
109. Plaintiff has no adequate remedy at law.
COUNT TEN
(INJUNCTIVE AND DECLARATORY RELIEF AGAINST FIRST BANK:
AIDING AND ABETTING BREACHES OF FIDUCIARY DUTY)
110. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 109
hereof.
111. First Bank, with knowledge of the breaches
of fiduciary duties alleged herein on the part of First
Interstate and the defendant directors, substantially as-
sisted in such breaches by surreptitiously repurchasing
large blocks of its own stock immediately after the First
Bank Proposed Merger was announced so as to raise artifi-
cially the value of its offer and thereby to mislead the
First Interstate stockholders and by agreeing to the Break-
Up Fee and Lock-Up Stock Option and the First Bank Proposed
Merger, thereby aiding and abetting First Interstate and the
defendant directors in such breaches. In the alternative,
First Bank aided and abetted those breaches by failing to
inform First Interstate about the repurchases and their
effect on the First Bank stock or by failing publicly to
acknowledge them and their effect on the First Bank stock
when First Interstate failed or refused to do so.
112. Plaintiff seeks a declaration that First
Bank aided and abetted First Interstate and the defendant
directors in their breach of fiduciary duties.
113. Plaintiff seeks injunctive relief against
First Bank's participation in First Interstate's and the
defendant directors' breaches of their fiduciary duties,
including, but not limited to, an injunction compelling
First Bank publicly and immediately to disclose the nature
and amount of its purchases in its own stock since November
6, 1995, and an injunction prohibiting the continued repur-
chase of First Bank stock while the Wells Fargo Exchange
Offer is being considered. In addition, plaintiff seeks an
injunction prohibiting First Bank's acceptance of a Break-Up
Fee or the receipt of any First Interstate stock (or receipt
of any money) from First Interstate pursuant to the Lock-Up
Stock Option.
114. Plaintiff has no adequate remedy at law.
COUNT ELEVEN
DECLARATORY JUDGMENT AGAINST FIRST BANK:
THE WELLS FARGO EXCHANGE OFFER, PROXY SOLICITATION AND
CONSENT SOLICITATION DO NOT CONSTITUTE TORTIOUS INTERFERENCE
WITH OR ANY OTHER BUSINESS-RELATED TORT IN CONNECTION
WITH THE FIRST INTERSTATE-FIRST BANK PROPOSED MERGER)
115. Plaintiff repeats and realleges each and
every allegation set forth in paragraphs 1 through 114
hereof.
116. First Interstate stockholders benefit from
free, open and unfettered competitive bidding in the face of
a proposed merger and will be the beneficiaries if permitted
to consider the Wells Fargo Exchange Offer. Indeed, the
First Bank Proposed Merger contemplates the possibility of a
higher offer since it may be terminated by First Interstate
following tile receipt of another takeover proposal. More-
over, the stockholders of First Interstate are entitled to
know what offers are available to them at the time they
vote. Accordingly, Wells Fargo's Exchange Offer, Proxy
Solicitation and Consent Solicitation do not constitute and
should not be deemed to be tortious interference with, or
any other business-related tort in connection with, the
First Bank Proposed Merger.
117. Plaintiff seeks a declaratory judgment
that neither the Exchange Offer, the Proxy Solicitation nor
the Consent Solicitation constitutes tortious interference
with, or any other business-related tort in connection with,
the First Bank Proposed Merger.
118. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff respectfully requests that
this Court enter judgment against all defendants, and all
persons in active concert or participation with them, as
follows:
A. Declaring that the First Bank Proposed Merger,
the Break-Up Fee and the Lock-Up Stock Option breach the
fiduciary duties that the defendant directors owe to First
Interstate's stockholders and are, therefore, void and
unenforceable.
B. Permanently enjoining First Interstate and the
defendant directors from:
(i) consummating the First Bank Proposed Merger;
(ii) making any payments to First Bank pursuant to
the Break-Up Fee or issuing any stock (or making any
payment of money) to First Bank pursuant to the Lock-Up
Stock Option;
(iii) taking any action that would interfere with
the Exchange Offer, or entering into any agreement or
arrangement or using any device that would interfere
with, restrict or that would have the effect of re-
stricting consummation of the Exchange Offer,
(iv) employing any defensive device to interfere
with the Proxy Solicitation,
(v) employing any defensive device or taking any
steps to interfere with the Consent Solicitation or to
interfere with, or limit the power of, directors elect-
ed pursuant to the Consent Solicitation to execute
fully their fiduciary duties;
(vi) permitting the "Distribution Date" to occur
under the Poison Pill; and
(vii) applying the Nominating Restriction to the
Consent Solicitation.
C. Permanently enjoining First Bank and all
persons in active concert or participation with it from
participating in the consummation of the Proposed Merger and
the payment of the Break-Up Fee or issuance of First Inter-
state Stock (or any payment of money) to First Bank pursuant
to the Lock-Up Stock Option.
D. Compelling First Interstate and its defendant
directors to disclose to the First Interstate stockholders
that First Bank has been repurchasing its stock since the
First Bank Proposed Merger was announced and that such
repurchases have artificially inflated the price of First
Bank stock.
E. Compelling First Interstate and its defendant
directors to make all other pertinent information regarding
First Bank's stock repurchases available to First
interstate's stockholders.
F. Declaring that First Bank aided and abetted
First Interstate and the defendant directors' breaches of
their fiduciary duties.
G. Compelling First Bank publicly and immediately
to disclose the nature and amounts of its purchases of its
own stock since November 6, 1995, and prohibiting the con-
tinued repurchases of First Bank stock while the Wells Fargo
Exchange Offer is being considered.
H. Compelling First interstate and its defen-
dant directors to declare Wells Fargo's Exchange Offer to be
a "Qualified Offer," to redeem the Rights under the Poison
Pill or otherwise to amend the Poison Pill to make it inap-
plicable to the Exchange Offer or to any follow-on merger.
I. Compelling First Interstate and its defendant
directors to consider the differences in the imputed value
of the First Bank Proposed Merger and the Wells Fargo Ex-
change Offer in making their recommendation to stockholders
and to report the result of that reconsideration to the
stockholders.
J. Declaring that the Nominating Restriction
has no application to the Consent Solicitation or, in the
alternative, that it violates Delaware law if applied to the
Consent Solicitation and is, to that extent, void.
K. Declaring that the Exchange Offer and any
subsequent merger are exempt from Section 203 of the Dela-
ware Corporation Law pursuant to Section 203(b)(6), or that
Section 203 is otherwise inapplicable to the Exchange Offer
and any subsequent merger or, in the alternative, compelling
First Interstate and the defendant directors to approve the
Wells Fargo Exchange Offer under Section 203.
L. Declaring that the Wells Fargo Exchange
Offer, Proxy Solicitation and Consent Solicitation do not
constitute tortious interference with, or any other busi-
ness-related tort in connection with, the Proposed Merger.
M. Granting damages for all incidental injuries
suffered as a result of defendants' unlawful conduct.
N. Awarding plaintiff the costs and disburse-
ments of this action, including attorneys' fees.
O. Granting plaintiff such other and further
relief as the Court deems just and proper.
Jesse A. Finkelstein
Todd C. Schiltz
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
(302) 658-6541
Attorneys for Plaintiff
Of counsel:
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
