<PAGE>
As filed with the Securities and Exchange Commission on January 19, 1996
Registration No. 33-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------------
FIRST BANK SYSTEM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 6711 41-0255900
(State or other jurisdiction (Primary Standard Industrial (I.R.S Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
(612) 973-1111
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Lee R. Mitau, Esq.
First Bank System, Inc.
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
(612) 973-1111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
Patrick F. Courtemanche, Esq. Craig M. Wasserman, Esq.
Dorsey & Whitney P.L.L.P. Wachtell, Lipton, Rosen & Katz
220 South Sixth Street 51 West 52nd Street
Minneapolis, Minnesota 55402 New York, New York 10019
---------------------
Approximate date of commencement of proposed sale of the Securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
---------------------
If any of the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Each Amount Maximum Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
to be Registered(1) Registered Per Share Offering Price Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.25 par value 16,950,057 shares(2) Not Applicable Not Applicable $273,077.30(3)(4)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement relates to securities of the Registrant issuable
to holders of common stock of FirsTier Financial, Inc. ("FirsTier") in
connection with the merger described herein.
(2) Based on the maximum aggregate number of shares of the Registrant's Common
Stock issuable in the merger described herein.
(3) Pursuant to Rule 457(f)(1) and (c), the registration fee was calculated
based on the average of the high and low price per share ($41.25) of the
FirsTier common stock to be canceled in the merger (an aggregate of
19,198,162 shares), as reported on The Nasdaq National Market System
on January 12, 1996, and the maximum number of shares of such stock that
may be outstanding immediately prior to the merger.
(4) Of such registration fee, $157,425.00 was previously paid on October 10,
1995 upon the filing under the Securities Exchange Act of 1934 of
preliminary copies of FirsTier's proxy materials included herein and
$115,652.30 is being paid herewith.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- ------------------------------------------------------------------------------
<PAGE>
FIRST BANK SYSTEM, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
Item No. in Form S-4 Location in Prospectus
-------------------- ----------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement Facing page of registration statement;
and Outside Front Cover Page of outside front cover page of Prospectus
Prospectus
2. Inside Front and Outside Back Cover Available Information; Incorporation of
Pages of Prospectus Certain Documents by Reference; Table
of Contents
3. Risk Factors, Ratio of Earnings to Summary; Comparative Unaudited Per
Fixed Charges and Other Information Share Data; Historical Selected Financial
Data
4. Terms of the Transaction Summary; The Merger; Incorporation of
Certain Documents by Reference
5. Pro Forma Financial Information Unaudited Pro Forma Combined Financial
Information
6. Material Contacts with the Company Summary; The Merger
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Opinions; Experts
9. Disclosure of Commission Position *
on Indemnification for Securities
Act Liabilities
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Available Information; Incorporation
Registrants of Certain Documents by Reference;
Summary; Business of FBS; Description of
FBS Capital Stock
11. Incorporation of Certain Information Incorporation of Certain Documents by
by Reference Reference
12. Information with Respect to S-2 or *
S-3 Registrants
13. Incorporation of Certain Information *
by Reference
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item No. in Form S-4 Location in Prospectus
-------------------- ----------------------
<S> <C>
14. Information with Respect to Registrants *
Other Than S-2 or S-3 Registrants
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3 Incorporation of Certain Documents by
Companies Reference; Summary; Business of FirsTier;
Description of FirsTier Capital Stock
16. Information with Respect to S-2 or *
S-3 Companies
17. Information with Respect to *
Companies Other Than S-3 or S-2
Companies
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Incorporation of Certain Documents by
Authorizations are to be Solicited Reference; Information Concerning the
Special Meeting; The Merger; Management
and Additional Information
19. Information if Proxies, Consents or *
Authorizations are not to be Solicited
or in an Exchange Offer
</TABLE>
________
*Answer is negative or item is not applicable.
<PAGE>
[FIRSTIER LETTERHEAD]
January 19, 1996
Dear Shareholder of FirsTier Financial, Inc.:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Special Meeting") of FirsTier Financial, Inc. ("FirsTier") to be held on
February 16, 1996 at 10:00 a.m., local time, in the Second Floor Board Room of
FirsTier at 1700 Farnam Street, Omaha, Nebraska. A notice of the Special
Meeting, proxy statement and form of proxy containing information about the
matters to be acted upon are enclosed. All holders of FirsTier's outstanding
shares of Common Stock, $5.00 par value (the "FirsTier Common Stock"), as of
January 4, 1996 will be entitled to notice of and to vote at the Special
Meeting.
At the Special Meeting you will be asked to consider and vote upon approval
of an Agreement of Merger and Consolidation, dated August 6, 1995 (the "Merger
Agreement"), which provides for the merger (the "Merger") of FirsTier with and
into First Bank System, Inc. ("FBS"). Upon consummation of the Merger described
in the accompanying Proxy Statement/Prospectus, shareholders of FirsTier will
receive .8829 share of common stock, $1.25 par value, of FBS ("FBS Common
Stock") for each issued and outstanding share of FirsTier Common Stock owned by
them. Any fractional shares of FBS Common Stock resulting from the application
of the exchange ratio will be paid in cash. Based on the last reported sale
price of FBS Common Stock on the New York Stock Exchange on January 17, 1996,
the exchange ratio would result in a per share purchase price for a share of
FirsTier Common Stock of $42.60. Shareholders are urged to obtain current market
quotations.
THE BOARD OF DIRECTORS OF FIRSTIER BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF FIRSTIER AND ITS SHAREHOLDERS AND THEREFORE UNANIMOUSLY RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE MERGER AGREEMENT. It is expected that all of the
3,032,654 shares of FirsTier Common Stock beneficially owned by the directors
and executive officers of FirsTier and their affiliates (approximately 16.20% of
the outstanding shares of FirsTier Common Stock) will be voted for approval of
the Merger Agreement. Upon consummation of the Merger, FirsTier shareholders
will no longer hold any interest in FirsTier other than through their interest
in FBS Common Stock received in the Merger. Details of the background and
reasons for the proposed Merger appear and are explained in the Proxy
Statement/Prospectus. Additional information regarding FirsTier and FBS is also
set forth in the Proxy Statement/Prospectus or is incorporated by reference
therein from other documents. I urge you to read this material carefully.
FirsTier's Board of Directors has received the opinion of Morgan Stanley &
Co. Incorporated, FirsTier's financial advisor, that as of the date of the
opinion the exchange ratio in the Merger Agreement is fair from a financial
point of view to the holders of FirsTier Common Stock (other than FBS and its
affiliates). A copy of this opinion is included as Appendix B to the Proxy
Statement/Prospectus.
It is very important to ensure that your vote is represented at the Special
Meeting. Please indicate your vote on the enclosed form of proxy, date and sign
it, and return it in the enclosed envelope. EXECUTED BUT UNMARKED PROXIES WILL
BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT. You are welcome to attend the
Special Meeting and vote in person even if you have previously returned the form
of proxy. If you do not attend the Special Meeting, you may still revoke your
proxy at any time prior to the Special Meeting by providing written notice of
such revocation or by delivering a duly executed proxy bearing a later date to
Thomas B. Fischer, Secretary of FirsTier. FAILURE TO RETURN A PROPERLY EXECUTED
PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE MERGER AGREEMENT.
Please do not send in any stock certificates at this time. If the Merger
Agreement is approved, you will be sent instructions regarding the surrender of
your existing stock certificates.
Sincerely,
[SIGNATURE]
David A. Rismiller
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
FIRSTIER FINANCIAL, INC.
1700 FARNAM STREET
OMAHA, NEBRASKA 68102-2183
(402) 348-6000
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 16, 1996
---------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of FirsTier Financial, Inc. ("FirsTier") will be held in the Second
Floor Board Room of FirsTier at 1700 Farnam Street, Omaha, Nebraska at 10:00
a.m., local time, on February 16, 1996 to consider and take action on the
following:
1. A proposal to approve the Agreement of Merger and Consolidation (the
"Merger Agreement"), dated August 6, 1995, by and between First Bank
System, Inc. ("FBS") and FirsTier, a copy of which is attached to the
accompanying Proxy Statement/Prospectus as Appendix A. Pursuant to the
Merger Agreement, among other things, FirsTier will be merged with and
into FBS, and each issued and outstanding share of the Common Stock,
$5.00 par value, of FirsTier (the "FirsTier Common Stock"), will be
exchanged for .8829 share of the Common Stock, $1.25 par value, of FBS.
2. Such other matters as may properly come before the Special Meeting or
any adjournment or postponement thereof.
Any action may be taken on any of the foregoing proposals at the Special
Meeting on such date or on any date or dates to which the Special Meeting may be
properly adjourned or postponed. The Board of Directors is not aware of any
other business to come before the Special Meeting.
Only shareholders of record of FirsTier Common Stock at the close of
business on January 4, 1996, are entitled to notice of, and to vote at, the
Special Meeting. Approval of the Merger Agreement by FirsTier shareholders
requires the affirmative vote of at least two-thirds of the shares of FirsTier
Common Stock outstanding and entitled to vote at the Special Meeting.
Holders of FirsTier Common Stock are not entitled to assert dissenters
rights with respect to their shares under the Nebraska Business Corporation Act.
It is important that all shareholders of FirsTier Common Stock be
represented at the Special Meeting. We urge you to sign and return the enclosed
proxy as promptly as possible -- whether or not you plan to attend the Special
Meeting. The proxy should be returned in the enclosed envelope. FAILURE TO
RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL
HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. The proxy may be
revoked at any time prior to its exercise. No proxy will be used if you attend
and vote at the Special Meeting in person.
By Order of the Board of Directors
[SIGNATURE]
Thomas B. Fischer
SECRETARY
Omaha, Nebraska
Date: January 19, 1996
YOUR VOTE IS IMPORTANT. HOLDERS OF FIRSTIER COMMON STOCK ARE URGED TO
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE SPECIAL MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AND VOTE IN PERSON.
THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER
DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. THE PROCEDURE FOR
THE EXCHANGE OF YOUR SHARES AFTER THE MERGER IS CONSUMMATED IS SET FORTH IN THE
PROXY STATEMENT/PROSPECTUS.
<PAGE>
PROXY STATEMENT
OF
FIRSTIER FINANCIAL, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1996
------------------------
PROSPECTUS
OF
FIRST BANK SYSTEM, INC.
COMMON STOCK, $1.25 PAR VALUE
---------------------
This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus"), is being
furnished to holders of common stock, $5.00 par value ("FirsTier Common Stock"),
of FirsTier Financial, Inc., a Nebraska corporation ("FirsTier"), in connection
with the solicitation of proxies by the Board of Directors of FirsTier for use
at a special meeting of such holders (the "Special Meeting") to be held on
February 16, 1996, commencing at 10:00 a.m., local time, and at any adjournment
or postponement thereof. At the Special Meeting, holders of FirsTier Common
Stock will be asked to consider and act upon a proposal to approve the Agreement
of Merger and Consolidation, dated August 6, 1995 (the "Merger Agreement"), by
and between First Bank System, Inc., a Delaware corporation ("FBS"), and
FirsTier, and the transactions contemplated thereby, pursuant to which, among
other things, FirsTier would be acquired by FBS by means of a merger of FirsTier
with and into FBS (the "Merger"). A copy of the Merger Agreement is attached
hereto as Appendix A and is incorporated herein by reference.
Pursuant to the Merger Agreement, each issued and outstanding share of
FirsTier Common Stock will be converted into .8829 share of common stock, par
value $1.25 per share, of FBS ("FBS Common Stock"), subject to certain
adjustments as described in the Proxy Statement/Prospectus. The outstanding
shares of FBS Common Stock are, and it is a condition to the consummation of the
Merger that the shares of FBS Common Stock to be issued in the Merger be, listed
on the New York Stock Exchange (the "NYSE") under the symbol "FBS." The last
reported sale price of FBS Common Stock on the NYSE on January 17, 1996 was
$48.25 per share. Based on such last reported sale price, the exchange ratio
resulted in a per share purchase price for the FirsTier Common Stock of $42.60.
This Proxy Statement/Prospectus and the accompanying form of proxy for the
Special Meeting are first being mailed to the shareholders of FirsTier on or
about January 19, 1996.
(CONTINUED ON NEXT PAGE)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF FBS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK
INSURANCE FUND, SAVINGS ASSOCIATION INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS JANUARY 19, 1996.
<PAGE>
Because the exchange ratio is fixed, a change in the market price of FBS
Common Stock before the Merger would affect the value of the FBS Common Stock to
be received in the Merger in exchange for the FirsTier Common Stock. THERE CAN
BE NO ASSURANCE AS TO THE MARKET PRICE OF THE FBS COMMON STOCK AT ANY TIME
BEFORE THE DATE ON WHICH THE MERGER BECOMES EFFECTIVE (THE "EFFECTIVE DATE") OR
AS TO THE MARKET PRICE OF THE FBS COMMON STOCK AT ANY TIME THEREAFTER.
Shareholders are urged to obtain current market quotations.
If between the date of the Merger Agreement and the Effective Date there
shall have been a "Significant Decline" in the "Average Closing Price" of FBS
Common Stock compared to $43.0417, FirsTier may, at its option, abandon and
terminate the Merger Agreement before it takes effect. See "The Merger --
Termination."
For additional information regarding the terms of the Merger, see the Merger
Agreement attached as Appendix A hereto and "The Merger" herein.
Morgan Stanley & Co. Incorporated has rendered its opinion dated January 19,
1996 to the Board of Directors of FirsTier that, as of that date, the exchange
ratio in the Merger Agreement was fair from a financial point of view to the
holders of FirsTier Common Stock (other than FBS and its affiliates). See "The
Merger -- Opinion of FirsTier Financial Advisor" herein.
Consummation of the Merger is conditioned upon, among other things, receipt
of all required shareholder and regulatory approvals. See "The Merger --
Regulatory Approvals Required."
THE BOARD OF DIRECTORS OF FIRSTIER UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF FIRSTIER VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
This Proxy Statement/Prospectus also constitutes a prospectus of FBS with
respect to the shares of FBS Common Stock issuable to shareholders of FirsTier
upon consummation of the Merger. FBS has supplied all information contained in
this Proxy Statement/Prospectus relating to FBS and its subsidiaries, and
FirsTier has supplied all information contained in this Proxy
Statement/Prospectus relating to FirsTier and its subsidiary.
This Proxy Statement/Prospectus is included as part of a registration
statement on Form S-4 filed with the Securities and Exchange Commission by FBS,
relating to the registration under the Securities Act of 1933, as amended, of up
to 16,950,057 shares of FBS Common Stock to be issued in connection with the
Merger.
2
<PAGE>
AVAILABLE INFORMATION
FBS is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information concerning FBS can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 Madison Street,
Chicago, Illinois 60661. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and other
information concerning FBS also can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
FBS has filed a registration statement on Form S-4 (together with all
amendments and exhibits thereto, including documents and information
incorporated by reference, the "Registration Statement") with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
the shares of FBS Common Stock to be issued in connection with the Merger. This
Proxy Statement/Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement. Statements contained in this Proxy
Statement/Prospectus as to the contents of any document are not necessarily
complete, and in each instance reference is made to such document itself, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO FBS
(EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN) ARE AVAILABLE TO
EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROXY
STATEMENT/PROSPECTUS IS DELIVERED WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO
KARIN E. GLASGOW, INVESTOR RELATIONS, FIRST BANK SYSTEM, INC., FIRST BANK PLACE,
601 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402-4302, TELEPHONE NUMBER
(612) 973-2264. DOCUMENTS RELATING TO FIRSTIER (EXCLUDING EXHIBITS UNLESS
SPECIFICALLY INCORPORATED THEREIN) ARE AVAILABLE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO THOMAS B. FISCHER, ESQ., VICE
PRESIDENT AND GENERAL COUNSEL, FIRSTIER FINANCIAL, INC., 1700 FARNAM STREET,
OMAHA, NEBRASKA 68102-2183, TELEPHONE NUMBER (402) 348-6000. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE RECEIVED NO LATER THAN
FEBRUARY 9, 1996.
The following FBS documents which have been filed by FBS with the Commission
are hereby incorporated by reference in this Proxy Statement/Prospectus: (i)
Annual Report on Form 10-K for the year ended December 31, 1994; (ii) quarterly
reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995; (iii) Current Reports on Form 8-K filed March 3, 1995 (as
amended by Amendment No. 1 on Form 8-K/A filed March 7, 1995), April 13, 1995,
April 25, 1995, July 6, 1995, August 18, 1995 (as amended by Amendment No. 1 on
Form 8-K/A filed August 30, 1995 and Amendment No. 2 on Form 8-K/A filed
November 15, 1995), September 11, 1995, November 13, 1995, November 16, 1995
(two Reports), December 13, 1995, December 15, 1995, January 9, 1996 and January
19, 1996; (iv) Current Report on Form 8 K/A filed February 13, 1995
(constituting Amendment No. 4 to the Current Report on Form 8-K filed August 5,
1994); and (v) the description of FBS Common Stock contained in Item 1 of the
FBS Registration Statement on Form 8-A dated March 19, 1984, as amended in its
entirety by that Form 8 Amendment dated February 26, 1993 and that Form 8-A/A-2
dated October 6, 1994, and any amendment or report filed for the purpose of
updating such description filed subsequent to the date of this Proxy Statement/
Prospectus and prior to the termination of the offering described herein; and
the description of the rights to purchase preferred stock contained in Item 1 of
the FBS Registration Statement on Form 8-A dated December 21, 1988, as amended
by that Form 8 Amendment dated June 11, 1990, as amended in
3
<PAGE>
its entirety by that Form 8 Amendment dated February 26, 1993 and as further
amended by that Form 8-A/A-3 filed November 16, 1995, and any amendment or
report filed for the purpose of updating such description filed subsequent to
the date of this Proxy Statement/Prospectus and prior to the termination of the
offering described herein.
The following FirsTier documents which have been filed by FirsTier with the
Commission are hereby incorporated by reference in this Proxy
Statement/Prospectus: (i) Annual Report on Form 10-K for the year ended December
31, 1994; (ii) quarterly reports on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; (iii) Current Reports on Form 8-K
dated August 6, 1995, May 19, 1995, January 17, 1995, January 5, 1995 and
January 3, 1995, and (iv) the description of FirsTier Common Stock which is
contained in its Registration Statement filed under Section 12 of the Exchange
Act and any amendment or report filed for the purpose of updating such
description filed subsequent to the date of this Proxy Statement/Prospectus and
prior to the termination of the offering described herein.
All documents filed by FBS or FirsTier pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof and before the Special
Meeting shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in
another subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement/Prospectus.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION
WITH THE SOLICITATION OF PROXIES AND OFFERING MADE HEREBY AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FBS OR FIRSTIER.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY, OR AN OFFER TO SELL OR A SOLICITATION OR AN OFFER TO PURCHASE ANY
SECURITIES, IN ANY JURISDICTION IN WHICH SUCH SOLICITATION OR OFFER MAY NOT
LAWFULLY BE MADE.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT COVER ANY RESALES OF THE FBS COMMON
STOCK OFFERED HEREBY TO BE RECEIVED BY SHAREHOLDERS OF FIRSTIER DEEMED TO BE
"AFFILIATES" OF FIRSTIER OR FBS UPON THE CONSUMMATION OF THE MERGER. NO PERSON
IS AUTHORIZED TO MAKE USE OF THIS PROXY STATEMENT/ PROSPECTUS IN CONNECTION WITH
ANY SUCH RESALES.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION
OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF FBS OR FIRSTIER SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE. FBS HAS SUPPLIED ALL INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS RELATING TO FBS AND ITS SUBSIDIARIES, AND FIRSTIER HAS
SUPPLIED ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS RELATING
TO FIRSTIER AND ITS SUBSIDIARIES.
FOR NORTH CAROLINA RESIDENTS:
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION................................................................. 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 3
SUMMARY............................................................................... 7
The Parties to the Merger........................................................... 7
The Proposed Merger................................................................. 8
Special Meeting of FirsTier Shareholders............................................ 9
Vote Required to Approve the Merger; Quorum......................................... 9
Recommendation of the FirsTier Board of Directors................................... 9
Interests of Certain Persons in the Merger.......................................... 10
Opinion of FirsTier Financial Advisor............................................... 10
No Solicitation; Option Granted to FBS.............................................. 11
Regulatory Approvals Required....................................................... 11
Conditions, Waiver and Amendment and Termination.................................... 11
Effective Date of the Merger........................................................ 12
Exchange of FirsTier Stock Certificates............................................. 12
Certain Federal Income Tax Consequences to FirsTier Shareholders.................... 12
Resales of FBS Common Stock......................................................... 13
Accounting Treatment................................................................ 13
No Dissenters' Rights of Appraisal.................................................. 13
Markets and Market Prices........................................................... 13
Differences in Rights of FirsTier Shareholders...................................... 14
Expenses............................................................................ 14
COMPARATIVE UNAUDITED PER SHARE DATA.................................................. 15
SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA............................ 17
HISTORICAL SELECTED FINANCIAL DATA OF FIRST BANK SYSTEM, INC.......................... 18
HISTORICAL SELECTED FINANCIAL DATA OF FIRST INTERSTATE BANCORP........................ 19
HISTORICAL SELECTED FINANCIAL DATA OF FIRSTIER FINANCIAL, INC......................... 20
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA OF FIRST BANK SYSTEM, INC. AND
FIRSTIER FINANCIAL, INC.............................................................. 22
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA OF FIRST BANK SYSTEM, INC.,
FIRSTIER FINANCIAL, INC. AND FIRST INTERSTATE BANCORP................................ 23
INFORMATION CONCERNING THE SPECIAL MEETING............................................ 25
General............................................................................. 25
Solicitation, Voting and Revocability of Proxies.................................... 25
THE MERGER............................................................................ 27
Background of and Reasons for the Merger; Recommendation of FirsTier Board of
Directors.......................................................................... 27
Opinion of FirsTier Financial Advisor............................................... 29
Terms of the Merger; Consideration to be Received by FirsTier Shareholders.......... 33
Effective Date of the Merger........................................................ 34
Exchange of FirsTier Common Stock Certificates...................................... 34
Conditions to Consummation of the Merger............................................ 35
Regulatory Approvals Required....................................................... 37
Waiver and Amendment................................................................ 39
Termination......................................................................... 39
</TABLE>
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<TABLE>
<S> <C>
No Solicitation..................................................................... 40
Option Granted to FBS............................................................... 40
Conduct of FirsTier Business Pending the Merger..................................... 43
Management and Operations of FirsTier Following the Merger.......................... 44
Interests of Certain Persons in the Merger.......................................... 45
Effect on FirsTier Employee Benefit Plans and Stock Option Plans.................... 47
No Dissenters' Rights for FirsTier Shareholders..................................... 48
Certain Federal Income Tax Consequences to FirsTier Shareholders.................... 48
Stock Exchange Listing of FBS Common Stock.......................................... 49
Resale of FBS Common Stock Received by FirsTier Shareholders........................ 49
FBS Dividend Reinvestment and Common Stock Purchase Plan............................ 50
Accounting Treatment................................................................ 50
Expenses............................................................................ 50
Material Differences in Rights of FirsTier Shareholders............................. 50
BUSINESS OF FBS....................................................................... 53
General............................................................................. 53
Recent Developments................................................................. 54
BUSINESS OF FIRSTIER.................................................................. 55
OWNERSHIP OF FIRSTIER COMMON STOCK.................................................... 56
DESCRIPTION OF FBS CAPITAL STOCK...................................................... 56
General............................................................................. 56
Preferred Stock..................................................................... 56
Common Stock........................................................................ 58
First Interstate Preferred Stock.................................................... 61
DESCRIPTION OF FIRSTIER CAPITAL STOCK................................................. 62
LEGAL OPINIONS........................................................................ 62
EXPERTS............................................................................... 62
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 63
SHAREHOLDER PROPOSALS................................................................. 63
MANAGEMENT AND ADDITIONAL INFORMATION................................................. 63
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.......................... F-1
APPENDIX A -- AGREEMENT OF MERGER AND CONSOLIDATION................................... A-1
APPENDIX B -- OPINION OF MORGAN STANLEY & CO. INCORPORATED............................ B-1
</TABLE>
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ALL RESPECTS BY THE MORE DETAILED
INFORMATION INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS, THE APPENDICES HERETO
AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS ARE URGED TO
READ CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES.
AS USED IN THIS PROXY STATEMENT/PROSPECTUS, THE TERMS "FBS" AND "FIRSTIER" REFER
TO FIRST BANK SYSTEM, INC. AND FIRSTIER FINANCIAL, INC., RESPECTIVELY, AND,
WHERE THE CONTEXT SO REQUIRES, TO SUCH CORPORATIONS AND THEIR RESPECTIVE
SUBSIDIARIES. ALL INFORMATION CONCERNING FBS INCLUDED HEREIN HAS BEEN FURNISHED
BY FBS, AND ALL INFORMATION INCLUDED HEREIN CONCERNING FIRSTIER HAS BEEN
FURNISHED BY FIRSTIER.
THE PARTIES TO THE MERGER
FBS. FBS is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act"), headquartered
in Minneapolis, Minnesota. As of September 30, 1995, FBS owned eight subsidiary
banks, a savings association and other financial companies with 350 offices,
located primarily in Minnesota, Colorado, Illinois, Montana, North Dakota, South
Dakota, Wisconsin, Iowa, Nebraska, Kansas and Wyoming. Through its subsidiaries,
FBS provides commercial and agricultural finance, consumer banking, trust,
capital markets, treasury management, investment management, data processing,
leasing, mortgage banking and brokerage services. At September 30, 1995, FBS and
its consolidated subsidiaries had consolidated assets of $33.0 billion,
consolidated deposits of $21.9 billion and shareholders' equity of $2.7 billion.
On November 6, 1995, FBS and First Interstate Bancorp ("First Interstate")
announced that they had entered into a definitive agreement (the "First
Interstate Merger Agreement") whereby FBS will exchange 2.60 shares of FBS
Common Stock for each share of First Interstate common stock (and cash in lieu
of fractional shares) (the "First Interstate Transaction"). The combined
institution, which will use the First Interstate Bancorp name, will have
approximately $90 billion in assets and $7 billion in shareholders' equity. The
First Interstate Transaction, which will qualify as a tax-free reorganization
and be accounted for as a pooling-of-interests, is subject to a number of
conditions including receipt of shareholder and regulatory approvals. There can
be no assurance as to whether or when the First Interstate Transaction will be
consummated; however, the Merger is not contingent upon the consummation of the
First Interstate Transaction. Wells Fargo & Co. announced on November 13, 1995
that it intended to commence an unsolicited hostile exchange offer in which
holders of First Interstate common stock would have the right to exchange each
of their shares for two-thirds of a share of Wells Fargo & Co. common stock. See
"Business of FBS -- Recent Developments."
FBS reported fourth quarter 1995 net income of $150.7 million, or $1.12 per
fully diluted share, compared with fourth quarter 1994 operating income of
$122.6 million, or $.90 per share. The reported net loss for the fourth quarter
of 1994 (including discontinued operations and merger-related items) was $35.3
million, or $.28 per share. Net income in 1995 was $568.1 million, or $4.11 per
fully diluted share, compared with $470.4 million, or $3.32 per fully diluted
share, from continuing operations before merger-related items in 1994. Reported
net income for 1994, including discontinued operations and merger-related items,
was $305.0 million, or $2.14 per fully diluted share.
Return on average assets and return on average common equity in the fourth
quarter of 1995 were 1.80% and 22.4%, respectively, compared with 1.43% and
18.0% in the fourth quarter of 1994, from continuing operations before
merger-related items. The net interest margin on a taxable-equivalent basis of
4.83% in the fourth quarter of 1995 was slightly higher than the margin of 4.79%
in the fourth quarter of 1994. The efficiency ratio, the ratio of expenses to
revenues, continued to improve, to 51.2% from 57.3% for the fourth quarter of
1994, excluding merger-related charges.
The strong fourth quarter 1995 results reflected growth in noninterest
income, lower operating expenses, and effective capital management. Fourth
quarter noninterest income was $197.3 million, an increase of $24.7 million, or
14%, from the same quarter of 1994, excluding merger-related securities losses.
The improvement resulted primarily from growth in credit card and trust fees.
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Fourth quarter 1995 noninterest expense totaled $287.3 million, a decrease of
$24.5 million, or 8%, from the fourth quarter of 1994. Net interest income on a
taxable-equivalent basis was $363.7 million, a decrease of $6.5 million, or 2%
compared with the fourth quarter of 1994. The decrease was primarily
attributable to lower total earning assets (as loan growth was more than offset
by sales and maturities of securities) and higher funding costs, including the
cost of funding the buyback of common stock, purchased primarily in connection
with the Merger. The provision for credit losses for the quarter was up $3.5
million, or 13%, to $31.0 million from fourth quarter 1994.
Nonperforming assets declined to $153.7 million at December 31, 1995, down
$78.6 million, or 34%, from $232.3 million at December 31, 1994. The ratio of
the allowance for credit losses to nonperforming loans at quarter-end was 401%
compared with 283% at the end of 1994.
For further information concerning FBS, see "Business of FBS" and "Selected
Historical and Unaudited Pro Forma Financial Data -- Historical Selected
Financial Data of First Bank System, Inc." herein and the FBS documents
incorporated by reference herein as described under "Incorporation of Certain
Documents by Reference." The principal executive offices of FBS are located at
First Bank Place, 601 Second Avenue South, Minneapolis, Minnesota 55402-4302
(telephone (612) 973-1111).
FIRSTIER. FirsTier is a bank holding company registered under the Bank
Holding Company Act, incorporated under the laws of the state of Nebraska,
headquartered in Omaha, Nebraska. FirsTier is comprised of 7 bank subsidiaries,
serving communities throughout Nebraska and in parts of Iowa. Through its
subsidiaries, FirsTier provides a broad range of commercial, agricultural and
consumer services. At September 30, 1995, FirsTier and its consolidated
subsidiaries had consolidated assets of approximately $3.6 billion, consolidated
deposits of $2.8 billion and shareholders' equity of $376 million.
For further information concerning FirsTier, see "Business of FirsTier" and
"Selected Historical and Unaudited Pro Forma Financial Data -- Historical
Selected Financial Data of FirsTier Financial, Inc." herein and the FirsTier
documents incorporated by reference herein as described under "Incorporation of
Certain Documents by Reference." The principal executive offices of FirsTier are
located at 1700 Farnam Street, Omaha, Nebraska 68102-2183 (telephone (402)
348-6000).
THE PROPOSED MERGER
The Agreement of Merger and Consolidation, dated August 6, 1995 (the "Merger
Agreement"), by and between FBS and FirsTier, provides for the merger of
FirsTier with and into FBS, with FBS as the surviving corporation (the
"Merger"). The Merger will become effective upon the filing of certificates of
merger with the Secretaries of State in the States of Delaware and Nebraska (the
"Effective Date"). Upon consummation of the Merger, each outstanding share of
FirsTier Common Stock will be converted into .8829 share of FBS Common Stock on
the Effective Date with cash paid in lieu of fractional shares. Each outstanding
share of FBS capital stock will remain outstanding and unchanged following the
Merger. Based on the number of shares of FirsTier Common Stock actually
outstanding on the record date for the FirsTier Special Meeting, holders of
FirsTier Common Stock other than FBS would receive an aggregate of 16,414,117
shares of FBS Common Stock upon consummation of the Merger and would hold in the
aggregate approximately 10.83% of the FBS Common Stock outstanding immediately
after consummation of the Merger, based on the number of shares of FBS Common
Stock outstanding at January 4, 1996. Based on the total number of shares and
rights to acquire shares of FirsTier Common Stock outstanding on such record
date, a maximum aggregate of 16,950,057 shares of FBS Common Stock could be
issued to persons other than FBS in the Merger, or approximately 11.15% of the
FBS Common Stock outstanding immediately after consummation of the Merger, based
on the number of shares of FBS Common Stock outstanding at January 4, 1996.
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If between the date of the Merger Agreement and the Effective Date there
shall have been a "Significant Decline" in the "Average Closing Price" of FBS
Common Stock compared to $43.0417, FirsTier may, at its option, abandon and
terminate the Merger Agreement before it takes effect. See "The Merger --
Termination."
The Merger is subject to a number of other conditions, including the receipt
of required regulatory approvals and approval of the shareholders of FirsTier.
See "The Merger -- Conditions to Consummation of the Merger."
Pursuant to the Merger Agreement, the certificate of incorporation and
bylaws of FBS as in effect prior to the Effective Date will be the certificate
of incorporation and bylaws of FBS, as the surviving corporation in the Merger,
after the Effective Date. In addition, the officers and directors of FBS prior
to the Effective Date will be the officers and directors of FBS, as the
surviving corporation in the Merger, after the Effective Date.
SPECIAL MEETING OF FIRSTIER SHAREHOLDERS
The Special Meeting to consider and vote upon the Merger Agreement will be
held in Omaha, Nebraska, in the Second Floor Board Room of FirsTier at 1700
Farnam Street, on February 16, 1996 at 10:00 a.m. local time. Only holders of
record of FirsTier Common Stock at the close of business on January 4, 1996 (the
"Record Date"), will be entitled to notice of and to vote at the Special
Meeting. At the close of business on the Record Date, there were outstanding and
entitled to vote 18,715,040 shares of FirsTier Common Stock. Each share of
FirsTier Common Stock is entitled to one vote on the Merger Agreement. See
"Information Concerning the Special Meeting."
VOTE REQUIRED TO APPROVE THE MERGER; QUORUM
Pursuant to Nebraska law, approval of the Merger Agreement requires the
affirmative vote of at least two-thirds of all shares of FirsTier Common Stock
outstanding at the Record Date. A majority of all shares of FirsTier Common
Stock outstanding and entitled to vote, represented in person or by proxy, will
constitute a quorum for the Special Meeting. Approval of the Merger Agreement by
the shareholders of FBS is not required under applicable law.
It is expected that all of the 3,032,654 shares of FirsTier Common Stock
beneficially owned by directors and executive officers, and their affiliates, of
FirsTier at the Record Date (approximately 16.20% of the total number of
outstanding shares of FirsTier Common Stock at such date) will be voted for
approval of the Merger Agreement. As of the Record Date, FBS beneficially owned
123,900 shares of FirsTier Common Stock, and directors and officers of FBS and
their affiliates beneficially owned less than 1% of the outstanding shares of
FirsTier Common Stock. See "Information Concerning the Special Meeting."
RECOMMENDATION OF THE FIRSTIER BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FIRSTIER RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE MERGER AGREEMENT.
The FirsTier Board of Directors believes that the terms of the Merger
Agreement are fair and in the best interests of FirsTier and its shareholders.
The terms of the Merger Agreement were reached on the basis of arms' length
negotiations between FirsTier and FBS. In the course of reaching its decision to
approve the Merger Agreement, the FirsTier Board of Directors consulted with its
legal advisors regarding the legal terms of the Merger and its financial
advisor, Morgan Stanley & Co. Incorporated, regarding the fairness from a
financial point of view to the holders of FirsTier Common Stock (other than FBS
and its affiliates) of the exchange ratio in the Merger Agreement. See "The
Merger -- Background and Reasons for the Merger; Recommendation of the FirsTier
Board of Directors."
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
CHANGE OF CONTROL BONUS POOL PLAN. The FirsTier Change of Control Bonus
Pool Plan provides that a bonus pool will be established on the business day
preceding the consummation of the Merger for payment to certain executives of
FirsTier. The size of the bonus pool is based on increases in the price of
FirsTier Common Stock between a date chosen by a committee of the FirsTier Board
of Directors and the time of the Merger. Notwithstanding the terms of the plan,
FirsTier (with the consent of FBS) established the amount of the Change in
Control Bonus Pool at $7 million. Certain of such payments were made by FirsTier
in 1995, were not contingent upon consummation of the Merger, and are subject to
reimbursement by FBS in the event that the Merger is not consummated. See "The
Merger -- Interests of Certain Persons in the Merger -- Change of Control Bonus
Pool Plan."
SEVERANCE AGREEMENTS. Aaron C. Hilkemann, Vice President and Director of
Financial Operations of FirsTier, is party to a severance agreement with
FirsTier pursuant to which he is entitled to receive certain benefits if his
employment is terminated at any time within one year after a "change of control"
(as defined in such agreement and which would include the Merger) or if he
voluntarily resigns within the first six months after the change of control.
Certain of such payments were made by FirsTier in 1995, were not contingent upon
consummation of the Merger, and are subject to reimbursement by FBS in the event
that the Merger is not consummated. See "The Merger -- Interests of Certain
Persons in the Merger -- Severance Agreement."
EMPLOYMENT AGREEMENTS. Each of David A. Rismiller, Chairman, President and
Chief Executive Officer of FirsTier, and Jack R. McDonnell, Executive Vice
President and Chief Operating Officer of FirsTier, are parties to employment
agreements with FirsTier pursuant to which they are entitled to receive certain
benefits if their employment is terminated under certain circumstances following
the Merger. Certain of such payments were made by FirsTier in 1995, were not
contingent upon consummation of the Merger, and are subject to reimbursement by
FBS in the event that the Merger is not consummated. See "The Merger --
Interests of Certain Persons in the Merger -- Employment Agreement with David A.
Rismiller" and "-- Employment Agreement with Jack R. McDonnell."
DIRECTORS' AND OFFICERS' INSURANCE; LIMITATION OF LIABILITY OF FIRSTIER
DIRECTORS AND OFFICERS. The Merger Agreement requires that, for a period of five
years after the Effective Date, FBS shall use its best efforts to provide that
portion of directors' and officers' liability insurance that serves to reimburse
officers and directors of FirsTier with respect to claims against such officers
and directors arising from facts or events which occurred before the Effective
Date. Such insurance shall be of at least the same coverage and amounts, and
contain terms and conditions no less advantageous, as that coverage currently
provided by FirsTier, subject to certain requirements and limitations. The
Merger Agreement also requires FBS, for a period of six years after the
Effective Date, to indemnify present and former officers, directors and
employees of FirsTier (including its subsidiaries) against certain losses and
other expenses in connection with claims which arise out of such persons' having
served in such capacities and pertain to matters or facts arising, existing or
occurring before the Effective Date (including, without limitation, the
transactions contemplated by the Merger Agreement).
The foregoing interests of members of management or shareholders of FirsTier
and its affiliates in the Merger may mean that such persons have personal
interests in the Merger which may not be identical to the interests of
nonaffiliated shareholders. See "The Merger -- Interests of Certain Persons in
the Merger."
OPINION OF FIRSTIER FINANCIAL ADVISOR
FirsTier's financial advisor, Morgan Stanley & Co. Incorporated has rendered
its opinion dated January 19, 1996 to the Board of Directors of FirsTier that,
as of that date, the exchange ratio in the Merger Agreement was fair from a
financial point of view to the holders of FirsTier Common Stock (other than FBS
and its affiliates). A copy of the Morgan Stanley & Co. Incorporated opinion
dated January 19, 1996 is attached as Appendix B hereto and should be read in
its entirety with respect to the assumptions made, other matters considered and
limitations on the reviews undertaken.
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NO SOLICITATION; OPTION GRANTED TO FBS
The Merger Agreement provides that FirsTier (including its subsidiaries)
will not, and will cause its officers, directors, employees, agents and
affiliates, not to, directly or indirectly, solicit, authorize, initiate or
encourage submission of, any proposal, offer, tender offer or exchange offer
from any person or entity (including officers or employees of FirsTier or such
subsidiaries) relating to any liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or a material portion of
the assets or deposits of, or any equity interest in, FirsTier or any of its
subsidiaries, or, unless FirsTier shall have determined, after receipt of a
written opinion of counsel to FirsTier (a copy of which opinion shall be
delivered to FBS), that the Board of Directors of FirsTier has a fiduciary duty
to do so, (i) participate in any negotiations in connection with or in
furtherance of any of the foregoing or (ii) permit any person other than FBS and
its representatives to have any access to the facilities of, or furnish to any
person other than FBS and its representatives any non-public information with
respect to, FirsTier or any of its subsidiaries in connection with or in
furtherance of any of the foregoing. See "The Merger -- Limitation on
Negotiations."
Following the execution of the Merger Agreement, FirsTier granted FBS an
option (the "Option") to purchase authorized but unissued or treasury shares of
FirsTier Common Stock in a number approximately equal to 19.9% of the number of
shares of FirsTier Common Stock outstanding immediately before exercise of the
Option. The exercise price of the Option is $37.00 per share, subject to
adjustment under specified circumstances. The Option is exercisable only upon
the occurrence of specified events relating generally to the making by third
parties of offers to acquire FirsTier and the acquisition by third parties of
specified percentages of FirsTier Common Stock. To the best knowledge of
FirsTier and FBS, no event giving rise to the right to exercise the Option has
occurred as of the date of this Proxy Statement/Prospectus. See "The Merger --
Option Granted to FBS."
The foregoing provisions may have the effect of discouraging competing
offers to acquire or merge with FirsTier.
REGULATORY APPROVALS REQUIRED
The Merger is subject to the prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act and, with respect to limited aspects of the Merger, the Wyoming
Commissioner of Banking and the Iowa Superintendent of Banking. Additionally, a
notice filing with the Arizona Department of Insurance is required. Federal
Reserve Board approval was obtained on December 18, 1995, the Wyoming
Commissioner of Banking Commission approval was obtained on December 8, 1995 and
the Iowa Superintendent of Banking approval was obtained on January 17, 1996.
The Arizona notice was filed on December 26, 1995 and the Arizona Department of
Insurance stated that it had no objection to the Merger by letter dated January
9, 1996. See "The Merger -- Regulatory Approvals Required."
CONDITIONS, WAIVER AND AMENDMENT AND TERMINATION
The respective obligations of FBS and FirsTier to consummate the Merger are
subject to the satisfaction of certain conditions, including, among others, (i)
the receipt of all required regulatory approvals with respect to the Merger,
(ii) the approval of the Merger Agreement by the requisite vote of FirsTier
shareholders and (iii) certain other conditions customary in transactions of
this kind. A failure of any of such conditions to be satisfied would, if not
waived, prevent consummation of the Merger.
At any time before the Effective Date, any party to the Merger Agreement may
(i) extend the time for performance of any obligations or other acts of any
other party under the Merger Agreement or (ii) waive compliance with any of the
agreements of the other parties or with any conditions of its own obligations
contained in the Merger Agreement, to the extent that such obligations,
agreements and conditions are intended for such party's own benefit. In
addition, the Merger Agreement may be amended by written instrument approved by
the parties and signed on behalf of each of the parties. The Merger Agreement
may be amended without the approval of FirsTier shareholders, except that
11
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no such amendment will be made following approval of the Merger Agreement by
FirsTier shareholders if such amendment changes the number of shares of FBS
Common Stock for which the FirsTier Common Stock is to be exchanged or otherwise
materially adversely affects the rights of such shareholders. See "The Merger --
Waiver and Amendment."
The Merger Agreement may be terminated at any time before the Effective Date
(i) by mutual consent of FBS and FirsTier; (ii) by either FBS or FirsTier if any
of the conditions to such party's obligation to consummate the transaction
contemplated in the Merger Agreement have become impossible to satisfy; (iii) by
either FBS or FirsTier if the Merger is not duly approved by the FirsTier
shareholders; (iv) by either FBS or FirsTier if the Effective Date is not on or
before March 31, 1996 (unless the failure to consummate the Merger by such date
shall be due to the action or failure to act of the party seeking to terminate
the Merger Agreement in breach of such party's obligations thereunder); (v) by
FBS if, after the date of the Merger Agreement, the Board of Directors of
FirsTier shall have withdrawn, modified or changed its recommendation of the
Merger Agreement or the Merger; (vi) by FBS if there shall have occurred
specified events relating generally to the making by third parties of offers to
acquire FirsTier and the acquisition by third parties of specified percentages
of FirsTier Common Stock; and (vii) by FirsTier if there shall have been a
"Significant Decline" in the "Average Closing Price" of FBS Common Stock
compared to the price of $43.0417. See "The Merger -- Termination" and "--
Conditions to Consummation of the Merger."
EFFECTIVE DATE OF THE MERGER
The Merger will become effective upon the filing of certificates of merger
relating thereto with the Secretaries of State in the States of Delaware and
Nebraska. The Merger Agreement provides that the parties to the Merger Agreement
will cause such certificates of merger to be so filed as soon as practicable
after receipt of all necessary regulatory approvals, provided that each of the
conditions to consummation of the Merger has been satisfied or waived. The
Merger cannot become effective until FirsTier shareholders have approved the
Merger Agreement and all required regulatory approvals and actions have been
obtained and taken. The Merger Agreement may be terminated by either FBS or
FirsTier if the Merger has not become effective by March 31, 1996 (unless
failure to consummate the Merger by such date shall be due to the action or
failure to act of the party seeking to terminate the Merger Agreement in breach
of such party's obligations thereunder). Accordingly, there can be no assurance
as to whether or when the Merger will become effective. See "The Merger --
Effective Date of the Merger," "-- Conditions to Consummation of the Merger" and
"-- Regulatory Approvals Required."
EXCHANGE OF FIRSTIER STOCK CERTIFICATES
Following the Merger, First Chicago Trust Company of New York (the "Exchange
Agent") will send a notice and transmittal form, with instructions, to each
holder of FirsTier Common Stock of record at the time the Merger becomes
effective advising such holder of the effectiveness of the Merger and of the
procedure for surrendering to the Exchange Agent their certificates formerly
evidencing FirsTier Common Stock in exchange for new certificates evidencing FBS
Common Stock. FIRSTIER SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE THE NOTICE AND TRANSMITTAL FORM FROM THE EXCHANGE AGENT. See
"The Merger -- Surrender of FirsTier Common Stock Certificates."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO FIRSTIER SHAREHOLDERS
The obligations of both FirsTier and FBS to consummate the Merger are
conditioned on, among other things, the receipt of an opinion of counsel of
Wachtell, Lipton, Rosen & Katz, counsel to FirsTier, to the effect that for
federal income tax purposes (i) the Merger will qualify as a "reorganization"
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) no gain or loss will be recognized by any FirsTier shareholder
(except in connection with the receipt of cash) upon the exchange of FirsTier
Common Stock for FBS Common Stock in the Merger, (iii) the basis of the FBS
Common Stock received by a FirsTier shareholder who exchanges FirsTier Common
Stock for FBS Common Stock will be the same as the basis of the FirsTier Common
Stock surrendered in exchange therefor (subject to any adjustments required as
the result of the receipt of cash in lieu of
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a fractional share of FBS Common Stock), (iv) the holding period of the FBS
Common Stock received by a FirsTier shareholder receiving FBS Common Stock will
include the period during which the FirsTier Common Stock surrendered in
exchange therefor was held (provided that the FirsTier Common Stock of such
FirsTier shareholder was held as a capital asset as of the Effective Date), and
(v) cash received by a FirsTier shareholder in lieu of a fractional share
interest of FBS Common Stock will be treated as having been received as a
distribution in full payment in exchange for the fractional share interest of
FBS Common Stock which such FirsTier shareholder would otherwise be entitled to
receive, and will generally qualify as capital gain or loss (assuming the
FirsTier Common Stock was a capital asset in such FirsTier shareholder's hands
at the Effective Date). Wachtell, Lipton, Rosen & Katz has delivered to FirsTier
an opinion of counsel to the foregoing effect, which opinion is based upon
various representations and is subject to a number of assumptions and
conditions. EACH FIRSTIER SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER, AS WELL AS
ANY APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES, BASED UPON SUCH
SHAREHOLDER'S OWN PARTICULAR FACTS AND CIRCUMSTANCES. See "The Merger -- Certain
Federal Income Tax Consequences to FirsTier Shareholders."
RESALES OF FBS COMMON STOCK
The shares of FBS Common Stock issuable to shareholders of FirsTier upon
consummation of the Merger may be traded freely by those shareholders who are
not "affiliates" of FirsTier or FBS. FirsTier has agreed in the Merger Agreement
to use its best efforts to obtain signed representations from each shareholder
of FirsTier who may reasonably be deemed an "affiliate" of FirsTier (as such
term is used in Rule 145 under the Securities Act) to the effect that such
person will not dispose of shares issued to him pursuant to the Merger except in
compliance with Rule 145 under the Securities Act, in a transaction that, in the
opinion of counsel reasonably satisfactory to FBS, is otherwise exempt from the
registration requirements under the Securities Act, or in an offering registered
under the Securities Act. See "The Merger -- Resale of FBS Common Stock Received
by FirsTier Shareholders."
ACCOUNTING TREATMENT
FBS intends to account for the Merger using the purchase method under
generally accepted accounting principles. See "The Merger -- Accounting
Treatment."
NO DISSENTERS RIGHTS OF APPRAISAL
Under Nebraska law, holders of stock in a bank holding company such as
FirsTier are not entitled to employ the procedure whereby shareholders may elect
to have the "fair value" of their shares (determined in accordance with Nebraska
law) judicially appraised and paid to them. Accordingly, all holders of FirsTier
Common Stock will be required to exchange their shares for shares of FBS Common
Stock. See "The Merger -- No Dissenters Rights for FirsTier Shareholders."
MARKETS AND MARKET PRICES
FBS Common Stock is listed on the NYSE under the symbol "FBS" and FirsTier
Common Stock is listed on the Nasdaq National Market System under the symbol
"FRST." The following table sets forth the closing price per share of FBS Common
Stock, the closing price per share of FirsTier Common Stock and the "equivalent
per share price" (as defined below) of FirsTier Common Stock as of (i) August 4,
1995, the last trading day before FBS announced execution of the Merger
Agreement, and (ii) January 17, 1996. The "equivalent per share price" of
FirsTier Common Stock as of such dates equals the closing price per share of FBS
Common Stock on such dates multiplied times .8829, which
13
<PAGE>
is the number of shares of FBS Common Stock to be issued in exchange for each
share of FirsTier Common Stock pursuant to the Merger Agreement, subject to
certain adjustments. See "The Merger -- Terms of the Merger; Consideration to be
Received by FirsTier Shareholders."
<TABLE>
<CAPTION>
MARKET PRICE FBS FIRSTIER EQUIVALENT
PER SHARE AT: COMMON STOCK COMMON STOCK PER SHARE PRICE
- --------------------- -------------- -------------- ---------------
<S> <C> <C> <C>
August 4, 1995 $ 43.00 $ 39.00 $ 37.96
January 17, 1996 $ 48.25 $ 42.50 $ 42.60
</TABLE>
FBS and FirsTier believe the FirsTier Common Stock presently trades on the basis
of the value of the FBS Common Stock expected to be issued in exchange for such
FirsTier Common Stock in the Merger, discounted for the time value of money and
for the uncertainties associated with any transaction. Apart from the publicly
disclosed information concerning FBS which is included and incorporated by
reference in this Proxy Statement/Prospectus, FBS does not know what factors
account for changes in the market price of its stock.
FirsTier shareholders are advised to obtain current market quotations for
FBS Common Stock and FirsTier Common Stock. No assurance can be given as to the
market prices of FBS Common Stock or FirsTier Common Stock at any time before
the Merger becomes effective or as to the market price of FBS Common Stock at
any time thereafter. Because the exchange ratio of FBS Common Stock for FirsTier
Common Stock is fixed at .8829 and will not increase or decrease due to
fluctuations in the market price of either stock, it will not compensate
FirsTier shareholders for certain decreases in the market price of FBS Common
Stock which could occur before the Merger becomes effective. As a result, in the
event the market price of FBS Common Stock decreases, the value of the FBS
Common Stock to be received in the Merger in exchange for FirsTier Common Stock
would decrease. In the event the market price of FBS Common Stock instead
increases, the value of the FBS Common Stock to be received in the Merger in
exchange for FirsTier Common Stock would increase. See "-- The Proposed Merger"
above and "The Merger -- Terms of the Merger; Consideration to be Received by
FirsTier Shareholders."
If between the date of the Merger Agreement and the Effective Date there
shall have been a "Significant Decline" in the "Average Closing Price" of FBS
Common Stock compared to the price of $43.0417, FirsTier may, at its option,
abandon and terminate the Merger Agreement before it takes effect. See "The
Merger -- Termination."
Following the Merger, FirsTier Common Stock will no longer exist and, as a
result, will no longer be listed on the Nasdaq National Market System.
DIFFERENCES IN RIGHTS OF FIRSTIER SHAREHOLDERS
Upon consummation of the Merger, holders of FirsTier Common Stock will
become holders of FBS Common Stock. As a result, their rights as shareholders,
which are now governed by Nebraska corporate law and FirsTier's Articles of
Incorporation and Bylaws, will be governed by Delaware corporate law and FBS's
Certificate of Incorporation and Bylaws. Because of certain differences between
Nebraska and Delaware corporate law and between the provisions of FirsTier's
Articles of Incorporation and Bylaws and FBS's Certificate of Incorporation and
Bylaws, the current rights of FirsTier shareholders will change significantly
after the Merger. For a discussion of the material differences between the
rights of shareholders of FirsTier and the rights of shareholders of FBS, see
"The Merger -- Certain Differences in Rights of FirsTier Shareholders."
EXPENSES
The Merger Agreement provides that all costs and expenses incurred in
connection with such agreement and the transactions contemplated thereby shall
be paid by the party incurring such costs and expenses. See "The Merger --
Expenses."
14
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
The following table presents selected comparative unaudited per share data
for FBS on a historical and pro forma combined basis, and for FirsTier on a
historical and pro forma equivalent basis, giving effect to the Merger using the
purchase method of accounting, and to the First Interstate Transaction using the
pooling-of-interests method of accounting. The information presented below is
derived from the consolidated historical financial statements of FBS, FirsTier
and First Interstate, including the related notes thereto, and the unaudited pro
forma combined financial information, including the notes thereto, incorporated
by reference into, or appearing elsewhere in, this Proxy Statement/Prospectus.
This information should be read in conjunction with such historical and pro
forma financial statements and the related notes thereto. See "Incorporation of
Certain Documents by Reference" and "Unaudited Pro Forma Condensed Combined
Financial Information."
The per share data included within are presented for comparative purposes
only and are not necessarily indicative of the future combined financial
position, the results of the future operations or the actual results or combined
financial position of the combined entity that would have been achieved had the
Merger and the First Interstate Transaction been consummated prior to the
periods indicated.
<TABLE>
<CAPTION>
FBS COMMON STOCK FIRSTIER COMMON STOCK
------------------------------------ ------------------------------------
PRO FORMA COMBINED PRO FORMA EQUIVALENT
------------------------- -------------------------
FBS, FIRSTIER FBS, FIRSTIER
AND AND
FBS AND FIRST FBS AND FIRST
HISTORICAL FIRSTIER INTERSTATE HISTORICAL FIRSTIER INTERSTATE
--------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
BOOK VALUE (1):
September 30, 1995........................ $ 20.33 $ 22.59 $ 19.30 $ 20.30 $ 19.94 $ 17.04
December 31, 1994......................... 18.63 20.06 17.72 18.53 17.71 15.64
DIVIDENDS DECLARED (2):
Nine Months Ended:
September 30, 1995...................... 1.0875 1.0875 1.0875 0.86 0.9602 0.9602
Year Ended:
December 31, 1994....................... 1.16 1.16 1.16 1.04 1.02 1.02
INCOME FROM CONTINUING OPERATIONS (3):
Nine Months Ended:
September 30, 1995...................... 3.05 3.00 3.13 2.28 2.65 2.76
Year Ended:
December 31, 1994....................... 2.21 2.24 2.90 2.69 1.98 2.56
</TABLE>
(Notes on following page)
15
<PAGE>
NOTES TO COMPARATIVE UNAUDITED PER SHARE DATA
(1) The pro forma FBS and FirsTier combined book values per share of FBS Common
Stock are based upon the pro forma total equity for FBS and FirsTier,
divided by the total pro forma common shares of the combined entity assuming
conversion of the FirsTier common stock at the exchange ratio, net of
related repurchases of existing FBS Common Stock equal to one-half of the
FBS Common Stock to be issued in connection with the Merger. The pro forma
FBS, FirsTier and First Interstate combined book values per share of FBS
Common Stock are based upon the pro forma total common equity for FBS,
FirsTier and First Interstate, divided by the total pro forma common shares
of the combined entity assuming conversion of FirsTier and First Interstate
common stock at the respective exchange ratios, net of related repurchases
of existing FBS Common Stock equal to one-half of the FBS Common Stock to be
issued in connection with the Merger. The pro forma equivalent book values
per share of FirsTier Common Stock represent the pro forma combined amounts
per share of FBS Common Stock multiplied by the Exchange Ratio. See "The
Merger -- Terms of the Merger; Consideration to be Received by FirsTier
Shareholders."
(2) The pro forma combined dividends declared assume no changes in the
historical dividends declared per share of FBS Common Stock. The pro forma
equivalent dividends per share of FirsTier Common Stock represent the cash
dividends declared on one share of FBS Common Stock multiplied by the
Exchange Ratio. See "The Merger -- Terms of the Merger; Consideration to be
Received by FirsTier Shareholders."
(3) The pro forma FBS and FirsTier combined income from continuing operations
per share of FBS Common Stock are based upon the pro forma combined income
from continuing operations for FBS and FirsTier, divided by the average pro
forma common shares of the combined entity. The pro forma FBS, FirsTier and
First Interstate combined income from continuing operations per share of FBS
Common Stock are based upon the pro forma combined income from continuing
operations for FBS, FirsTier and First Interstate, divided by the average
pro forma common shares of the combined entity. The pro forma equivalent
income from continuing operations per share of FirsTier Common Stock
represents the pro forma combined income per share of FBS Common Stock
multiplied by the Exchange Ratio. See "The Merger -- Terms of the Merger;
Consideration to be Received by FirsTier Shareholders."
After the Merger FBS expects to achieve operating cost savings by various
means including reductions in staff and consolidation of certain data processing
and other back office operations. No adjustment has been included in the
unaudited pro forma combined financial statements for the anticipated operating
cost savings.
Financial results for FBS for 1994 include merger-related items with an
after-tax effect of $156.9 million ($1.15 per share) associated with the merger
with Metropolitan Financial Corporation. Financial results for FBS in 1993
include merger-related charges with an after-tax effect of $50.0 million ($.37
per share) associated with the merger with Colorado National Bankshares, Inc.
Included in FBS results of operations in 1992 are after-tax merger-related
charges of $81.8 million ($.66 per share) associated with the merger with
Western Capital Investment Corporation and Bank Shares Incorporated.
16
<PAGE>
SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The following tables set forth certain selected historical consolidated
financial information for FBS, FirsTier and First Interstate, and certain
unaudited pro forma combined financial information giving effect to the Merger
using the purchase method of accounting (included in the nine months ended
September 30, 1995 and the year ended December 31, 1994 only) and the pending
First Interstate Transaction using the pooling-of-interests method of
accounting. The pro forma combined balance sheet information for September 30,
1995 also includes Midwestern Services, Inc. and Southwest Holdings, Inc., both
of which were acquired by FBS on November 1, 1995, as well as the intangible
assets related to the pending purchase by FBS of the corporate trust
relationships and accounts of BankAmerica Corporation (the "Corporate Trust
Acquisition"). The pro forma combined income statement information does not
include Midwestern Services, Inc. and Southwest Holdings, Inc., or the fees
attributable to the Corporate Trust Acquisition, as they are immaterial. The
historical selected financial data for the years ended December 31, 1990 through
1994 are derived from audited consolidated financial statements of FBS,
FirstTier and First Interstate. The historical selected financial data for the
nine months ended September 30, 1994 and 1995 are derived from the unaudited
historical financial statements of FBS, FirsTier and First Interstate and
reflect, in the respective opinions of management of FBS, FirsTier and First
Interstate, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. This information should be read
in conjunction with the consolidated historical financial statements of FBS,
FirsTier and First Interstate, and the related notes thereto, incorporated by
reference in this Proxy Statement/Prospectus, and in conjunction with the
unaudited pro forma condensed combined financial information, including the
notes thereto, appearing elsewhere in this Proxy Statement/Prospectus. See
"Incorporation of Certain Documents by Reference" and "Unaudited Pro Forma
Condensed Combined Financial Information."
The unaudited pro forma combined financial data are presented for
informational purposes only and are not necessarily indicative of the future
combined financial position or results of the future operations of the combined
entity or the actual results or combined financial position that would have been
achieved had the Merger and the other transactions described above been
consummated on these dates or prior to the periods presented. In addition,
results for the nine months ended September 30, 1995 are not necessarily
indicative of results expected for the entire year.
17
<PAGE>
HISTORICAL SELECTED FINANCIAL DATA OF
FIRST BANK SYSTEM, INC.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1995 1994 1994 (4) 1993 (5) 1992 (6) 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Interest income......................... $ 1,903.0 $ 1,668.2 $ 2,288.1 $ 2,134.5 $ 2,106.1 $ 2,369.0 $ 2,745.3
Interest expense........................ 823.1 615.4 868.7 796.3 953.1 1,354.2 1,844.2
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 1,079.9 1,052.8 1,419.4 1,338.2 1,153.0 1,014.8 901.1
Provision for credit losses............. 84.0 79.6 123.6 133.1 191.7 210.2 219.7
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for
credit losses.......................... 995.9 973.2 1,295.8 1,205.1 961.3 804.6 681.4
Noninterest income...................... 585.8 497.5 558.9 618.9 613.7 557.0 472.1
Noninterest expense..................... 918.6 913.7 1,349.4 1,264.7 1,246.3 1,067.9 1,063.0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing operations before
income taxes and cumulative effect of
accounting changes..................... 663.1 557.0 505.3 559.3 328.7 293.7 90.5
Applicable income taxes................. 245.7 210.1 191.8 198.6 115.7 30.3 6.5
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing operations before
cumulative effect of accounting
changes................................ 417.4 346.9 313.5 360.7 213.0 263.4 84.0
(Loss) income from discontinued
operations (1)......................... -- (6.6) (8.5) 2.5 2.7 1.1 0.6
Cumulative effect of accounting
changes................................ -- -- -- -- 233.2 -- 1.0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............................. $ 417.4 $ 340.3 $ 305.0 $ 363.2 $ 448.9 $ 264.5 $ 85.6
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Average common and common equivalent
shares................................. 135.0 136.0 136.3 134.6 124.7 117.3 106.1
PER COMMON SHARE:
Income from continuing operations before
cumulative effect of accounting
changes................................ $ 3.05 $ 2.47 $ 2.21 $ 2.46 $ 1.46 $ 2.00 $ 0.53
Net income.............................. 3.05 2.43 2.15 2.48 3.35 2.01 0.55
Dividends paid.......................... 1.0875 0.87 1.16 1.00 0.88 0.82 0.82
Common shareholders' equity............. 20.33 19.77 18.63 18.91 17.89 14.67 13.28
CONSOLIDATED BALANCE SHEET DATA AT PERIOD
END:
Assets.................................. $ 32,958 $ 34,364 $ 34,128 $ 33,370 $ 32,758 $ 28,508 $ 29,339
Securities.............................. 3,302 3,990 5,185 5,030 6,092 4,744 5,061
Loans................................... 25,877 24,360 24,556 23,497 20,692 18,766 18,870
Deposits................................ 21,895 24,299 24,256 26,386 26,395 22,969 22,772
Long-term debt.......................... 3,127 2,730 2,981 2,070 1,151 1,360 2,085
Shareholders' equity.................... 2,736 2,800 2,612 2,744 2,745 2,131 1,826
SELECTED FINANCIAL DATA AT PERIOD END:
Common shareholders' equity to assets... 8.0% 7.8% 7.3% 7.4% 7.2% 5.9% 5.1%
Total shareholders' equity to assets.... 8.3 8.1 7.7 8.2 8.4 7.5 6.2
Tier 1 capital ratio (2)................ 7.4 8.2 7.3 9.4 9.8 8.5 6.8
Total capital ratio (2)................. 12.3 12.2 11.4 13.4 13.0 11.3 9.7
Allowance for credit losses............. $ 469 $ 478 $ 475 $ 466 $ 484 $ 453 $ 484
Percentage of loans................... 1.81% 1.96% 1.93% 1.98% 2.34% 2.42% 2.57%
Nonperforming assets (3)................ $ 167 $ 245 $ 232 $ 341 $ 511 $ 658 $ 737
Percentage of total assets............ 0.51% 0.71% 0.68% 1.02% 1.56% 2.31% 2.51%
SELECTED FINANCIAL DATA FOR THE PERIOD:
Return on average assets from continuing
operations before cumulative effect of
accounting changes..................... 1.70% 1.39% 0.93% 1.12% 0.74% 0.95% 0.28%
Return on average assets................ 1.70 1.36 0.91 1.13 1.56 0.96 0.29
Return on average common equity from
continuing operations before cumulative
effect of accounting changes........... 20.9 17.3 11.6 13.8 8.7 14.7 4.1
Return on average common equity......... 20.9 17.0 11.2 13.9 20.0 14.8 4.2
Net interest margin (taxable-equivalent
basis)................................. 4.94 4.72 4.74 4.69 4.54 4.15 3.46
Net interest margin without taxable-
equivalent increments.................. 4.89 4.67 4.69 4.63 4.45 4.01 3.29
</TABLE>
See notes to historical selected financial data
18
<PAGE>
HISTORICAL SELECTED FINANCIAL DATA OF
FIRST INTERSTATE BANCORP
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1995 (7) 1994 1994 (7) 1993 (8) 1992 1991 1990 (9)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Interest income......................... $ 2,789.1 $ 2,329.8 $ 3,192.0 $ 2,944.2 $ 3,189.7 $ 3,935.3 $ 4,820.8
Interest expense........................ 884.5 619.8 865.5 872.1 1,175.1 1,843.6 2,517.6
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 1,904.6 1,710.0 2,326.5 2,072.1 2,014.6 2,091.7 2,303.2
Provision for credit losses............. -- -- -- 112.6 314.3 810.2 499.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for
credit losses.......................... 1,904.6 1,710.0 2,326.5 1,959.5 1,700.3 1,281.5 1,803.8
Noninterest income...................... 823.3 792.0 1,054.3 954.2 912.1 1,184.4 1,203.5
Noninterest expense..................... 1,638.3 1,659.6 2,197.8 2,032.4 2,209.2 2,732.2 2,562.3
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes,
extraordinary item and cumulative
effect of accounting changes........... 1,089.6 842.4 1,183.0 881.3 403.2 (266.3) 445.0
Applicable income taxes................. 419.9 320.1 449.5 319.9 120.9 21.8 6.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary item
and cumulative effect of accounting
changes................................ 669.7 522.3 733.5 561.4 282.3 (288.1) 438.6
Extraordinary item...................... -- -- -- (24.8) -- -- --
Cumulative effect of accounting
changes................................ -- -- -- 200.1 -- -- 30.1
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)....................... $ 669.7 $ 522.3 $ 733.5 $ 736.7 $ 282.3 $ (288.1) $ 468.7
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Average common and common equivalent
shares................................. 77.2 81.7 80.4 77.0 69.1 62.5 58.9
PER COMMON SHARE:
Income (loss) before extraordinary item
and cumulative effect of accounting
changes................................ $ 8.36 $ 6.09 $ 8.71 $ 6.68 $ 3.23 $ (5.24) $ 6.79
Extraordinary item...................... -- -- -- (0.32) -- -- --
Cumulative effect of accounting
changes................................ -- -- -- 2.60 -- -- 0.51
Net income (loss)....................... 8.36 6.09 8.71 8.96 3.23 (5.24) 7.30
Dividends paid.......................... 2.30 2.00 2.75 1.60 1.20 1.80 3.00
Common shareholders' equity............. 47.95 41.24 41.59 41.36 35.04 32.57 39.78
CONSOLIDATED BALANCE SHEET DATA AT PERIOD
END:
Assets.................................. $ 55,067 $ 54,207 $ 55,813 $ 51,461 $ 50,863 $ 48,922 $ 51,356
Securities.............................. 9,432 14,744 13,851 16,542 13,913 8,496 6,975
Loans................................... 35,967 30,331 33,222 25,988 24,201 28,182 33,007
Deposits................................ 48,236 48,055 48,427 44,701 43,675 41,433 43,141
Long-term debt.......................... 1,368 1,261 1,388 1,533 2,702 3,108 3,178
Shareholders' equity.................... 3,981 3,550 3,436 3,548 3,251 2,639 2,868
SELECTED FINANCIAL DATA AT PERIOD END:
Common shareholders' equity to assets... 6.6% 5.9% 5.5% 6.2% 5.2% 4.2% 4.8%
Total shareholders' equity to assets.... 7.2 6.5 6.2 6.9 6.4 5.4 5.6
Tier 1 capital ratio (2)................ 7.5 8.6 7.2 9.9 9.4 6.3 5.6
Total capital ratio (2)................. 10.5 11.5 10.2 13.1 13.9 10.6 9.4
Allowance for credit losses............. $ 847 $ 952 $ 934 $ 1,001 $ 1,068 $ 1,273 $ 1,011
Percentage of loans................... 2.35% 3.14% 2.81% 3.85% 4.41% 4.52% 3.06%
Nonperforming assets (3)................ $ 206 $ 291 $ 258 $ 309 $ 751 $ 1,588 $ 1,749
Percentage of total assets............ 0.37% 0.54% 0.46% 0.60% 1.48% 3.25% 3.41%
SELECTED FINANCIAL DATA FOR THE PERIOD:
Return on average assets before
extraordinary item and cumulative
effect of accounting changes........... 1.61% 1.33% 1.38% 1.14% 0.57% (0.59)% 0.81%
Return on average assets................ 1.61 1.33 1.38 1.49 0.57 (0.59) 0.86
Return on average common equity before
extraordinary item and cumulative
effect of accounting changes........... 25.4 20.1 21.6 17.3 9.6 (14.0) 18.2
Return on average common equity......... 25.4 20.1 21.6 23.2 9.6 (14.0) 19.6
Net interest margin (taxable-equivalent
basis)................................. 5.41 5.09 5.14 4.91 4.89 5.04 5.06
Net interest margin without taxable-
equivalent increments.................. 5.37 5.05 5.10 4.87 4.84 4.98 4.95
</TABLE>
See notes to historical selected financial data
19
<PAGE>
HISTORICAL SELECTED FINANCIAL DATA OF
FIRSTIER FINANCIAL, INC.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 (10) 1991 (10) 1990 (10)
---------- ---------- ---------- ---------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Interest income...................... $ 195.0 $ 171.0 $ 231.5 $ 223.8 $ 225.1 $ 251.6 $ 248.1
Interest expense..................... 94.5 69.6 97.1 92.0 103.4 142.8 155.1
---------- ---------- ---------- ---------- ----------- ----------- -----------
Net interest income................ 100.5 101.4 134.4 131.8 121.7 108.8 93.0
Provision for credit losses.......... 0.8 (1.2) (0.2) 5.4 9.7 10.7 27.1
---------- ---------- ---------- ---------- ----------- ----------- -----------
Net interest income after provision
for credit losses................... 99.7 102.6 134.6 126.4 112.0 98.1 65.9
Noninterest income................... 42.4 41.7 52.0 59.0 56.7 54.5 46.1
Noninterest expense.................. 84.0 87.7 118.1 115.4 109.1 107.0 110.2
---------- ---------- ---------- ---------- ----------- ----------- -----------
Income before income taxes........... 58.1 56.6 68.5 70.0 59.6 45.6 1.8
Applicable income taxes.............. 15.5 15.2 17.6 18.8 16.2 11.0 (0.8)
---------- ---------- ---------- ---------- ----------- ----------- -----------
Net income........................... $ 42.6 $ 41.4 $ 50.9 $ 51.2 $ 43.4 $ 34.6 $ 2.6
---------- ---------- ---------- ---------- ----------- ----------- -----------
---------- ---------- ---------- ---------- ----------- ----------- -----------
Average common and common equivalent
shares.............................. 18.7 19.0 18.8 19.1 19.0 19.0 17.2
PER COMMON SHARE:
Net income........................... $ 2.28 $ 2.18 $ 2.69 $ 2.68 $ 2.30 $ 1.85 $ 0.15
Dividends paid....................... 0.86 0.78 1.04 0.66 0.47 0.42 0.40
Common shareholders' equity.......... 20.30 18.43 18.53 17.30 15.09 13.22 11.97
CONSOLIDATED BALANCE SHEET DATA AT
PERIOD END:
Assets............................... $ 3,585 $ 3,517 $ 3,540 $ 3,400 $ 3,302 $ 3,113 $ 3,076
Securities........................... 1,002 990 938 1,035 961 803 676
Loans................................ 2,191 2,056 2,149 1,953 1,875 1,785 1,801
Deposits............................. 2,776 2,624 2,815 2,721 2,776 2,552 2,583
Long-term debt....................... 164 148 154 38 23 47 35
Shareholders' equity................. 376 343 342 326 284 248 206
SELECTED FINANCIAL DATA AT PERIOD END:
Common shareholders' equity to
assets.............................. 10.5% 9.7% 9.7% 9.6% 8.6% 8.0% 6.7%
Total shareholders' equity to
assets.............................. 10.5 9.7 9.7 9.6 8.6 8.0 6.7
Tier 1 capital ratio (2)............. 15.0 14.2 13.5 14.0 13.3 11.5 9.8
Total capital ratio (2).............. 16.3 15.5 14.8 15.2 14.6 12.8 11.3
Allowance for credit losses.......... $ 52 $ 53 $ 53 $ 54 $ 50 $ 46 $ 43
Percentage of loans................ 2.38% 2.59% 2.48% 2.78% 2.69% 2.71% 2.39%
Non-performing assets (3)............ $ 12 $ 15 $ 14 $ 18 $ 28 $ 31 $ 29
Percentage of total assets......... 0.34% 0.41% 0.40% 0.53% 0.85% 1.00% 0.94%
SELECTED FINANCIAL DATA FOR THE PERIOD:
Return on average assets............. 1.59% 1.62% 1.47% 1.54% 1.40% 1.14% 0.09%
Return on average common equity...... 15.9 16.4 14.9 16.6 16.4 14.8 1.2
Net interest margin (taxable-
equivalent basis)................... 4.46 4.68 4.61 4.73 4.71 4.25 4.02
Net interest margin without taxable-
equivalent increments............... 4.11 4.35 4.26 4.63 4.35 4.01 3.75
</TABLE>
See notes to historical selected financial data
20
<PAGE>
NOTES TO HISTORICAL SELECTED FINANCIAL DATA
(1) FBS acquired Edina Realty, Inc., a real estate brokerage, as part of its
merger with Metropolitan Financial Corporation on January 24, 1995. Because
of regulatory restrictions on non-banking activities, FBS has entered into
an agreement to sell Edina Realty, Inc. Accordingly, its operations are
accounted for as discontinued operations.
(2) Capital ratios are computed based on 1992 Federal Reserve Board rules and
regulations, as in effect in 1992.
(3) Includes nonaccrual and restructured loans, other nonperforming assets and
other real estate owned.
(4) Financial results for FBS for 1994 include merger-related items with an
after tax effect of $156.9 million ($1.15 per share) associated with the
merger with Metropolitan Financial Corporation.
(5) The FBS results of operations for the year ended December 31, 1993 include
merger-related charges of $50.0 million ($.37 per share), on an after-tax
basis, associated with FBS's acquisition of Colorado National Bankshares,
Inc.
(6) The FBS results of operations for the year ended December 31, 1992 include
merger-related charges of $81.8 million ($.66 per share), on an after-tax
basis, associated with FBS's acquisition of Western Capital Investment
Corporation and Bank Shares Incorporated. The results of operations for that
year also include the effect of adopting two new accounting standards:
Statement of Financial Accounting Standards No. ("SFAS") 109, "Accounting
for Income Taxes," and SFAS 106 "Employers' Accounting for Postretirement
Benefits Other than Pensions." The cumulative effect of adopting SFAS 109
was an increase of $264.8 million in net income. The cumulative effect of
adopting SFAS 106 was a decrease of $31.6 million in net income.
(7) The First Interstate results of operations for the nine months ended
September 30, 1995 and the year ended December 31, 1994, include after-tax
charges of $9.5 million and $87.6 million, respectively, related to the
adoption of a restructuring plan to improve efficiency and better position
First Interstate for the introduction of full interstate banking.
(8) First Interstate's 1993 financial results include an extraordinary loss of
$24.8 million related to the early extinguishment of debt. Also included in
1993 is the effect of adopting SFAS 109 and SFAS 106. The cumulative effect
of adopting SFAS 109 was an increase of $305.0 million in net income. The
cumulative effect of adopting SFAS 106 was a decrease of $104.9 million in
net income.
(9) First Interstate's 1990 financial results include the effect of adopting
SFAS 96, "Accounting for Income Taxes." The cumulative effect of adopting
SFAS 96 was an increase of $30.1 million in net income.
(10) Historical Selected Financial Data for FirsTier for the year ended December
31, 1990 has not been restated to reflect FirsTier's acquisition of
Cornerstone Bank Group, Inc. ("CBG"). Tier 1 capital ratios and total
capital ratios have not been restated to reflect the acquisition of CBG for
the years ended December 31, 1992 and 1991. In addition, net interest margin
(taxable-equivalent basis) and net interest margin without
taxable-equivalent increments have not been restated to reflect the
acquisition of CBG for the year ended December 31, 1991. The effect of the
restatement would not be material.
21
<PAGE>
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
OF FIRST BANK SYSTEM, INC. AND
FIRSTIER FINANCIAL, INC. (1)
<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 1995 1994
------------------- ------------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Interest income........................................................... $ 2,098.0 $ 2,519.6
Interest expense.......................................................... 932.6 982.6
-------- ------------
Net interest income..................................................... 1,165.4 1,537.0
Provision for credit losses............................................... 84.8 123.4
-------- ------------
Net interest income after provision for credit losses..................... 1,080.6 1,413.6
Noninterest income........................................................ 628.2 610.9
Noninterest expense....................................................... 1,015.3 1,484.4
-------- ------------
Income from continuing operations before income taxes..................... 693.5 540.1
Applicable income taxes................................................... 255.6 203.0
-------- ------------
Income from continuing operations......................................... $ 437.9 $ 337.1
-------- ------------
-------- ------------
Average common and common equivalent shares............................... 143.9 144.6
PER COMMON SHARE:
Income from continuing operations......................................... $ 3.00 $ 2.24
Dividends paid............................................................ 1.0875 1.16
Common shareholders' equity............................................... 22.59 20.06
CONSOLIDATED BALANCE SHEET DATA AT PERIOD END:
Assets.................................................................... $ 37,485 $ 37,668
Securities................................................................ 4,404 6,123
Loans..................................................................... 28,334 26,705
Deposits.................................................................. 25,401 27,071
Long-term debt............................................................ 3,301 3,135
Shareholders' equity...................................................... 3,297 2,954
SELECTED FINANCIAL DATA AT PERIOD END:
Common shareholders' equity to assets..................................... 8.5% 7.6%
Total shareholders' equity to assets...................................... 8.8 7.8
Tier 1 capital ratio...................................................... 6.7 6.7
Total capital ratio....................................................... 11.3 10.7
Allowance for credit losses............................................... $ 524 $ 528
Percentage of loans..................................................... 1.85% 1.98 %
Nonperforming assets (2).................................................. $ 179 $ 246
Percentage of total assets.............................................. 0.48 % 0.65 %
SELECTED FINANCIAL DATA FOR THE PERIOD ENDED:
Return on average assets from continuing operations....................... 1.59 % 0.90 %
Return on average common equity from continuing operations................ 19.3 11.0
Net interest margin (taxable-equivalent basis)............................ 4.83 4.68
Net interest margin without taxable-equivalent increments................. 4.75 4.61
</TABLE>
See notes to unaudited pro forma combined selected financial data
22
<PAGE>
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
OF FIRST BANK SYSTEM, INC.,
FIRSTIER FINANCIAL, INC. AND
FIRST INTERSTATE BANCORP (1)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------------
1995 1994 1993 1992
------------------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Interest income............................................... $ 4,887.1 $ 5,711.6 $ 5,078.7 $ 5,295.8
Interest expense.............................................. 1,817.1 1,848.1 1,668.4 2,128.2
-------- ---------- ---------- ----------
Net interest income......................................... 3,070.0 3,863.5 3,410.3 3,167.6
Provision for credit losses................................... 84.8 123.4 245.7 506.0
-------- ---------- ---------- ----------
Net interest income after provision for credit losses......... 2,985.2 3,740.1 3,164.6 2,661.6
Noninterest income............................................ 1,451.5 1,665.2 1,573.1 1,525.8
Noninterest expense........................................... 2,653.6 3,682.2 3,297.1 3,455.5
-------- ---------- ---------- ----------
Income from continuing operations before income taxes,
extraordinary item and cumulative effect of accounting
changes...................................................... 1,783.1 1,723.1 1,440.6 731.9
Applicable income taxes....................................... 675.5 652.5 518.5 236.6
-------- ---------- ---------- ----------
Income from continuing operations before extraordinary item
and cumulative effect of accounting changes.................. $ 1,107.6 $ 1,070.6 $ 922.1 $ 495.3
-------- ---------- ---------- ----------
-------- ---------- ---------- ----------
Average common and common equivalent shares................... 344.5 353.7 343.1 312.7
PER COMMON SHARE:
Income from continuing operations before extraordinary item
and cumulative effect of accounting changes.................. $ 3.13 $ 2.90 $ 2.47 $ 1.29
Dividends paid................................................ 1.0875 1.16 1.00 0.88
Common shareholders' equity................................... 19.30 17.72 17.09 15.25
CONSOLIDATED BALANCE SHEET DATA AT PERIOD END:
Assets........................................................ $ 88,692 $ 93,853 $ 84,831 $ 83,621
Securities.................................................... 9,836 19,974 21,572 20,005
Loans......................................................... 64,301 59,927 49,485 44,893
Deposits...................................................... 73,637 75,498 71,087 70,070
Long-term debt................................................ 4,669 4,523 3,603 3,853
Shareholders' equity.......................................... 6,983 6,405 6,292 5,996
SELECTED FINANCIAL DATA AT PERIOD END:
Common shareholders' equity to assets......................... 7.4% 6.3% 6.7% 6.0%
Total shareholders' equity to assets.......................... 7.9 6.8 7.4 7.2
Tier 1 capital ratio.......................................... 6.8 7.0 9.7 9.6
Total capital ratio........................................... 10.6 10.4 13.2 13.5
Allowance for credit losses................................... $ 1,371 $ 1,462 $ 1,467 $ 1,552
Percentage of loans......................................... 2.13% 2.44% 2.96% 3.46%
Nonperforming assets (2)...................................... $ 385 $ 504 $ 650 $ 1,262
Percentage of total assets.................................. 0.43% 0.54% 0.77% 1.51%
SELECTED FINANCIAL DATA FOR THE PERIOD:
Return on average assets from continuing operations before
extraordianary item and cumulative effect of accounting
changes...................................................... 1.60% 1.19% 1.13% 0.64%
Return on average common equity from continuing operations
before extraordinary item and cumulative effect of accounting
changes...................................................... 22.6 16.5 15.7 9.2
Net interest margin (taxable-equivalent basis)................ 5.18 4.95 4.82 4.76
Net interest margin without taxable-equivalent increments..... 5.12 4.89 4.78 4.70
</TABLE>
See notes to unaudited pro forma combined selected financial data
23
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
(1) The Merger will be accounted for by FBS under the purchase method of
accounting in accordance with APB No. 16 and, accordingly, this method has
been applied in the unaudited pro forma condensed combined financial
statements. Under this method of accounting, the purchase price will be
allocated to assets acquired and liabilities assumed based on their
estimated fair values at the closing of the transaction. The historical cost
of FirsTier's assets and liabilities approximates fair value, making
mark-to-market adjustments immaterial. Accordingly, the historical cost of
FirsTier's assets and liabilities have been combined with the historical
consolidated balance sheet of FBS. Based on current estimates, the amount of
intangible assets relating to FirsTier is $338 million, calculated as the
purchase price of $714 million less FirsTier September 30, 1995 common
equity of $376 million. Certain adjustments, primarily to accrue for costs
related to the Merger expected to be incurred within one year of the
closing, are not material and have not been reflected in the unaudited pro
forma condensed combined financial statements.
Amortization expense relating to the Merger has been included in the
unaudited pro forma combined income statement data for the nine months ended
September 30, 1995 and the year ended December 31, 1994. Amortization
expense was calculated based on the intangible asset balance of $338 million
using the straight-line method over an average estimated period of benefit
of 20 years.
The First Interstate Transaction will be accounted for by FBS under the
pooling-of-interests method of accounting in accordance with APB No. 16 and,
accordingly, this method has been applied in the unaudited pro forma
condensed combined financial statements. Under this method of accounting,
the recorded assets, liabilities, shareholders' equity, income and expenses
of FBS and First Interstate are combined and recorded at their historical
amounts.
FBS expects to achieve operating cost savings by various means including
reductions in staff and consolidation of certain data processing and other
back office operations. The operating cost savings are expected to be
achieved in various amounts at various times during the year subsequent to
the closing and not ratably over, or at the beginning or end of, such
periods. No adjustment has been included in the unaudited pro forma
condensed combined financial statements for the anticipated operating cost
savings.
Pro forma adjustments related to the Merger and the First Interstate
Transaction represent management's best estimate based on all available
information at this time. These adjustments may change as additional
information becomes available. See "Unaudited Pro Forma Condensed Combined
Financial Information" for additional details on these adjustments.
(2) Nonperforming assets include nonaccrual and restructured loans, other
nonperforming assets and other real estate owned.
24
<PAGE>
INFORMATION CONCERNING THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of FirsTier
Common Stock as part of the solicitation of proxies by the FirsTier Board of
Directors for use at the Special Meeting to be held on February 16, 1996 and at
any adjournment or postponement thereof. This Proxy Statement/ Prospectus, and
the accompanying Proxy Card, are being first mailed to FirsTier shareholders on
or about January 19, 1996.
The purpose of the Special Meeting is to consider and vote upon the proposal
to approve the Merger Agreement, dated August 6, 1995, by and between FBS and
FirsTier, which sets forth the terms and conditions of the Merger. Upon
consummation of the Merger, each outstanding share of FirsTier Common Stock will
be converted into .8829 share of FBS Common Stock, with cash paid in lieu of
fractional shares. Based on the number of shares of FirsTier Common Stock
actually outstanding on the record date for the FirsTier Special Meeting,
holders of FirsTier Common Stock other than FBS would receive an aggregate of
16,414,117 shares of FBS Common Stock upon consummation of the Merger and would
hold in the aggregate approximately 10.83% of the FBS Common Stock outstanding
immediately after consummation of the Merger, based on the number of shares of
FBS Common Stock outstanding at January 4, 1996. Based on the total number of
shares and rights to acquire shares of FirsTier Common Stock outstanding on such
record date, a maximum aggregate of 16,950,057 shares of FBS Common Stock could
be issued to persons other than FBS in the Merger, or approximately 11.15% of
the FBS Common Stock outstanding immediately after consummation of the Merger,
based on the number of shares of FBS Common Stock outstanding at January 4,
1996. The Merger is also subject to a number of other conditions, including the
receipt of required regulatory approvals and approval of FirsTier shareholders.
See "The Merger -- Conditions to Consummation of the Merger."
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors of FirsTier has fixed the close of business on
January 4, 1996 (the "Record Date") as the record date for the determination of
the shareholders of FirsTier entitled to notice of and to vote at the Special
Meeting. Accordingly, only holders of record of shares of FirsTier Common Stock
at the close of business on such date will be entitled to vote at the Special
Meeting, with each share entitling its owner to one vote on all matters properly
presented at the Special Meeting. On the Record Date, there were approximately
2,002 holders of record of the 18,715,040 shares of FirsTier Common Stock then
outstanding. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of FirsTier Common Stock entitled to vote at
the Special Meeting is necessary to constitute a quorum at the Special Meeting.
Under Nebraska law, the affirmative vote of at least two-thirds of the total
number of outstanding shares of FirsTier Common Stock entitled to vote at the
Special Meeting is required to approve the Merger Agreement. If an executed
Proxy Card is returned and the shareholder has affirmatively abstained from
voting on any matter, the shares represented by such proxy will be considered
present at the Special Meeting for purposes of determining a quorum and for
purposes of calculating the vote, but will not be considered to have voted in
favor as to such matter. If an executed Proxy Card is returned by a broker
holding shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote with respect to such matter.
FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL
MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
It is expected that all of the 3,032,654 shares of FirsTier Common Stock
(excluding shares subject to stock options) beneficially owned by directors and
executive officers of FirsTier and their affiliates at the Record Date (16.20%
of the total number of outstanding shares of FirsTier Common Stock at such date)
will be voted for approval and adoption of the Merger Agreement. As of the
Record Date, FBS beneficially owned 123,900 shares of FirsTier Common Stock
(excluding shares issuable to FBS
25
<PAGE>
under certain conditions as described under "The Merger -- Option Granted to
FBS"), and directors and executive officers of FBS beneficially owned less than
1% of the outstanding shares of FirsTier Common Stock.
If the accompanying Proxy Card is properly executed and returned to FirsTier
in time to be voted at the Special Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT. The Board of Directors of FirsTier does not know of any matters other
than those described in the notice of the Special Meeting that are to come
before the Special Meeting. If any other matters are properly brought before the
Special Meeting, one or more of the persons named in the Proxy Card will vote
the shares represented by such proxy upon such matters as determined in their
best judgment.
THE BOARD OF DIRECTORS OF FIRSTIER UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF FIRSTIER VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The presence of a shareholder at the Special Meeting will not automatically
revoke such shareholder's proxy. Any proxy given pursuant to this solicitation
may be revoked by the person giving it by giving written notice of such
revocation to the Secretary of FirsTier at any time before it is voted, by
delivering to FirsTier or any other person a duly executed, later-dated proxy or
by attending the Special Meeting and voting in person. All written notices of
revocation and other communications with respect to revocation of proxies should
be addressed to: Thomas B. Fischer, Secretary, FirsTier Financial, Inc., 1700
Farnam Street, Omaha, Nebraska 68102-2183.
The cost of soliciting proxies for the Special Meeting will be borne by
FirsTier. In addition to use of the mails, proxies may be solicited personally
or by telephone, telegraph or facsimile by directors, officers and employees of
FirsTier, who will not be specially compensated for such activities. FirsTier
will also request persons, firms and companies holding shares in their names or
in the name of their nominees, which are beneficially owned by others, to send
proxy materials to and obtain proxies from such beneficial owners. FirsTier will
reimburse such persons for their reasonable expenses incurred in that
connection. FirsTier has retained Morrow & Co., Inc. to assist in the
solicitation of proxies at a cost of approximately $7,500 plus customary
expenses.
SHAREHOLDERS OF FIRSTIER ARE INSTRUCTED NOT TO SEND IN THE STOCK
CERTIFICATES REPRESENTING THEIR SHARES OF FIRSTIER COMMON STOCK WITH THEIR
PROXY. IF THE MERGER IS APPROVED, SHAREHOLDERS OF FIRSTIER WILL RECEIVE
INSTRUCTIONS REGARDING THE EXCHANGE OF THEIR STOCK CERTIFICATES. SEE "THE MERGER
- -- EXCHANGE OF FIRSTIER COMMON STOCK CERTIFICATES."
26
<PAGE>
THE MERGER
THIS SECTION OF THE PROXY STATEMENT/PROSPECTUS DESCRIBES CERTAIN ASPECTS OF
THE PROPOSED MERGER. TO THE EXTENT THAT IT RELATES TO THE MERGER AGREEMENT, THE
FOLLOWING DESCRIPTION DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED
HERETO AS APPENDIX A AND IS INCORPORATED HEREIN BY REFERENCE. ALL SHAREHOLDERS
ARE URGED TO READ THE MERGER AGREEMENT AND THE OTHER APPENDICES HERETO IN THEIR
ENTIRETY.
BACKGROUND OF AND REASONS FOR THE MERGER; RECOMMENDATION OF FIRSTIER BOARD OF
DIRECTORS
BACKGROUND OF THE MERGER. In late 1992, the Board of Directors of FirsTier
(the "FirsTier Board"), with the assistance of Morgan Stanley & Co. Incorporated
("Morgan Stanley"), began considering strategic business alternatives. Based
upon consultations with Morgan Stanley and the FirsTier Board's consideration of
various alternatives (including remaining independent), the FirsTier Board
determined to pursue a possible strategic alliance with BANC ONE CORPORATION. On
April 19, 1993, FirsTier and BANC ONE CORPORATION entered into a merger
agreement (the "BANC ONE Agreement"); however, pursuant to the BANC ONE
Agreement, on February 14, 1994, the FirsTier Board decided to terminate the
BANC ONE Agreement on the basis of the decline in value of the BANC ONE
CORPORATION stock.
Following the termination of the BANC ONE Agreement, the FirsTier Board
determined that FirsTier would return to its normal course of business while
remaining open to the possibility of a strategic alliance with another bank
holding company if such a transaction could be pursued on a basis that was
advantageous to FirsTier and its shareholders. With the assistance of Morgan
Stanley, FirsTier from time to time engaged in discussions with other bank
holding companies, including FBS, concerning a possible business combination. No
such discussions resulted in negotiations concerning a possible transaction
until June 1995 when FirsTier and FBS began to engage in discussions and
negotiations concerning a possible transaction on the terms set forth herein.
On June 19, 1995, the FirsTier Board authorized discussions concerning a
potential business combination with FBS. Managements of the two companies and
their respective financial and legal advisors discussed the structure of a
possible transaction and issues relating to the management and operations of the
surviving company following a business combination between FirsTier and FBS. On
July 31, 1995, the FirsTier Board was presented with a progress report on the
discussions. Over the next week, the parties negotiated the Merger Agreement and
the Stock Option Agreement (as defined below, see "-- Option Granted to FBS").
REASONS OF FIRSTIER FOR THE MERGER. On August 4, 1995, the FirsTier Board
convened to consider in detail the Merger and other transactions contemplated by
the Merger Agreement. At the meeting, members of FirsTier management and
FirsTier's outside financial and legal advisors reviewed the proposed terms of
the Merger Agreement and the transactions contemplated thereby with the FirsTier
Board. On August 6, 1995, the FirsTier Board convened again to consider the
Merger, at which meeting Morgan Stanley delivered its oral opinion that, as of
that date, the exchange ratio in the Merger Agreement was fair from a financial
point of view to the holders of FirsTier Common Stock (other than FBS and its
affiliates). See "-- Opinion of FirsTier Financial Advisor." After deliberating
with respect to the Merger and the other transactions contemplated by the Merger
Agreement, considering, among other things, the matters set forth below and the
opinion of Morgan Stanley referred to above, the FirsTier Board unanimously
approved the Merger Agreement and the transactions contemplated thereby.
THE FIRSTIER BOARD BELIEVES THAT THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF FIRSTIER AND ITS SHAREHOLDERS. THE FIRSTIER BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
In connection with its approval of the Merger Agreement and the Stock Option
Agreement, the FirsTier Board considered and approved the adoption of an
amendment dated as of August 6, 1995, to the Rights Agreement between FirsTier
and State Street Bank and Trust Company, as rights agent,
27
<PAGE>
dated as of December 19, 1994, as amended (the "Rights Agreement"), to permit
the execution of the Merger Agreement and the Stock Option Agreement and the
consummation of the Merger without triggering the exercisability under the
Rights Agreement of the rights issued thereunder. Additionally, for purposes of
the Nebraska Revised Statutes Section 21-2452 and otherwise, the FirsTier Board
approved the execution and delivery of, and performance under, the Merger
Agreement and the Stock Option Agreement, and exempted such transactions from
the application of provisions of the Nebraska Revised Statutes as well as any
and all anti-takeover statutes or prohibitions under the laws of the State of
Nebraska or otherwise.
In reaching its determination to approve and adopt the Merger Agreement and
the transactions contemplated thereby, the FirsTier Board considered a number of
factors, including, without limitation, the following:
(i) the FirsTier Board's familiarity with and review of the financial
condition, results of operations, cash flows, business and purposes of FBS;
(ii) the FirsTier Board's review of the operating environment,
including, but not limited to, the continued consolidation and increasing
competition in the banking and financial services industries, the prospect
for further changes in these industries and the importance of financial
resources to being able to capitalize on developing opportunities in these
industries;
(iii) the FirsTier Board's assessment that the combined entity resulting
from the Merger would better serve the convenience and needs of its
customers and the communities it serves as a result of being a substantially
larger bank (as compared to FirsTier remaining independent), thereby
affording access to financial and managerial resources and an ability to
offer an expanded range of potential products and services;
(iv) the anticipated cost savings and operating efficiencies available to
the combined institution from the Merger (see "-- Management and Operations
of FirsTier Following the Merger");
(v) the FirsTier Board's review, based in part on the analysis of Morgan
Stanley, of strategic alternatives, including potential transactions with
other parties and remaining independent, which alternatives the FirsTier
Board believed were not likely to result in greater shareholder value than
the Merger;
(vi) the financial presentations of Morgan Stanley and the opinion of
Morgan Stanley that, as of the date of such opinion, the exchange ratio in
the Merger Agreement was fair from a financial point of view to the holders
of FirsTier Common Stock (other than FBS and its affiliates) (see "--
Opinion of FirsTier Financial Advisor");
(vii) the FirsTier Board's belief that the terms of the Merger Agreement
are attractive in that the agreement allows FirsTier shareholders to become
shareholders in a combined institution which would be a larger, more
geographically diverse bank with a strong competitive position in key
western and mid-western markets;
(viii) the expectation that the Merger will generally be a tax-free
transaction to FirsTier and its shareholders (see "-- Certain Federal Income
Tax Consequences to FirsTier Shareholders");
(ix) the FirsTier Board's belief, after consultation with its legal
counsel, that the required regulatory approvals could be obtained to
consummate the Merger (see "-- Regulatory Approvals Required"); and
(x) the effect of the Merger on FirsTier's other constituencies,
including its senior management and other employees and the communities
served by FirsTier, including the FirsTier Board's awareness and assessment
of the potential that a merger could be expected to provide FirsTier
employees, including senior management, with employment and other benefits
(see "-- Interests of Certain Persons in the Merger" and "-- Effect on
FirsTier Employee Benefit Plans and Stock Option Plans").
28
<PAGE>
The foregoing discussion of the information and factors considered by the
FirsTier Board is not intended to be exhaustive but is believed to include all
material factors considered by the FirsTier Board. In reaching its determination
to approve and recommend the Merger, the FirsTier Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors. Throughout its
deliberations, the FirsTier Board received the advice of special counsel.
RECOMMENDATION OF FIRSTIER BOARD OF DIRECTORS. The Board of Directors of
FirsTier recommends that the shareholders of FirsTier approve the Merger
Agreement. The Board believes that the terms of the Merger Agreement are fair
and that the Merger is in the best interests of FirsTier and its shareholders.
THE BOARD OF DIRECTORS OF FIRSTIER RECOMMENDS THAT FIRSTIER SHAREHOLDERS
VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
REASONS OF FBS FOR THE MERGER. The acquisition of FirsTier by FBS will
expand FBS's retail banking operations in Nebraska. The acquisition will allow
FBS to leverage its existing presence in Nebraska, providing the opportunity to
realize substantial economies from consolidation. Significant cost savings are
expected to result from personnel reductions, branch and operational
consolidations and general reductions in corporate and administrative support
functions. See "-- Management and Operations of FirsTier Following the Merger."
OPINION OF FIRSTIER FINANCIAL ADVISOR
FirsTier retained Morgan Stanley to act as FirsTier's financial advisor in
connection with the Merger and related matters based upon its qualifications,
expertise and reputation, as well as Morgan Stanley's prior investment banking
relationship and familiarity with FirsTier. At the August 6, 1995, meeting of
the FirsTier Board, Morgan Stanley rendered an oral opinion to the FirsTier
Board that, as of such date, the exchange ratio in the Merger Agreement was fair
from a financial point of view to the holders of FirsTier Common Stock (other
than FBS and its affiliates). Morgan Stanley delivered to the FirsTier Board a
written opinion dated as of the date of the Proxy Statement/Prospectus which
confirms its August 6, 1995, oral opinion. No limitations were imposed by
FirsTier with respect to the investigations made or the procedures followed by
Morgan Stanley in rendering its opinions.
THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF THE DATE OF THE PROXY
STATEMENT/PROSPECTUS, WHICH SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX B TO THE PROXY STATEMENT/PROSPECTUS.
FIRSTIER SHAREHOLDERS ARE URGED TO READ THE MORGAN STANLEY OPINION IN ITS
ENTIRETY. MORGAN STANLEY'S OPINION ADDRESSES ONLY THE FAIRNESS OF THE EXCHANGE
RATIO IN THE MERGER FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF FIRSTIER
COMMON STOCK (OTHER THAN FBS AND ITS AFFILIATES) AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF FIRSTIER COMMON STOCK AS TO HOW TO VOTE AT THE
SPECIAL MEETING. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THE
PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION.
Morgan Stanley's opinion is addressed to the FirsTier Board and does not
constitute a recommendation to any shareholder of FirsTier as to how such
shareholder should vote at the Special Meeting.
In connection with rendering its August 6, 1995, oral opinion, and its
written opinion dated the date of the Proxy Statement/Prospectus, Morgan
Stanley, among other things: (i) analyzed certain publicly available financial
statements and other information of FirsTier and FBS, respectively; (ii)
analyzed certain internal financial statements and other financial and operating
data concerning FirsTier and FBS prepared by the managements of FirsTier and
FBS, respectively; (iii) analyzed certain financial projections prepared by the
management of FirsTier; (iv) reviewed certain public research reports concerning
FBS and discussed these research reports, including earnings estimates contained
therein, with the management of FBS; (v) discussed the past and current
operations and financial condition and the prospects of FirsTier and FBS with
senior executives of FirsTier and FBS, respectively; (vi) reviewed the reported
prices and trading activity for the FirsTier Common Stock and
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the FBS Common Stock; (vii) compared the financial performance of FirsTier and
the prices and trading activity of the FirsTier Common Stock with that of
certain other comparable publicly-traded companies and their securities; (viii)
reviewed the financial terms, to the extent publicly available, of certain
comparable precedent transactions; (ix) participated in discussions and
negotiations among representatives of FirsTier and FBS and their legal advisors;
(x) reviewed the Merger Agreement, and the Stock Option Agreement and certain
related documents; and (xi) performed such other analyses as it deemed
appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of its opinion. With respect to the
financial projections, Morgan Stanley assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of FirsTier. Morgan Stanley has
not made any independent valuation or appraisal of the assets or liabilities of
FirsTier, nor has Morgan Stanley been furnished with any such appraisals and
Morgan Stanley has not examined any loan files of FirsTier or FBS. Morgan
Stanley's opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to Morgan Stanley as of, the
date of the opinions.
The projections furnished to Morgan Stanley for FirsTier were prepared by
the management of FirsTier. FirsTier does not publicly disclose internal
management projections of the type provided to Morgan Stanley in connection with
Morgan Stanley's review of the Merger. Such projections were not prepared with a
view towards public disclosure. The projections were based on numerous variables
and assumptions that are inherently uncertain, including without limitation
factors related to general economic and competitive conditions. Accordingly,
actual results could vary significantly from those set forth in such
projections.
Each of FBS and FirsTier believes (i) that the historical financial
information provided by it to Morgan Stanley in connection with its analysis was
accurate and complete in all material respects; and (ii) that the projections
provided by it to Morgan Stanley in connection with its analysis were reasonably
prepared and reflected the best currently available estimates and judgments of
the management of FirsTier.
The following is a brief summary of the analyses performed by Morgan Stanley
in preparation for its presentations to the FirsTier Board with respect to the
Merger, and in preparation for rendering its oral opinion to the FirsTier Board
on August 6, 1995.
(a) OVERVIEW OF TRANSACTION TERMS AND BACKGROUND. Morgan Stanley reviewed
the major terms and conditions of the Merger. Morgan Stanley also presented an
overview of the performance, from January 1, 1993, through August 3, 1995, of
the closing price of the FirsTier's Common Stock relative to the closing price
of the Morgan Stanley Bank Index (which consists of 35 regional banks). Morgan
Stanley highlighted the entry into and subsequent termination of the BANC ONE
Agreement.
(b) VALUATION METHODOLOGIES. As part of its financial analysis, Morgan
Stanley evaluated the positions and strengths of FirsTier on a stand-alone
basis, considered cost savings and synergies relating to the Merger and
determined an acquisition value based upon specified assumptions. In addition,
Morgan Stanley considered transactions comparable to the Merger. For purposes of
its analyses of FirsTier on a historical basis, Morgan Stanley utilized
financial information concerning FirsTier as of June 30, 1995.
COMPARABLE COMPANY ANALYSIS. Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded
peers. Based on relative performance and outlook for a company versus its
peers, this analysis enables an implied unaffected market trading value to
be determined. Morgan Stanley analyzed the operating performance of FirsTier
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relative to 35 bank holding companies (the "Morgan Stanley Bank Index," or
the "Comparables"). Historical financial information used in connection with
the ratios provided below with respect to the Comparables is as of June 30,
1995.
Morgan Stanley analyzed the relative performance and value of FirsTier
by comparing certain market trading statistics for FirsTier with the
Comparables. Market information used in ratios provided below is as of June
30, 1995. The market trading information used in the valuation analysis was
market price to book value (which was 1.9x for FirsTier; the average was
1.7x for the Morgan Stanley Bank Index) and market price to earnings per
share estimates for 1995 and 1996 (which, for FirsTier, were 12.5x and
11.7x, respectively; the averages were 10.4x and 9.5x, respectively, for the
Morgan Stanley Bank Index). Earnings per share estimates for FirsTier were
based on First Call estimates as of August 3, 1995. Earnings per share
estimates for the Morgan Stanley Bank Index were based on Institutional
Brokers Estimate System ("IBES") estimates as of July 20, 1995. IBES and
First Call are data services that monitor and publish compilations of
earnings estimates produced by selected research analysts regarding
companies of interest to institutional shareholders. The implied range of
values for FirsTier Common Stock derived from the analysis of the
Comparables market price to book value and market price to 1995 and 1996
earnings per share estimates ranged from $28 to approximately $32.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to FirsTier or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of FirsTier and other factors that could affect
the public trading value of the companies to which they are being compared.
Mathematical analysis (such as determining the average or median) is not in
itself a meaningful method of using comparable transaction data or
comparable company data.
DIVIDEND DISCOUNT ANALYSIS. Morgan Stanley performed a dividend
discount analysis to determine a range of present values per share of
FirsTier Common Stock assuming FirsTier continued to operate as a
stand-alone entity. This range was determined by adding (i) the present
value of the estimated future dividend stream that FirsTier could generate
over the period beginning in June 1995 and ending in year 2000 and (ii) the
present value of the "terminal value" of FirsTier Common Stock at the end of
year 2000. To determine a projected dividend stream, Morgan Stanley assumed
a dividend payout ratio equal to 40% of FirsTier's projected net income. The
earnings projections which formed the basis for the dividends were adapted
from First Call estimates, as of August 3, 1995, for 1995 and 1996 and a
growth rate suggested by management of FirsTier for 1997 through 2000. The
"terminal value" of FirsTier Common Stock at the end of the five-year period
was determined by applying two price-to-earnings multiples (10x and 11x) to
year 2000 projected net income for FirsTier. The dividend stream and
terminal values were discounted to present values using discount rates of
12% and 13%, which Morgan Stanley viewed as the appropriate discount rate
range for a company with FirsTier's risk characteristics. For the 10x case
the fully diluted stand-alone value of FirsTier Common Stock ranged from
approximately $27 per share to approximately $28 per share, and for the 13%
case the fully diluted stand-alone value of FirsTier Common Stock ranged
from approximately $29 per share to approximately $30 per share.
VALUE OF POTENTIAL COST SAVINGS. In order to ultimately determine an
implied acquisition value of the FirsTier Common Stock, the potential for
realization of future cost savings was estimated by Morgan Stanley using the
same present value calculation as used in the Dividend Discount Analysis.
Based on discussions with FirsTier management, Morgan Stanley determined the
net theoretical present value of the cost savings that could result if
FirsTier were acquired. The estimates for such cost savings ranged from
15-25% of FirsTier's core non-interest expense (I.E., excluding OREO
expenses and any non-recurring charges). Based on discount rates of 12% to
13%, a phase-in of cost savings over two years (50% in the first year, 100%
thereafter), a non-interest expense growth rate of 2.0%, a restructuring
charge incurred in the first year following
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the Merger equal to the fully phased-in cost savings, and applying a
terminal multiple of 10x-11x to year 2000 projected cost savings, the range
of present values for the cost savings is between $4 and $7 per share of
FirsTier Common Stock. This analysis did not consider any loss in value that
could result if divestitures of deposits or assets were required upon an
acquisition of FirsTier.
COMPARABLE TRANSACTION ANALYSIS. Morgan Stanley performed an analysis
of transactions by selected holding companies of commercial banks in order
to obtain a valuation range for the FirsTier Common Stock based upon
comparable merger transactions. Multiples of market value, book value, and
earnings implied by the consideration to be received by shareholders of
FirsTier in the Merger were compared with multiples paid in other comparable
merger transactions from July 1, 1994 through August 4, 1995. The comparison
included a total of 14 transactions. The transactions examined were
(acquiree/acquiror): Premier Bancorp/BANC ONE CORPORATION, NBD Bancorp,
Inc./First Chicago Corporation, Midlantic Corporation/PNC Bank Corp.,
Intercontinental Bank/NationsBank Corp., First Fidelity Bancorp/First Union
Corp., United Counties Bancorp/Meridian Bancorp, West One Bancorp/U.S.
Bancorp, Shawmut National Corporation/ Fleet Financial Group, Inc., Michigan
National Corporation/National Australia Bank Limited, Security Capital/CCB
Financial, Worthen Banking/Boatmen's Bancshares, Southern National
Corporation/BB&T Financial Corporation, First Colonial Bankshares/Firstar
Corp., and Grenada Sunburst System Inc./Union Planters. In terms of price to
book multiple, the mean for the comparable transactions was 1.9x compared to
approximately 1.9x for the Merger. Return on equity of the acquiree in each
transaction was also considered, with a mean for the comparable transactions
of 15.0% compared with 15.9% for the Merger. For the comparable transactions
multiples of book value ranged from 1.4x to 2.2x and the return on equity of
the acquiree ranged from 5.5% to 21.5%.
In connection with its opinion dated as of the date of the Proxy
Statement/Prospectus, Morgan Stanley confirmed the appropriateness of its
reliance on the analyses used to render its August 6, 1995, opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have given various analyses more or less weight than other
analyses, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described above should not be taken to be Morgan Stanley's
view of the actual value of FirsTier.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of FBS or FirsTier. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as a part of Morgan Stanley's
analysis of the fairness from a financial point of view of the exchange ratio in
the Merger Agreement to the holders of FirsTier Common Stock (other than FBS and
its affiliates) and were provided to the FirsTier Board in connection with the
delivery of Morgan Stanley's August 6, 1995, opinion. The analyses do not
purport to be appraisals or to reflect the prices at which a company might
actually be sold. In addition, as described above, Morgan Stanley's opinion and
presentations to the FirsTier Board was one of many factors taken into
consideration by the FirsTier Board in making its determination to approve the
Merger. Consequently, the Morgan Stanley analyses described above should not be
viewed as determinative of the FirsTier Board's or FirsTier management's opinion
with respect to the value of FirsTier or of whether the FirsTier Board or
FirsTier management would have been willing to agree to a different exchange
ratio.
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The FirsTier Board retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. Morgan Stanley, as part of its investment banking business,
is continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes. Morgan Stanley makes
a market in FirsTier Common Stock and FBS Common Stock, and may continue to
provide investment banking services to FBS in the future. In the course of its
market-making and other trading activities, Morgan Stanley may, from time to
time, have a long or short position in, and buy and sell securities of, FirsTier
and FBS. In the past, Morgan Stanley and its affiliates have provided financial
advisory and financing services to FBS, and have received customary fees for the
rendering of these services. Recent services rendered by Morgan Stanley to FBS
include acting, in September 1995, as lead manager in connection with the
offering of $250 million subordinated notes due 2007 of FBS. Since the beginning
of 1993, Morgan Stanley and its affiliates have also provided financial advisory
and financing services to FirsTier, and received customary fees totalling
approximately $275,000 for the rendering of those services. Recent services
rendered by Morgan Stanley to FirsTier include serving as financial advisor to
FirsTier in connection with the BANC ONE Agreement.
FirsTier has agreed to pay Morgan Stanley an advisory fee of a maximum of
$100,000 and a transaction fee of $4.5 million, against which the advisory fee
will be credited, which will become payable upon the consummation of the Merger.
In addition, FirsTier has agreed, among other things, to reimburse Morgan
Stanley for all reasonable out-of-pocket expenses incurred in connection with
the services provided by Morgan Stanley, and to indemnify and hold harmless
Morgan Stanley and certain related parties to the full extent lawful from and
against certain liabilities and expenses, including certain liabilities under
the federal securities laws, in connection with its engagement.
TERMS OF THE MERGER; CONSIDERATION TO BE RECEIVED BY FIRSTIER SHAREHOLDERS
On the Effective Date, FirsTier will merge with and into FBS, with FBS as
the surviving corporation. The officers and directors of FBS prior to the
Effective Date will be the officers and directors of FBS, as the surviving
corporation, after the Effective Date. The Certificate of Incorporation and
Bylaws of FBS as in effect immediately prior to the Merger will be the
Certificate of Incorporation and Bylaws of the surviving corporation until
further amended as provided therein and in accordance with law. On the Effective
Date, each outstanding share of FirsTier Common Stock will be converted into
.8829 share of FBS Common Stock. See "Description of FBS Capital Stock." Also on
the Effective Date, each outstanding option to purchase shares of FirsTier
Common Stock issued pursuant to FirsTier's employee stock option plans shall be
assumed by FBS and shall thereafter be deemed to constitute an option to acquire
shares of FBS Common Stock with appropriate adjustments. See "Effect on FirsTier
Employee Benefit and Stock Option Plans." If the Merger is consummated, holders
of FirsTier Common Stock will no longer hold any interest in FirsTier other than
through their interests in shares of FBS Common Stock.
Because the exchange ratio of FBS Common Stock for FirsTier Common Stock is
fixed, FirsTier shareholders will not be compensated for any decreases in the
market price of FBS Common Stock which could occur before the Effective Date. As
a result, in the event the market price of FBS Common Stock decreases, the value
of the FBS Common Stock to be received in the Merger in exchange for FirsTier
Common Stock would decrease. However, in the event the market price of FBS
Common Stock increases, the value of the FBS Common Stock to be received in the
Merger in exchange for FirsTier Common Stock would increase. The market prices
of FBS Common Stock and FirsTier Common Stock as of a recent date are set forth
herein under "Summary -- Markets and Market Prices," and FirsTier shareholders
are advised to obtain recent market quotations for FBS Common Stock and FirsTier
Common Stock. NO ASSURANCE CAN BE GIVEN AS TO THE MARKET PRICES OF FBS COMMON
STOCK OR FIRSTIER COMMON STOCK AT ANY TIME BEFORE THE EFFECTIVE DATE OR AS TO
THE MARKET PRICE OF FBS COMMON STOCK AT ANY TIME THEREAFTER.
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The Merger Agreement provides that if, between August 6, 1995 (the date of
the Merger Agreement) and the Effective Date, shares of FBS Common Stock are
changed into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend or extraordinary cash dividend thereon is
declared with a record date within such period, then the number of shares of FBS
Common Stock issued as a result of the Merger will be appropriately and
proportionately adjusted so that holders of FirsTier Common Stock will receive
that number of shares of FBS Common Stock that they would have received if the
record date for such reclassification, recapitalization, split-up, combination,
exchange of shares, readjustment or stock dividend had been immediately
following the Effective Date.
No fractional shares of FBS Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that in lieu of any fractional share FBS
will pay to each holder of FirsTier Common Stock who otherwise would be entitled
to receive a fractional share of FBS Common Stock a cash amount (without
interest) determined by multiplying (i) the closing price per share of FBS
Common Stock on the Effective Date by (ii) the fractional share interest to
which such holder would otherwise be entitled.
Shares of FBS capital stock issued and outstanding immediately prior to the
Effective Date will remain issued and outstanding thereafter and will not be
affected by the Merger.
EFFECTIVE DATE OF THE MERGER
The Merger will become effective upon the filing of certificates of merger
relating thereto with the Secretaries of State of the States of Delaware and
Nebraska. The Merger Agreement provides that the parties thereto will cause such
certificates of merger to be filed as soon as practicable after receipt of all
necessary regulatory approvals provided that each of the conditions to
consummation of the Merger has been satisfied or waived. See "-- Conditions to
Consummation of the Merger." The Merger cannot become effective until FirsTier
shareholders have approved the Merger Agreement and all required regulatory
approvals and actions have been obtained and taken. See "-- Regulatory Approvals
Required.' The Merger Agreement may be terminated by either FBS or FirsTier if
the Merger has not become effective by March 31, 1996 (unless failure to
consummate the Merger by such date shall be due to the action or failure to act
of the party seeking to terminate the Merger Agreement in breach of such party's
obligations thereunder). If between the date of the Merger Agreement and the
Effective Date there shall have been a "Significant Decline" in the "Average
Closing Price" of FBS Common Stock compared to the price of $43.0417, FirsTier
may, at its option, abandon and terminate the Merger Agreement before it takes
effect. See "-- Termination."
EXCHANGE OF FIRSTIER COMMON STOCK CERTIFICATES
Following the Effective Date, First Chicago Trust Company of New York, the
Exchange Agent, will send a notice and transmittal form to each holder of
FirsTier Common Stock of record at the Effective Date advising such holder of
the effectiveness of the Merger and of the procedure for surrendering their
certificates formerly evidencing FirsTier Common Stock in exchange for new
certificates evidencing FBS Common Stock. Such notice and transmittal form will
be sent as soon as practicable after the Effective Date. FIRSTIER SHAREHOLDERS
SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF
TRANSMITTAL FORM AND INSTRUCTIONS FROM THE EXCHANGE AGENT.
Upon surrender to the Exchange Agent of one or more certificates formerly
evidencing FirsTier Common Stock, together with a properly completed and signed
letter of transmittal, there will be issued and mailed to the holder thereof a
new certificate or certificates representing the number of whole shares of FBS
Common Stock to which such holder is entitled under the Merger Agreement and,
where applicable, a check for the amount of cash payable in lieu of a fractional
share of FBS Common Stock. A certificate representing FBS Common Stock or a
check in lieu of a fractional share will be issued in a name other than the name
in which the surrendered FirsTier Common Stock certificate was registered only
if (i) the FirsTier Common Stock certificate surrendered is properly endorsed or
accompanied by appropriate stock powers and is otherwise in proper form for
transfer and (ii) the person requesting the issuance of such certificate or
check either pays to the Exchange Agent
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any transfer or other taxes required by reason of the issuance of such
certificate or check in a name other than that of the registered holder of the
certificate surrendered or establishes to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
After the Effective Date and until surrendered and exchanged as described
above, certificates which, prior to the Effective Date, represented shares of
FirsTier Common Stock shall be deemed to represent and evidence only the right
to receive shares of FBS Common Stock and cash in lieu of a fractional share
pursuant to the terms of the Merger Agreement. After the Effective Date, the
record holder of an outstanding certificate formerly evidencing FirsTier Common
Stock will be entitled to vote the shares of FBS Common Stock into which such
shares of FirsTier Common Stock shall be converted on any matters on which the
holders of record of FBS Common Stock shall be entitled to vote. However, until
such certificates are surrendered to FBS, no dividend or distribution payable to
holders of record of FBS Common Stock will be paid to the holders of record of
such unsurrendered certificates. Upon the surrender of such a certificate, there
will be paid to the holder thereof, without interest, the amount of any
dividends or distributions which had a record date on or after the Effective
Date with respect to such number of whole shares of FBS Common Stock.
If any certificate formerly evidencing FirsTier Common Stock has been lost,
stolen or destroyed, the Exchange Agent shall, upon the making of an affidavit
of that fact by the holder thereof, issue and pay in exchange for such lost,
stolen or destroyed certificate shares of FBS Common Stock and cash in lieu of a
fractional share as may be required pursuant to the Merger Agreement; provided,
however, that FBS may, in its discretion and as a condition to the issuance and
payment of consideration to which the holder of such certificate is entitled as
a result of the Merger, require the owner thereof to deliver a bond in such sum
as FBS may direct as indemnity against any claim that may be made against FBS,
FirsTier, the Exchange Agent or any other party with respect to the certificate
alleged to have been lost, stolen or destroyed. After the Effective Date, there
shall be no further registration of transfers on the records of FBS of
outstanding certificates formerly representing shares of FirsTier Common Stock,
and if a certificate formerly representing such shares is presented to FirsTier
or FBS, it shall be forwarded to the Exchange Agent for cancellation and
exchange for the consideration as described above. Certificates formerly
evidencing shares of FirsTier Common Stock surrendered by any former shareholder
of FirsTier who is deemed an "affiliate" of FirsTier will not be exchanged for
shares of FBS Common Stock and cash in lieu of a fractional share until such
shareholder has executed and delivered to FBS a letter with respect to the
resale of shares of FBS Common Stock received by such shareholders in the
Merger. See "-- Resale of FBS Common Stock Received by FirsTier Shareholders."
All consideration paid or delivered upon the surrender of FirsTier Common
Stock shall be deemed to have been issued and paid in full satisfaction of all
rights pertaining to such shares of FirsTier Common Stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
The Merger will occur only if the Merger Agreement is approved by the
requisite vote of FirsTier shareholders. In addition, consummation of the Merger
is subject to the satisfaction of certain other conditions, unless waived (to
the extent such waiver is permitted by law). A failure of any such conditions to
be satisfied, if not waived, would prevent consummation of the Merger.
The obligations of both FBS and FirsTier to consummate the Merger are
subject to satisfaction of the following conditions, among others: (i)
regulatory approval for the consummation of the transactions contemplated by the
Merger Agreement shall have been obtained from the Federal Reserve Board, the
Superintendent of Banking of Iowa, the Banking Commissioner of Wyoming and any
other governmental authority from which approval is required, the applicable
waiting period, if any, under the Bank Holding Company Act shall have expired or
been terminated and all other statutory or regulatory waiting periods shall have
lapsed; (ii) no injunction or other court order shall have been issued and
remain in effect which would impair consummation of the transactions
contemplated by the Merger Agreement; (iii) no party to the Merger Agreement
shall have terminated such agreement
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as permitted therein; (iv) the Registration Statement of which this Proxy
Statement/Prospectus is a part shall have been declared effective and shall not
be subject to a stop order of the Securities and Exchange Commission, and such
Registration Statement shall not be subject to a stop order of any state
securities commission; (v) an opinion of Wachtell, Lipton, Rosen & Katz, counsel
to FirsTier, shall have been obtained to the effect that for federal income tax
purposes, (a) the Merger will qualify as a "reorganization" under Section 368(a)
of the Code, (b) no gain or loss will be recognized by any FirsTier shareholder
(except in connection with the receipt of cash) upon the exchange of FirsTier
Common Stock for FBS Common Stock in the Merger, (c) the basis of the FBS Common
Stock received by a FirsTier shareholder who exchanges FirsTier Common Stock for
FBS Common Stock will be the same as the basis of the FirsTier Common Stock
surrendered in exchange therefor (subject to any adjustments required as the
result of receipt of cash in lieu of a fractional share of FBS Common Stock),
(d) the holding period of the FBS Common Stock received by a FirsTier
shareholder receiving FBS Common Stock will include the period during which the
FirsTier Common Stock surrendered in exchange thereof was held (provided that
the FirsTier Common Stock of such FirsTier shareholder was held as a capital
asset at the Effective Date), and (e) cash received by a FirsTier shareholder in
lieu of a fractional share interest of FBS Common Stock will be treated as
having been received as a distribution in full payment in exchange for the
fractional share interest of FBS Common Stock which such shareholder would
otherwise be entitled to receive, and will qualify as capital gain or loss
(assuming the FirsTier Common Stock was a capital asset in such shareholder's
hands at the Effective Date); and (vi) the FBS Common Stock to be issued to
holders of FirsTier Common Stock in the Merger shall have been approved for
listing on the NYSE on official notice of issuance. The Merger Agreement
provides that no regulatory approval referred to in (i) above shall contain any
conditions or restrictions that FBS reasonably believes will materially restrict
or limit the business or activities of FBS or FirsTier or FirsTier's
subsidiaries, taken as a whole, or have a material adverse effect on, or would
be reasonably likely to have a material adverse effect on, the business,
operations, results of operations or financial condition of FBS and its
subsidiaries, taken as a whole, on the one hand, and FirsTier and its
subsidiaries taken as a whole, on the other hand.
In addition to the foregoing conditions, the obligation of FirsTier to
consummate the Merger is subject to satisfaction of the following conditions,
among others: (i) the representations and warranties of FBS set forth in the
Merger Agreement shall be true and correct as of the date of such agreement and
as of the Effective Date, except where the failure to be true and correct would
not have, or would not reasonably be expected to have individually or in the
aggregate, a material adverse effect on the business, operations, results of
operations or financial condition of FBS and its subsidiaries, taken as a whole;
and FBS shall in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with by
it under the Merger Agreement at or prior to the Effective Date; (ii) FirsTier
shall have received an officer's certificate of the Chief Financial Officer of
FBS, dated as of the Effective Date, to the effect that he has no reason to
believe that the conditions set forth in (i) above have not been fulfilled;
(iii) the Merger Agreement shall have been approved by the affirmative vote of
the holders of the percentage of FirsTier capital stock required for such
approval under the provisions of FirsTier's charter and bylaws and the Nebraska
Business Corporation Act; (iv) since the date of the Merger Agreement, there
shall have been no adverse change in, and no event, occurrence or developments
in the business of FBS or its subsidiaries that, taken together with other
events, occurrences and developments with respect to such business, would have
or would reasonably be expected to have a material adverse effect on, the
business, operations, results of operations or financial condition of FBS and
its subsidiaries, taken as whole; and (v) no event shall have occurred resulting
in the preferred share purchase rights relating to FBS Common Stock being
distributed or becoming exercisable or triggered (see "Description of FBS
Capital Stock").
In addition to the foregoing conditions, the obligation of FBS to consummate
the Merger is subject to satisfaction of the following conditions, among others:
(i) the representations and warranties of FirsTier in the Merger Agreement shall
have been true and correct as of the date of such agreement and as of the
Effective Date, except where the failure to be true and correct would not have,
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or would not reasonably be expected to have, individually or in the aggregate a
material adverse effect on the business, operations, results of operations or
financial condition of FirsTier and its subsidiaries, taken as a whole; and
FirsTier shall in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with by
it under the Merger Agreement at or prior to the Effective Date; (ii) FBS shall
have received an officer's certificate of the Chief Executive Officer of
FirsTier, dated as of the Effective Date, to the effect he has no reason to
believe that the conditions set forth in (i) above have not been fulfilled;
(iii) FirsTier shall have delivered to FBS the affiliate letters of FirsTier
described under "-- Resale of FBS Common Stock Received by FirsTier
Shareholders"; (iv) there shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction proposed, enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated by the
Merger Agreement by any federal, state or other court, government or
governmental authority or agency which would reasonably be expected to have
specified adverse consequences; (v) since the date of the Merger Agreement,
there shall have been no material adverse change in, and no event, occurrence or
development in the business of FirsTier or its subsidiaries that, taken together
with other events, occurrences and developments with respect to such business,
would have or would reasonably be expected to have a material adverse effect on,
the business, operations, results of operations or financial condition of
FirsTier and its subsidiaries, taken as a whole; and (vi) no event shall have
occurred resulting in the "rights" relating to FirsTier Common Stock being
distributed or becoming exercisable or triggered (see "Description of FirsTier
Capital Stock").
REGULATORY APPROVALS REQUIRED
Under the Merger Agreement, the obligations of both FBS and FirsTier to
consummate the Merger are conditioned upon the receipt of all required
regulatory approvals (without certain restrictions or limitations) and the lapse
of all required regulatory waiting periods. See "-- Conditions to Consummation
of the Merger." There can be no assurance that any applicable regulatory
authority will approve or take other required action with respect to the Merger
or as to the date of such regulatory approval or other action. FBS and FirsTier
are not aware of any governmental approvals or actions that are required in
order to consummate the Merger except as described below. Should such other
approval or action be required, it is contemplated that FBS and FirsTier would
seek such approval or action. There can be no assurance as to whether or when
any such other approval or action, if required, could be obtained.
FEDERAL RESERVE BOARD. The Merger is subject to the prior approval of the
Federal Reserve Board under Section 3(a)(5) of the Bank Holding Company Act.
Under the Bank Holding Company Act, the Federal Reserve Board is required, in
approving a transaction such as the Merger, to take into consideration the
financial and managerial resources and future prospects of the existing and
proposed institutions and the convenience and needs of the communities to be
served. The Bank Holding Company Act prohibits the Federal Reserve Board from
approving the Merger if it would result in a monopoly or be in furtherance of
any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States. The Bank Holding Company
Act also prohibits the Federal Reserve Board from approving the Merger if its
effect in any section of the United States may be substantially to lessen
competition or tend to create a monopoly, or if it would in any other manner
result in a restraint of trade, unless the Federal Reserve Board finds that the
anti-competitive effects of the Merger are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the communities to be served.
Finally, the Bank Holding Company Act, as amended by the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, authorizes "adequately
capitalized" and "adequately managed" bank holding companies to make
acquisitions of banks located anywhere in the United States without regard to
state laws that might otherwise prohibit such transactions. The Federal Reserve
Board's authority to approve such transactions, however, is subject to
compliance with the following conditions: (i) the Federal Reserve Board must
consider a bank holding company's record of compliance with Community
Reinvestment Act of 1977, as amended (the "Community Reinvestment Act") and
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similar state laws; (ii) the Federal Reserve Board may not approve a transaction
if a bank holding company controls, or would control, deposits in excess of
applicable state or federal concentration limits; and (iii) the Federal Reserve
Board may not approve a transaction if the bank(s) to be acquired by a bank
holding company do not satisfy any state-imposed minimum age requirements (up to
a maximum of five years).
For the foregoing purposes, Iowa and Nebraska law both impose a five-year
minimum age requirement. In addition, Iowa law imposes a maximum deposit
limitation of 10 percent of the total time and demand deposits of all banks,
savings and loan associations, and savings banks in the State of Iowa, and
Nebraska law imposes a maximum deposit limitation of 14 percent of the total
deposits of all banks in the State of Nebraska plus the total deposits, savings
accounts, passbook accounts, and shares in savings and loan associations and
building and loan associations in the State of Nebraska.
In addition, under the Community Reinvestment Act of 1977, as amended (the
"Community Reinvestment Act"), the Federal Reserve Board must take into account
the record of performance of the existing institutions in meeting the credit
needs of the entire community, including low- and moderate-income neighborhoods,
served by such institutions.
The acquisition of FirsTier Common Stock by FBS pursuant to the Stock Option
Agreement would be subject to approval by the Federal Reserve Board under
Section 3 of the Bank Holding Company Act. See "-- Option Granted to FBS."
ARIZONA DIRECTOR OF INSURANCE. Under Section 20-481.02(B) of the Arizona
Revised Statutes, FBS must provide at least 30-days prior written notice to the
Director of Insurance (the "Director") of its intent to acquire FirsTier and its
insurance company subsidiary, FirsTier Insurance, Inc. The Director must issue
an order disapproving FBS's acquisition of FirsTier Insurance, Inc. and
requiring its expeditious divestiture if he finds that the acquisition of
control: (i) is contrary to law; (ii) is inequitable to the shareholders of
FirsTier Insurance, Inc.; (iii) would substantially reduce the security of and
service to be rendered to policyholders of FirsTier Insurance, Inc. in the State
of Arizona or elsewhere; (iv) after the change of control FirsTier Insurance,
Inc. would not be able to satisfy the requirements for the reissuance of a
certificate of authority to write the line or lines of insurance for which it is
presently licensed; (v) the effect of the acquisition of control would be to
substantially lessen competition in insurance in the State of Arizona or tend to
create a monopoly; (vi) the financial condition of FBS might jeopardize the
financial stability of FirsTier Insurance, Inc. or prejudice the interest of its
policyholders; (vii) the plans or proposals that FBS has to liquidate FirsTier
Insurance, Inc., sell its assets, or consolidate or merge it with any person, or
to make any other material change in its business or corporate structure or
management, are unfair and unreasonable to policyholders of FirsTier Insurance,
Inc. and are not in the public interest; (viii) the competence, experience, and
integrity of FBS are such that it would not be in the interest of policyholders
of FirsTier Insurance, Inc. and of the public to permit the acquisition of
control; or (ix) the acquisition is likely to be hazardous or prejudicial to the
insurance-buying public.
IOWA SUPERINTENDENT OF BANKING. Under Section 524.1802(1) of the Iowa Code
Annotated, FBS may not acquire control of FirsTier Bank, National Association,
Council Bluffs, Nevada National Bank, Valley State Bank, and Security Savings
Bank, a subsidiary of FirsTier, as a result of the Merger if, as a result of the
Merger, FBS would control more than 10 percent of the total time and demand
deposits of all banks, savings and loan associations, and savings banks in the
State of Iowa, as determined by the Iowa Superintendent of Banking on the basis
of the most recent reports of such depository institutions to their supervisory
authorities. In addition, FBS's acquisition of Valley State Bank and Security
Savings Bank is subject to the prior approval of the Iowa Superintendent of
Banking under Section 524.519 of the Iowa Code Annotated. The Iowa
Superintendent of Banking must approve the acquisition of Valley State Bank and
Security Savings Bank if he is satisfied (i) that FBS is qualified by character,
experience and financial responsibility to control and operate Valley
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State Bank and Security Savings Bank in a sound and legal manner, and (ii) that
the interests of depositors, creditors and shareholders of Valley State Bank and
Security Savings Bank, and the public generally, will not be jeopardized by the
proposed change in control.
WYOMING COMMISSIONER OF BANKING. FBS's acquisition of Wyoming Trust and
Management Co. as a result of the Merger is subject to the prior approval of the
Wyoming Commissioner of Banking under Section 13-9-303 of the Wyoming Statutes.
The Wyoming Commissioner of Banking must approve the acquisition of Wyoming
Trust and Management Co. unless she determines that (i) there is or recently has
been evidence of criminal activity on the part of FBS or any of its officers or
directors, or (ii) the acquisition would jeopardize the integrity of Wyoming
Trust and Management Co., or (iii) FBS has not responsibly met the service,
credit, and financing needs of the communities it serves. In addition, under
Section 13-9-303(c) of the Wyoming Statutes, FBS may not acquire control of
Wyoming Trust and Management Co. unless Wyoming Trust and Management Co. has
been in existence for at least three years. With respect to compliance with this
requirement, Wyoming Trust and Management Co. has been in existence for more
than three years.
CURRENT STATUS OF REGULATORY APPROVALS. Federal Reserve Board approval was
obtained on December 18, 1995, the approval of the Wyoming Commissioner of
Banking was obtained on December 8, 1995 and the approval the Iowa
Superintendent of Banking was obtained on January 17, 1996. The Arizona notice
was filed on December 26, 1995, and the Arizona Department of Insurance stated
that it had no objection to the Merger by letter dated January 9, 1996.
WAIVER AND AMENDMENT
At any time prior to the Effective Date, any party to the Merger Agreement
may (i) extend the time for performance of any obligations or other acts of any
other party under the Merger Agreement or (ii) waive compliance with any of the
agreements of the other parties or with any conditions of its own obligations
contained in the Merger Agreement, to the extent that such obligations,
agreements and conditions are intended for such party's own benefit.
The Merger Agreement may not be amended except by written instrument
approved by the parties to such agreement and signed on behalf of each of the
parties thereto. The Merger Agreement may be amended without the approval of
FirsTier shareholders, except that no such amendment will be made following
approval of the Merger agreement by FirsTier shareholders if such amendment
changes the number of shares of FBS Common Stock for which the FirsTier Common
Stock is to be exchanged or otherwise materially adversely affects the rights of
such shareholders.
TERMINATION
The Merger Agreement may be terminated at any time before the Effective Date
(i) by mutual consent of FBS and FirsTier; (ii) by either FBS or FirsTier if any
of the conditions to such party's obligation to consummate the transaction
contemplated in the Merger Agreement have become impossible to satisfy; (iii) by
either FBS or FirsTier if the Merger Agreement and the Merger are not duly
approved by the FirsTier shareholders at the Special Meeting; (iv) by either FBS
or FirsTier if the Effective Date is not on or before March 31, 1996 (unless the
failure to consummate the Merger by such date shall be due to the action or
failure to act of the party seeking to terminate the Merger Agreement in breach
of such party's obligations thereunder); (v) by FBS if, after the date of the
Merger Agreement, the Board of Directors of FirsTier shall have withdrawn,
modified or changed its recommendation of the Merger Agreement or the Merger;
(vi) by FBS if there shall have occurred specified events relating generally to
the making by third parties of offers to acquire FirsTier and the acquisition by
third parties of specified percentages of FirsTier Common Stock; and (vii) by
FirsTier if, between the date of the Merger Agreement and the Effective Date
there shall have been a "Significant Decline" (as defined below) in the "Average
Closing Price" (as defined below) of FBS Common Stock compared to the price of
$43.0417. See "The Merger -- Conditions to Consummation of the Merger."
The "Average Closing Price" of FBS Common Stock shall mean the average of
the closing price of FBS Common Stock as reported on the NYSE for the 20
consecutive trading days ending on the date
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the Federal Reserve Board issues an order approving the Merger (the "Final
Calculation Period"). A "Significant Decline" shall be deemed to have occurred
if (i) the FBS Average Closing Price is less than $34.43336 and (ii) the number
obtained by dividing the FBS Average Closing Price by the $43.0417 is less than
the number obtained by dividing the average of the closing prices of the Morgan
Stanley 35-Bank Regional Peer Group during the Final Calculation Period by the
average of the closing prices of the Morgan Stanley 35-Bank Regional Peer Group
for the 20 consecutive trading days ending on the day prior to August 6, 1995
and subtracting .20 from the quotient.
Any party desiring to terminate the Merger Agreement is required to give
written notice of such termination and the reasons therefor to the other party.
If the Merger Agreement is terminated pursuant to the foregoing provisions, such
termination will be without liability or obligation of any party (or any
shareholder, officer, employee, agent, consultant or representative of such
party) to any other party except as otherwise provided in law or equity and
except for the survival of certain covenants relating to payment by the
respective parties of their own expenses and confidentiality of information
provided.
NO SOLICITATION
The Merger Agreement provides that FirsTier (including its subsidiaries)
will not, and will cause its officers, directors, employees, agents and
affiliates, not to, directly or indirectly, solicit, authorize, initiate or
encourage submission of, any proposal, offer, tender offer or exchange offer
from any person or entity (including officers or employees of FirsTier or such
subsidiaries) relating to any liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or a material portion of
the assets or deposits of, or any equity interest in, FirsTier or any of its
subsidiaries, or, unless FirsTier shall have determined, after receipt of a
written opinion of counsel to FirsTier (a copy of which opinion shall be
delivered to FBS), that the Board of Directors of FirsTier has a fiduciary duty
to do so, (i) participate in any negotiations in connection with or in
furtherance of any of the foregoing or (ii) permit any person other than FBS and
its representatives to have any access to the facilities of, or furnish to any
person other than FBS and its representatives any non-public information with
respect to, FirsTier or any of its subsidiaries in connection with or in
furtherance of any of the foregoing. The Merger Agreement also requires FirsTier
promptly to notify FBS if a proposal, offer, inquiry or contact is made with it
concerning any such transactions and promptly to provide FBS with such
information concerning such matters as FBS may request. The foregoing provisions
of the Merger Agreement may have the effect of discouraging competing offers to
acquire or merge with FirsTier.
OPTION GRANTED TO FBS
On the day following execution of the Merger Agreement, FirsTier and FBS
executed a Stock Option Agreement dated August 7, 1995 (the "Stock Option
Agreement"). The Stock Option Agreement has been filed as an exhibit to the
registration statement of which this Proxy Statement/ Prospectus is a part. The
following description of the Stock Option Agreement does not purport to be
complete and is qualified in its entirety by reference to the Stock Option
Agreement, which is incorporated herein in its entirety. Exercise of the Option
granted by the Stock Option Agreement is subject to the prior approval of the
Federal Reserve Board under the Bank Holding Company Act. See "-- Regulatory
Approvals Required."
Under the Stock Option Agreement, FirsTier granted FBS the Option to
purchase newly authorized but unissued or treasury shares of FirsTier Common
Stock in a number approximately equal to 19.9% of the number of shares of
FirsTier Common Stock outstanding immediately before exercise of the Option. The
exercise price of the Option is $37.00 per share, subject to adjustment under
specified circumstances (such exercise price, as so adjusted, being referred to
herein as the "Option Price"). The Option is exercisable only if both an
"Initial Triggering Event" and a "Subsequent Triggering Event" occur prior to
the occurrence of an "Exercise Termination Event," as such terms are defined
below.
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The Stock Option Agreement defines the term "Initial Triggering Event" to
mean any of the following events or transactions:
(i) FirsTier or any of its subsidiaries, without having received the
prior written consent of FBS, enters into an agreement to engage in an
"Acquisition Transaction" (as defined below) with any person other than FBS
or a subsidiary of FBS, or the FirsTier Board of Directors recommends that
FirsTier shareholders approve or accept any Acquisition Transaction other
than as contemplated by the Merger Agreement or the Stock Option Agreement;
(ii) Any person other than FBS or a subsidiary of FBS acquires
beneficial ownership (as defined under Section 13(d) of the Exchange Act) or
the right to acquire beneficial ownership of 10% or more of the outstanding
shares of FirsTier Common Stock;
(iii) The shareholders of FirsTier have not approved the transactions
contemplated by the Merger Agreement at the Special Meeting or any
adjournment thereof, or such meeting has not been held or has been canceled
prior to termination of the Merger Agreement, in either case, after
FirsTier's Board of Directors has withdrawn or modified (or publicly
announced its intention to withdraw or modify or interest in withdrawing or
modifying) its recommendation that the shareholders of FirsTier approve the
transactions contemplated by the Merger Agreement, or FirsTier or any
FirsTier subsidiary, without having received FBS's prior written consent,
has authorized, recommended, proposed (or publicly announced its intention
to authorize, recommend or propose or interest in authorizing, recommending
or proposing) an agreement to engage in an Acquisition Transaction with any
person other than FBS or an FBS subsidiary;
(iv) Any person other than FBS or a subsidiary of FBS makes a bona fide
proposal to FirsTier or its shareholders to engage in an Acquisition
Transaction;
(v) FirsTier has willfully breached any covenant or obligation contained
in the Merger Agreement in anticipation of engaging in an Acquisition
Transaction, and such breach entitles FBS to terminate the Merger Agreement;
or
(vi) Any person other than FBS or a subsidiary of FBS, other than in
connection with a transaction to which FBS has given its prior written
consent, files an application or notice with the Federal Reserve Board or
other federal or state bank regulatory authority, which is accepted for
processing, for approval to engage in an Acquisition Transaction.
As used in the Stock Option Agreement, the term "Acquisition Transaction" means
(a) a merger or consolidation or any similar transaction, involving FirsTier or
any "significant subsidiary" (as defined in accounting rules of the Securities
and Exchange Commission) of FirsTier, (b) a purchase, lease or other acquisition
of all or substantially all of the assets or deposits of FirsTier or any such
significant subsidiary or (c) a purchase or other acquisition (including by
merger, consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of FirsTier or any such significant subsidiary.
The Stock Option Agreement defines the term "Subsequent Triggering Event" to
mean any of the following events or transactions: (i) The acquisition by any
person of beneficial ownership of 20% or more of the then outstanding FirsTier
Common Stock or (ii) FirsTier or any of its subsidiaries, without having
received the prior written consent of FBS, enters into an agreement to engage in
an Acquisition Transaction with any person other than FBS or a subsidiary of
FBS, or the FirsTier Board of Directors recommends that FirsTier shareholders
approve or accept any Acquisition Transaction other than as contemplated by the
Merger Agreement; provided, that for purposes of the definition of "Subsequent
Triggering Event," the percentage referred to in clause (c) of the definition of
"Acquisition Transaction" above shall be 20% rather than 10%.
The Stock Option Agreement defines the term "Exercise Termination Event" to
mean any of (i) the time the Merger becomes effective, (ii) termination of the
Merger Agreement in accordance with its provisions, if such termination occurs
prior to the occurrence of an Initial Triggering Event,
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or (iii) the passage of 18 months, subject to certain extensions, after
termination of the Merger Agreement under certain circumstances if such
termination follows the occurrence of an Initial Triggering Event.
If the Option becomes exercisable, it may be exercised in whole or in part
upon written notice from FBS within 12 months following the applicable
Subsequent Triggering Event. FBS's right to exercise the Option and certain
other rights under the Option Agreement are subject to an extension in order to
obtain required regulatory approvals and comply with applicable regulatory
waiting periods and to avoid liability under Section 16(b) of the Exchange Act.
The Option Price will be reduced if FirsTier issues or agrees to issue shares of
FirsTier Common Stock (other than pursuant to certain disclosed options, rights
or plans) at a price less than the then current Option Price to such lesser
price, and the Option Price and the number of shares issuable under the Option
are subject to adjustment in the event of specified changes in the capital stock
of FirsTier.
Upon the occurrence of a Subsequent Triggering Event that occurs prior to an
Exercise Termination Event, FBS will have the right for 12 months (subject to
extension as described in the Stock Option Agreement) to demand that FirsTier
register the shares of FirsTier Common Stock issued or issuable pursuant to the
Option under the Securities Act, subject to specified conditions and
limitations. The Stock Option Agreement grants two such demand registrations to
FBS and provides that FirsTier will bear the costs of such demand registrations.
The Stock Option Agreement also provides that if a Subsequent Triggering
Event occurs prior to an Exercise Termination Event, upon notice delivered
within 12 months (subject to extension as described in the Stock Option
Agreement) of the Subsequent Triggering Event, FirsTier shall be obligated to
repurchase all or any part of the Option and all or any part of the shares
received upon exercise of the Option or any part ("Option Shares") from the
holder thereof. Such repurchase for the Option or any part of it shall be at a
price equal to the amount by which the "market/offer price" (as defined below)
exceeds the Option exercise price (as adjusted), multiplied by the number of
shares for which the Option may then be exercised, plus certain of FBS's
expenses in connection with the transactions contemplated by the Merger
Agreement. Such repurchase for any Option Shares shall be at a price equal to
the "market/offer price" multiplied by the number of Option Shares to be
repurchased, plus certain of FBS's expenses in connection with the transactions
contemplated by the Merger Agreement. The term "market/offer price" is defined
to mean the highest of (i) the price per share at which a tender or exchange
offer has been made for FirsTier Common Stock, (ii) the price per share of
FirsTier Common Stock that any third party is to pay pursuant to an agreement
with FirsTier, (iii) the highest closing price per share within the six-month
period immediately preceding the date that notice to repurchase is given or (iv)
in the event of a sale of all or substantially all of FirsTier's assets or
deposits, the sum of the net price paid for such assets or deposits and the
current market value of the remaining net assets (as determined by a nationally
recognized investment banking firm), divided by the number of shares of FirsTier
Common Stock outstanding at the time of such sale.
Pursuant to the terms of the Stock Option Agreement, in the event that,
prior to an Exercise Termination Event, FirsTier enters into certain
transactions in which FirsTier is not the surviving corporation, certain
fundamental changes in the capital stock of FirsTier occur or FirsTier sells all
or substantially all of its or certain subsidiaries assets, the agreement
governing such transaction shall provide for the issuance of a substitute
option, with similar terms as the Option, to purchase capital stock of the
entity that is the effective successor to FirsTier.
The Stock Option Agreement provides that neither FBS nor FirsTier may assign
any of its rights or obligations thereunder or under the Option without the
written consent of the other party, except that if a Subsequent Triggering Event
occurs prior to an Exercise Termination Event, FBS may, subject to limitations
contained in the Stock Option Agreement, assign its rights and obligations under
the Stock Option Agreement in whole or in part within 12 months following such
Subsequent Triggering Event (subject to extension as described in the Stock
Option Agreement); provided, that
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until 30 days after the Federal Reserve Board approves the application by FBS to
acquire shares subject to the Option, FBS may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase more than two
percent of the voting shares of FirsTier, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on FBS's behalf or (iv) any other manner approved
by the Federal Reserve Board.
The foregoing provisions of the Stock Option Agreement may have the effect
of discouraging competing offers to acquire or merge with FirsTier. To the best
knowledge of FirsTier and FBS, no event giving rise to the right to exercise the
Option has occurred as of the date of this Proxy Statement/Prospectus.
CONDUCT OF FIRSTIER BUSINESS PENDING THE MERGER
The Merger Agreement provides that from the date of the Merger Agreement to
the Effective Date, unless FBS shall otherwise agree in writing or as otherwise
contemplated or permitted by the Merger Agreement:
(i) FirsTier will not declare or pay any dividends or make any
distributions on shares of FirsTier Common Stock, except cash dividends
which shall be equal to either (a) $.30 per share per quarter or (b) that
amount per share per quarter calculated by multiplying the amount paid by
FBS on each share of FBS Common Stock for such quarter times the exchange
ratio set forth in the Merger Agreement, provided that no such dividends
will be declared in the quarter in which the Effective Date shall occur;
(ii) FirsTier will not issue, sell, grant any warrant, option, phantom
stock option, stock appreciation right or commitment of any kind for, or
related to, or acquire for value, any shares of its capital stock or
otherwise effect any change in connection with its equity capitalization,
except pursuant to certain arrangements set forth on a schedule to the
Merger Agreement and except pursuant to the Stock Option Agreement;
(iii) FirsTier will carry on its businesses in substantially the same
manner as previously conducted, keep in full force and effect insurance
comparable in amount and scope of coverage to that maintained by it as of
the date of the Merger Agreement and use its best efforts to maintain and
preserve its business organization intact, except as contemplated by the
Merger Agreement;
(iv) neither FirsTier nor any of its subsidiaries will (a) enter into any
new line of business or incur or agree to incur any obligation or liability
except liabilities and obligations (including corporate debt issuances)
incurred in the ordinary course of business, except as may be directed by
any regulatory agency; (b) except as may be directed by any regulatory
agency, change its or its subsidiaries' lending, investment, liability
management and other material banking policies in any material respect; (c)
except in the ordinary course of business and consistent with prior
practice, grant any general or uniform increase in the rates of pay of
employees; (d) establish any new employee benefit plan or bonus plan or
arrangement, or amend any existing employee benefit or bonus plan or
arrangement (except as required by law); (e) incur or commit to any single
or group of related capital expenditures or commitment therefor with an
aggregate market value in excess of $250,000 other than in the ordinary
course of business (which will in no event include the establishment of new
branches and other facilities or any capital expenditures for such purpose);
or (f) merge into, consolidate with or permit any other corporation to be
merged or consolidated with it or any of its subsidiaries or acquire outside
of the ordinary course of business part of or all the assets or stock of any
other corporation or person;
(v) FirsTier will not change its or its subsidiaries' methods of
accounting in effect at December 31, 1994, except as required by changes in
generally accepted accounting principles as concurred in by Ernst & Young
LLP, or change any of its methods of reporting income and
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deductions for Federal income tax purposes from those employed in the
preparation of FirsTier's Federal income tax returns for the taxable years
ending December 31, 1993 and 1994, except as required by changes in law;
(vi) FirsTier will promptly advise FBS in writing of all material
corporate actions taken by the directors and shareholders of FirsTier and
furnish FBS with copies of all monthly and other interim financial
statements of FirsTier as they become available;
(vii) FirsTier, its subsidiaries and their respective officers, directors
and employees will not contract for or acquire, at the expense of FirsTier
or any of its subsidiaries, a policy or policies providing for insurance
coverage for directors, officers and/or employees of FirsTier and/or its
subsidiaries for any period subsequent to the Effective Date for events
occurring before or after the Effective Date; provided, however, that
FirsTier may renew, extend or replace existing policies in the ordinary
course consistent with past practices for periods of not greater than one
year;
(viii) neither FirsTier nor any of its subsidiaries shall, directly or
indirectly, amend or propose to amend its Articles of Incorporation or
Bylaws;
(ix) neither FirsTier nor any of its subsidiaries shall sell, assign,
transfer, mortgage or pledge any of its assets with an aggregate market
value in excess of $200,000, except (a) in the ordinary course of business,
including REO, (b) liens and encumbrances for current property taxes not yet
due and payable and (c) liens and encumbrances which do not materially
affect the value of, or interfere with the past or future use or ability to
convey, the property subject thereto or affected thereby;
(x) neither FirsTier nor any of its subsidiaries shall enter into any
settlement or similar agreement involving payments of more than $250,000
with respect to any action, suit, proceeding, order or investigation or take
any other significant action with respect to the conduct of any action,
suit, proceeding, order or investigation to which FirsTier or any of its
subsidiaries is a party or becomes a party after the date of the Merger
Agreement, in each case without prior consultation with FBS; and
(xi) neither FirsTier nor any of its subsidiaries shall agree to do any
of the foregoing.
Pursuant to the Merger Agreement, FirsTier also is required to take certain
affirmative actions at or before the Effective Date. These include certain
specified actions with respect to its employee benefit and stock option plans,
see "-- Effect on FirsTier Employee Benefit Plans and Stock Option Plans." The
Merger Agreement also prevents FirsTier from negotiating for an acquisition of
FirsTier by any other party, subject to specified exceptions, see "-- No
Solicitation," and from taking any action which would disqualify the Merger as a
"reorganization" that would be tax-free to shareholders of FirsTier pursuant to
Section 368(a) of the Code, see "-- Certain Federal Income Tax Consequences to
FirsTier Shareholders." The Merger Agreement provides that, subject to certain
conditions, FirsTier will, consistent with generally accepted accounting
principles, establish such additional accruals and reserves as may be necessary
to conform FirsTier's accounting and credit loss reserve practices and methods
to those of FBS, to reflect the plans of FBS with respect to the conduct of
FirsTier's business following the Merger and to provide for certain costs and
expenses relating to the Merger. In addition, the Merger Agreement provides that
FirsTier will use reasonable efforts to cause its existing customer data files
and records to be in such format, as of the Effective Date, as is necessary to
allow the then existing FBS loan and deposit application systems to process
FirsTier's customer data. See Unaudited Pro Forma Combined Financial
Information.
MANAGEMENT AND OPERATIONS OF FIRSTIER FOLLOWING THE MERGER
The officers and directors of FBS prior to the Effective Date will be the
officers and directors of FBS, as the surviving corporation in the Merger, after
the Effective Date. First Bank Omaha, Southwest Bank and the Nebraska branches
of First Bank, fsb are expected to be merged in November 1995 to become First
Bank National Association ("First Bank Nebraska"); FirsTier Omaha will merge
into
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First Bank Nebraska (the "Bank Merger"). The Bank Merger is expected to occur
within one month of the Effective Date, assuming receipt of all required
regulatory approvals. FBS anticipates that significant cost savings will result
from FirsTier's inclusion in the FBS enterprise. These cost savings are expected
to result from personnel reductions, branch and operational consolidations and
general reductions in corporate and administrative support functions. FBS
expects cost savings of approximately 30% of FirsTier's non-interest operating
expenses in the first year of combined operations. The operating cost savings
are expected to be achieved in various amounts during the periods following the
Merger and not ratably over, or at the beginning or end of, such periods. There
can be no assurance that the expected cost savings or effect on earnings will be
realized or that they will be realized in the period discussed.
FBS anticipates converting FirsTier's data processing systems and product
application systems to its systems soon after the Effective Date. After
conversion of the data processing and product systems, FBS plans to rapidly
introduce its standardized products into the FirsTier branch network. In
addition, all back office administrative and support functions will also be
centralized shortly after the systems conversion.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
CHANGE OF CONTROL BONUS POOL PLAN. Under the FirsTier Change of Control
Bonus Pool Plan, adopted in May 1995, on the business day immediately prior to
the day set for the closing of certain types of mergers (including the Merger),
FirsTier is required to contribute to a Change of Control Bonus Pool an amount
determined in accordance with the formula set forth in such plan. The amount to
be contributed to the Change of Control Bonus Pool is equal to 4% of the
following: the dollar amount by which the price per share to be realized by
FirsTier's shareholders at the time of the date set for closing of a merger
exceeds a price designated by the chairman of the executive committee of the
FirsTier board of directors by reference to the fair market value of FirsTier
Common Stock following execution of an agreement to merge (the "Strike Price"),
multiplied by the number of shares of FirsTier Common Stock then outstanding.
The Strike Price is $32. Such plan is administered by the executive committee of
FirsTier's board of directors, and bonuses are determined by such committee.
Notwithstanding the terms of the plan set forth above, in November 1995, with
the consent of FBS, the executive committee set the bonus pool at $7.0 million
and made certain of the bonus payments in 1995. Such payments were not
contingent upon consummation of the Merger and are subject to reimbursement by
FBS in the event that the Merger is not consummated. The following payments were
made to executive officers of FirsTier pursuant to the Plan: David A. Rismiller,
$3,200,000; Jack R. McDonnell, $1,920,000; and Aaron C. Hilkemann, $250,000.
SEVERANCE AGREEMENT. Effective as of January 26, 1993, FirsTier entered
into letter agreements relating to severance with certain employees. Such an
agreement was entered into with Aaron C. Hilkemann, Vice President and Director
of Financial Operations of FirsTier (the "Severance Agreement"), pursuant to
which Mr. Hilkemann is entitled to receive certain benefits if his employment is
terminated at any time within one year after a "change of control" (as defined
in the Severance Agreement and which would include the Merger) or if he
voluntarily resigns within the first six months after the change of control. In
the event Mr. Hilkemann is terminated by FirsTier or its successor, he would
receive a cash payment in an amount equal to one times the sum of his annual
base salary for the fiscal year in which such change of control is effective
plus one times his annual cash bonus for the preceding fiscal year plus a pro
rata amount of such base salary and bonus based upon the number of months
remaining from the date of termination through the first anniversary of the
change in control. In the event Mr. Hilkemann resigns within six months of such
change of control, he would receive a cash payment in an amount equal to the
amount he would receive if terminated, except he would receive one and one half
times his annual cash bonus for the preceding year, rather than one times such
cash bonus. Such cash payments are payable either in a lump sum or, at Mr.
Hillkemann's election, in 12 equal monthly payments. The Severance Agreement
also provides that in the event Mr. Hilkemann's employment with FirsTier is
terminated or Mr. Hilkemann resigns, he would be entitled to (a) continue to
participate in the group health plans maintained by FirsTier (or
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reimburse his premium payments for plans providing equivalent benefits) until he
becomes covered under another group health plan which does not exclude coverage
on account of a pre-existing condition, and (b) reduction in force and
termination benefits, monetary or otherwise (including monetary payments,
payment for accrued vacation, outplacement services, temporary office space and
telephone). The Severance Agreement permits payments under other severance plans
of FirsTier, if applicable. In connection with the anticipated termination of
Mr. Hilkemann's employment at the time of the Merger, FirsTier made a payment of
approximately $932,000 in December 1995 in full satisfaction of FirsTier's
obligations under the Severance Agreement. Such amount includes the payment made
to Mr. Hilkemann under the Change of Control Bonus Pool Plan described above.
Such payment was not contingent upon consummation of the Merger, and FBS is
required to reimburse FirsTier for such payment in the event that the Merger is
not consummated.
EMPLOYMENT AGREEMENT WITH DAVID A. RISMILLER. In connection with the
execution of the Merger Agreement, David A. Rismiller, Chairman, President and
Chief Executive Officer of FirsTier, and FirsTier entered into an employment
agreement dated August 4, 1995. Such agreement is in addition to Mr. Rismiller's
employment agreement with FirsTier dated March 20, 1995 (the "Prior Agreement").
The agreement provides for an employment period commencing on the Effective Date
and ending on December 31, 1996. Under the agreement, Mr. Rismiller will serve
as Chairman and Chief Executive Officer of First Bank Nebraska at an annual
salary of $350,000. In addition, he will receive health, welfare and similar
benefits similar to those provided to other executives, continuation of a
disability income policy and continuation of certain fringe benefits. The
agreement provides for certain payments under the Change of Control Bonus Pool
Plan, which have been satisfied by the payment to Mr. Rismiller set forth in the
description of such plan appearing above. The agreement also provides that upon
consummation of the Merger, Mr. Rismiller shall immediately receive the
termination benefit provided by the Prior Agreement as if he had beenterminated
by FirsTier (or its successor) as a result of a change in control.
Notwithstanding the terms of the agreement, in satisfaction of the termination
payment amount under the Prior Agreement that was to be made upon consummation
of the Merger, the payment under the Change of Control Bonus Pool Plan (as
described above) and certain other arrangements entered into with the consent of
FBS, Mr. Rismiller received cash payments in December 1995 and January 1996
totaling approximately $6,298,000. Such payments are subject to reimbursement by
FBS in the event that the Merger is not consummated. If Mr. Rismiller's
employment is terminated without "cause" prior to the end of the employment
period under the agreement, he shall be entitled to receive a termination
payment equal to the balance of his annual salary that would be payable had he
continued employment through the end of the calendar year during which such
termination occurs. "Cause" is defined in the agreement to be conviction of a
felony involving moral turpitude or conduct willfully injurious to the employer.
The agreement also provides for certain retirement and other benefits upon
termination of employment for any reason, including benefits under a
supplemental executive retirement plan and an executive death benefit plan. The
agreement permits payments under other severance plans of FirsTier, if
applicable. Pursuant to the agreement, Mr. Rismiller will receive a "gross-up"
payment which, net of all tax, is sufficient to pay any excise tax on "excess
parachute" payments received by him.
EMPLOYMENT AGREEMENT WITH JACK R. MCDONNELL. Jack R. McDonnell, former
Executive Vice President and Chief Executive Officer of FirsTier, entered into
an employment agreement with FirsTier dated March 20, 1995. Mr. McDonnell
resigned from his positions with FirsTier, effective November 30, 1995, in
connection with the Merger. FirsTier and Mr. McDonnell entered into a letter
agreement regarding the payments to be received by Mr. McDonnell in connection
with his resignation in satisfaction of FirsTier's obligations, including under
Mr. McDonnell's employment agreement. In satisfaction of such obligations,
FirsTier has made a payment to Mr. McDonnell in November 1995 in the amount of
$3,948,350. Such amount includes the payment made to Mr. McDonnell under the
Change of Control Bonus Pool Plan described above. Such payment is not
contingent upon consummation of the Merger and is subject to reimbursement by
FBS if the Merger is not consummated. Pursuant to the Agreement, Mr. McDonnell
will be reimbursed for any excise taxes he incurs
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on account of payments relating to a change in control and for income taxes
incurred on account of the reimbursement for such excise taxes. In addition, Mr.
McDonnell is entitled to benefits under a supplemental executive retirement plan
and an executive death benefit plan.
DIRECTORS' AND OFFICERS' INSURANCE; LIMITATION OF LIABILITY OF FIRSTIER
DIRECTORS AND OFFICERS. The Merger Agreement requires that, for a period of five
years after the Effective Date, FBS shall use its best efforts to provide that
portion of directors' and officers' liability insurance that serves to reimburse
officers and directors of FirsTier (as opposed to FBS) with respect to claims
against such officers and directors arising from facts or events which occurred
before the Effective Date of at least the same coverage and amounts, and
containing terms and conditions no less advantageous, as that coverage currently
provided by FirsTier, subject to certain requirements and limitations. The
Merger Agreement also requires FBS, for a period of six years after the
Effective Date, to indemnify present and former officers, directors and
employees of FirsTier (including its subsidiaries) against certain losses and
other expenses in connection with claims which arise out of such persons' having
served in such capacities and pertain to matters or facts arising, existing or
occurring before the Effective Date (including, without limitation, the
transactions contemplated by the Merger Agreement).
FIRSTIER EQUITY-BASED INCENTIVE AWARDS. Pursuant to the terms of FirsTier's
stock-based option and incentive plans, on the Effective Date, each FirsTier
stock option held by active employees shall become immediately exercisable and
all restrictions with respect to restricted stock will automatically lapse. On
November 29, 1995, all stock options granted to certain officers of FirsTier,
including Messrs. Rismiller, McDonnell and Hilkemann, were deemed to be
immediately exercisable by a committee of the FirsTier Board of Directors.
The foregoing interests of members of management or shareholders of FirsTier
in the Merger may mean that such persons have personal interests in the Merger
which may not be identical to the interests of nonaffiliated shareholders.
EFFECT ON FIRSTIER EMPLOYEE BENEFIT PLANS AND STOCK OPTION PLANS
After the Effective Date, the current employee benefit plans of FirsTier
will continue in force until amended or terminated in accordance with their
terms. Notwithstanding the foregoing, the Merger Agreement provides that FBS
will have the right, after the Effective Date, to continue, amend or terminate
any such plans in accordance with the terms thereof and subject to applicable
law.
STOCK OPTIONS. On the Effective Date, and to the extent permitted by
applicable plans and agreements, each outstanding option to purchase shares of
FirsTier Common Stock (a "Stock Option") issued pursuant to the stock option
plans listed in a schedule to the Merger Agreement (collectively, the "FirsTier
Stock Option Plans") shall be assumed by FBS and shall thereafter be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such option, the same number of shares of FBS Common Stock as
the holder of such option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Date, at a price per share equal to (x) the aggregate exercise price
for the shares of FirsTier Common Stock otherwise purchasable pursuant to such
option divided by (y) the number of full shares of FBS Common Stock deemed
purchasable pursuant to such option; provided, however, that in the case of any
option to which Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such options shall be determined in order to comply with Section 424(a) of the
Code. Pursuant to the terms of the FirsTier Stock Option Plans, all outstanding,
unvested options to purchase FirsTier Common Stock will vest upon consummation
of the Merger. Additionally, equity-based awards to certain officers of FirsTier
were vested by action of a committee of the FirsTier Board of Directors on
November 29, 1995.
401(K) PLAN. The Merger Agreement provides that within two years after the
Effective Date, FBS will terminate the accrual of benefits under FirsTier 401(k)
plans and will take such actions as may be necessary to cause the assets and
liabilities of such plans to be merged with and into the FBS
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401(k) plan (the "Capital Accumulation Plan"). All contributions to the FirsTier
401(k) plans after the Effective Date and prior to the date on which accrual of
benefits is terminated shall be immediately and fully vested. Distributions
shall not be permitted from the FirsTier 401(k) plans merely because of the
discontinuance of contributions or the transfer of assets and liabilities to the
Capital Accumulation Plan. FBS is also required to take such actions as may be
necessary to cause eligible FirsTier employees to become qualified to
participate in the Capital Accumulation Plan concurrent with the date that FBS
causes accruals to cease under the FirsTier 401(k) plans. All service with
FirsTier (whether before or after the Effective Date) since an employee's most
recent date of hire shall be recognized under the Capital Accumulation Plan for
eligibility and vesting purposes but shall not be recognized for contribution
and allocation purposes. FBS shall take such actions as may be necessary to
cause the Capital Accumulation Plan to accept transfers of assets and
liabilities from the FirsTier 401(k) plan.
OTHER BENEFITS. The Merger Agreement provides that, at such time following
the Effective Date as FBS shall determine, FBS shall use its best efforts to
cause FirsTier employees to be covered by the welfare and other generally
applicable benefit plans and practices of FBS, provided that during any interim
period, FBS shall not be obligated to continue any particular welfare or other
benefit plans or practices of FirsTier applicable to FirsTier employees.
NO DISSENTERS' RIGHTS FOR FIRSTIER SHAREHOLDERS
Section 138(3) of the Nebraska Business Corporation Act (the "NBCA")
provides that the rights of shareholders to dissent and obtain payment of the
"fair value" of their shares in the event of a merger shall not apply to
shareholders of, among other entities, a bank holding company such as FirsTier.
SHAREHOLDERS WILL NOT BE ELIGIBLE TO USE THE DISSENTERS' RIGHTS PROVISIONS OF
THE NBCA IN CONNECTION WITH THE MERGER, AND WILL BE REQUIRED TO ACCEPT SHARES OF
FBS COMMON STOCK IN EXCHANGE FOR THEIR SHARES OF FIRSTIER COMMON STOCK AS
PROVIDED IN THE MERGER AGREEMENT IF THE MERGER IS APPROVED AND CONSUMMATED.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO FIRSTIER SHAREHOLDERS
FirsTier expects that the Merger will be treated as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code and that
for federal income tax purposes no gain or loss will be recognized by any
shareholder of FirsTier upon the receipt of FBS Common Stock for FirsTier Common
Stock pursuant to the Merger. Gain will be recognized upon the receipt of cash
in lieu of fractional shares of FBS Common Stock. The Internal Revenue Service
(the "Service") has not been and will not be asked to rule upon the tax
consequences of the Merger. Instead, FirsTier will rely upon the opinion of
Wachtell, Lipton, Rosen & Katz, its special counsel, as to certain federal
income tax consequences of the Merger. The opinion of Wachtell, Lipton, Rosen &
Katz is based upon facts described herein and upon certain representations made
by FirsTier and FBS. The opinion of Wachtell, Lipton, Rosen & Katz is also based
upon the Code, Regulations now in effect thereunder, current administrative
rulings and practice, and judicial authority, all of which are subject to
change. An opinion of counsel is not binding on the Service and there can be no
assurance, and none is hereby given, that the Service will not take a position
contrary to one or more positions reflected herein or that the opinion will be
upheld by the courts if challenged by the Service. EACH HOLDER OF FIRSTIER
COMMON STOCK IS URGED TO CONSULT HIS OR HER OWN TAX AND FINANCIAL ADVISORS AS TO
THE EFFECT OF SUCH FEDERAL INCOME TAX CONSEQUENCES ON HIS OR HER OWN PARTICULAR
FACTS AND CIRCUMSTANCES AND ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES ARISING OUT OF THE MERGER.
Based upon the facts and representations provided to it, and subject to
various assumptions and qualifications, FirsTier has received the opinion of
Wachtell, Lipton, Rosen & Katz that the following federal income tax
consequences will result from the Merger:
(a) The Merger will qualify as a "reorganization" under Section 368(a)
of the Code;
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(b) No gain or loss will be recognized by any FirsTier shareholder
(except in connection with the receipt of cash) upon the receipt of FBS
Common Stock for FirsTier Common Stock in the Merger;
(c) The basis of the FBS Common Stock received by a FirsTier shareholder
who exchanges FirsTier Common Stock for FBS Common Stock will be the same as
the basis of the FirsTier Common Stock surrendered in exchange therefor
(subject to any adjustments required as the result of receipt of cash in
lieu of a fractional share of FBS Common Stock);
(d) The holding period of the FBS Common Stock received by a FirsTier
shareholder will include the period during which the FirsTier Common Stock
surrendered in exchange therefor was held (provided that the FirsTier Common
Stock of such FirsTier shareholder was held as a capital asset at the
Effective Date); and
(e) Cash received by a FirsTier shareholder in lieu of a fractional
share interest of FBS Common Stock will be treated as having been received
as a distribution in full payment in exchange for the fractional share
interest of FBS Common Stock which such shareholder would otherwise be
entitled to receive, and will generally qualify as capital gain or loss
(assuming the FirsTier Common Stock was a capital asset in such
shareholder's hands at the Effective Date).
The foregoing is a description of the material anticipated federal income
tax consequences of the Merger, without regard to the particular facts and
circumstances of the tax situation of each shareholder of FirsTier. It does not
discuss all of the consequences that may be relevant to shareholders of FirsTier
entitled to special treatment under the Code (such as insurance companies,
dealers in securities, exempt organizations or foreign persons) or to
shareholders of FirsTier who acquired their FirsTier Common Stock pursuant to
the exercise of employee stock options or otherwise as compensation. The summary
set forth above does not purport to be a complete analysis of all potential tax
effects of the transactions contemplated by the Merger Agreement or the Merger
itself. No information is provided herein with respect to the tax consequences,
if any, of the Merger under state, local, foreign or other tax laws.
STOCK EXCHANGE LISTING OF FBS COMMON STOCK
It is anticipated that FBS will file a listing application with the NYSE
covering the shares of FBS Common Stock which are issuable and that such
application will be approved subject to notice of issuance at or before the
Effective Date. It is a condition to the obligations of FirsTier and FBS to
consummate the Merger that such shares have been approved for listing on the
NYSE on official notice of issuance.
RESALE OF FBS COMMON STOCK RECEIVED BY FIRSTIER SHAREHOLDERS
The shares of FBS Common Stock issuable to shareholders of FirsTier upon
consummation of the Merger have been registered under the Securities Act. Such
shares may be traded freely without restriction by those shareholders who are
not deemed to be "affiliates" of FirsTier or FBS, as that term is defined in
rules promulgated under the Securities Act.
Shares of FBS Common Stock received by those shareholders of FirsTier who
are deemed to be "affiliates" of FirsTier at the time of the Special Meeting may
be resold without registration under the Securities Act only as permitted by
Rule 145 under the Securities Act or as otherwise permitted under the Securities
Act. FirsTier has agreed in the Merger Agreement to use its best efforts to
obtain and deliver to FBS at least 31 days prior to the Effective Date signed
representation letters from each shareholder of FirsTier who may reasonably be
deemed to be an "affiliate" of FirsTier to the effect that such persons will not
offer to sell, transfer or otherwise dispose of any of the shares of FBS Common
Stock distributed to them pursuant to the Merger except in compliance with Rule
145, or in a transaction that, in the opinion of counsel reasonably satisfactory
to FBS, is otherwise exempt from the registration requirements of the Securities
Act, or in an offering which is registered under the Securities Act. This Proxy
Statement/Prospectus does not cover any resales of FBS Common Stock received by
persons who are deemed to be "affiliates" of FirsTier. No person is authorized
to make use
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of this Proxy Statement/Prospectus in connection with any such resales. Former
shareholders of FirsTier who are deemed to be "affiliates" of FirsTier and who
surrender certificates formerly evidencing shares of FirsTier Common Stock must
execute and deliver to FBS a letter containing the representations described
above before any exchange of such certificates for certificates representing
shares of FBS Common Stock will be effected. See "-- Surrender of FirsTier
Common Stock Certificates."
FBS DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN
FBS provides eligible shareholders with a simple and convenient method of
investing cash dividends and optional cash payments at 100% of the average price
(as defined) in additional shares of FBS Common Stock without payment of any
brokerage commission or service charge pursuant to its Automatic Dividend
Reinvestment and Common Stock Purchase Plan. The plan includes certain dollar
limitations on participation and provides for eligible shareholders to elect
dividend reinvestment on only a part of the shares registered in the name of a
participant (while continuing to receive cash dividends on remaining shares). It
is anticipated that the plan will continue after the Effective Date and that
shareholders of FirsTier who receive FBS Common Stock in the Merger will have
the right to participate therein.
ACCOUNTING TREATMENT
The Merger will be accounted for by FBS under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations," as amended. Under this method of accounting, the
purchase price will be allocated to assets acquired and liabilities assumed
based on their estimated fair values as of the Effective Date. Income of the
combined company will not include income or loss of FirsTier prior to the
Effective Date.
EXPENSES
The Merger Agreement provides that all costs and expenses incurred in
connection with such agreement and the transactions contemplated thereby shall
be paid by the party incurring such costs and expenses.
MATERIAL DIFFERENCES IN RIGHTS OF FIRSTIER SHAREHOLDERS
The rights of holders of FirsTier Common Stock are governed by the Articles
of Incorporation of FirsTier, as amended (the "FirsTier Articles of
Incorporation"), the bylaws of FirsTier (the "FirsTier Bylaws") and the laws of
the State of Nebraska. The rights of FBS shareholders are governed by the
Restated Certificate of Incorporation of FBS, as amended (the "FBS Certificate
of Incorporation"), the bylaws of FBS (the "FBS Bylaws") and the laws of the
State of Delaware. After the Effective Date, the rights of holders of FirsTier
Common Stock will be governed by the FBS Certificate of Incorporation, the FBS
Bylaws and the laws of the State of Delaware. Because of certain differences
between Nebraska and Delaware corporate law and between the FirsTier Articles of
Incorporation and FirsTier Bylaws, on the one hand, and the FBS Certificate of
Incorporation and the FBS Bylaws, on the other hand, the current rights of
FirsTier shareholders will change significantly as a result of the Merger; the
following is a summary of the material differences.
BUSINESS COMBINATIONS AND SUPERMAJORITY VOTING. Under Delaware law, a
corporation is prohibited from engaging in certain business combinations,
including a merger, sale of substantial assets, loan or substantial issuance of
stock, with an interested shareholder, or an interested shareholder's affiliates
and associates, for a three-year period beginning on the date the interested
shareholder acquires 15% or more of the outstanding voting stock of the
corporation. The restrictions on business combinations do not apply if the board
of directors gives prior approval to the transaction in which the 15% ownership
level is exceeded, the interested shareholder acquires at one time 85% of the
corporation's stock (excluding shares held by management or employee stock plans
in which employees do not have the effective power to tender stock) or the
business combination is approved by the board of directors and authorized at a
meeting of shareholders by the holders of at least 66 2/3% of the outstanding
voting stock, excluding shares owned by the interested shareholder. The FBS
Certificate of
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Incorporation contains provisions that provide for supermajority voting
requirements in connection with certain "Business Combinations" or "Business
Transactions" (as defined) involving a "Related Person" (as defined). The FBS
Certificate of Incorporation contains provisions designed primarily to address
fair price considerations, and the required supermajority shareholder vote is
not required under certain fair price circumstances or if a majority of the
"Continuing Directors" (as defined) approve the transaction. The FirsTier
Articles of Incorporation contain similar provisions. The affirmative vote of at
least 80% of the outstanding shares entitled to vote generally in the election
of directors is required to approve such a transaction under the FirsTier
Articles of Incorporation and the FBS Certificate of Incorporation. The FBS
Certificate of Incorporation also requires supermajority voting at the 80% level
to amend, add to, alter, change or repeal those articles thereof relating to
director numbers, filling vacancies on the board of directors, director
classification and "Business Transactions."
The Nebraska Shareholders' Protection Act contains provisions governing the
rights of shareholders in the case of certain share acquisitions and business
combinations involving public corporations incorporated in (or having certain
other significant ties to) Nebraska. FirsTier is a public corporation as defined
in such act and, accordingly, is governed by such act's provisions, which
generally require that specific information delivery, voting and other
procedures be followed in certain acquisitions of shares of corporations subject
to such act.
DISSENTERS' RIGHTS. Under Delaware law, appraisal rights are available only
in connection with certain statutory mergers or consolidations, unless the
certificate of incorporation grants such rights with respect to amendments to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation, or sales of all or substantially all
of the assets of a corporation. Neither the FirsTier nor the FBS Certificate of
Incorporation grants such rights. Appraisal rights under Delaware law, however,
are not available if the corporation's stock is (prior to the relevant
transaction) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 shareholders; provided that, if the merger or consolidation requires
shareholders to exchange their stock for anything other than shares of the
surviving or resulting corporation, shares of another corporation which will be
listed on a national securities exchange or held by more than 2,000
shareholders, cash in lieu of fractional shares of any such corporation, or a
combination of such shares and cash, then appraisal rights will be available.
Under Nebraska law, dissenters' rights of appraisal are not available to the
shareholders of certain financial institutions and holding companies of such
financial institutions. FirsTier is such a financial institution holding
company, and accordingly holders of FirsTier Common Stock have no dissenters
rights. See "-- No Dissenters' Rights for FirsTier Shareholders."
PREEMPTIVE RIGHTS. Under Delaware law, shareholders of a corporation have
no preemptive rights unless such rights are expressly granted in the certificate
of incorporation. The FBS Certificate of Incorporation contains no such
provision. Under Nebraska law, preemptive rights are presumed unless denied in
the articles of incorporation. The FirsTier Articles of Incorporation deny
preemptive rights.
AMENDMENTS TO CHARTER AND BYLAWS. Under Delaware law, a corporation's
certificate of incorporation may be amended by resolution of the board of
directors and the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote. Under Nebraska law, amendment of a
corporation's articles of incorporation requires the affirmative vote of at
least two-thirds of the shares entitled to vote. Delaware law reserves the power
to amend or repeal the bylaws exclusively to the shareholders unless the
certificate of incorporation confers such power upon the directors. The FBS
Certificate of Incorporation provides that the FBS Bylaws may be amended or
repealed by the Board of Directors of FBS, subject to the power of the
shareholders to amend or repeal any such change to the Bylaws. Nebraska law
provides that a corporation's initial bylaws shall be adopted by the
shareholders but that thereafter either the shareholders or the directors may
adopt, amend or repeal bylaws, except
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that the directors may not amend or repeal any bylaw if it specifically provides
that they may not and the directors may not adopt bylaws providing for a
supermajority quorum or supermajority voting except as required by a
corporation's articles of incorporation or Nebraska law.
REMOVAL OF DIRECTORS. Under the FBS Certificate of Incorporation, FBS
shareholders may remove a director only for cause upon a majority vote of the
shareholders. Under Nebraska law, a vote of the holders of a majority of shares
then entitled to vote at an election of directors may remove a director with or
without cause, provided that a director may not be removed if the number of
votes sufficient to elect that director under cumulative voting is voted against
the director's removal and that a director may only be removed at a meeting
called for such purpose. The FirsTier Articles of Incorporation do not contain
provisions with respect to removal of directors.
SPECIAL MEETINGS OF SHAREHOLDERS. The FirsTier Bylaws provide that special
meetings of FirsTier shareholders may be called by the Chairman or the Board of
Directors, and shall be called by the Chairman at the request of the holders of
not less than 10% of the outstanding shares of FirsTier entitled to vote at such
meeting. The FBS Bylaws provide that special meetings may be called by the Board
of Directors or the Chief Executive Officer.
QUORUM AT SHAREHOLDERS' MEETINGS. Nebraska law provides that the holders of
a majority of the outstanding shares entitled to vote at a meeting, represented
in person or by proxy, shall constitute a quorum for purposes of such a meeting.
The FBS Bylaws require only that the holders of not less than one-third of the
shares entitled to vote at the meeting be present, in person or by proxy, to
constitute a quorum.
VOTING RIGHTS. Under Delaware law, a corporation's certificate of
incorporation may provide for cumulative voting in the election of directors.
The FBS Certificate of Incorporation does not provide for cumulative voting.
Nebraska law provides for cumulative voting rights in the election of directors.
LIMITATION ON PERSONAL LIABILITY OF DIRECTORS. The FBS Certificate of
Incorporation provides that directors of FBS shall not be liable to FBS or its
shareholders for monetary damages for breaches of fiduciary duty; provided,
however, that such liability of a director shall not be eliminated or limited to
the extent provided by applicable law under certain circumstances. The FirsTier
Articles of Incorporation do not contain such a provision.
INDEMNIFICATION. The FBS Bylaws provide that FBS shall indemnify FBS
directors, advisory directors and officers and those serving at FBS's request as
directors, advisory directors and officers of other entities against certain
expenses under certain circumstances; the indemnification of FBS employees shall
be at the discretion of the FBS board of directors, and the FBS Bylaws do not
contemplate the indemnification of any other persons.
The FirsTier Bylaws provide that FirsTier shall indemnify FirsTier's
directors, officers or employees and those serving at FirsTier's request as
directors, officers or employees of other entities against certain expenses
under certain circumstances. In addition, under Nebraska law, a corporation is
required to indemnify a director or officer of a corporation against expenses
actually and reasonably incurred in connection with the successful defense of
certain actions, suits, claims or proceedings.
Under Nebraska law, any indemnification of a director, including any payment
or reimbursement of expenses, shall be reported in writing to the shareholders
with the notice of the next shareholders' meeting or prior to such meeting.
Delaware law contains no such requirement.
DIVIDENDS. Under Delaware law, dividends may be paid out of surplus or out
of net profits for the fiscal year in which the dividend is paid or the
preceding fiscal year, except that no dividends may be paid if the capital of
the corporation has been diminished to an amount less than the liquidation
preference of outstanding preferred stock. Nebraska law allows payment of
dividends except when the corporation is insolvent or would be rendered
insolvent by the payment thereof and provided that dividends in cash or property
only be paid out of unreserved and unrestricted earned surplus.
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RIGHTS PLAN. FBS has adopted a shareholder rights plan, which may have
certain anti-takeover effects. The terms of the FBS rights plan are summarized
and described herein under "Description of FBS Capital Stock -- Common Stock --
Preferred Stock Purchase Rights." FirsTier also has adopted a shareholder rights
plan, which may have certain anti-takeover effects. See "Description of FirsTier
Capital Stock."
GENERAL. The foregoing discussion of certain similarities and material
differences between the rights of holders of FirsTier Common Stock and the
rights of holders of FBS Common Stock under the Articles and Certificate of
Incorporation, respectively, and Bylaws pursuant to Delaware and Nebraska law is
only a summary of certain provisions and does not purport to be a complete
description of such similarities and differences. The foregoing discussion is
qualified in its entirety by reference to the Nebraska Business Corporation Act,
the Delaware General Corporation Law, the common law thereunder, the 1995
Amendments and the full texts of the Articles and Certificate of Incorporation,
respectively, and Bylaws of FirsTier and FBS. Such Articles and Certificate of
Incorporation and Bylaws are filed or incorporated by reference as exhibits to
the Registration Statement of which this Proxy Statement/Prospectus is a part.
BUSINESS OF FBS
GENERAL
FBS is a bank holding company registered under the Bank Holding Company Act
headquartered in Minneapolis, Minnesota. As of September 30, 1995, FBS was
comprised of eight subsidiary banks, a savings association and other financial
companies with 350 offices, located primarily in Minnesota, Colorado, Illinois,
Montana, North Dakota, South Dakota, Wisconsin, Iowa, Nebraska, Kansas and
Wyoming. Through its subsidiaries, FBS provides commercial and agricultural
finance, consumer banking, trust, capital markets, treasury management,
investment management, data processing, leasing, mortgage banking and brokerage
services. At September 30, 1995, FBS and its consolidated subsidiaries had
consolidated assets of $33.0 billion, consolidated deposits of $21.9 billion and
shareholders equity of $2.7 billion.
The subsidiary banks of FBS engage in general commercial banking business,
principally in domestic markets, and provide banking and ancillary services to
individuals, businesses, institutional organizations, governmental entities and
other financial institutions. The largest subsidiary bank, First Bank National
Association ("FBNA"), had assets of $15.4 billion at September 30, 1995.
FBS is a legal entity separate and distinct from its banking and non-banking
affiliates. The principal sources of FBS's income are dividends, interest and
fees from FBNA and the other banking and non-banking affiliates. The bank and
thrift subsidiaries of FBS (the "Banks"), are subject to certain restrictions
imposed by federal law on any extensions of credit to, and certain other
transactions with, FBS and certain other affiliates; and on investments in stock
or other securities thereof. Such restrictions prevent FBS and such other
affiliates from borrowing from the Banks unless the loans are secured by various
types of collateral. Further, such secured loans, other transactions and
investments by any of the Banks are generally limited in amount as to FBS and as
to each of such other affiliates to 10% of such Bank's capital and surplus and
as to FBS and all of such other affiliates to an aggregate of 20% of such Bank's
capital and surplus. In addition, payment of dividends to FBS by the subsidiary
banks is subject to ongoing review by regulators and is subject to various
statutory limitations and in certain circumstances requires approval by
regulatory authorities.
FBS was incorporated under Delaware law in 1929 and has functioned as a
multi-bank holding company since that time. Its principal executive offices are
located at First Bank Place, 601 Second Avenue South, Minneapolis, Minnesota
55402-4302 (telephone (612) 973-1111). For further information concerning FBS,
see the FBS documents incorporated by reference herein as described under
"Incorporation of Certain Documents by Reference."
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RECENT DEVELOPMENTS
1995 YEAR END RESULTS
FBS reported fourth quarter 1995 net income of $150.7 million, or $1.12 per
fully diluted share, compared with fourth quarter 1994 operating income of
$122.6 million, or $.90 per share. The reported net loss for the fourth quarter
of 1994 (including discontinued operations and merger-related items) was $35.3
million, or $.28 per share. Net income in 1995 was $568.1 million, or $4.11 per
fully diluted share, compared with $470.4 million, or $3.32 per fully diluted
share, from continuing operations before merger-related items in 1994. Reported
net income for 1994, including discontinued operations and merger-related items,
was $305.0 million, or $2.14 per fully diluted share.
Return on average assets and return on average common equity in the fourth
quarter of 1995 were 1.80% and 22.4%, respectively, compared with 1.43% and
18.0% in the fourth quarter of 1994, from continuing operations before
merger-related items. The net interest margin on a taxable-equivalent basis of
4.83% in the fourth quarter of 1995 was slightly higher than the margin of 4.79%
in the fourth quarter of 1994. The efficiency ratio, the ratio of expenses to
revenues, continued to improve, to 51.2% from 57.3% for the fourth quarter of
1994, excluding merger-related charges.
The strong fourth quarter 1995 results reflected growth in noninterest
income, lower operating expenses, and effective capital management. Fourth
quarter noninterest income was $197.3 million, an increase of $24.7 million, or
14%, from the same quarter of 1994, excluding merger-related securities losses.
The improvement resulted primarily from growth in credit card and trust fees.
Fourth quarter 1995 noninterest expense totaled $287.3 million, a decrease of
$24.5 million, or 8%, from the fourth quarter of 1994. Net interest income on a
taxable-equivalent basis was $363.7 million, a decrease of $6.5 million, or 2%
compared with the fourth quarter of 1994. The decrease was primarily
attributable to lower total earning assets (as loan growth was more than offset
by sales and maturities of securities) and higher funding costs, including the
cost of funding the buyback of common stock, purchased primarily in connection
with the Merger. The provision for credit losses for the quarter was up $3.5
million, or 13%, to $31.0 million from fourth quarter 1994.
Nonperforming assets declined to $153.7 million at December 31, 1995, down
$78.6 million, or 34%, from $232.3 million at December 31, 1994. The ratio of
the allowance for credit losses to nonperforming loans at quarter-end was 401%
compared with 283% at the end of 1994.
FIRST INTERSTATE TRANSACTION
On November 6, 1995, FBS and First Interstate announced that they had
entered into a definitive agreement whereby FBS will exchange 2.60 shares of FBS
Common Stock for each share of First Interstate common stock (and cash in lieu
of fractional shares) (the "First Interstate Transaction"). The combined
institution will use the First Interstate Bancorp name, will have approximately
$90 billion in assets and $7 billion in shareholders' equity. The First
Interstate Transaction will qualify as a tax-free reorganization and be
accounted for as a pooling of interests. The previously announced capital
management program as described in FBS's Form 8-K dated December 13, 1995 has
changed. In order that the First Interstate Transaction be accounted for as a
pooling of interests, the Staff of the Commission believes that generally
accepted accounting principles require FBS to suspend its ongoing repurchase
program for two years following consummation of such proposed merger, except for
shares reacquired for issuance in connection with stock options and other
compensation plans and purchase business combinations. The First Interstate
Transaction is subject to a number of conditions customary in such transactions,
including regulatory approvals and approval by the shareholders of each of First
Interstate and FBS. A failure of any such condition to be satisfied, if not
waived, would prevent consummation of the First Interstate Transaction. There
can be no assurance that the First Interstate Transaction will be consummated;
however, the Merger is not contingent upon the consummation of the First
Interstate Transaction. On November 13, 1995, following the announcement of the
proposed First Interstate Transaction, Wells Fargo & Co. ("Wells") announced
that it intended to commence an unsolicited hostile exchange offer in which
holders of First Interstate common stock would have the right to exchange each
of their shares for two-thirds of a share of Wells common stock. For additional
information concerning the proposed First Interstate Transaction, see "Unaudited
Pro Forma Condensed Combined Financial Information" and the documents referred
to under "Incorporation of Certain Documents by Reference."
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First Interstate is a bank holding company registered under the Bank Holding
Company Act, and conducts a commercial banking business through its bank
subsidiaries. At September 30, 1995, First Interstate, through its 16 subsidiary
banks (the "Subsidiary Banks"), operated approximately 1,150 banking offices in
13 states.
At September 30, 1995, First Interstate and its consolidated subsidiaries
had total assets of $55.1 billion, consolidated deposits of $48.2 billion and
shareholders' equity of $4.0 billion. At that date, First Interstate was the
fourteenth largest commercial banking organization in the United States ranked
by total assets.
The Subsidiary Banks accept checking, savings and other time deposit
accounts and employ these funds by making principally consumer, real estate and
commercial loans and investing in securities and other interest bearing assets.
All of their deposit accounts are insured by the FDIC, all but three exercise
trust powers, and the thirteen national banks and one of the three state banks
are members of the Federal Reserve System. The larger Subsidiary Banks provide
international banking services throughout the international departments of their
domestic offices and through a business development agreement between First
Interstate Bank of California and Standard Chartered PLC. They also maintain
correspondent relationships with major banks throughout the world.
First Interstate also provides banking-related financial services and
products. These include asset-based commercial financing, asset management and
investment counseling, bank card operations, mortgage banking, venture capital
and investment products. It engages in these activities through non-bank
subsidiaries of First Interstate, through the Subsidiary Banks and through
subsidiaries of the Subsidiary Banks.
The largest of the Subsidiary Banks, First Interstate Bank of California, a
California state-chartered bank, had total assets of approximately $24.8
billion, total deposits of approximately $21.2 billion and shareholder's equity
of approximately $2.0 billion at September 30, 1995.
BUSINESS OF FIRSTIER
FirsTier, a multi-bank bank holding company registered under the Bank
Holding Company Act having its principal place of business at Seventeenth and
Farnam Streets, Omaha, Nebraska 68102, was incorporated in Nebraska in 1968.
FirsTier's wholly owned, consolidated, active subsidiaries include FirsTier
Bank, National Association, Omaha; FirsTier Bank, National Association, Lincoln;
FirsTier Bank, National Association, Norfolk; FirsTier Bank, National
Association, Scottsbluff; Nevada National Bank, Nevada, Iowa; Valley State Bank,
Rock Valley, Iowa; and Security Savings Bank, Williamsburg, Iowa; Wyoming Trust
and Management Company, a trust company; and FirsTier Insurance Inc., a credit,
life and disability reinsurance company.
At September 30, 1995, FirsTier and its consolidated subsidiaries had
consolidated assets of approximately $3.6 billion, consolidated deposits of $2.8
billion, and shareholders' equity of $376 million. Because the banks are the
dominant operating entities of FirsTier, FirsTier functions principally to
supplement the banks' activities, and related expenses of FirsTier are allocated
to the banks. FirsTier meets its dividend and working capital requirements
through funds primarily derived from dividends from its bank subsidiaries.
Through its subsidiaries, FirsTier provides a broad range of commercial bank
financial services to its local, regional and national customers including line
of credit facilities, accounts receivable, inventory and other working capital
financing, sales and equipment financing, real estate and interim construction
financing and cash management services. It serves its many agricultural
customers by providing loans to farmers, ranchers and feeders for crop
production, equipment, breeding herds and stock/feeder cattle programs.
Through its subsidiaries, FirsTier also offers a full range of consumer
services, including mortgage, installment and home improvement loans, checking
accounts, various savings account and
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certificate of deposit programs, trust services, safe deposit facilities, Credit
Line Checking and MasterCard and VISA credit card accounts, and additionally
offers customers a variety of fiduciary services ranging from the administration
of estates and trusts to the management of funds under pension and profit
sharing plans.
For further information concerning FirsTier, see the FirsTier documents
incorporated by reference herein as described under "Incorporation of Certain
Documents by Reference."
OWNERSHIP OF FIRSTIER COMMON STOCK
Information concerning the directors and executive officers of FirsTier,
together with information related to principal shareholders of FirsTier, is set
forth in FirsTier's Proxy Statement dated April 14, 1995, incorporated herein by
reference to FirsTier's Annual Report on Form 10-K for the year ended December
31, 1994. See "Incorporation of Certain Documents by Reference."
DESCRIPTION OF FBS CAPITAL STOCK
The following is a description of the material features of the capital stock
of FBS. This description does not purport to be complete and is qualified in its
entirety by reference to the FBS Certificate of Incorporation, the certificate
of designation for each series of preferred stock of FBS, and the agreements and
documents referred to below under "-- Common Stock -- Preferred Stock Purchase
Rights" and "-- Periodic Stock Purchase Rights and Risk Event Warrants," copies
of which are incorporated by reference as exhibits to the Registration Statement
of which this Proxy Statement/ Prospectus is a part.
GENERAL
The authorized capital stock of FBS consists of 200,000,000 shares of FBS
Common Stock, par value $1.25 per share, and 10,000,000 shares of preferred
stock, par value $1.00 per share ("preferred stock of FBS"). Under the FBS
Certificate of Incorporation, the Board of Directors of FBS or a duly authorized
committee thereof has the power, without further action by the shareholders
unless action is required by applicable laws or regulations or by the terms of
outstanding preferred stock of FBS, to provide for the issuance of preferred
stock in one or more series and to fix the voting rights, designations,
preferences, and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, by adopting a resolution or
resolutions creating and designating such series. As of September 30, 1995,
there were 2,095,800 shares of preferred stock of FBS outstanding, having an
aggregate liquidation preference of $104,790,000, and 1,412,750 shares of
preferred stock of FBS reserved for issuance. At September 30, 1995, 135,632,324
shares of FBS Common Stock were issued and outstanding (including 6,202,961
shares held in treasury), 7,680,088 shares were reserved for issuance under the
FBS employee plans and dividend reinvestment plan, 3,616,512 shares were
reserved for issuance upon conversion of the Series 1991A Convertible Preferred
Stock described below, and 15,000,000 shares were reserved for issuance upon
exercise of the Periodic Stock Purchase Rights and Risk Event Warrants described
below.
The FBS Board of Directors has approved a proposed amendment to the FBS
Certificate of Incorporation that would increase the number of authorized shares
of FBS Common Stock from 200,000,000 to 500,000,000 and would increase the
number of authorized shares of preferred stock of FBS from 10,000,000 to
15,000,000. The increase in the number of authorized shares of FBS Common Stock
is necessary to have sufficient shares available for consummation of the First
Interstate Transaction, in connection with which FBS anticipates issuing up to
207,480,000 shares of FBS Common Stock. Such amendment is contingent upon FBS
shareholder approval of certain other matters relating to the First Interstate
Transaction.
PREFERRED STOCK
GENERAL. FBS presently has one series of preferred stock issued and
outstanding and two series of preferred stock authorized for future issuance.
The Series 1991A Convertible Preferred Stock,
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which is issued and outstanding, and the Series 1990A Preferred Stock, which is
authorized for future issuance as described below, rank on a parity with one
another. The Series A Junior Participating Preferred Stock (the "Junior
Preferred Stock"), which is authorized for future issuance as described below,
ranks junior to the other two series of preferred stock.
SERIES 1990A PREFERRED STOCK. In connection with the sale by FBS of
12,600,000 shares of FBS Common Stock and accompanying periodic stock purchase
rights and risk event warrants in a private placement in July 1990, FBS may
under certain circumstances be obligated to issue up to 12,750 shares of Series
1990A Preferred Stock. See "-- Common Stock -- Periodic Stock Purchase Rights
and Risk Event Warrants" below. The shares of Series 1990A Preferred Stock
would, if issued, provide for a liquidation preference of $100,000 per share,
and the dividend rate would be adjusted quarterly and would be determined at the
time of issuance. If, at the time of any annual meeting of shareholders for the
election of directors, the amount of accrued but unpaid dividends on the Series
1990A Preferred Stock were equal to at least six quarterly dividends on such
series, then the number of directors of FBS would be increased by one and the
holders of such series, voting separately as a series, would be entitled to
elect one additional director who would continue to serve the full term for
which he or she would have been elected, notwithstanding the declaration or
payment of any dividends on such series of preferred stock. Holders of Series
1990A Preferred Stock would not have any other voting rights, except as
described under "-- Preferred Stock Voting Rights" below.
SERIES 1991A CONVERTIBLE PREFERRED STOCK. In November 1991, FBS issued in a
public offering 2,290,000 shares of its Series 1991A Convertible Preferred Stock
and 2,113,700 of such shares remained outstanding at June 30, 1995. Such shares
bear a dividend rate of 7.125% per annum of the liquidation preference per
share. The shares of Series 1991A Convertible Preferred Stock are convertible at
the option of the holder at any time at the rate of 1.7256 shares of FBS Common
Stock for each such share, which is equivalent to a conversion price of $28.975
per share of FBS Common Stock. The conversion rate is subject to adjustment upon
the occurrence of specified events. The shares of Series 1991A Convertible
Preferred Stock are not subject to any sinking fund provisions and have no
preemptive rights. Such shares provide for a liquidation preference of $50 per
share plus accrued and unpaid dividends, and are subject to redemption upon at
least 30 days' notice, at the option of FBS at any time on or after January 1,
1996 at a redemption price equal to $52.1375 per share, declining to $50 per
share on or after January 1, 2002, plus in each case accrued and unpaid
dividends; provided, however, that the shares of Series 1991A Convertible
Preferred Stock are not redeemable in part in the event that full cumulative
dividends have not been paid. Holders of Series 1991A Convertible Preferred
Stock do not have any voting rights, except as described under "-- Preferred
Stock Voting Rights" below.
JUNIOR PREFERRED STOCK. FBS has issued preferred stock purchase rights to
holders of FBS Common Stock entitling such holders, under specified conditions,
to purchase Junior Preferred Stock of FBS. See "-- Common Stock -- Preferred
Stock Purchase Rights" below. If issued, each share of Junior Preferred Stock
would have a minimum liquidation preference of $100 per share plus accrued and
unpaid dividends and would be entitled to an aggregate payment equal to the
liquidation payment made on 100 shares of FBS Common Stock. In addition, each
share of Junior Preferred Stock would have a minimum preferential quarterly
dividend payment of $1.00 per share but would be entitled to an aggregate
payment equal to the dividends declared on 100 shares of FBS Common Stock. The
shares of Junior Preferred Stock would not be entitled to the benefit of any
sinking fund and would not be redeemable. Each share of Junior Preferred Stock
would have 100 votes, voting together with the FBS Common Stock.
PREFERRED STOCK VOTING RIGHTS. The following voting provisions apply to all
series of the preferred stock of FBS other than the Junior Preferred Stock. The
voting rights of the Junior Preferred Stock, and certain additional voting
rights of the Series 1990A Preferred Stock, are described above under "-- Series
1990A Preferred Stock" and "-- Junior Preferred Stock."
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If, at the time of any annual meeting of shareholders for the election of
directors, the amount of accrued but unpaid dividends on any preferred stock of
FBS is equal to at least six quarterly dividends on such series of preferred
stock of FBS, the number of the directors of FBS will be increased by two and
the holders of all outstanding series of preferred stock of FBS (excluding the
Series 1990A Preferred Stock), voting as a single class without regard to
series, will be entitled to elect such additional two directors until all
dividends in default on all preferred stock of FBS have been paid or declared
and set apart for payment.
The affirmative vote or consent of the holders of at least two-thirds of the
outstanding shares of any series of the preferred stock of FBS, voting as a
class, will be required for any amendment of the FBS Certificate of
Incorporation (including any certificate of designation or any similar document
relating to any series of preferred stock of FBS) which will adversely affect
the powers, preferences, privileges or rights of such series of preferred stock.
The affirmative vote or consent of the holders of at least two-thirds of the
outstanding shares of any series of preferred stock of FBS, voting as a single
class without regard to series, will be required to issue, authorize, or
increase the authorized amount of, or issue or authorize any obligation or
security convertible into or evidencing a right to purchase, any additional
class or series of stock ranking prior to such series of preferred stock as to
dividends or upon liquidation.
ADDITIONAL PROVISIONS. The rights of holders of FBS Common Stock will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. Any such issuance may
adversely affect the interests of holders of the FBS Common Stock by limiting
the control which such holders may exert by exercise of their voting rights, by
subordinating their rights in liquidation to the rights of the holders of the
preferred stock of FBS, and otherwise. In addition, the issuance of preferred
stock of FBS may, in some circumstances, deter or discourage takeover attempts
and other changes in control of FBS, including takeovers and changes in control
which some holders of the FBS Common Stock may deem to be in their best
interests and in the best interests of FBS, by making it more difficult for a
person who has gained a substantial equity interest in FBS to obtain voting
control or to exercise control effectively. FBS has no current plans or
agreements with respect to the issuance of any shares of preferred stock except
as described above with respect to the Series 1990A Preferred Stock and except
in connection with the proposed issuance of shares of preferred stock to holders
of First Interstate Preferred Stock. See "-- First Interstate Preferred Stock."
The FBS Certificate of Incorporation requires the affirmative vote of the
holders of 80% of the Voting Stock (as defined therein) of FBS to approve
certain mergers, consolidations, reclassifications, dispositions of assets or
liquidation, involving or proposed by certain significant shareholders, unless
certain price and procedural requirements are met or unless the transaction is
approved by the Continuing Directors (as defined therein). In addition, the FBS
Certificate of Incorporation provides for classification of the Board of
Directors into three separate classes and authorizes action by the shareholders
of FBS only pursuant to a meeting and not by a written consent. The Bylaws of
FBS provide that special meetings of shareholders may be called only by the
Board of Directors or the chief executive officer. The overall effect of these
provisions may be to delay or prevent attempts by other corporations or groups
to acquire control of FBS without negotiation with the Board of Directors.
COMMON STOCK
GENERAL. Each share of FBS Common Stock is entitled to such dividends as
may from time to time be declared by the Board of Directors from any funds
legally available for dividends. FBS may not declare any cash dividends on, or
make any payment on account of, the purchase, redemption or other retirement of,
FBS Common Stock unless full dividends (including accumulated dividends, if
applicable) have been paid or declared or set apart for payment upon all
outstanding shares of the preferred stock of FBS and FBS is not in default or in
arrears with respect to any sinking or other analogous fund or other agreement
for the purchase, redemption or other retirement of any shares of preferred
stock of FBS. Holders of FBS Common Stock are entitled to one vote per share.
Shareholders do not
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have the right to cumulate their votes in the election of directors. FBS Common
Stock has no conversion rights and the holders of FBS Common Stock have no
preemptive or other rights to subscribe for additional securities of FBS. In the
event of liquidation of FBS, after the payment or provision for payment of all
debts and liabilities and subject to the rights of the holders of preferred
stock of FBS which may be outstanding, the holders of FBS Common Stock will be
entitled to share ratably in the remaining assets of FBS. Shares of FBS Common
Stock are fully paid and nonassessable, and the shares of FBS Common Stock to be
issued to the holders of FirsTier Common Stock in the Merger will, when issued,
be legally issued. The shares of FBS Common Stock are listed on the NYSE.
PREFERRED STOCK PURCHASE RIGHTS. On December 21, 1988, the Board of
Directors of FBS declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of FBS Common Stock. The dividend was paid
on January 4, 1989 to the FBS shareholders of record on that date. Each holder
of shares of FBS Common Stock issued upon consummation of the Merger will
receive one Right for each share of FBS Common Stock.
Each Right initially entitles the registered holder to purchase from FBS one
one-hundredth of a share of Junior Preferred Stock of FBS at a price of $80.00,
subject to adjustment (the "Purchase Price"). The Rights are not and will not be
exercisable or represented by separate certificates until 10 days following the
earlier of a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired beneficial ownership of
20% or more of the outstanding shares of FBS Common Stock or have commenced or
announced an intention to make a tender offer or exchange offer for 20% or more
of such outstanding shares of FBS Common Stock (the earlier of such dates being
called the "Distribution Date"). In the event that any person or group of
affiliated or associated persons becomes the beneficial owner of 20% or more of
the outstanding shares of FBS Common Stock, each Right (other than any Right
held by a person or group of affiliated or associated persons beneficially
owning 20% or more of the outstanding shares of FBS Common Stock, which Rights
will thereafter be void) will thereafter entitle the holder to receive upon
exercise that number of shares of FBS Common Stock having a market value of
twice the Purchase Price. In addition, in such event, the Board of Directors of
FBS will thereafter be entitled to exchange the outstanding Rights (other than
any Right held by an Acquiring Person, which Right shall thereafter be void), in
whole or in part, for shares of FBS Common Stock or Junior Preferred Stock at an
exchange ratio of one share of FBS Common Stock, or one one-hundredth of a share
of Junior Preferred Stock, per Right. In connection with the First Interstate
Transaction, FBS amended the Rights Agreement (as hereinafter defined) to, among
other things, provide that certain transactions relating to the First Interstate
Transaction will not cause the Rights to be distributed or become exercisable.
In the event that FBS is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
each Right will thereafter entitle the holder to receive upon exercise that
number of shares of common stock of the acquiring company having a market value
of twice the Purchase Price.
Prior to the Distribution Date, the Rights cannot be transferred apart from
FBS Common Stock and are represented solely by the FBS Common Stock
certificates. As soon as practicable following the Distribution Date, separate
certificates representing the Rights will be mailed to holders of record of
shares of FBS Common Stock as of such date, and the Rights could then begin to
trade separately from FBS Common Stock.
The Rights do not have any voting rights and are not entitled to dividends.
The terms of the Rights may be amended without the consent of the holders,
provided that, after a person becomes an Acquiring Person, such amendment may
not adversely affect the interests of the holders.
The terms of the Junior Preferred Stock issuable upon exercise of Rights are
described above under "-- Preferred Stock -- Junior Preferred Stock."
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the earlier of (a) the date which is 24 months after the first date
upon which FBS can generally be acquired by bank
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holding companies, and FBS is generally permitted to acquire banks, principally
located in at least fifteen of the twenty states which as of September 30, 1992
had the largest amount of bank deposits or (b) January 4, 1999, unless, before
that date, all of the Rights are either redeemed by FBS at a price of $.01 per
Right prior to the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 20% or more of the outstanding shares of FBS
Common Stock, or are exchanged by FBS for shares of FBS Common Stock or Junior
Preferred Stock as described above. It is currently anticipated that the first
date on which FBS can generally be acquired by bank holding companies, and FBS
is generally permitted to acquire banks, principally located in at least fifteen
of the twenty states which as of September 30, 1992 had the largest amount of
bank deposits will be in July 1996.
The Rights may have certain anti-takeover effects. The Rights may cause
substantial dilution to an Acquiring Person if it attempts to merge with, or
engage in certain other transactions with, FBS. The Rights should not, however,
interfere with any merger or other business combination approved by the Board of
Directors of FBS prior to the occurrence of the Distribution Date because the
Rights may be redeemed prior to such time.
The complete terms of the Rights are set forth in a Rights Agreement, dated
as of December 21, 1988, as amended, between FBS and First Chicago Trust Company
of New York (formerly Morgan Shareholder Services Trust Company), as Rights
Agent (the "Rights Agreement"). The description of the Rights set forth herein
does not purport to be complete and is qualified in its entirety by reference to
the complete Rights Agreement, a copy of which is incorporated by reference as
an exhibit to the Registration Statement of which this Proxy
Statement/Prospectus is a part.
PERIODIC STOCK PURCHASE RIGHTS AND RISK EVENT WARRANTS. On May 30, 1990,
FBS entered into (i) a Stock Purchase Agreement, dated as of May 30, 1990 (the
"Stock Purchase Agreement"), by and among Corporate Partners, L.P. ("Corporate
Partners"), Corporate Offshore Partners, L.P. ("Offshore" and, together with
Corporate Partners, the "Partnerships"), The State Board of Administration of
Florida ("State Board") solely in its capacity as a managed account and not in
its individual capacity (State Board and the Partnerships being referred to
herein collectively as the "Purchasers"), Corporate Advisors, L.P. and FBS and
(ii) a Stock Purchase Agreement, dated as of May 30, 1990 (the "Florida Stock
Purchase Agreement"), by and between State Board in its individual capacity and
FBS. Pursuant to the Stock Purchase Agreement, FBS sold (a) to Corporate
Partners 8,856,241 shares of FBS Common Stock, ten Periodic Stock Purchase
Rights (each a "PSPR") and one Risk Event Warrant, (b) to Offshore 643,976
shares of FBS Common Stock, ten PSPRs and one Risk Event Warrant, and (c) to
State Board 939,783 shares of FBS Common Stock, ten PSPRs and one Risk Event
Warrant. Pursuant to the Florida Stock Purchase Agreement, FBS sold to State
Board 2,160,000 shares of FBS Common Stock, ten PSPRs and one Risk Event
Warrant. Effective as of May 30, 1990, FBS and First Chicago Trust Company of
New York entered into Amendment No. 1 to the Rights Agreement to exclude the
acquisition of shares of FBS Common Stock by the Purchasers and State Board
pursuant to the Stock Purchase Agreement and the Florida Stock Purchase
Agreement, respectively, and the transactions contemplated thereby and certain
other transactions from the operation of the Rights Agreement. See "-- Preferred
Stock Purchase Rights" above.
The Stock Purchase Agreement and the Florida Stock Purchase Agreement
contain transfer restrictions with respect to the shares of FBS Common Stock
acquired thereunder and standstill provisions limiting further acquisitions of
FBS Common Stock by the Purchasers and State Board. The Stock Purchase Agreement
and the Florida Stock Purchase Agreement also grant each of the Purchasers and
State Board the right to purchase its pro rata share of any Voting Securities
(as defined) sold by FBS for cash, subject to certain exceptions. Pursuant to
the Stock Purchase Agreement, the Purchasers have designated one person to act
as a non-voting observer of the Board of Directors of FBS.
Each PSPR issued to the Purchasers and State Board relates to a specific
twelve-month period commencing with the twelve-month period following closing of
the transactions contemplated under
60
<PAGE>
the Stock Purchase Agreement and the Florida Stock Purchase Agreement. Each PSPR
shall become exercisable in the event that a Dividend Shortfall (as defined)
exists for the specific twelve-month period to which such PSPR relates. A
Dividend Shortfall will be deemed to exist to the extent that FBS has not paid a
cash dividend equal to $0.205 per share of FBS Common Stock for each quarter
within such twelve-month period. The PSPRs will be exercisable for that number
of shares of FBS Common Stock or (subject to the prior approval of the Federal
Reserve Board) depositary shares representing one one-thousandth of a share of
Series 1990A Preferred Stock ("Depositary Shares") such that the holders of
PSPRs will receive value equal to the Dividend Shortfall. Once a PSPR has become
exercisable, it will remain exercisable for a one-year period at an exercise
price of $1.25 per share of FBS Common Stock or $1.00 per Depositary Share. If a
PSPR were to become exercisable and were not redeemed by FBS as described below,
the issuance of Depositary Shares or FBS Common Stock upon exercise of a PSPR
could adversely affect the market price of the FBS Common Stock. If the PSPRs
were to be exercised for FBS Common Stock, there could be substantial dilution
of the FBS Common Stock.
Each Risk Event Warrant shall become exercisable in the event of certain
defined change of control events with respect to FBS where the value received by
holders of the FBS Common Stock is less than $13.875 per share, or in certain
circumstances in the event the FBS Common Stock is valued at less than $13.875
per share on the tenth anniversary of the closing of the transactions
contemplated under the Stock Purchase Agreement. The Risk Event Warrants will be
exercisable for that number of shares of FBS Common Stock at an exercise price
of $1.25 per share or, in certain circumstances (subject to the prior approval
of the Federal Reserve Board), Depositary Shares such that the holders of Risk
Event Warrants will receive value equal to such shortfall. If the Risk Event
Warrants were to become exercisable and were not redeemed by FBS as described
below, the issuance of Depositary Shares or FBS Common Stock upon exercise of a
Risk Event Warrant could adversely affect the market price of the FBS Common
Stock. If the Risk Event Warrants were to be exercised for FBS Common Stock,
there could be substantial dilution of the FBS Common Stock. In the event of a
change in control at a time when the market price of the FBS Common Stock is
less than $13.875 per share, the Risk Event Warrants may have the effect of
reducing the price per share to be received by the holders of the FBS Common
Stock.
In the event of the exercise of a Risk Event Warrant upon the occurrence of
certain change of control events, FBS may, at its option (subject to the prior
approval of the Federal Reserve Board), elect to have such Risk Event Warrant
become exercisable for other securities of FBS acceptable to the holder of such
Risk Event Warrant in lieu of the shares of FBS Common Stock for which such Risk
Event Warrant would otherwise become exercisable. In addition, FBS has the right
(subject to the prior approval of the Federal Reserve Board) to redeem any PSPR
at a price equal to the Dividend Shortfall and any Risk Event Warrant at a price
equal to the Value Shortfall (as defined) or the Termination Shortfall Amount
(as defined), as applicable, after such PSPR or Risk Event Warrant, as the case
may be, shall have become exercisable. FBS also has entered into a registration
rights agreement with the Purchasers and with State Board pursuant to which the
Purchasers and State Board, respectively, are granted certain rights to cause
FBS to register with the Commission the FBS Common Stock acquired pursuant to
the Stock Purchase Agreement and the Florida Stock Purchase Agreement and the
securities acquired upon exercise of the PSPRs and the Risk Event Warrants.
The foregoing is a summary of the transactions contemplated by the Stock
Purchase Agreement and the Florida Stock Purchase Agreement and related
documents and is qualified in its entirety by the more detailed information
contained in such agreements and documents, copies of which are incorporated by
reference as exhibits to the Registration Statement of which this Proxy
Statement/ Prospectus is a part.
FIRST INTERSTATE PREFERRED STOCK
In connection with the First Interstate Transaction, the First Interstate
Merger Agreement provides that each outstanding share of First Interstate 9.875%
preferred stock will be converted into one share of 9.875% preferred stock of
FBS and each outstanding share of First Interstate 9.0%
61
<PAGE>
preferred stock will be converted into one share of 9.0% preferred stock of FBS
upon consummation of the First Interstate Transaction. The terms, designations,
preferences, limitations, privileges and rights of the respective series of FBS
preferred stock issued will be substantially the same as those of the
corresponding series of First Interstate preferred stock. The FBS preferred
stock issued will rank on a parity as to payment of dividends and distributions
of assets upon dissolution, liquidation or winding up of FBS with each other
currently outstanding share of preferred stock of FBS.
DESCRIPTION OF FIRSTIER CAPITAL STOCK
The authorized capital stock of FirsTier consists of 40,000,000 shares of
Common Stock, $5.00 par value, and 2,000,000 shares of Preferred Stock, $30.00
par value. Under of FirsTier's Articles of Incorporation, the FirsTier Board
may, without further shareholder action, authorize from time to time the
issuance of up to 2,000,000 shares of preferred stock of FirsTier, certain terms
of which may be determined by the FirsTier Board. As of January 4, 1996, there
were 18,715,040 shares of FirsTier Common Stock outstanding, and no shares of
FirsTier preferred stock designated and outstanding. The FirsTier Common Stock
is described in FirsTier's Registration Statement filed under Section 12 of the
Exchange Act, including any amendment or report filed for the purpose of
updating such description filed subsequent to the date of this Proxy
Statement/Prospectus and prior to the termination of the offering described
herein. See "Incorporation of Certain Documents by Reference."
LEGAL OPINIONS
The validity of the securities offered hereby has been passed upon for FBS
by Dorsey & Whitney P.L.L.P., Minneapolis, Minnesota. Dorsey & Whitney P.L.L.P.
and certain of its members are indebted to and have other banking and trust
relationships with certain banking subsidiaries of FBS.
The opinion of counsel described under "The Merger -- Certain Federal Income
Tax Consequences To FirsTier Shareholders" has been rendered by Wachtell,
Lipton, Rosen & Katz, New York, New York, counsel to FirsTier.
EXPERTS
The consolidated financial statements of FBS as of December 31, 1994 and
1993, and for each of the three years in the period ended December 31, 1994
appearing in FBS's Current Report on Form 8-K dated March 3, 1995 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of FirsTier appearing in FBS's
Amendment No. 1 on Form 8-K/A filed August 30, 1995 to FBS's Current Report on
Form 8-K filed August 18, 1995 have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report with respect
thereto, and are incorporated by reference in reliance upon the authority of
said firm as experts in accounting and auditing in giving said reports.
The consolidated financial statements of First Interstate as of December 31,
1994 and 1993, and for each of the three years in the period ended December 31,
1994 appearing in the Annual Report on Form 10-K of First Interstate for the
year ended December 31, 1994 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
said firm as experts in accounting and auditing.
62
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP, FirsTier's independent auditor, are
expected to be present at the FirsTier Special Meeting. They may be afforded the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
FIRSTIER SHAREHOLDER PROPOSALS. If the Merger is not consummated, FirsTier
is expected to retain its December 31 fiscal year end. In such event, in order
to be eligible for inclusion in FirsTier's proxy solicitation materials for its
1996 annual meeting of shareholders, any shareholder proposal to be considered
at such meeting must have been received by FirsTier's Corporate Secretary,
Thomas B. Fischer, at FirsTier's main office, 1700 Farnam Street, Omaha,
Nebraska 68102-2183, no later than December 11, 1995. Any such proposal shall be
subject to the requirements of the proxy rules adopted under the Exchange Act.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the management, executive compensation,
various benefit plans (including stock plans), voting securities and the
principal holders thereof, certain relationships and related transactions and
other related matters as to FBS and FirsTier is set forth in or incorporated by
reference in the respective Annual Reports on Form 10-K for the year ended
December 31, 1994 of FBS and FirsTier, which are incorporated by reference in
this Proxy Statement/Prospectus. See "Incorporation of Certain Documents by
Reference." FBS and FirsTier shareholders who wish to obtain copies of these
documents may contact FBS or FirsTier, as applicable, at its address or
telephone number set forth under "Incorporation of Certain Documents by
Reference."
63
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Balance Sheet as of
September 30, 1995, combines the historical consolidated balance sheets of First
Bank System, Inc. ("FBS"), FirsTier Financial, Inc. ("FirsTier"), First
Interstate Bancorp ("First Interstate"), Midwestern Services, Inc., and
Southwest Holdings, Inc. as if the mergers with FirsTier (the "Merger") and
First Interstate and the other acquisitions had been effective on September 30,
1995, after giving effect to certain adjustments described in the attached Notes
to Unaudited Pro Forma Condensed Combined Financial Statements. The Unaudited
Pro Forma Condensed Combined Balance Sheet also includes the repayment of
existing FBS short-term debt through the sale of existing First Interstate
investment securities and the intangible assets related to the purchase by FBS
of the corporate trust relationships and accounts of BankAmerica Corporation.
The Unaudited Pro Forma Condensed Combined Statements of Income for the nine
months ended September 30, 1995, and the year ended December 31, 1994, present
the combined results of operations of FBS, FirsTier and First Interstate as if
the Merger and the First Interstate merger had been effective at the beginning
of each period, after giving effect to certain adjustments described in the
attached Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Forma Condensed Combined Statements of Income for the years
ended December 31, 1993 and 1992, present only the combined results of
operations of FBS and First Interstate as if the First Interstate merger had
been effective at the beginning of each period, after giving effect to certain
adjustments described in the attached Notes to Unaudited Pro Forma Condensed
Combined Financial Statements.
The unaudited pro forma condensed combined financial statements and
accompanying notes reflect the application of the purchase method of accounting
for the Merger. Under this method of accounting, the purchase price will be
allocated to assets acquired and liabilities assumed based on their estimated
fair values at the closing of the acquisition. The amount of the purchase
accounting adjustments included in these unaudited pro forma condensed combined
financial statements are preliminary estimates. The actual amount of the
adjustments will be based on information available at the closing of the
acquisition and could be different from the estimates.
The First Interstate merger is reflected using the pooling-of-interests
method of accounting. Under this method of accounting, the recorded assets,
liabilities, shareholders' equity, income and expenses of FBS and First
Interstate are combined and recorded at their historical amounts.
The unaudited pro forma condensed combined financial information presented
is included for informational purposes only and is not necessarily indicative of
the combined financial position or results of the future operations of the
combined entity or the actual results that would have been achieved had the
Merger and the First Interstate merger been consumated prior to the periods
indicated.
The pro forma condensed combined financial information should be read in
conjunction with the financial statements of FirsTier and subsidiaries included
in FBS's Amendment No. 1 on Form 8-K/A filed August 30, 1995 and Amendment No. 2
on Form 8-K/A filed November 15, 1995, the financial statements of First
Interstate and subsidiaries included in FBS's Current Report on Form 8-K filed
November 16, 1995 and the financial statements of FBS and subsidiaries included
in its Current Report on Form 8-K filed March 3, 1995, and its Form 10-Q
Quarterly Report for the nine months ended September 30, 1995.
F-1
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Pro Forma Condensed Combined Balance Sheet at September 30,
1995..................................................................... F-3
Unaudited Pro Forma Condensed Combined Statement of Income:
Nine months ended September 30, 1995.................................... F-4
Year ended December 31, 1994............................................ F-5
Year ended December 31, 1993............................................ F-6
Year ended December 31, 1992............................................ F-7
Notes to Unaudited Pro Forma Condensed Combined Financial Statements...... F-8
</TABLE>
F-2
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FIRST INTERSTATE
FIRSTIER CONSOLIDATED
------------------------ -----------------------
FBS PURCHASE OTHER FBS MERGER FINANCING
CONSOLIDATED HISTORICAL ADJUSTMENTS ACQUISITIONS PRO FORMA HISTORICAL ADJUSTMENTS TRANSACTION
------------ ----------- ----------- ------------ ---------- ---------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks...... $ 1,586 $ 208 $ 10 $ 1,804 $ 5,916
Federal funds sold and
securities purchased under
agreements to resell........ 260 97 12 369 470
Trading account securities... 164 164 116
Held-to-maturity securities.. 741 $ (741) 9,320 $ (4,000)
Available-for-sale
securities.................. 3,302 261 741 100 4,404 112
Loans........................ 25,877 2,191 266 28,334 35,967
Less allowance for credit
losses.................... 469 52 3 524 847
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
Net loans.................. 25,408 2,139 263 27,810 35,120
Bank premises and
equipment................... 410 50 11 471 1,277 (40)
Interest receivable.......... 189 35 224 326
Customers' liability on
acceptances................. 165 1 166 54
Other assets................. 1,474 53 338 208 2,073 2,356 180
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
Total assets............. $ 32,958 $ 3,585 $ 338 $ 604 $ 37,485 $ 55,067 $ 140 $ (4,000)
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing........ $ 5,779 $ 471 $ 74 $ 6,324 $ 17,044
Interest-bearing........... 16,116 2,305 656 19,077 31,192
------------ ----------- ------ ---------- ----------
Total deposits........... 21,895 2,776 730 25,401 48,236
Federal funds purchased and
securities sold under
agreements to repurchase.... 1,602 204 $ 202 (200) 1,808 307 $ (2,115)
Other short-term funds
borrowed.................... 2,554 6 4 2,564 69 (1,885)
Long-term debt............... 3,127 164 10 3,301 1,368
Acceptances outstanding...... 165 1 166 54
Other liabilities............ 879 58 11 948 1,052 435
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
Total liabilities........ 30,222 3,209 202 555 34,188 51,086 435 (4,000)
Shareholders' equity:
Preferred stock............ 105 105 350
Common stock............... 169 94 (84) 2 181 169 77
Capital surplus............ 900 5 225 45 1,175 1,667 (719)
Retained earnings.......... 1,837 283 (283) 2 1,839 2,436 (295)
Unrealized (loss) gain on
securities, net of tax.... (3) 4 (4) (3) 1
Less cost of common stock
in treasury............... (272) (10) 282 (642) 642
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
Total shareholders'
equity.................. 2,736 376 136 49 3,297 3,981 (295)
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
Total liabilities and
shareholders' equity.... $ 32,958 $ 3,585 $ 338 $ 604 $ 37,485 $ 55,067 $ 140 $ (4,000)
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
------------ ----------- ----------- ------ ---------- ---------- ----------- -----------
<CAPTION>
PRO FORMA
COMBINED
---------
<S> <C>
ASSETS
Cash and due from banks...... $ 7,720
Federal funds sold and
securities purchased under
agreements to resell........ 839
Trading account securities... 280
Held-to-maturity securities.. 5,320
Available-for-sale
securities.................. 4,516
Loans........................ 64,301
Less allowance for credit
losses.................... 1,371
---------
Net loans.................. 62,930
Bank premises and
equipment................... 1,708
Interest receivable.......... 550
Customers' liability on
acceptances................. 220
Other assets................. 4,609
---------
Total assets............. $ 88,692
---------
---------
LIABILITIES AND SHAREHOLDERS'
Deposits:
Noninterest-bearing........ $ 23,368
Interest-bearing........... 50,269
---------
Total deposits........... 73,637
Federal funds purchased and
securities sold under
agreements to repurchase.... 0
Other short-term funds
borrowed.................... 748
Long-term debt............... 4,669
Acceptances outstanding...... 220
Other liabilities............ 2,435
---------
Total liabilities........ 81,709
Shareholders' equity:
Preferred stock............ 455
Common stock............... 427
Capital surplus............ 2,123
Retained earnings.......... 3,980
Unrealized (loss) gain on
securities, net of tax.... (2)
Less cost of common stock
in treasury............... 0
---------
Total shareholders'
equity.................. 6,983
---------
Total liabilities and
shareholders' equity.... $ 88,692
---------
---------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-3
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FIRSTIER
-------------------------- FIRST
FBS PURCHASE FBS INTERSTATE PRO FORMA
CONSOLIDATED HISTORICAL ADJUSTMENTS PRO FORMA CONSOLIDATED COMBINED
------------- ----------- ------------ ----------- ------------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans........................ $1,693.0 $ 142.9 $ 1,835.9 $ 2,282.7 $4,118.6
Securities:
Taxable.................... 175.2 29.0 204.2 478.8 683.0
Exempt from federal income
taxes..................... 8.4 18.0 26.4 1.3 27.7
Other interest income........ 26.4 5.1 31.5 26.3 57.8
------------- ----------- ------------ ----------- ------------- ------------
Total interest income.... 1,903.0 195.0 2,098.0 2,789.1 4,887.1
Interest Expense:
Deposits..................... 538.2 78.3 616.5 721.8 1,338.3
Federal funds purchased and
repurchase agreements....... 87.6 8.2 $ 15.0 110.8 69.4 180.2
Other short-term funds
borrowed.................... 56.8 1.2 58.0 2.8 60.8
Long-term debt............... 140.5 6.8 147.3 90.5 237.8
------------- ----------- ------------ ----------- ------------- ------------
Total interest expense... 823.1 94.5 15.0 932.6 884.5 1,817.1
------------- ----------- ------------ ----------- ------------- ------------
Net interest income.......... 1,079.9 100.5 (15.0) 1,165.4 1,904.6 3,070.0
Provision for credit
losses...................... 84.0 0.8 84.8 84.8
------------- ----------- ------------ ----------- ------------- ------------
Net interest income after
provision for credit
losses.................. 995.9 99.7 (15.0) 1,080.6 1,904.6 2,985.2
Noninterest Income:
Credit card fees............. 171.0 7.3 178.3 41.4 219.7
Trust fees................... 127.5 12.6 140.1 123.3 263.4
Service charges on deposit
accounts.................... 93.3 12.8 106.1 446.3 552.4
Securities gains............. 5.6 5.6
Gain on sale of branches..... 31.0 31.0 31.0
Other........................ 163.0 9.7 172.7 206.7 379.4
------------- ----------- ------------ ----------- ------------- ------------
Total noninterest
income.................. 585.8 42.4 628.2 823.3 1,451.5
Noninterest Expense:
Salaries and benefits........ 405.9 41.4 447.3 804.2 1,251.5
Occupancy and equipment...... 146.1 10.7 156.8 293.5 450.3
Amortization of goodwill and
other intangible assets..... 42.2 1.3 12.7 56.2 45.3 101.5
Restructuring................ 15.7 15.7
Other........................ 324.4 30.6 355.0 479.6 834.6
------------- ----------- ------------ ----------- ------------- ------------
Total noninterest
expense................. 918.6 84.0 12.7 1,015.3 1,638.3 2,653.6
------------- ----------- ------------ ----------- ------------- ------------
Income before income taxes..... 663.1 58.1 (27.7) 693.5 1,089.6 1,783.1
Applicable income taxes........ 245.7 15.5 (5.6) 255.6 419.9 675.5
------------- ----------- ------------ ----------- ------------- ------------
Net Income..................... $ 417.4 $ 42.6 $ (22.1) $ 437.9 $ 669.7 $1,107.6
------------- ----------- ------------ ----------- ------------- ------------
------------- ----------- ------------ ----------- ------------- ------------
Net income applicable to common
equity........................ $ 411.8 $ 42.6 $ (22.1) $ 432.3 $ 644.8 $1,077.1
------------- ----------- ------------ ----------- ------------- ------------
------------- ----------- ------------ ----------- ------------- ------------
Earnings Per Common Share
Average common and common
equivalent shares........... 135,007,519 344,505,319
Net income................... $ 3.05 $ 3.13
------------- ------------
------------- ------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-4
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
FIRSTIER
-------------------------- FIRST
FBS PURCHASE FBS INTERSTATE PRO FORMA
CONSOLIDATED HISTORICAL ADJUSTMENTS PRO FORMA CONSOLIDATED COMBINED
------------- ----------- ------------ ----------- ------------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans......................... $1,914.7 $ 161.9 $ $ 2,076.6 $ 2,303.7 $4,380.3
Securities:
Taxable..................... 327.9 44.3 372.2 841.6 1,213.8
Exempt from federal income
taxes...................... 12.0 20.5 32.5 2.7 35.2
Other interest income......... 33.5 4.8 38.3 44.0 82.3
------------- ----------- ------ ----------- ------------- ------------
Total interest income..... 2,288.1 231.5 2,519.6 3,192.0 5,711.6
Interest Expense:
Deposits...................... 597.3 82.1 679.4 725.0 1,404.4
Federal funds purchased and
repurchase agreements........ 103.1 7.9 16.8 127.8 26.5 154.3
Other short-term funds
borrowed..................... 20.4 1.4 21.8 7.7 29.5
Long-term debt................ 147.9 5.7 153.6 106.3 259.9
------------- ----------- ------ ----------- ------------- ------------
Total interest expense.... 868.7 97.1 16.8 982.6 865.5 1,848.1
------------- ----------- ------ ----------- ------------- ------------
Net interest income........... 1,419.4 134.4 (16.8) 1,537.0 2,326.5 3,863.5
Provision for credit losses... 123.6 (0.2) 123.4 -- 123.4
------------- ----------- ------ ----------- ------------- ------------
Net interest income after
provision for credit
losses................... 1,295.8 134.6 (16.8) 1,413.6 2,326.5 3,740.1
Noninterest Income:
Credit card fees.............. 179.0 9.6 188.6 39.7 228.3
Trust fees.................... 159.2 16.1 175.3 193.3 368.6
Service charges on deposit
accounts..................... 127.3 15.6 142.9 561.9 704.8
Securities (losses) gains..... (115.0) (3.7) (118.7) 21.1 (97.6)
Other......................... 208.4 14.4 222.8 238.3 461.1
------------- ----------- ------ ----------- ------------- ------------
Total noninterest income.. 558.9 52.0 610.9 1,054.3 1,665.2
Noninterest Expense:
Salaries and benefits......... 556.4 52.8 609.2 1,079.9 1,689.1
Occupancy and equipment....... 192.1 16.8 208.9 356.6 565.5
Amortization of goodwill and
other intangible assets...... 50.4 1.7 16.9 69.0 35.3 104.3
Merger, integration and
severance costs.............. 122.7 122.7 122.7
Restructuring................. 141.3 141.3
Other......................... 427.8 46.8 474.6 584.7 1,059.3
------------- ----------- ------ ----------- ------------- ------------
Total noninterest
expense.................. 1,349.4 118.1 16.9 1,484.4 2,197.8 3,682.2
------------- ----------- ------ ----------- ------------- ------------
Income from continuing
operations before income
taxes.......................... 505.3 68.5 (33.7) 540.1 1,183.0 1,723.1
Applicable income taxes......... 191.8 17.6 (6.4) 203.0 449.5 652.5
------------- ----------- ------ ----------- ------------- ------------
Income from continuing
operations..................... $ 313.5 $ 50.9 $ (27.3) $ 337.1 $ 733.5 $1,070.6
------------- ----------- ------ ----------- ------------- ------------
------------- ----------- ------ ----------- ------------- ------------
Income from continuing
operations applicable to common
equity......................... $ 300.9 $ 50.9 $ (27.3) $ 324.5 $ 700.2 $1,024.7
------------- ----------- ------ ----------- ------------- ------------
------------- ----------- ------ ----------- ------------- ------------
Earnings Per Common Share
Average common and common
equivalent shares............ 136,274,991 353,672,040
Income from continuing
operations................... $ 2.21 $ 2.90
------------- ------------
------------- ------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-5
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
FIRST
FBS INTERSTATE PRO FORMA
CONSOLIDATED CONSOLIDATED COMBINED
-------------- -------------- --------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest Income:
Loans.......................................................... $1,730.7 $ 1,980.9 $3,711.6
Securities:
Taxable...................................................... 352.1 861.4 1,213.5
Exempt from federal income taxes............................. 14.6 2.9 17.5
Other interest income.......................................... 37.1 99.0 136.1
-------------- -------------- --------------
Total interest income...................................... 2,134.5 2,944.2 5,078.7
Interest Expense:
Deposits....................................................... 648.3 719.9 1,368.2
Federal funds purchased and repurchase agreements.............. 31.8 10.2 42.0
Other short-term funds borrowed................................ 20.1 5.8 25.9
Long-term debt................................................. 96.1 136.2 232.3
-------------- -------------- --------------
Total interest expense..................................... 796.3 872.1 1,668.4
-------------- -------------- --------------
Net interest income............................................ 1,338.2 2,072.1 3,410.3
Provision for credit losses.................................... 133.1 112.6 245.7
-------------- -------------- --------------
Net interest income after provision for credit losses...... 1,205.1 1,959.5 3,164.6
Noninterest Income:
Credit card fees............................................... 137.1 44.1 181.2
Trust fees..................................................... 146.1 177.4 323.5
Service charges on deposit accounts............................ 126.0 513.0 639.0
Securities gains............................................... 0.3 9.7 10.0
Other.......................................................... 209.4 210.0 419.4
-------------- -------------- --------------
Total noninterest income................................... 618.9 954.2 1,573.1
Noninterest Expense:
Salaries and benefits.......................................... 538.9 975.3 1,514.2
Occupancy and equipment........................................ 190.4 337.2 527.6
Amortization of goodwill and other intangible assets........... 41.3 24.2 65.5
Merger and integration......................................... 72.2 72.2
Other.......................................................... 421.9 695.7 1,117.6
-------------- -------------- --------------
Total noninterest expense.................................. 1,264.7 2,032.4 3,297.1
-------------- -------------- --------------
Income from continuing operations before income taxes,
extraordinary item and cumulative effect of changes in
accounting principles........................................... 559.3 881.3 1,440.6
Applicable income taxes.......................................... 198.6 319.9 518.5
-------------- -------------- --------------
Income from continuing operations before extraordinary item and
cumulative effect of changes in accounting principles........... $ 360.7 $ 561.4 $ 922.1
-------------- -------------- --------------
-------------- -------------- --------------
Income from continuing operations before extraordinary item and
cumulative effect of changes in accounting principles applicable
to common equity................................................ $ 331.5 $ 514.8 $ 846.3
-------------- -------------- --------------
-------------- -------------- --------------
Earnings Per Common Share
Average common and common equivalent shares.................... 134,588,664 343,147,811
Income from continuing operations before extraordinary item and
cumulative effect of changes in accounting principles........... $ 2.46 $ 2.47
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-6
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
FIRST
FBS INTERSTATE PRO FORMA
CONSOLIDATED CONSOLIDATED COMBINED
------------- ------------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest Income:
Loans.......................................................... $1,687.2 $ 2,238.8 $3,926.0
Securities:
Taxable...................................................... 336.5 746.9 1,083.4
Exempt from federal income taxes............................. 12.0 3.9 15.9
Other interest income.......................................... 70.4 200.1 270.5
------------- ------------- -------------
Total interest income...................................... 2,106.1 3,189.7 5,295.8
Interest Expense:
Deposits....................................................... 797.7 932.8 1,730.5
Federal funds purchased and repurchase agreements.............. 37.1 10.4 47.5
Other short-term funds borrowed................................ 17.1 4.0 21.1
Long-term debt................................................. 101.2 227.9 329.1
------------- ------------- -------------
Total interest expense..................................... 953.1 1,175.1 2,128.2
------------- ------------- -------------
Net interest income............................................ 1,153.0 2,014.6 3,167.6
Provision for credit losses.................................... 191.7 314.3 506.0
------------- ------------- -------------
Net interest income after provision for credit losses...... 961.3 1,700.3 2,661.6
Noninterest Income:
Credit card fees............................................... 116.9 37.3 154.2
Trust fees..................................................... 127.8 170.3 298.1
Service charges on deposit accounts............................ 114.8 478.9 593.7
Securities gains (losses)...................................... 46.3 (1.8) 44.5
Other.......................................................... 207.9 227.4 435.3
------------- ------------- -------------
Total noninterest income................................... 613.7 912.1 1,525.8
Noninterest Expense:
Salaries and benefits.......................................... 521.2 1,035.4 1,556.6
Occupancy and equipment........................................ 170.4 359.4 529.8
Amortization of goodwill and other intangible assets........... 34.0 33.0 67.0
Merger and integration......................................... 84.0 84.0
Other real estate.............................................. 45.1 159.6 204.7
Other.......................................................... 391.6 621.8 1,013.4
------------- ------------- -------------
Total noninterest expense.................................. 1,246.3 2,209.2 3,455.5
------------- ------------- -------------
Income from continuing operations before income taxes and
cumulative effect of changes in accounting principles........... 328.7 403.2 731.9
Applicable income taxes.......................................... 115.7 120.9 236.6
------------- ------------- -------------
Income from continuing operations before cumulative effect of
changes in accounting principles................................ $ 213.0 $ 282.3 $ 495.3
------------- ------------- -------------
------------- ------------- -------------
Income from continuing operations before cumulative effect of
changes in accounting principles applicable to common equity.... $ 181.4 $ 223.1 $ 404.5
------------- ------------- -------------
------------- ------------- -------------
Earnings Per Common Share
Average common and common equivalent shares.................... 124,670,657 312,722,239
Income from continuing operations before cumulative effect of
changes in accounting principles.............................. $ 1.46 $ 1.29
------------- -------------
------------- -------------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-7
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
NOTE A: ANNOUNCED MERGERS AND ACQUISITIONS
On August 6, 1995, First Bank System, Inc. ("FBS") signed a definitive
purchase agreement (the "Merger Agreement") to acquire FirsTier Financial, Inc.
("FirsTier"), a regional financial services holding company based in Omaha,
Nebraska, with approximately $3.6 billion in assets, $2.8 billion in deposits
and $376 million in shareholders' equity. The agreement calls for a tax-free
exchange of .8829 shares of FBS Common Stock for each common share of FirsTier,
or 16.6 million shares of FBS Common Stock. The acquisition of FirsTier (the
"Merger") will be accounted for by FBS under the purchase method of accounting
in accordance with APB No. 16 and, accordingly, this method has been applied in
the unaudited pro forma condensed combined financial statements. Under this
method of accounting, the purchase price will be allocated to assets acquired
and liabilities assumed based on their estimated fair value at the closing of
the transaction. The historical cost of FirsTier's assets and liabilities
approximates fair value, making mark-to-market adjustments immaterial.
Accordingly, the historical cost of FirsTier's assets and liabilities have been
combined with the historical consolidated balance sheet of FBS. Certain
adjustments, primarily to accrue for costs related to the Merger expected to be
incurred within one year of closing, are not material and have not been
reflected in the unaudited pro forma condensed combined financial statements.
On November 5, 1995, FBS signed a definitive agreement with First Interstate
Bancorp ("First Interstate") pursuant to which a wholly owned acquisition
subsidiary of FBS will be merged with and into First Interstate, subject to
certain conditions. First Interstate is an interstate financial services holding
company based in Los Angeles, California, with approximately $55.1 billion in
assets, $48.2 billion in deposits and $4.0 billion in shareholders' equity. The
agreement calls for a tax-free exchange of 2.60 shares of FBS Common Stock for
each common share of First Interstate, or approximately 200 million shares of
FBS Common Stock. The First Interstate merger will be accounted for by FBS under
the pooling-of-interests method of accounting in accordance with APB No. 16 and,
accordingly, this method has been applied in the unaudited pro forma condensed
combined financial statements. Under this method of accounting, the recorded
assets, liabilities, shareholders' equity, income and expenses of FBS and First
Interstate are combined and recorded at their historical amounts.
FBS completed the acquisitions of two commercial bank holding companies --
Midwestern Services, Inc. and Southwest Holdings, Inc. -- both in Omaha,
Nebraska on November 1, 1995. Together, the two companies have total assets of
approximately $424 million and deposits of approximately $380 million. The
acquisitions were accounted for under the purchase method of accounting as
described above.
On August 22, 1995, FBS signed a definitive agreement to buy the corporate
trust relationships and accounts of BankAmerica Corporation ("Corporate Trust").
NOTE B: BASIS OF PRESENTATION
The Unaudited Pro Forma Condensed Combined Balance Sheet is based on the
unaudited consolidated balance sheets of FBS, FirsTier, First Interstate,
Midwestern Services, Inc. and Southwest Holdings, Inc. as of September 30, 1995.
In addition, the Unaudited Pro Forma Condensed Combined Balance Sheet reflects
the intangible assets related to the purchase of the Corporate Trust
relationships and accounts. The Unaudited Pro Forma Condensed Combined
Statements of Income are based on the unaudited consolidated statements of
income of FBS, FirsTier and First Interstate for the nine months ended September
30, 1995, and the audited consolidated statements of income for the year ended
December 31, 1994. The Unaudited Pro Forma Condensed Combined Statements of
Income for the years ended December 31, 1993, and 1992, are based on the audited
consolidated statements of
F-8
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (CONTINUED)
income of FBS and First Interstate for such years. The Unaudited Pro Forma
Condensed Combined Statements of Income do not include the results of operations
of Midwestern Services, Inc. and Southwest Holdings, Inc., or the fees from
Corporate Trust, as they are immaterial.
FBS expects to achieve operating cost savings by various means including
reductions in staff, consolidation of certain data processing and other back
office operations, and consolidation and elimination of certain duplicate or
excess office facilities in connection with the mergers and acquisitions. The
operating cost savings are expected to be achieved in various amounts at various
times during the year subsequent to the closing and not ratably over, or at the
beginning or end of, such periods. No adjustment has been included in the
unaudited pro forma condensed combined financial statements for the anticipated
operating cost savings. There can be no assurance that anticipated operating
cost savings will be achieved in the amounts or at the times anticipated.
Certain amounts in the historical financial statements of FirsTier and First
Interstate have been reclassified to conform with FBS's historical financial
statement presentation.
Financial results for FBS for 1994 include merger-related items with an
after-tax effect of $156.9 million ($1.15 per share) associated with the merger
of Metropolitan Financial Corporation. Financial results for FBS in 1993 include
merger-related charges with an after-tax effect of $50.0 million ($.37 per
share) associated with the merger of Colorado National Bankshares, Inc. Included
in FBS's results of operations in 1992 are after-tax merger-related charges of
$81.8 million ($.66 per share) associated with the merger of Western Capital
Investment Corporation and Bank Shares Incorporated. The First Interstate
results of operations for the nine months ended September 30, 1995, and the year
ended December 31, 1994, include after-tax charges of $9.5 million and $87.6
million, respectively, related to the adoption of a restructuring plan to
improve efficiency and better position First Interstate for the introduction of
full interstate banking.
The FBS results of operations in 1992 also include the effect of adopting
two new accounting standards: Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes" and SFAS No. 106, "Employers
Accounting for Postretirement Benefits Other than Pensions". First Interstate's
results of operations in 1993 reflect the adoption of SFAS No. 109 and SFAS No.
106.
Pro forma adjustments related to these business combinations represent
management's best estimate based on all available information at this time.
These adjustments may change as additional information becomes available.
NOTE C: SECURITIES AND FINANCING TRANSACTION
FBS anticipates recording FirsTier's investment portfolio as available for
sale in connection with the application of purchase accounting. In addition,
substantially all securities held by First Interstate will be reclassified to
available for sale in accordance with the pending one-time reclassification
opportunity approved by the Financial Accounting Standards Board at its November
15, 1995 meeting. Following this one-time reclassification and based on its
preliminary analysis of First Interstate's financial condition, FBS anticipates
selling approximately $4.0 billion of securities to reduce First Interstate's
excess liquidity and repay a similar amount of FBS's existing short-term
borrowings. This financing transaction is expected to occur at or shortly after
consummation of the First Interstate Transaction and has been reflected in the
Unaudited Pro Forma Condensed Combined Financial Statements as reductions in
held-to-maturity securities and in Fed funds purchased and securities sold under
agreements to repurchase.
F-9
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE D: ALLOWANCE FOR CREDIT LOSSES
The unaudited pro forma condensed combined financial statements include the
combined allowance for credit losses of FBS and First Interstate. Estimation of
probable loan losses involves judgment, including the collectibility of
individual loans, recent loss experience and current and anticipated economic
conditions. Management of FBS and First Interstate each believe that the
estimated allowance for the individual banks falls within a reasonable range of
acceptability. Furthermore, the impact of the Merger on the combined
organization cannot be fully assessed until appropriate information is available
on a combined basis to make an informed judgment and a decision about the
adequacy of the allowance for credit losses. However, FBS currently projects
that the allowance for credit losses could be reduced up to approximately $250
million based on its preliminary analysis of the combined allowance. The
projection assumes that the greater diversification of the expanded 21-state
geographic territory and customer base will result in lower overall risk of the
combined organization. The final amount of an adjustment, if any, will be
determined after a review of the risk profile and allowance requirements of the
New First Interstate following consummation of the Merger.
NOTE E: GOODWILL AND OTHER INTANGIBLE ASSETS
As explained in Note B, purchase accounting adjustments may change as
additional information becomes available. When the ultimate allocation of the
purchase price for FirsTier is made, remaining intangible assets will be
recorded. Based on current estimates, the amount of intangible assets relating
to FirsTier is $338 million, calculated as the purchase price of $714 million
less FirsTier September 30, 1995 common equity of $376 million.
Amortization expense relating to the Merger has been included in the
Unaudited Pro Forma Condensed Combined Statements of Income for the nine months
ended September 30, 1995 and the year ended December 31, 1994. Amortization
expense was calculated based on the intangible asset balance using the
straight-line method over an average estimated period of benefit of 20 years
which is comprised of 25 years for goodwill and 10 years for other intangible
assets. The final allocation of intangible assets between goodwill and other
intangible assets, as well as the methods of amortization, has not been
determined. Subsequent changes to the purchase adjustments, as well as the final
allocation of the intangible assets between goodwill and other intangible assets
will result in an adjustment to goodwill, which will have a corresponding impact
on amortization expense. Accordingly, pro forma combined income for the nine
month period ended September 30, 1995 and the year ended December 31, 1994,
would also change, as well as the related pro forma combined earnings per share
amounts.
NOTE F: MERGER AND INTEGRATION ACCRUALS
Certain merger-related costs are expected to be recorded in connection with
the Merger. Accruals or adjustments have not, however, been reflected in the pro
forma condensed combined financial statements related to this at this time as
these costs are not expected to be material.
In connection with the First Interstate merger, FBS expects to incur
merger-related costs as follows: $175 million for severance, $40 million for
occupancy/equipment write-offs, $210 million for conversion costs, and $50
million for other merger-related charges. These amounts have been reflected in
the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30,
1995. These amounts will be recorded in the financial statements in accordance
with generally accepted accounting principles.
F-10
<PAGE>
FIRST BANK SYSTEM, INC.
MERGER WITH FIRSTIER FINANCIAL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE G: SHAREHOLDERS' EQUITY
In conjunction with the Merger, FBS will exchange .8829 shares of FBS Common
Stock for each share of common stock of FirsTier. As part of purchase accounting
adjustments, retained earnings of FirsTier have been eliminated. As previously
announced, FBS intends to repurchase a number of outstanding shares of FBS
Common Stock approximately equal to one-half of the number of shares of FBS
Common Stock to be issued in connection with the Merger. These shares, as well
as all other treasury shares, will be issued in connection with purchase
acquisitions and other previously authorized purposes. Accordingly, the treasury
stock has been eliminated in the Unaudited Pro Forma Condensed Combined Balance
Sheet.
In conjunction with the First Interstate merger, FBS will exchange 2.60
shares of FBS Common Stock for each outstanding share of the common stock of
First Interstate. Common stock in the Unaudited Pro Forma Condensed Combined
Balance Sheet has been adjusted to reflect the par value of FBS Common Stock to
be issued, with a related adjustment to capital surplus. First Interstate's
treasury stock will be retired in conjunction with the First Interstate merger
and has been eliminated in the Unaudited Pro Forma Condensed Combined Balance
Sheet. Pro forma combined retained earnings reflects the adjustments for
anticipated merger-related costs as discussed above.
NOTE H: INCOME TAX PROVISIONS
The income tax provision for adjustments related to the Merger reflected in
the Unaudited Pro Forma Condensed Combined Statements of Income has been
computed at FBS's effective combined federal and state marginal tax rate.
F-11
<PAGE>
APPENDIX A
AGREEMENT OF MERGER AND CONSOLIDATION
AGREEMENT OF MERGER AND CONSOLIDATION dated August 6, 1995, by and between
FIRST BANK SYSTEM, INC., a Delaware corporation ("FBS"), and FIRSTIER FINANCIAL,
INC., a Nebraska corporation ("FFI").
WHEREAS, the Boards of Directors of FBS and FFI have determined that it is
in the best interests of FBS and FFI and their respective shareholders to
consummate the merger of FFI with and into FBS as described in Article 1 of this
Agreement (the "Merger");
WHEREAS, as a result of the Merger, all of the outstanding common stock,
$5.00 par value, of FFI ("FFI Common Stock") will be converted into common
stock, $1.25 par value, of FBS ("FBS Common Stock") on the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, (a) FFI directly or indirectly owns all of the issued and
outstanding capital stock of the national banking associations listed on
Schedule 3.8 hereto (the "National Banks") and the state banking corporations
listed on Schedule 3.8 hereto (the "State Banks" and together with the National
Banks, the "Banking Subsidiaries") and (b) FFI directly or indirectly owns all
of the issued and outstanding capital stock of the corporations listed on
Schedule 3.8 hereto (the "Nonbanking Subsidiaries," and, together with the
Banking Subsidiaries, the "Subsidiaries");
WHEREAS, as a condition and inducement to FBS's willingness to enter into
this Agreement, FBS and FFI are entering into, on the day after the execution
and delivery hereof, a Stock Option Agreement in the form attached hereto as
Exhibit A (the "Stock Option Agreement") pursuant to which FFI shall grant to
FBS an option to purchase shares of FFI Common Stock; and
WHEREAS, FBS and FFI desire that the Merger be made on the terms and subject
to the conditions set forth in this Agreement and qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
MERGER
Subject to the satisfaction or waiver of the conditions set forth in Article
6, on a date mutually satisfactory to the parties as soon as practicable
following receipt of all necessary federal and state bank regulatory approvals
(including waiting periods), FFI will merge with and into FBS. FBS, in its
capacity as the corporation surviving the Merger, is sometimes referred to
herein as the "Surviving Corporation." The Merger will be effected pursuant to
the provisions of, and with the effect provided in Section 21-2076 of the
Nebraska Business Corporation Act (the "NBCA") and Section 252 of the Delaware
General Corporation Law (the "DGCL").
1.1. EFFECT OF MERGER.
(a) On the Effective Date (as defined in Section 1.1(d)), FFI shall be
merged with and into FBS, and the separate existence of FFI shall cease. The
Charter (as defined in Section 2.2) and Bylaws of FBS, as in effect immediately
prior to the Effective Date, shall be the Charter and the Bylaws of the
Surviving Corporation until further amended as provided therein and in
accordance with law. The directors and officers of FBS immediately prior to the
Effective Date will be the directors and officers of the Surviving Corporation
until their successors are elected and qualify.
(b) The Surviving Corporation shall thereupon and thereafter be responsible
and liable for all the liabilities, debts, obligations and penalties of each of
FBS and FFI.
A-1
<PAGE>
(c) The Surviving Corporation shall thereupon and thereafter possess all the
rights, privileges, immunities and franchises, of a public as well as of a
private nature, of each of FBS and FFI; all property, real, personal and mixed,
and all debts due on whatever account, and all and every other interest, of or
belonging to or due to each of FBS and FFI, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate or any interest therein, vested in FBS
and FFI, shall not revert or be in any way impaired by reason of the Merger.
(d) To effect the Merger, the parties hereto will cause appropriate
certificates of merger relating to the Merger to be filed with the Secretary of
State of Delaware and the Secretary of State of Nebraska. In addition, pursuant
to Sections 21-2070 and 21-2073 of the NBCA, a Plan of Merger (the "Plan of
Merger") containing certain terms of this Merger Agreement, in substantially the
form attached hereto as Exhibit B, shall be filed with the certificate of merger
filed by FBS and FFI with the Secretary of State of Nebraska. The Merger shall
be effective upon the filing of the later of such certificates of merger to be
filed. As used herein, the term "Effective Date" shall mean the date on which
the Merger shall become effective as provided in the preceding sentence.
1.2. EFFECT ON OUTSTANDING SHARES OF FFI CAPITAL STOCK.
To effectuate the Merger and subject to the terms and conditions of this
Agreement:
(a) each issued and outstanding share of FFI Common Stock (other than
shares held as treasury stock of FFI or shares held directly or indirectly
by FBS, other than shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted) shall be converted into .8829 shares of FBS
Common Stock, and FBS shall issue to holders of FFI Common Stock .8829
shares of FBS Common Stock subject to adjustment as provided in Section 1.3
(the "Exchange Ratio"), in exchange for each such share of FFI Common Stock;
(b) to the extent permitted by applicable plans and agreements, all
outstanding options and warrants to purchase shares of FFI Common Stock
shall be exchanged for options and warrants to purchase FBS Common Stock, or
shares of FBS Common Stock, as provided in Section 5.13;
(c) each share of FFI Common Stock held as treasury stock of FFI or held
directly or indirectly by FBS, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted, shall be
canceled, retired and cease to exist, and no exchange or payment shall be
made with respect thereof; and
(d) shares of FBS Common Stock issued in the Merger shall have attached
to them rights as set forth in the Rights Agreement dated as of December 21,
1988, between FBS and First Chicago Trust Company of New York, as Rights
Agent, as amended (the "FBS Rights Agreement").
1.3. FBS COMMON STOCK ADJUSTMENTS. If, between the date hereof and the
Effective Date, shares of FBS Common Stock shall be changed into a different
number of shares or a different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend or extraordinary cash dividend thereon
shall be declared with a record date within such period, then the number of
shares of FBS Common Stock issued to holders of FFI Common Stock pursuant to
this Agreement will be appropriately and proportionately adjusted so that the
number of such shares of FBS Common Stock (or such class of shares into which
shares of FBS Common Stock have been changed) that will be issued to holders of
FFI Common Stock will equal the number of such shares and other consideration
that holders of FFI Common Stock would have received pursuant to such
classification, recapitalization, split-up, combination, exchange of shares or
readjustment had the record date therefor been immediately following the
Effective Date.
1.4. RIGHTS OF HOLDERS OF FFI CAPITAL STOCK; CAPITAL STOCK OF FBS.
(a) On and after the Effective Date and until surrendered for exchange, each
outstanding stock certificate which immediately prior to the Effective Date
represented shares of FFI Common Stock shall be deemed for all purposes, except
as provided in Section 1.6(b), to evidence ownership of and to
A-2
<PAGE>
represent the number of whole shares of FBS Common Stock into which such shares
of FFI Common Stock shall have been converted, and the record holder of such
outstanding certificate shall, after the Effective Date, be entitled to vote the
shares of FBS Common Stock into which such shares of FFI Common Stock shall have
been converted on any matters on which the holders of record of FBS Common
Stock, as of any date subsequent to the Effective Date, shall be entitled to
vote. In any matters relating to such certificates, FBS may rely conclusively
upon the record of shareholders maintained by FFI containing the names and
addresses of the holders of record of FFI Common Stock on the Effective Date.
(b) On and after the Effective Date, each share of FBS Common Stock issued
and outstanding immediately prior to the Effective Date shall remain an issued
and existing share of common stock of the Surviving Corporation and shall not be
affected by the Merger.
1.5. NO FRACTIONAL SHARES. No fractional shares of FBS Common Stock, and
no certificates representing such fractional shares, shall be issued upon the
surrender for exchange of certificates representing FFI Common Stock. In lieu of
any fractional share, FBS shall pay to each holder of FFI Common Stock who
otherwise would be entitled to receive a fractional share of FBS Common Stock an
amount of cash (without interest) determined by multiplying (a) the closing
price per share of FBS Common Stock on the Effective Date times (b) the
fractional share interest to which such holder would otherwise be entitled.
1.6. PROCEDURE FOR EXCHANGE OF STOCK.
(a) After the Effective Date, holders of certificates theretofore evidencing
outstanding shares of FFI Common Stock, upon surrender of such certificates to
an exchange agent appointed by FBS (the "Exchange Agent"), shall be entitled to
receive certificates representing the number of whole shares of FBS Common Stock
into which shares of FFI Common Stock theretofore represented by the
certificates so surrendered shall have been converted as provided in Section
1.2(a) and cash payments in lieu of fractional shares, if any, as provided in
Section 1.5. As soon as practicable after the Effective Date, FBS shall cause
the Exchange Agent to mail appropriate and customary transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of FFI Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent) to
each holder of FFI Common Stock of record as of the Effective Date advising such
holder of the effectiveness of the Merger and the procedure for surrendering to
the Exchange Agent outstanding certificates formerly evidencing FFI Common Stock
in exchange for new certificates for FBS Common Stock. FBS shall not be
obligated to deliver the consideration to which any former holder of shares of
FFI Common Stock is entitled as a result of the Merger until such holder
surrenders the certificate or certificates representing such shares for exchange
as provided in such transmittal materials and this Section 1.6(a). In addition,
certificates surrendered for exchange by any person deemed an "affiliate" of FFI
(as defined in Section 5.9), shall not be exchanged for such consideration until
FBS has received a written agreement from such person as provided in Section
5.9. Upon surrender, each certificate evidencing FFI Common Stock shall be
canceled.
(b) Until outstanding certificates formerly representing FFI Common Stock
are surrendered as provided in Section 1.6(a), no dividend or distribution
payable to holders of record of FBS Common Stock shall be paid to any holder of
such outstanding certificates, but upon surrender of such outstanding
certificates by such holder there shall be paid to such holder the amount of any
dividends or distributions (without interest) theretofore paid with respect to
such whole shares of FBS Common Stock, but not paid to such holder, and which
dividends or distributions had a record date occurring on or subsequent to the
Effective Date.
(c) After the Effective Date, there shall be no further registration of
transfers on the records of FFI of outstanding certificates formerly
representing shares of FFI Common Stock and, if a certificate formerly
representing such shares is presented to FFI or FBS, it shall be forwarded to
the Exchange Agent for cancellation and exchange for certificates representing
shares of FBS Common Stock as herein provided.
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(d) All shares of FBS Common Stock and cash for any fractional shares issued
and paid upon the surrender for exchange of FFI Common Stock in accordance with
the above terms and conditions shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such shares of FFI Common Stock.
(e) If outstanding certificates for shares of FFI Common Stock are not
surrendered prior to the date on which the consideration to which any holder of
such shares is entitled as a result of the Merger would otherwise escheat to or
become the property of any governmental unit or agency, the unclaimed
consideration shall, to the extent permitted by abandoned property and any other
applicable law, become the property of FBS (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. None of FBS, the Exchange
Agent or any other person shall be liable to any former holder of FFI Common
Stock for any amount delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) In the event any certificate for FFI Common Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue and pay in exchange for such
lost, stolen or destroyed certificate, upon the making of an affidavit of that
fact by the holder thereof in form satisfactory to FBS, such shares of FBS
Common Stock and cash for fractional shares, if any, as may be required pursuant
to this Agreement; provided, however, that FBS may, in its discretion and as a
condition precedent to the issuance and payment thereof, require the owner of
such lost, stolen or destroyed certificate to deliver a bond in such sum as it
may direct as indemnity against any claim that may be made against FBS, FFI, the
Exchange Agent or any other party with respect to the certificate alleged to
have been lost, stolen or destroyed.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF FBS
FBS hereby represents and warrants to FFI as follows:
2.1. ORGANIZATION. FBS is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
requisite corporate power to carry on its business as now conducted. FBS is
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "Bank Holding Company Act").
2.2. AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. FBS has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by FBS and the consummation by FBS of the transactions contemplated
hereby have been duly authorized by the Board of Directors of FBS, and no other
corporate proceedings on the part of FBS are necessary to authorize this
Agreement and such transactions. This Agreement has been duly executed and
delivered by FBS and constitutes a valid and binding obligation of FBS,
enforceable in accordance with its terms. FBS is not subject to, or obligated
under, any provision of (a) its Charter (as hereinafter defined) or Bylaws, (b)
any agreement, arrangement or understanding, (c) any license, franchise or
permit or (d) subject to obtaining the approvals referred to in the next
sentence, any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its or any of its subsidiaries' assets
would be created, by its execution, delivery and performance of this Agreement
and the consummation by it of the transactions contemplated hereby, other than
any such breaches or violations which will not, individually or in the
aggregate, have a material adverse effect on the business, operations, results
of operations or financial condition of FBS and its subsidiaries, taken as a
whole, or the consummation of the transactions contemplated hereby. Other than
in connection with obtaining any approvals required by the Bank Holding Company
Act, the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "1933 Act"), the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "1934 Act"), rules of the New York
Stock Exchange (the "NYSE"), state securities or blue sky laws,
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and the rules and regulations thereunder ("Blue Sky Laws"), rules and
regulations of any applicable state insurance regulatory authority ("Applicable
Insurance Regulations"), the Nebraska Department of Banking and Finance, the
Superintendent of Banking of Iowa, the Banking Commissioner of Wyoming and the
filing of certificates of merger with the Secretary of State of Delaware and the
Secretary of State of Nebraska, no authorization, consent or approval of, or
filing with, any public body, court or authority is necessary on the part of FBS
for the consummation by it of the transactions contemplated by this Agreement
and the Stock Option Agreement, except for such authorizations, consents,
approvals and filings as to which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, results of operations or financial condition of FBS and
its subsidiaries, taken as a whole, or the consummation of the transactions
contemplated hereby or by the Stock Option Agreement. As used in this Agreement,
the term "Charter" with respect to any corporation or banking association shall
mean those instruments that at that time constitute its charter as filed or
recorded under the general corporation or other applicable law of the
jurisdiction of incorporation or association, including the articles or
certificate of incorporation or association, any amendments thereto and any
articles or certificate of merger or consolidation.
2.3. VALIDITY OF FBS COMMON STOCK. The shares of FBS Common Stock to be
issued pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and subject to no preemptive rights.
2.4. CAPITAL STOCK. The authorized capital stock of FBS consists of
200,000,000 shares of FBS Common Stock and 10,000,000 shares of preferred stock,
par value $1.00 per share (the "FBS Preferred Stock"). As of June 30, 1995, (a)
135,632,324 shares of FBS Common Stock were issued and outstanding (including
2,212,758 shares of FBS Common Stock, par value $1.25 per share, held in
treasury), 8,293,286 shares of FBS Common Stock were reserved for issuance
pursuant to FBS's 1987 Stock Option Plan, 1991 Stock Incentive Plan, 1994 Stock
Incentive Plan, Restated Employee Stock Purchase Plan and Dividend Reinvestment
Plan, the Western Capital Investment Corp. 1984 Stock Option and Incentive Plan,
the 1988 Equity Participation Plan, the MFC Stock Warrants and the Edina Realty,
Inc. 1995 Sales Associate Stock Purchase Plan and 3,952,000 shares of FBS Common
Stock were reserved for issuance upon conversion of FBS's $3.5625 Cumulative
Preferred Stock, Series 1991A (the "Series 1991A Preferred"); (b) 2,113,700
shares of Series 1991A Preferred were outstanding; (c) 12,750 shares of
Adjustable Rate Cumulative Preferred Stock, Series 1990A were reserved for
issuance pursuant to certain periodic stock purchase rights and risk event
warrants issued by FBS; and (d) 1,400,000 shares of Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of rights
to purchase shares of Junior Participating Preferred Stock of FBS pursuant to
the FBS Rights Agreement.
2.5. 1934 ACT REPORTS.
(a) Prior to the execution of this Agreement, FBS has delivered or made
available to FFI complete and accurate copies of (a) FBS's Annual Reports on
Form 10-K for the years ended December 31, 1992, 1993 and 1994, as amended (the
"FBS 10-K Reports"), as filed under the 1934 Act with the Securities and
Exchange Commission (the "SEC"), (b) all FBS proxy statements and annual reports
to shareholders used in connection with meetings of FBS shareholders held since
January 1, 1993, and (c) FBS's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995 (the "FBS 10-Q Report"), as filed under the 1934 Act with
the SEC. As of their respective dates, such documents (i) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) complied as to
form in all material respects with the applicable laws and rules and regulations
of the SEC. Since January 1, 1992, FBS has filed in a timely manner all reports
that it was required to file with the SEC pursuant to the 1934 Act. After the
date hereof and prior to the Effective Date, documents filed by FBS pursuant to
Section 13, 14 or 15(d) of the 1934 Act (i) will not contain any untrue
statement of a material fact or omit to state a material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading and (ii)
will comply as to form in all material respects with the applicable laws and
rules and regulations of the SEC.
(b) The FBS financial statements (including any footnotes thereto) contained
in the FBS 10-K Reports and the FBS 10-Q Report were, and FBS financial
statements (including any footnotes thereto) contained in any documents filed by
FBS after the date hereof and prior to the Effective Date pursuant to Section
13, 14 or 15(d) of the 1934 Act will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved and fairly present, or will fairly present, as the case may be, the
consolidated financial position of FBS and its subsidiaries as of the dates
thereof and the consolidated results of operations, changes in shareholders'
equity and cash flows for the periods then ended.
2.6. NO MATERIAL ADVERSE CHANGES. Since March 31, 1995, there has been no
material adverse change in, and no event, occurrence or development in the
business of FBS or its subsidiaries that, taken together with other events,
occurrences and developments with respect to such business, has had or would
reasonably be expected to have a material adverse effect on, the business,
operations, results of operations or financial condition of FBS and its
subsidiaries, taken as a whole, or the ability of FBS to consummate the
transactions contemplated hereby.
2.7. PROSPECTUS/PROXY STATEMENT. At the time the Registration Statement
(as defined in Section 5.8(a)) becomes effective and at the time the
Prospectus/Proxy Statement (as defined in Section 5.8(a)) is mailed to the
shareholders of FFI for purposes of obtaining the approvals referred to in
Section 5.8(a) and at all times subsequent to such mailing up to and including
the times of such approvals, the Registration Statement and the Prospectus/Proxy
Statement (including any amendments or supplements thereto), with respect to all
information set forth therein relating to FBS, the FBS Common Stock, this
Agreement, the Merger and all other transactions contemplated hereby, will (a)
comply in all material respects with applicable provisions of the 1933 Act and
the 1934 Act and (b) not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
2.8. LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best knowledge of FBS, threatened against FBS
or any of its subsidiaries which if determined adversely to FBS or its
subsidiaries could reasonably be expected to have a material adverse effect on
the financial condition, business, operations or results of operations of FBS
and its subsidiaries, taken as a whole, or would have a material adverse effect
on the ability of FBS to consummate the transactions contemplated hereby.
2.9. REPORTS AND FILINGS. Since January 1, 1992, each of FBS and its
subsidiaries has filed each report or other filing it was required to file with
any federal or state banking or bank holding company or other regulatory
authority having jurisdiction over it (together with all exhibits thereto, the
"FBS Regulatory Reports"), except for such reports and filings which the failure
to so file would not have a material adverse effect on the business, operations,
results of operations or financial condition of FBS and its subsidiaries, taken
as a whole, or the ability of FBS to consummate the transactions contemplated
hereby. As of their respective dates or as subsequently amended prior to the
date hereof, each of the FBS Regulatory Reports was true and correct in all
material respects and complied in all material respects with applicable laws,
rules and regulations.
2.10. REGULATORY APPROVALS. As of the date hereof, FBS is not aware of any
reason that the regulatory approvals specified in Section 5.1 and required to be
obtained by FBS would not be obtained.
2.11. COMPLIANCE WITH LAWS; PERMITS. FBS has complied in all respects with
all applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof which affect the business or any owned or
leased properties of FBS and to which FBS may be subject (including,
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without limitation, the Occupational Safety and Health Act of 1970, the Federal
Deposit Insurance Act, the Real Estate Settlement Procedures Act, the Home
Mortgage Disclosure Act of 1975, the Fair Housing Act, the Equal Credit
Opportunity Act and the Federal Reserve Act, each as amended, and any other
state or federal acts (including rules and regulations thereunder) regulating or
otherwise affecting employee health and safety or the environment), except where
failure to so comply would not, individually or in the aggregate, have a
material adverse effect on the business, operations, results of operations or
financial condition of FBS, or FBS's ability to consummate the transactions
contemplated hereby; and no claims have been filed by any such governments or
agencies against FBS alleging such a violation of any such law or regulation
which have not been resolved to the satisfaction of such governments or
agencies. FBS holds all of the permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of its business, except where failure to obtain such
authorizations would not, individually or in the aggregate, have a material
adverse effect on the business, operations, results of operations or financial
condition of FBS, or the ability of FBS to consummate the transactions
contemplated hereby. FBS is not subject to any cease and desist order, written
agreement or memorandum of understanding with, nor is it a party to any
commitment letter or similar undertaking to, nor is it subject to any order or
directive by, nor is it a recipient of any extraordinary supervisory agreement
letter from, nor has it adopted any board resolutions at the request of, federal
or state governmental authorities charged with the supervision or regulation of
banks or bank holding companies or engaged in the insurance of bank deposits
(collectively, the "Bank Regulators"), nor has FBS been advised by any Bank
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FFI
FFI hereby represents and warrants to FBS as follows:
3.1. ORGANIZATION AND QUALIFICATION. FFI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nebraska.
Each of the National Banks is a national banking association duly organized,
validly existing and in good standing under the laws of the United States and
has the requisite corporate power to carry on its business as now conducted.
Each of the State Banks is a state banking corporation duly organized, validly
existing and in good standing under the laws of the state of its organization
and has the requisite corporate power to carry on its business as now conducted.
Each of the Nonbanking Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
The copies of the Charter and Bylaws of each of FFI and the Subsidiaries which
have been made available to FBS prior to the date of this Agreement are correct
and complete and reflect all amendments made thereto through such date. Each of
FFI and the Subsidiaries is licensed or qualified to do business in every
jurisdiction in which the nature of its respective business or its ownership of
property requires it to be licensed or qualified, except where the failure to be
so licensed or qualified would not have or would not reasonably be expected to
have a material adverse effect on the business, operations, results of
operations or financial condition of FFI and the Subsidiaries, taken as a whole.
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. FFI has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by FFI and the consummation by FFI of the transactions contemplated
hereby have been duly authorized by the Board of Directors of FFI and, except
for approval of this Agreement and the Merger by the affirmative vote of at
least two-thirds of the outstanding shares of FFI Common Stock, no other
corporate proceedings on the part of FFI are necessary to authorize this
Agreement and such transactions. This Agreement has been duly executed and
delivered by FFI and constitutes a valid and binding obligation of FFI,
enforceable in accordance with its terms. None of FFI or the Subsidiaries is
subject to, or obligated under, any provision of (a) its
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Charter or Bylaws, (b) any agreement, arrangement or understanding, (c) any
license, franchise or permit or (d) subject to obtaining the approvals referred
to in the next sentence, any law, regulation, order, judgment or decree, which
would be breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets would be created, by the
execution, delivery or performance of this Agreement, the Stock Option Agreement
or the consummation of the transactions contemplated hereby or thereby, other
than any such breaches or violations which will not, individually or in the
aggregate, have a material adverse effect on the business, operations, results
of operations or financial condition of FFI and the Subsidiaries, taken as a
whole, or the consummation of the transactions contemplated hereby or thereby.
Other than in connection with obtaining any approvals required by the Bank
Holding Company Act, the 1933 Act, the 1934 Act, the rules of the NYSE, Blue Sky
Laws, Applicable Insurance Regulations, the Nebraska Department of Banking and
Finance, the Superintendent of Banking of Iowa, the Banking Commissioner of
Wyoming and the filing of certificates of merger with the Secretary of State of
Delaware and the Secretary of State of Nebraska, no authorization, consent or
approval of, or filing with, any public body, court or authority is necessary on
the part of FFI or any of the Subsidiaries for the consummation by FFI of the
transactions contemplated by this Agreement or the Stock Option Agreement,
except for such authorizations, consents, approvals and filings as to which the
failure to obtain or make would not, individually or in the aggregate, have a
material adverse effect on the business, operations, results of operations or
financial condition of FFI and the Subsidiaries, taken as a whole, or the
consummation of the transactions contemplated hereby or by the Stock Option
Agreement.
3.3. CAPITALIZATION. The authorized and issued and outstanding capital
stock of each of FFI and the Subsidiaries as of the date hereof is correctly set
forth on Schedule 3.3. The issued and outstanding shares of capital stock of
each of FFI and the Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and have not been issued in violation of any preemptive
rights. Except as disclosed on Schedule 3.3 and as permitted in Section 4.1,
there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating FFI or any Subsidiary to
issue, sell, purchase or redeem any shares of its capital stock or securities or
obligations of any kind convertible into or exchangeable for any shares of its
capital stock or of any of its subsidiaries or affiliates, nor are there any
stock appreciation, phantom or similar rights outstanding based upon the book
value or any other attribute of any of the capital stock of FFI or any of the
Subsidiaries, or the earnings or other attributes of FFI or any of the
Subsidiaries. FFI has heretofore delivered to FBS true and correct copies of all
such agreements, arrangements (including all stock option plans) or commitments
identified on Schedule 3.3.
3.4. 1934 ACT REPORTS. Prior to the execution of this Agreement, FFI has
delivered or made available to FBS complete and accurate copies of (a) FFI's
Annual Reports on Form 10-K for the years ended December 31, 1992, 1993 and 1994
(the "FFI 10-K Reports") as filed under the 1934 Act with the SEC, (b) all FFI
proxy statements and annual reports to shareholders used in connection with
meetings of FFI shareholders held since January 1, 1992 and (c) FFI's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995 (the "FFI 10-Q Report")
as filed under the 1934 Act with the SEC. As of their respective dates, such
documents (i) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied as to form in all material respects with the
applicable laws and rules and regulations of the SEC. Since January 1, 1992, FFI
has filed in a timely manner all reports that it was required to file with the
SEC pursuant to the 1934 Act. After the date hereof and prior to the Effective
Date, documents filed by FFI pursuant to Section 13, 14 or 15(d) of the 1934 Act
(i) will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading
and (ii) will comply as to form in all material respects with the applicable
laws and rules and regulations of the SEC.
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3.5. FINANCIAL STATEMENTS. The FFI financial statements (including any
footnotes thereto) contained in the FFI 10-K Reports and the FFI 10-Q Report
have been, and FFI financial statements (including any footnotes thereto)
contained in any documents filed by FFI after the date hereof and prior to the
Effective Date pursuant to Section 13, 14 or 15(d) of the 1934 Act will be,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved and fairly present or will fairly
present, as the case may be, the consolidated financial position of FFI and the
Subsidiaries as of the dates thereof and the results of operations, changes in
shareholders' equity and cash flows for the periods then ended. FFI has
furnished FBS with copies of the consolidated balance sheet of FFI as of June
30, 1995 (the "Latest FFI Balance Sheet") and the related statements of income
and changes in shareholders' equity for the six months ended June 30, 1995 (the
"Related FFI Statements"). The Latest FFI Balance Sheet and the Related FFI
Statements have been prepared in accordance with generally accepted accounting
principles and fairly present the consolidated financial position of FFI and the
Subsidiaries, subject to normal recurring year-end adjustments, as of the date
thereof and the results of operations and changes in shareholders' equity for
the six-month period then ended.
3.6. LOANS.
(a) The documentation relating to each loan made by each Banking Subsidiary
and relating to all security interests, mortgages and other liens with respect
to all collateral for each such loan, taken as a whole, are adequate in all
material respects for the enforcement of the material terms of each such loan
and of the related security interests, mortgages and other liens. The terms of
each such loan and of the related security interests, mortgages and other liens
comply in all material respects with all applicable laws, rules and regulations
(including, without limitation, laws, rules and regulations relating to the
extension of credit).
(b) Except as set forth in Schedule 3.6, (i) as of June 30, 1995, there are
no loans, leases, other extensions of credit or commitments to extend credit of
any Banking Subsidiary that have been or, to FFI's knowledge, should have been
classified by any such Banking Subsidiary as non-accrual, as restructured, as 90
days past due, as still accruing and doubtful of collection or any comparable
classification, (ii) FFI has provided to FBS true, correct and complete in all
material respects written information concerning the loan portfolios of the
Banking Subsidiaries, and (iii) no material information with respect to the loan
portfolios of the Banking Subsidiaries has been withheld from FBS.
3.7. REPORTS AND FILINGS. Since January 1, 1992, each of FFI and the
Subsidiaries has filed each report or other filing that it was required to file
with any federal or state banking, bank holding company or other applicable
regulatory authorities having jurisdiction over it (together with all exhibits
thereto, the "FFI Regulatory Reports"). As of their respective dates or as
subsequently amended prior to the date hereof, each of the FFI Regulatory
Reports was true and correct in all material respects and complied in all
material respects with applicable laws, rules and regulations.
3.8. SUBSIDIARIES. Schedule 3.8 correctly sets forth the jurisdiction of
incorporation of each Subsidiary. All of the issued and outstanding shares of
capital stock of each Subsidiary are owned by FFI free and clear of any lien,
pledge, security interest, encumbrance or charge of any kind, other than
encumbrances arising as a result of requisite regulatory approvals for transfer.
Except for the stock of the Subsidiaries owned by FFI and as otherwise disclosed
on Schedule 3.8, neither FFI nor any of the Subsidiaries owns any stock,
partnership interest, joint venture interest or any other security issued by any
other corporation, organization or entity, except securities owned by the
Banking Subsidiaries in the ordinary course of its business.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES. All of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction,
including Taxes (as defined in Section 3.13) with respect to or based upon
transactions or events heretofore occurring ("Liabilities"), required to be
reflected on the Latest FFI Balance Sheet in
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accordance with generally accepted accounting principles have been so reflected.
FFI and the Subsidiaries have no Liabilities except (a) as reflected on the
Latest FFI Balance Sheet, (b) Liabilities which have arisen after the date of
the Latest FFI Balance Sheet in the ordinary course of business or (c)
Liabilities which would not have, individually or in the aggregate, a material
adverse effect on the business, operations, results of operations or financial
condition of FFI and the Subsidiaries, taken as a whole. As of June 30, 1995,
Schedule 3.9 sets forth all agreements or commitments binding the Banking
Subsidiaries to extend credit in the amount per "one borrower" (as defined in 12
C.F.R. Section 563.93) of $500,000 or more.
3.10. NO MATERIAL ADVERSE CHANGES. Since the date of the Latest FFI
Balance Sheet, there has been no material adverse change in, and no event,
occurrence or development in the business of FFI or the Subsidiaries that, taken
together with other events, occurrences and developments with respect to such
business, has had or would reasonably be expected to have a material adverse
effect on the business, operations, results of operations or financial condition
of FFI and the Subsidiaries, taken as a whole, or the ability of FFI to
consummate the transactions contemplated hereby.
3.11. ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in the Latest
FFI Balance Sheet and the Related FFI Statements or on Schedule 3.11, unless
otherwise expressly contemplated or permitted by this Agreement, in the period
from June 30, 1995 to the date hereof, neither FFI nor any of the Subsidiaries
has (i) sold or issued any corporate debt securities or sold, issued, reissued
or increased its shares of its capital stock other than in connection with the
exercise of stock options; (ii) granted any option, phantom stock unit, stock
appreciation right for or related to the purchase of capital stock; (iii)
declared or set aside or paid any dividend or other distribution in respect of
its capital stock, except as permitted pursuant to Section 4.1(a) (and except
for declaration and payment of its regular quarterly dividend for the second
quarter of 1995) hereof, or directly or indirectly purchased, redeemed or
otherwise acquired any shares of such stock; (iv) incurred any obligation or
liability (absolute or contingent) except obligations or liabilities incurred in
the ordinary course of business, or mortgaged, pledged or subjected to lien or
encumbrance (other than statutory liens for taxes not yet delinquent and banking
transactions conducted in the ordinary course of business) any of its assets or
properties with an aggregate market value in excess of $250,000; (v) discharged
or satisfied any material lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities included in
the Latest FFI Balance Sheet, current liabilities incurred since the date
thereof in the ordinary course of business and liabilities incurred in carrying
out the transactions contemplated by this Agreement; (vi) sold, exchanged or
otherwise disposed of capital assets with an aggregate market value in excess of
$250,000; or acquired any single or group of related capital assets with an
aggregate market value in excess of $250,000; (vii) made any extraordinary
officers' salary increase or wage increase, entered into any employment contract
with any officer or salaried employee or instituted or amended any employee
welfare, bonus, stock option, profit-sharing, retirement or other benefit plan
or arrangement; (viii) suffered any damage, destruction or loss, whether or not
covered by insurance, that has had a material adverse effect on the business,
operations, results of operations or financial condition of FFI and the
Subsidiaries, taken as a whole, or waived any rights of value which, in the
aggregate, have had such a material adverse effect; (ix) entered into any
agreement or arrangement granting any preferential right to purchase any of its
material assets, properties or rights or requiring the consent of any party to
the transfer and assignment of any such material assets, properties or rights;
(x) entered into any other material transaction (other than in the ordinary
course of business) except as expressly contemplated by this Agreement; or
agreed to do any of the foregoing.
3.12. PROPERTIES.
(a) Each of FFI and the Subsidiaries owns good and marketable title to all
of the real property and all of the personal property, fixtures, furniture and
equipment reflected on the Latest FFI Balance Sheet or acquired since the date
thereof (other than real property reflected on the Latest FFI Balance Sheet as
REO), free and clear of all liens and encumbrances, except for (i) mortgages on
real property set forth on Schedule 3.12(a), (ii) encumbrances which do not
materially affect the value of, or
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interfere with the past or future use or ability to convey, the property subject
thereto or affected thereby, (iii) liens for current taxes and special
assessments not yet due and payable, (iv) leasehold estates with respect to
multi-tenant buildings owned by FFI or any of the Subsidiaries, which leases are
identified on Schedule 3.12(a), and (v) property disposed of since the date of
the Latest FFI Balance Sheet in the ordinary course of business.
(b) Schedule 3.12(b) correctly sets forth a brief description, including the
term, of each lease for real or personal property to which FFI or any of the
Subsidiaries is a party as lessee with respect to (i) each individual lease
which involves a remaining aggregate balance of lease payments payable of more
than $100,000 or any group of related leases which involves a remaining
aggregate balance of lease payments payable of more than $100,000, (ii) each
lease which is a "material contract" within the meaning of Item 601(b)(10) of
Regulation S-K promulgated by the SEC or (iii) each lease which was not entered
into in the ordinary course of business. FFI has delivered or made available to
FBS complete and accurate copies of each of the leases described on Schedules
3.12(a) and 3.12(b), and none of such leases has been modified in any material
respect, except to the extent that such modifications are disclosed by the
copies delivered to FBS. The leases described on Schedules 3.12(a) and 3.12(b)
are in full force and effect. FFI or one of the Subsidiaries (if lessee under
such lease) has a valid and existing leasehold interest under each lease
described on Schedule 3.12(b) for the term set forth therein. With respect to
the leases described on Schedule 3.12(b), neither FFI nor any of the
Subsidiaries is in default, nor, to the best knowledge of FFI and the
Subsidiaries, are any of the other parties to any of such leases in default,
and, to the best knowledge of FFI and the Subsidiaries, no circumstances (not in
the control of FFI and the Subsidiaries) exist which could result in such a
default under any of such leases. To the best knowledge of FFI and the
Subsidiaries, there has been no cancellation, breach or anticipated breach by
any other party to any lease described on Schedule 3.12(a) or 3.12(b).
(c) All of the buildings, fixtures, furniture and equipment necessary for
the conduct of the business of FFI and each of the Subsidiaries are in good
condition and repair in all material respects, ordinary wear and tear excepted,
and are usable in the ordinary course of business. Each of FFI and the
Subsidiaries owns, or leases under valid leases, all buildings, fixtures,
furniture, personal property, land improvements and equipment necessary for the
conduct of its business as it is presently being conducted.
(d) Except as set forth in Schedules 3.12(d) and 3.12(e), neither FFI nor
any of the Subsidiaries nor any of the buildings owned or leased by FFI or any
of the Subsidiaries is in violation of any applicable zoning ordinance or other
law, regulation or requirement relating to the operation of any properties used
in the operation of its business, including, without limitation, applicable
environmental protection laws and regulations, which violations would,
individually or in the aggregate, have a material adverse effect on the
business, operations, results of operations or financial condition of FFI and
the Subsidiaries taken as a whole; and neither FFI nor any of the Subsidiaries
has received any notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased by FFI or
any of the Subsidiaries. Except as set forth in Schedule 3.12(d), no Hazardous
Materials (as defined below) have been deposited or disposed of in, on or under
FFI's or any of the Subsidiaries' owned or leased properties (including
properties owned, managed or controlled by any Banking Subsidiary in connection
with its lending or fiduciary operations) during the period in which FFI or any
of the Subsidiaries has owned, occupied, managed, controlled or operated such
properties. Except as set forth on Schedule 3.12(d), to the best knowledge of
FFI and the Subsidiaries, no prior owners, occupants or operators of all or any
part of FFI's or any of the Subsidiaries' owned or leased properties (including
properties owned, managed or controlled by any Banking Subsidiary in connection
with its lending or fiduciary operations) ever used such properties as a dump or
gasoline service station, or deposited, disposed of or allowed to be deposited
or disposed of in, on or under such properties any hazardous substances,
Hazardous Materials. No asbestos or any material amount of ureaformaldehyde
materials exists in or on any of FFI's or the Subsidiaries' owned
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or leased properties (including properties owned, managed or controlled by any
Banking Subsidiary in connection with its lending or fiduciary operations), and
no electrical transformers or capacitors, other than those owned by public
utility companies, on such properties contain any PCBs.
As used in this Section 3.12(d), the following terms shall have the
following meanings:
(i) "Hazardous Materials" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined in
or governed by any federal, state or local law, statute, code, ordinance,
regulation, rule or other requirement relating to such substance or
otherwise relating to the environment or human health or safety, including
without limitation any waste, material, substance, pollutant or contaminant
that might cause any injury to human health or safety or to the environment
or might subject FFI or any Subsidiary or, after the Effective Date, FBS or
any of its affiliates, or any of their respective directors or officers, to
any imposition of costs or liability under any Environmental Laws.
(ii) "Environmental Laws" means all applicable federal, state, local and
foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to pollution,
contamination or protection of health, safety or the environment (including,
without limitation, all applicable federal, state, local and foreign laws,
rules, regulations, codes, ordinances, orders, decrees, directives, permits,
licenses and judgments relating to Hazardous Materials in effect as of the
date of this Agreement).
(e) Except as set forth in Schedule 3.12(e), there are no aboveground or
underground tanks (excluding hot water storage or propane tanks) located under,
in or about, nor, to the best knowledge of FFI and the Subsidiaries, have there
ever been any such tanks located under, in or about, any of FFI's or any of the
Subsidiaries' owned or leased properties (including properties owned, managed or
controlled by any Banking Subsidiary in connection with its lending or fiduciary
operations).
3.13. TAX MATTERS. Except as disclosed on Schedule 3.13, each of FFI, the
Subsidiaries and all members of any consolidated, affiliated, combined or
unitary group of which FFI or any of the Subsidiaries is a member have filed or
will file all Tax (as hereinafter defined) and Tax information returns or
reports required to be filed (taking into account permissible extensions) by
them on or prior to the Effective Date, and have paid (or have accrued or will
accrue, prior to the Effective Date, amounts for the payment of) all Taxes
relating to the time periods covered by such returns and reports. Except as
disclosed on Schedule 3.13, the accrued taxes payable accounts for Taxes
reflected on the Latest FFI Balance Sheet (or the notes thereto) are sufficient
for the payment of all unpaid Taxes of FFI and the Subsidiaries accrued for or
applicable to all periods ended on or prior to the date of the Latest FFI
Balance Sheet or which may subsequently be determined to be owing with respect
to any such period. Except as disclosed on Schedule 3.13, neither FFI nor any of
the Subsidiaries has waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to an assessment or deficiency for
Taxes. Each of FFI and the Subsidiaries has paid or will pay in a timely manner
and as required by law all Taxes due and payable by it or which it is obligated
to withhold from amounts owing to any employee or third party. Except as
disclosed on Schedule 3.13, all Taxes which will be due and payable, whether now
or hereafter, for any period ending on, prior to or including the Effective
Date, shall have been paid by or on behalf of FFI and the Subsidiaries or shall
be reflected on the books of FFI and the Subsidiaries as an accrued Tax
liability determined in a manner which is consistent with past practices and the
Latest FFI Balance Sheet, without taking account of the Merger. The aggregate
amount of all such accruals for Tax liability as of the date hereof will be set
forth on Schedule 3.13 (and a good faith estimate of such accruals as of the
Effective Date shall be provided in writing to FBS at least 10 days prior to the
Effective Date). In the five years prior to the date of this Agreement, no Tax
returns of FFI or the Subsidiaries have been audited by any governmental
authority other than as disclosed on Schedule 3.13; and, except as set forth on
Schedule 3.13, there are no unresolved questions, claims or disputes asserted by
any relevant taxing authority concerning the liability for Taxes of FFI or the
Subsidiaries. Neither FFI nor any of the Subsidiaries has made an election under
Section 341(f) of the Code for any taxable years not yet closed for statute of
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limitations purposes. In the five years prior to the date of this Agreement, no
demand or claim has been made against FFI or the Subsidiaries with respect to
any Taxes arising out of membership or participation in any consolidated,
affiliated, combined or unitary group of which FFI or the Subsidiaries was at
any time a member. For purposes of this Agreement, the term "Tax" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, property or windfall
profits tax, environmental tax, customs duty, capital stock, deposits,
franchise, employees' income withholding, foreign or domestic withholding,
social security, unemployment, disability, workers' compensation,
employment-related insurance, real property, personal property, sales, use,
transfer, value added, alternative or add-on minimum or other tax, fee,
assessment or charge of any kind whatsoever, including any interest, penalties
or additions to, or additional amounts in respect of the foregoing, for each of
FFI, the Subsidiaries and all members of any consolidated, affiliated, combined
or unitary group of which FFI or any Subsidiary is a member.
3.14. CONTRACTS AND COMMITMENTS.
(a) Except as set forth on Schedule 3.14, neither FFI nor any of the
Subsidiaries (i) is a party to any collective bargaining agreement or contract
with any labor union, (ii) is a party to any written or oral contract for the
employment of any officer, individual employee or other person on a full-time or
consulting basis, or relating to severance pay for any such person, (iii) is a
party to any written or oral agreement or understanding to repurchase assets
previously sold (or to indemnify or otherwise compensate the purchaser in
respect of such assets), except for securities sold under a repurchase agreement
providing for a repurchase date 30 days or less after the purchase date, (iv) is
a party to any (A) contract or group of related contracts with the same party
for the purchase or sale of products or services, under which the undelivered
balance of such products and services has a purchase price in excess of $250,000
for any individual contract or $250,000 for any group of related contracts in
the aggregate, (B) other contract which is a "material contract" within the
meaning of Item 601(b)(10) of Regulation S-K promulgated by the SEC, or (C)
other agreement which is not entered into in the ordinary course of business and
which is not disclosed on Schedules 3.12(a) or 3.12(b), or (v) has any
commitments for capital expenditures in excess of $250,000.
(b) Except as disclosed on Schedule 3.14, (i) to the best knowledge of FFI
and the Subsidiaries, since the date of the Latest FFI Balance Sheet, no
customer has indicated that it will stop or decrease the rate of business done
with FFI or any of the Subsidiaries (except for changes in the ordinary course
of such business) that would, individually or in the aggregate, have a material
adverse effect on the business, operations, results of operations or financial
condition of FFI and the Subsidiaries, taken as a whole; (ii) each of FFI and
the Subsidiaries has performed all obligations required to be performed by it
prior to the date hereof in connection with the contracts or commitments set
forth on Schedule 3.14, and none of FFI or any of the Subsidiaries is in receipt
of any claim of default under any contract or commitment set forth on Schedule
3.14, except for any failures to perform, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, results of operations or financial condition of FFI and
the Subsidiaries taken as a whole; (iii) none of FFI or any of the Subsidiaries
has any present expectation or intention of not fully performing any material
obligation pursuant to any contract or commitment set forth on Schedule 3.14;
and (iv) to the best knowledge of FFI and the Subsidiaries, there has been no
cancellation, breach or anticipated breach by any other party to any contract or
commitment set forth on Schedule 3.14, except for any cancellation, breach or
anticipated breach which would not, individually or in the aggregate, have a
material adverse effect on the business, operations, results of operations or
financial condition of FFI and the Subsidiaries, taken as a whole.
3.15. LITIGATION. Except as set forth on Schedule 3.15, there are no
actions, suits, proceedings, orders or investigations pending or, to the best
knowledge of FFI and the Subsidiaries, threatened against FFI or any of the
Subsidiaries, at law or in equity, or before or by any federal, state or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, except for such actions, suits, proceedings, orders or
investigations which are not reasonably likely to result in losses or expenses
that would have a material adverse effect on the business,
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operations, results of operations or financial condition of FFI and the
Subsidiaries, taken as a whole. Except as set forth on Schedule 3.15, none of
the matters set forth on such Schedule, individually or in the aggregate, will
have or could reasonably be expected to have a material adverse effect on the
business, operations, results of operations or financial condition of FFI and
the Subsidiaries, taken as a whole.
3.16. NO BROKERS OR FINDERS. Except as disclosed on Schedule 3.16, there
are no claims for brokerage commissions, finders' fees, investment advisory fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement, understanding, commitment or agreement made
by or on behalf of FFI or any of the Subsidiaries.
3.17. EMPLOYEES. FFI and each of the Subsidiaries has complied with all
laws relating to the employment of labor, including provisions thereof relating
to wages, hours, equal opportunity, collective bargaining, non-discrimination
and the payment of social security and other taxes, except where failure to so
comply would not, individually or in the aggregate, have a material adverse
effect on the business, operations, results of operations or financial condition
of FFI and the Subsidiaries, taken as a whole.
3.18. EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. For the purposes of this Section 3.18, unless the context
clearly requires otherwise, the term "Plan" or "Plans" includes all employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other benefit arrangements
(including, without limitation, any employment agreement or any program,
agreement, policy or commitment providing for insurance coverage of employees,
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health, disability or accidental
benefits) applicable to the employees of FFI or any of the Subsidiaries, to
which FFI or any of the Subsidiaries contribute, or which FFI or any of the
Subsidiaries have committed to implement for their employees prior to the date
of this Agreement. Unless the context clearly requires otherwise, "Plan" or
"Plans" shall also include any similar program or arrangement maintained by any
organization affiliated by ownership with FFI or any of the Subsidiaries for
which FFI or any of the Subsidiaries are or could be completely or partially
liable for the funding or the administration either as a matter of law or by
agreement but excluding customers of the trust departments of affiliates of FFI
where there is no ownership affiliation between such customers and FFI.
(b) Except as disclosed on Schedule 3.18:
(i) FULL DISCLOSURE OF ALL PLANS. With respect to all employees and
former employees of FFI and the Subsidiaries (and all dependents and
beneficiaries of such employees and former employees):
(A) Neither FFI nor any of the Subsidiaries maintain or contribute to
any nonqualified deferred compensation or retirement plans, contracts or
arrangements;
(B) Neither FFI nor any of the Subsidiaries maintain or contribute to
any qualified defined contribution plans (as defined in Section 3(34) of
ERISA or Section 414(i) of the Code);
(C) Neither FFI nor any of the Subsidiaries maintain or contribute to
any qualified defined benefit plans (as defined in Section 3(35) of ERISA
or Section 414(j) of the Code) ("Defined Benefit Plans"); and
(D) Neither FFI nor any of the Subsidiaries maintain or contribute to
any employee welfare benefit plans (as defined in Section 3(1) of ERISA).
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(ii) FUNDING. With respect to the Plans, (A) all required
contributions which are due have either been made or properly accrued and
(B) neither FFI nor any of the Subsidiaries is liable for any "accumulated
funding deficiency" as that term is defined in Section 412 of the Code or
any penalty or excise tax in connection therewith.
(iii) PLAN DOCUMENTS. With respect to all Plans sponsored or
administered by FFI or any Subsidiary and with respect to any other Plan if
available to FFI or any Subsidiary, FFI has furnished FBS with true and
complete copies of (A) the most recent determination letter, if any,
received by FFI or any of the Subsidiaries from the Internal Revenue Service
regarding each qualified Plan, (B) the Form 5500 and all Schedules and
accompanying financial statements, if any, for each Plan for which such form
is required to be filed for the three most recent fiscal Plan years, (C) the
most recently prepared actuarial valuation report, if any, for each Plan,
and (D) copies of the current Plan documents, trust agreements, insurance
contracts and all related contracts and documents (including any material
employee communications) with respect to each Plan.
(iv) DEFINED BENEFIT PLANS. Neither FFI nor any of the Subsidiaries
nor any affiliate of FFI or any of the Subsidiaries maintains or has
maintained any Defined Benefit Plans for which FFI, any of the Subsidiaries
or FBS have or will have any liability or, which if terminated, could result
in any liability to FFI, the Subsidiaries or FBS under Title IV of ERISA.
There are no unfunded vested liabilities (determined using the assumptions
used by the Plan for funding and without regard to future salary increases)
with respect to Defined Benefit Plans sponsored by FFI or any Subsidiary.
There have been no reportable events under Section 4043 of ERISA (with
respect to which the 30-day notice requirement has not been waived by
regulation) with respect to any Defined Benefit Plan maintained by FFI or
any of the Subsidiaries. No Defined Benefit Plan has been terminated that
will result in a material liability by FFI or any of the Subsidiaries to the
Pension Benefit Guaranty Corporation.
(v) MULTIEMPLOYER PLANS. Neither FFI nor any of the Subsidiaries has
any actual or potential liabilities under Sections 4201 or 4205 of ERISA for
any complete or partial withdrawal from any multiemployer plan.
(vi) FIDUCIARY BREACH; CLAIMS. Neither FFI nor any of the Subsidiaries
nor any of its directors, officers, employees or other "fiduciaries" (as
such term is defined in Section 3(21) of ERISA) has committed any breach of
fiduciary duty imposed by ERISA or any other applicable law with respect to
the Plans which would subject FFI or any of the Subsidiaries, directly or
indirectly, to any liability under ERISA or any applicable law. There are no
actions, suits or claims pending against FFI or any Subsidiary relating to
benefits other than routine, uncontested claims for benefits.
(vii) PROHIBITED TRANSACTION. Neither FFI nor any of the Subsidiaries
nor any officer, director, employee, agent or fiduciary of any Plan has
incurred any liability for any civil penalty imposed by Section 4975 of the
Code or Section 502(i) of ERISA.
(viii) MATERIAL COMPLIANCE WITH LAW. All Plans have been consistently
administered in accordance with their terms in all material respects. To the
extent required either as a matter of law or to obtain the intended tax
treatment and tax benefits, all Plans comply in all material respects with
the requirements of ERISA and the Code. All Tax information returns or
reports and all other required filings, disclosures and contributions have
been made with respect to all Plans. No condition exists that limits the
right of FFI or any of the Subsidiaries to amend or terminate any such Plan
(except as provided in such Plans or limited under ERISA or the Code).
(ix) VEBA FUNDING. No Plan is funded in whole or in part through a
voluntary employees' beneficiary association exempt from tax under Section
501(c)(9) of the Code. The limitations under Sections 419 and 419A of the
Code have been computed, all unrelated business income tax returns have been
filed and appropriate adjustments have been made on all other Tax returns.
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(x) RETIREMENT AND COBRA BENEFITS. Neither FFI nor any of the
Subsidiaries have actual or potential liability under current law for
benefits after separation from employment other than (i) benefits under
Plans described in clauses (A), (B) or (C) of Section 3.18(b)(i), and (ii)
health care continuation benefits described in Section 4980B of the Code or
Part G of Subtitle B of Title I of ERISA or any comparable provisions under
the laws of any state.
(xi) COLLECTIVE BARGAINING. No Plan is maintained in whole or in part
pursuant to collective bargaining.
(xii) PARACHUTE PAYMENTS. No Plan requires or would result, separately
or in the aggregate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code, and the consummation of the
transactions contemplated by this Agreement will not be a factor in causing
payments to be made by FBS, FFI or any of the Subsidiaries that are not
deductible (in whole or in part) under Section 280G of the Code.
3.19. INSURANCE. Schedule 3.19 hereto lists and summarizes each insurance
policy maintained by FFI or any of the Subsidiaries with respect to its
properties and assets. All such insurance policies are in full force and effect,
and neither FFI nor any of the Subsidiaries is in default with respect to its
obligations under any of such insurance policies.
3.20. COMPLIANCE WITH LAWS; PERMITS. Each of FFI and the Subsidiaries has
complied in all respects with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof which affect the
business or any owned or leased properties of FFI or any of the Subsidiaries and
to which FFI or any of the Subsidiaries may be subject (including, without
limitation, the Occupational Safety and Health Act of 1970, the Federal Deposit
Insurance Act, the Real Estate Settlement Procedures Act, the Home Mortgage
Disclosure Act of 1975, the Fair Housing Act, the Equal Credit Opportunity Act
and the Federal Reserve Act, each as amended, and any other state or federal
acts (including rules and regulations thereunder) regulating or otherwise
affecting employee health and safety or the environment), except where failure
to so comply would not, individually or in the aggregate, have a material
adverse effect on the business, operations, results of operations or financial
condition of FFI and the Subsidiaries, taken as a whole, or FFI's ability to
consummate the transactions contemplated hereby; and no claims have been filed
by any such governments or agencies against FFI or any of the Subsidiaries
alleging such a violation of any such law or regulation which have not been
resolved to the satisfaction of such governments or agencies. Each of FFI and
the Subsidiaries holds all of the permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of its business, except where failure to obtain such
authorizations would not, individually or in the aggregate, have a material
adverse effect on the business, operations, results of operations or financial
condition of FFI and the Subsidiaries, taken as whole, or the ability of FFI to
consummate the transactions contemplated hereby. Except as disclosed in Schedule
3.20, neither FFI nor any of the Subsidiaries is subject to any cease and desist
order, written agreement or memorandum of understanding with, or is a party to
any commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory agreement
letter from, or has adopted any board resolutions at the request of, federal or
state governmental authorities charged with the supervision or regulation of
banks or bank holding companies or engaged in the insurance of bank deposits
(collectively, the "Bank Regulators"), nor have any of FFI or any of the
Subsidiaries been advised by any Bank Regulator that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
3.21. ADMINISTRATION OF FIDUCIARY ACCOUNTS. Each Subsidiary has properly
administered, in all respects material and which could reasonably be expected to
be material to the business, operations, results of operations or financial
condition of FFI and the Subsidiaries, taken as a whole, all accounts for which
it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance
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with the terms of the governing documents and applicable state and federal law
and regulation and common law. Neither FFI, any Subsidiary, nor any director,
officer or employee of FFI or any Subsidiary has committed any breach of trust
with respect to any such fiduciary account which is material to or could
reasonably be expected to be material to the business, operations, results of
operations or financial condition of FFI and the Subsidiaries, taken as a whole,
and the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account in
all material respects.
3.22. PROSPECTUS/PROXY STATEMENT. At the time the Prospectus/Proxy
Statement is mailed to the shareholders of FFI in order to obtain approvals
referred to in Section 5.8(a) and at all times subsequent to such mailing up to
and including the times of such approvals, such Prospectus/Proxy Statement
(including any supplements thereto), with respect to all information set forth
therein relating to FFI (including the Subsidiaries) and its shareholders, FFI
Common Stock, this Agreement, the Merger and all other transactions contemplated
hereby, will (a) comply in all material respects with applicable provisions of
the 1933 Act and the 1934 Act, and (b) not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading.
3.23. REGULATORY APPROVALS. As of the date hereof, FFI is not aware of any
reason that the regulatory approvals specified in Section 5.1 would not be
obtained.
3.24. INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) Schedule 3.24 sets forth a true, correct and complete list of all
interest rate swaps, caps, floors and option agreements and other interest rate
risk management arrangements to which FFI or any of the Subsidiaries is a party
or by which any of their properties or assets may be bound. FFI has delivered or
made available to FBS true, correct and complete copies of all such interest
rate risk management agreements and arrangements.
(b) All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements to which FFI or any of the
Subsidiaries is a party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business and, to FFI's
knowledge, in accordance with prudent banking practice and applicable rules,
regulations and policies of the Bank Regulators and with counterparties believed
to be financially responsible at the time and are legal, valid and binding
obligations enforceable in accordance with their terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect. FFI and each of the Subsidiaries has duly
performed in all material respects all of its obligations thereunder to the
extent that such obligations to perform have accrued; and to FFI's knowledge,
there are no breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
3.25 RIGHTS AGREEMENT. The execution of this Agreement and the Stock
Option Agreement, the acquisition of FFI Common Stock pursuant to the Agreement
and the Stock Option Agreement and the consummation of the other transactions
contemplated hereby and thereby do not and will not result in FBS or any of its
existing or future affiliates or associates becoming an "Acquiring Person" (as
such term is defined in the Rights Agreement, dated as of December 19, 1994,
between State Street Bank & Trust Company and FFI (the "FFI Rights Agreement"))
under the FFI Rights Agreement, result in any Triggering Event (as such term is
defined in the FFI Rights Agreement) or enable or require the Rights (as such
term is defined in the FFI Rights Agreement) to become exercisable,
distributable or triggered.
3.26 ANTITAKEOVER PROVISIONS INAPPLICABLE. The provisions of Article 24 of
the Nebraska Revised Statutes do not and will not apply to this Agreement or the
Stock Option Agreement or the transactions contemplated thereby because the
required approval of FFI's Board of Directors with respect to such agreements
has been obtained prior to the execution of this Agreement and prior to the
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date of the Stock Option Agreement. FFI has taken all actions required to exempt
this Agreement and the Stock Option Agreement and the transactions contemplated
hereby and thereby from the provisions of Article X of the FFI Charter and any
state anti-takeover laws.
ARTICLE 4
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. CONDUCT OF BUSINESS OF FFI. From the date of this Agreement to the
Effective Date, unless FBS shall otherwise consent in writing, which consent
will not be unreasonably withheld, or as otherwise expressly contemplated or
permitted by other provisions of this Agreement, including this Section 4.1:
(a) Beginning with the third calendar quarter of 1995 and for each
succeeding calendar quarter thereafter prior to that calendar quarter in
which the Effective Date shall occur, FFI
(i) will not declare or pay any dividends or make any distributions
on shares of FFI Common Stock, except cash dividends which shall be equal
to either: (A) $.30 per share per quarter or (B) that amount per share
per quarter calculated by multiplying the amount paid by FBS on each
share of FBS Common Stock for such quarter times the Exchange Ratio; and
(ii) except as hereinbelow provided, will not declare any dividends
or distributions in any amount on FFI Common Stock in the quarter in
which the Effective Date shall occur and in which the shareholders of FFI
Common Stock are entitled to receive quarterly dividends on the shares of
FBS Common Stock into which the shares of FFI Common Stock have been
converted. It is the intent of this subparagraph (ii) to provide that the
holders of FFI Common Stock will receive, with respect to the quarter in
which the Effective Date occurs, either cash dividends on their shares of
FFI Common Stock with respect to such quarter or cash dividends with
respect to such quarter as the holders of shares of FBS Common Stock
received in exchange for the shares of FFI Common Stock, but will not
receive and will not become entitled to receive with respect to the same
calendar quarter both a cash dividend as shareholders of FFI and a cash
dividend as the holders of the shares of FBS Common Stock received in
exchange for the shares of FFI Common Stock. In the event that FFI does
not declare cash dividends on its FFI Common Stock in a particular
calendar quarter because of FFI's reasonable expectation that the
Effective Date would occur in said calendar quarter wherein the holders
of FFI Common Stock would have become entitled to receive cash dividends
with respect to such calendar quarter on the shares of FFI Common Stock,
and the Effective Date does not in fact occur effective in such calendar
quarter, then, as a result thereof, FFI shall be entitled to declare a
cash dividend (within the limitations of this Section 4.1) on said shares
of FFI Common Stock with respect to such calendar quarter as soon as
reasonably practicable.
(b) FFI will not issue, sell, grant any warrant, option, phantom stock
option, stock appreciation right or commitment of any kind for, or related
to, or acquire for value, any shares of its capital stock or otherwise
effect any change in connection with its equity capitalization, except as
set forth on Schedule 3.3 and except pursuant to the Stock Option Agreement.
(c) Except as otherwise set forth in or contemplated by this Agreement,
FFI will carry on its businesses in substantially the same manner as
heretofore, keep in full force and effect insurance comparable in amount and
scope of coverage to that now maintained by it and use its best efforts to
maintain and preserve its business organization intact.
(d) Neither FFI nor any Subsidiary will (i) enter into any new line of
business or incur or agree to incur any obligation or liability except
liabilities and obligations (including corporate debt issuances) incurred in
the ordinary course of business, except as may be directed by any regulatory
agency; (ii) except as may be directed by any regulatory agency, change its
or the
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Subsidiaries' lending, investment, liability management and other material
banking policies in any material respect; (iii) except in the ordinary
course of business and consistent with prior practice, grant any general or
uniform increase in the rates of pay of employees; (iv) establish any new
employee benefit plan or bonus plan or arrangement, or amend any existing
employee benefit or bonus plan or arrangement (except as required by law);
(v) incur or commit to any single or group of related capital expenditures
or commitment therefor with an aggregate market value in excess of $250,000
other than in the ordinary course of business (which will in no event
include the establishment of new branches and other facilities or any
capital expenditures for such purpose); or (vi) merge into, consolidate with
or permit any other corporation to be merged or consolidated with it or any
of its Subsidiaries or acquire outside of the ordinary course of business
part of or all the assets or stock of any other corporation or person.
(e) FFI will not change its or its Subsidiaries' methods of accounting
in effect at December 31, 1994, except as required by changes in generally
accepted accounting principles as concurred in by Ernst & Young LLP, or
change any of its methods of reporting income and deductions for Federal
income tax purposes from those employed in the preparation of FFI's Federal
income tax returns for the taxable years ending December 31, 1993 and 1994,
except as required by changes in law.
(f) FFI will promptly advise FBS in writing of all material corporate
actions taken by the directors and shareholders of FFI and furnish FBS with
copies of all monthly and other interim financial statements of FFI as they
become available.
(g) FFI, its Subsidiaries and their respective officers, directors and
employees will not contract for or acquire, at the expense of FFI or any of
its Subsidiaries, a policy or policies providing for insurance coverage for
directors, officers and/or employees of FFI and/or its Subsidiaries for any
period subsequent to the Effective Date for events occurring before or after
the Effective Date; provided, however, that FFI may renew, extend or replace
existing policies in the ordinary course consistent with past practices for
periods of not greater than one year.
(h) Neither FFI nor any of the Subsidiaries shall, directly or
indirectly, amend or propose to amend its Charter or Bylaws.
(i) Neither FFI nor any of the Subsidiaries shall sell, assign,
transfer, mortgage or pledge any of its assets with an aggregate market
value in excess of $200,000, except (x) in the ordinary course of business,
including REO, (y) liens and encumbrances for current property taxes not yet
due and payable and (z) liens and encumbrances which do not materially
affect the value of, or interfere with the past or future use or ability to
convey, the property subject thereto or affected thereby.
(j) Neither FFI nor any of the Subsidiaries shall enter into any
settlement or similar agreement involving payments of more than $250,000
with respect to any action, suit, proceeding, order or investigation or take
any other significant action with respect to the conduct of any action,
suit, proceeding, order or investigation to which FFI or any of the
Subsidiaries is a party or becomes a party after the date of this Agreement,
in each case without prior consultation with FBS.
(k) Neither FFI nor any of the Subsidiaries shall agree to do any of the
foregoing.
For purposes of this Agreement, the words "prior consultation" with respect to
any action means advance notice of such proposed action and a reasonable
opportunity to discuss such action in good faith prior to taking such action.
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4.2 CONDUCT OF BUSINESS OF FBS. From the date of this Agreement to the
Effective Date, unless FFI shall otherwise consent in writing, which consent
will not be unreasonably withheld or as otherwise expressly contemplated or
permitted by other provisions of this Agreement, including this Section 4.2:
(a) FBS will not adopt or implement any amendment to its Charter or any
plan or reorganization which would affect in any manner the terms and
provisions of the shares of FBS Common Stock or the rights of the holders of
such shares or reclassify the FBS Common Stock; provided that nothing in
this Section 4.2(a) shall be construed to prohibit FBS from amending its
Charter to increase the number of authorized shares of its capital stock.
(b) FBS will not, and will cause its subsidiaries not to, intentionally
make or agree to make any acquisition, or take any other action, that
materially adversely affects its ability to consummate the transactions
contemplated by this Agreement.
ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1. FILINGS AND APPROVALS. Each party will use all reasonable efforts and
will cooperate with the other party in the preparation and filing, within 45
days of the date of this Agreement, of all applications or other documents
required to obtain regulatory approvals and consents from the Board of Governors
of the Federal Reserve System (the "FRB"), the Nebraska Department of Banking
and Finance, the Superintendent of Banking of Iowa, the Banking Commissioner of
Wyoming and any other applicable regulatory authorities (including any
applications with the Office of the Comptroller of the Currency and the Office
of Thrift Supervision deemed by FBS to be necessary to allow it to consolidate
the operations of the Banking Subsidiaries with the operations of FBS's bank and
thrift subsidiaries) and provide copies of such applications, filings and
related correspondence to the other party. Prior to filing each application,
registration statement or other document with the applicable regulatory
authority, each party will provide the other party with an opportunity to review
and comment on the nonconfidential portions of each such application,
registration statement or other document. Each party will use all reasonable
efforts and will cooperate with the other parties in taking any other actions
necessary to obtain such regulatory or other approvals and consents, including
participating in any required hearings or proceedings. Subject to the terms and
conditions herein provided, each party will use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
5.2. CERTAIN LOANS AND RELATED MATTERS. FFI will continue to prepare,
consistent with past practices, and will furnish to FBS, a complete and accurate
list as of the end of each calendar month after June 1995 of (a) all of the
Banking Subsidiaries' periodic internal credit quality reports prepared during
such calendar month, (b) all loans of any Banking Subsidiary classified as
non-accrual, as restructured, as 90 days past due, as still accruing and
doubtful of collection or any comparable classification, (c) all REO, including
in-substance foreclosures and real estate in judgment, (d) any current
repurchase obligations of any Banking Subsidiary with respect to any loans, loan
participations or state or municipal obligations or revenue bonds and (e) any
standby letters of credit issued by any Banking Subsidiary.
5.3. EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
5.4. NO NEGOTIATIONS, ETC. FFI will not, and will cause the Subsidiaries
and FFI's and the Subsidiaries' respective officers, directors, employees,
agents and affiliates, not to, directly or indirectly, solicit, authorize,
initiate or encourage submission of, any proposal, offer, tender offer or
exchange offer from any person or entity (including any of its or their officers
or employees) relating to any liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or
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a material portion of the assets or deposits of, or any equity interest in, FFI
or any of the Subsidiaries or other similar transaction or business combination
involving FFI or any of the Subsidiaries, or, unless FFI shall have determined,
after receipt of a written opinion of counsel to FFI (a copy of which opinion
shall be delivered to FBS), that the Board of Directors of FFI has a fiduciary
duty to do so, (a) participate in any negotiations in connection with or in
furtherance of any of the foregoing or (b) permit any person other than FBS and
its representatives to have any access to the facilities of, or furnish to any
person other than FBS and its representatives any non-public information with
respect to, FFI or any of the Subsidiaries in connection with or in furtherance
of any of the foregoing. FFI shall promptly notify FBS if any such proposal or
offer, or any inquiry from or contact with any person with respect thereto, is
made, and shall promptly provide FBS with such information regarding such
proposal, offer, inquiry or contact as FBS may request.
5.5. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other party of (a) the occurrence or failure to occur of any event or the
discovery of any information, which occurrence, failure or discovery would be
likely to cause any representation or warranty on its part contained in this
Agreement to be materially untrue or inaccurate when made at the Effective Date
or at any time prior to the Effective Date and (b) any material failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
5.6. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) FFI shall permit and shall cause each of the Subsidiaries to permit FBS
full access on reasonable notice and at reasonable hours to its properties and
shall disclose and make available (together with the right to copy) to FBS and
to the internal auditors, loan review officers, employees, attorneys,
accountants and other representatives of FBS all books, papers and records
relating to the assets, stock, properties, operations, obligations and
liabilities of FFI and the Subsidiaries, including, without limitation, all
books of account (including, without limitation, the general ledger), tax
records, minute books of directors' and shareholders' meetings, organizational
documents, bylaws, contracts and agreements, filings with any regulatory
authority, accountants' work papers, litigation files (including, without
limitation, legal research memoranda), documents relating to assets and title
thereto (including, without limitation, abstracts, title insurance policies,
surveys, environmental reports, opinions of title and other information relating
to the real and personal property), plans affecting employees, securities
transfer records and shareholder lists, and any books, papers and records
relating to other assets, business activities or prospects in which FBS may have
a reasonable interest, including, without limitation, its interest in planning
for integration and transition with respect to the business of FFI and the
Subsidiaries; provided, however, that the foregoing rights granted to FBS shall,
whether or not and regardless of the extent to which the same are exercised, in
no way affect the nature or scope of the representations, warranties and
covenants of FFI set forth herein. In addition, FFI shall cause each of the
Subsidiaries to instruct its officers, employees, counsel and accountants to be
available for, and respond to any questions of, such FBS representatives at
reasonable hours and with reasonable notice by FBS to such individuals, and to
cooperate fully with FBS in planning for the integration of the business of FFI
and the Subsidiaries with the business of FBS and its subsidiaries.
(b) FBS shall permit reasonable access to its properties and shall disclose
and make available (together with the right to copy) to FFI and to its
representatives FBS's financial books and records, minute books of directors'
and shareholders' meetings, organizational documents, bylaws, and filings with
any regulatory authority; provided, however, that the foregoing rights granted
to FFI shall, whether or not and regardless of the extent to which the same are
exercised, in no way affect the nature or scope of the representations,
warranties and covenants of FBS set forth herein. In addition, FBS shall
instruct its officers, employees, counsel and accountants to be available for,
and respond to reasonable questions of, representatives of FFI at reasonable
hours and with reasonable notice by FFI to such individuals.
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(c) All information furnished by FFI or FBS pursuant hereto shall be treated
as the sole property of the party furnishing the information until the Effective
Date, and, if the Effective Date shall not occur, the receiving party shall
return to the party which furnished such information, or destroy, all documents
or other materials (including copies thereof) containing, reflecting or
referring to such information. In addition, the receiving party shall keep
confidential all such information and shall not directly or indirectly use such
information for any competitive or other commercial purpose. In the event that
this Agreement shall terminate, neither party shall disclose, except as required
by law or pursuant to the request of an administrative agency or other
regulatory body, the basis or reason for such termination, without the consent
of the other party. The obligation to keep such information confidential shall
not apply to (i) any information which (A) was already in the receiving party's
possession prior to the disclosure thereof to the receiving party by the party
furnishing the information, (B) was then generally known to the public, (C)
became known to the public through no fault of the receiving party or its
representatives or (D) was disclosed to the receiving party by a third party not
bound by an obligation of confidentiality or (ii) disclosures required by law,
governmental or regulatory authority.
5.7. FILING OF TAX RETURNS AND ADJUSTMENTS.
(a) FFI, on behalf of FFI and each of the Subsidiaries, shall file (or cause
to be filed) at their own expense, on or prior to the due date, all Tax returns,
including all Plan returns and reports, for all Tax periods ending on or before
the Effective Date where the due date for such returns or reports (taking into
account valid extensions of the respective due dates) falls on or before the
Effective Date; provided, however, that neither FFI nor any of the Subsidiaries
shall file any such Tax returns, or other returns, elections or information
statements with respect to any liabilities for Taxes (other than federal, state
or local sales, use, withholding or employment tax returns or statements), or
consent to any adjustment or otherwise compromise or settle any matters with
respect to Taxes, without prior consultation with FBS; provided, further, that
neither FFI nor any of the Subsidiaries shall make any election or take any
other discretionary position with respect to Taxes, in a manner inconsistent
with past practices, without the prior written approval of FBS, which approval
shall not be unreasonably withheld. In the event the granting or withholding of
such approval by FBS results in additional Taxes owing for any Tax period ending
on or before the Effective Date, liability for such additional Taxes shall not
cause any representation of FFI relating to Taxes to be untrue. FFI shall
provide FBS with a copy of appropriate workpapers, schedules, drafts and final
copies of each federal and state income Tax return or election of FFI and each
of the Subsidiaries (including returns of all Plans) at least ten days before
filing such return or election and shall reasonably cooperate with any request
by FBS in connection therewith.
(b) FBS, in its sole and absolute discretion, will file (or cause to be
filed) all Tax returns of FFI and each of the Subsidiaries due after the
Effective Date. After the Effective Date, FBS, in its sole and absolute
discretion and to the extent permitted by law, shall have the right to amend,
modify or otherwise change all Tax returns of FFI and each of the Subsidiaries
for all Tax periods.
5.8. REGISTRATION STATEMENT.
(a) For the purposes (i) of holding a meeting of the shareholders of FFI to
approve this Agreement and the Merger and (ii) of registering the FBS Common
Stock to be issued to holders of FFI Common Stock in connection with the Merger
with the SEC and with applicable state securities authorities, the parties
hereto shall cooperate in the preparation of an appropriate registration
statement (such registration statement, together with all and any amendments and
supplements thereto, being herein referred to as the "Registration Statement"),
which shall include a prospectus/ proxy statement satisfying all applicable
requirements of the 1933 Act, the 1934 Act, applicable state securities laws and
the rules and regulations thereunder (such prospectus/proxy statement, together
with any and all amendments or supplements thereto, being herein referred to as
the "Prospectus/ Proxy Statement").
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(b) FBS shall furnish such information concerning FBS as is necessary in
order to cause the Prospectus/Proxy Statement, insofar as it relates to FBS, to
be prepared in accordance with Section 5.8(a). FBS agrees promptly to advise FFI
if at any time prior to the FFI shareholders' meeting any information provided
by FBS in the Prospectus/Proxy Statement becomes incorrect or incomplete in any
material respect, and to provide the information needed to correct such
inaccuracy or omission.
(c) FFI shall furnish FBS with such information concerning FFI and the
Subsidiaries as is necessary in order to cause the Prospectus/Proxy Statement,
insofar as it relates to FFI and the Subsidiaries, to be prepared in accordance
with Section 5.8(a). FFI agrees promptly to advise FBS if at any time prior to
the FFI shareholders' meeting any information provided by FFI in the Prospectus/
Proxy Statement becomes incorrect or incomplete in any material respect, and to
provide FBS with the information needed to correct such inaccuracy or omission.
(d) FBS will use reasonable efforts to file the Registration Statement with
the SEC and applicable state securities agencies within 45 days of the date of
this Agreement. FBS shall use reasonable efforts to cause the Registration
Statement to become effective under the 1933 Act and applicable state securities
laws at the earliest practicable date. FFI authorizes FBS to utilize in the
Registration Statement the information concerning FFI and the Subsidiaries
provided to FBS for the purpose of inclusion in the Prospectus/Proxy Statement.
FFI shall have the right to review and comment on the form of proxy statement
included in the Registration Statement. FBS shall advise FFI promptly when the
Registration Statement has become effective and of any supplements or amendments
thereto, and FBS shall furnish FFI with copies of all such documents. Prior to
the Effective Date or the termination of this Agreement, each party shall
consult with the other with respect to any material (other than the
Prospectus/Proxy Statement) that might constitute a "prospectus" relating to the
Merger within the meaning of the 1933 Act.
(e) FBS shall use reasonable efforts to cause to be delivered to FFI a
letter relating to the Registration Statement from Ernst & Young LLP, FBS's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to FFI, in
form and substance reasonably satisfactory to FFI and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(f) FFI shall use reasonable efforts to cause to be delivered to FBS a
letter relating to the Registration Statement from Arthur Andersen LLP, FFI's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to FBS, in
form and substance reasonably satisfactory to FBS and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(g) FBS shall bear the costs of all SEC filing fees with respect to the
Registration Statement and the costs of qualifying the shares of FBS Common
Stock under Blue Sky Laws to the extent necessary. FFI shall bear all printing
and mailing costs in connection with the preparation and mailing of the
Prospectus/Proxy Statement to FFI shareholders. FBS and FFI shall each bear
their own legal and accounting expenses in connection with the Registration
Statement.
5.9. AFFILIATE LETTERS. FFI shall use its best efforts to obtain and
deliver to FBS at least 31 days prior to the Effective Date a signed
representation letter substantially in the form of Exhibit C hereto from each
shareholder of FFI who may reasonably be deemed an "affiliate" of FFI within the
meaning of such term as used in Rule 145 under the 1933 Act. FBS may place
appropriate legends on the stock certificates of affiliates of FFI.
5.10. ESTABLISHMENT OF ACCRUALS. If requested by FBS, on the business day
immediately prior to the Effective Date, FFI shall, consistent with generally
accepted accounting principles, establish such additional accruals and reserves
as may be necessary to conform FFI's accounting and credit loss reserve
practices and methods to those of FBS (as such practices and methods are to be
applied to FFI
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or its Subsidiaries from and after the Effective Date) and reflect FBS's plans
with respect to the conduct of FFI's business following the Merger and to
provide for the costs and expenses relating to the consummation by FFI of the
transactions contemplated by this Agreement; provided, however, that FFI shall
not be required to take such action (A) if such action is prohibited by
applicable law or (B) unless FBS informs FFI that it has no reason to believe
that all conditions to FBS's obligations to consummate the transactions
contemplated by this Agreement set forth in Article 6 hereof will not be
satisfied or waived. The establishment of such accruals and reserves shall not,
in and of itself, constitute a breach of any representation or warranty of FFI
contained in this Agreement or constitute a material adverse change in the
business, operations, results of operations or financial condition of FFI and
the Subsidiaries, taken as a whole.
5.11. EMPLOYEE MATTERS.
(a) GENERAL. Subject to the following agreements, after the Effective Date
FBS shall have the right to continue, amend or terminate any of the Plans (as
defined in Section 3.18) in accordance with the terms thereof and subject to any
limitation arising under applicable law. Until FBS shall take such action,
however, such Plans shall continue in force for the benefit of present and
former employees of FFI or the Subsidiaries who have any present or future
entitlement to benefits under any of the Plans ("FFI Employees").
(b) FFI 401(K) PLAN. After the Effective Date, FBS will terminate the
accrual of benefits under the FFI 401(k) plans listed on Schedule 3.18(b)(i)(B)
and sponsored by FFI or any Subsidiary not more than two years after the
Effective Date. Benefits accruing between the Effective Date and the date on
which the accrual of benefits is terminated shall be fully and immediately
vested as of that time. Distributions shall not be permitted from the FFI 401(k)
plans merely because of the discontinuance of accruals or the transfer of assets
and liabilities.
(c) FBS PLANS.
(i) FBS CAP (401(K)) PLAN. After the Effective Date, FBS shall take
such actions as may be necessary to cause eligible FFI Employees to become
qualified to participate in the FBS Capital Accumulation Plan ("CAP")
concurrent with the date that FBS causes accruals to cease under the FFI
401(k) plan. All service with FFI and any of the Subsidiaries (whether
before or after the Effective Date) since an individual's most recent date
of hire shall be recognized under the CAP for eligibility and vesting
purposes but shall not be recognized for contribution and allocation
purposes.
(ii) WELFARE AND OTHER BENEFITS. Following the Effective Date, at such
time as FBS shall determine, FBS shall use its best efforts to cause FFI
Employees to be covered by the welfare and other generally applicable
benefit plans and practices of FBS; and, pending such coverage, FBS will use
its best efforts to provide welfare and other generally applicable benefit
plans that, taken as a whole, provide coverage substantially similar to the
then current plans and practices of FBS or those of FFI immediately prior to
the Effective Date; provided, that during any such interim period, FBS shall
not be obligated to continue any particular welfare or other benefit plans
or practices of FFI or any Subsidiary, as the case may be, applicable to FFI
Employees.
(d) VESTED RIGHTS. FBS will honor the obligations of FFI with respect to
vested rights under Plans and agreements of FFI relating to FFI Employees in
accordance with the terms of such vested rights and subject to the provisions of
Section 5.11(a).
(e) LIMITATION ON ENFORCEMENT. This Section 5.11 is an agreement solely
between FFI and the Subsidiaries and FBS. Nothing in this Section 5.11, whether
express or implied, confers upon any employee of FFI, any of the Subsidiaries or
FBS or any other person, any rights or remedies, including, but not limited to:
(i) any right to employment or recall, (ii) any right to continued employment
for any specified period, or (iii) any right to claim any particular
compensation, benefit or aggregate of benefits, of any kind or nature
whatsoever, as a result of this Section 5.11.
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5.12. TAX TREATMENT. Neither FFI nor any of the Subsidiaries nor FBS shall
take any action which would disqualify the Merger as a "reorganization" that
would be tax free to the shareholders of FFI pursuant to Section 368(a) of the
Code.
5.13. STOCK OPTIONS.
(a) STOCK OPTION PLANS. On the Effective Date, and to the extent permitted
by applicable plans and agreements, each outstanding option to purchase shares
of FFI Common Stock (a "Stock Option") issued pursuant to the stock option plans
listed on Schedule 3.3 (collectively, the "FFI Stock Option Plans") shall be
assumed by FBS and shall thereafter be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such option,
the same number of shares of FBS Common Stock as the holder of such option would
have been entitled to receive pursuant to the Merger had such holder exercised
such option in full immediately prior to the Effective Date, at a price per
share equal to (x) the aggregate exercise price for the shares of FFI Common
Stock otherwise purchasable pursuant to such option divided by (y) the number of
full shares of FBS Common Stock deemed purchasable pursuant to such option;
provided, however, that in the case of any option to which Section 421 of the
Code applies by reason of its qualification under Section 422 of the Code
("incentive stock options"), the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of such options
shall be determined in order to comply with Section 424(a) of the Code.
(b) REGISTRATION OF STOCK OPTION PLANS. FBS shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of FBS
Common Stock for delivery upon exercise of Stock Options assumed by it in
accordance with this Section 5.13. As soon as practicable after the Effective
Date, FBS shall file a registration statement on Form S-3 or Form S-8, as the
case may be (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of FBS Common Stock subject to such
options and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
5.14. INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Date, FBS shall indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Date, an officer, director or
employee of FFI or any of the Subsidiaries (the "Indemnified Parties") against
all losses, claims, damages, costs, expenses (including attorney's fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of FBS, which consent shall
not be unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of FFI or any of the Subsidiaries if such Claim
pertains to any matter or fact arising, existing or occurring prior to the
Effective Date (including, without limitation, the Merger and other transactions
contemplated by this Agreement or the Stock Option Agreement), regardless of
whether such Claim is asserted or claimed prior to, at or after the Effective
Date (the "Indemnified Liabilities") to the full extent permitted under
applicable Nebraska or federal law as of the date hereof or as amended prior to
the Effective Date and under FFI's Charter and Bylaws as in effect on the date
hereof (and FBS shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent permitted
by law and under such Charter or Bylaws, upon receipt of any undertaking
required by such Charter, Bylaws or applicable law). Any Indemnified Party
wishing to claim indemnification under this Section 5.14(a), upon learning of
any Claim, shall notify FBS (but the failure so to notify FBS shall not relieve
it from any liability which FBS may have under this Section 5.14(a) except to
the extent such failure prejudices FBS) and shall deliver to FBS any undertaking
required by such Charter, Bylaws or applicable law. FBS shall use its best
efforts to assure, to the extent permitted under applicable law, that all
limitations of liability existing in favor of the Indemnified Parties as
provided in the FFI Charter and Bylaws, as in effect as of the date hereof, with
respect to claims or liabilities
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arising from facts or events existing or occurring prior to the Effective Date
(including, without limitation, the transactions contemplated by this
Agreement), shall survive the Merger. The obligations of FBS described in this
Section 5.14(a) shall continue in full force and effect, without any amendment
thereto, for a period of not less than six years from the Effective Date;
provided, however, that all rights to indemnification in respect of any Claim
asserted or made within such period shall continue until the final disposition
of such Claim.
(b) From and after the Effective Date, the directors, officers and employees
of FFI and the Subsidiaries who become directors, officers or employees of FBS
or any of its subsidiaries, except for the indemnification rights set forth in
Section 5.14(a) or as otherwise provided by applicable law, shall have
indemnification rights with prospective application only. The prospective
indemnification rights shall consist of such rights to which directors, officers
and employees of FBS are entitled under the provisions of the Charter or similar
governing documents of FBS and its subsidiaries, as in effect from time to time
after the Effective Date, as applicable, and provisions of applicable law as in
effect from time to time after the Effective Date.
(c) The obligations of FBS provided under Sections 5.14(a) and 5.14(b) are
intended to benefit, and be enforceable against FBS directly by, the Indemnified
Parties, and shall be binding on all respective successors of FBS.
(d) For a period of five years after the Effective Date, FBS shall use its
best efforts to provide that portion of directors' and officers' liability
insurance that serves to reimburse officers and directors of FFI or any of the
Subsidiaries (as opposed to FBS or FFI) with respect to claims against such
officers and directors arising from facts or events which occurred before the
Effective Date of at least the same coverage and amounts, and containing terms
and conditions no less advantageous, as that coverage currently provided by FFI;
provided, however, that the annual premiums for such coverage will not exceed
200% of the annual premiums currently paid by FFI for such coverage; provided,
further, that officers and directors of FFI or any Subsidiary may be required to
make application and provide customary representations and warranties to FBS's
insurance carrier for the purpose of obtaining such insurance; and provided,
further, that such coverage will have a single aggregate for such three-year
period in an amount not less than the annual aggregate of such coverage
currently provided by FFI.
5.15. FBS SEC REPORTS. FBS shall continue to file all reports with the SEC
necessary to permit the shareholders of FFI who are "affiliates" of FFI (within
the meaning of such term as used in Rule 145 under the 1933 Act) to sell the FBS
Common Stock received by them in connection with the Merger pursuant to Rules
144 and 145(d) under the 1933 Act if they would otherwise be so permitted. After
the Effective Date, FBS will file with the SEC reports and other materials
required by the federal securities laws on a timely basis.
5.16. SEC REPORTS. Each of FBS and FFI agree to provide to the other party
copies of all reports and other documents filed with the SEC by it between the
date hereof and the Effective Date within five days after the date such reports
or other documents are filed with the SEC.
5.17. STOCK EXCHANGE LISTING. FBS shall use its best efforts to list on
the New York Stock Exchange, subject to official notice of issuance, the shares
of FBS Common Stock to be issued to the holders of FFI Common Stock in the
Merger.
5.18. SHAREHOLDER APPROVAL. FFI shall call a meeting of its shareholders
for the purpose of voting upon this Agreement and the Merger, and shall schedule
such meeting based on consultation with FBS. The Board of Directors of FFI shall
recommend approval of this Agreement and the Merger, and use its best efforts
(including, without limitation, soliciting proxies for such approvals) to obtain
such shareholder approval, unless the Board of Directors of FFI determines,
after receipt of a written opinion of counsel to FFI (a copy of which shall be
delivered to FBS), that recommending such approval or using its best efforts to
obtain such shareholder approval would be a breach of its fiduciary duties.
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5.19. CONVERSION OF CUSTOMER DATA FILES AND RECORDS. As of the Effective
Date, FFI shall use reasonable efforts to cause its existing customer data files
and records to be in such format as is necessary to allow the then existing FBS
loan and deposit application systems to process FFI's customer data. FBS agrees
to cooperate with FFI to exchange information and data regarding the respective
procedures, records and systems with the objective of assisting FFI in
developing and implementing such a conversion of data files and records.
Customer data files and records shall include all customer information,
accounting information, statement records and data regularly maintained by FFI
on electronic information systems or electronic media (including, without
limitation, data relating to all deposit and loan customers, ACH and ATM
transactions, cash management and collection services, wire transfers, credit
card processing systems and other related or similar systems). In the event that
this Agreement is terminated pursuant to the terms of Section 7.1 hereof, FBS
shall promptly reimburse FFI for its expenses directly relating to its effort to
comply with the provisions of this Section 5.19.
5.20. EMPLOYMENT AGREEMENT. As of the Effective Date, FBS shall expressly
assume and agree to perform the Employment Agreement dated August 4, 1995
between FFI and David A. Rismiller as in effect on the date of this Agreement or
as amended with the prior written consent of FBS.
5.21. PRE-ACQUISITION INVESTIGATION. FBS will initiate a pre-acquisition
review of the books, records and facilities of FFI and the Subsidiaries and will
complete such investigation as soon as reasonably possible, but in any event,
not later than September 5, 1995. FFI will use its best efforts to provide FBS
as soon as reasonably practicable but in any event not later than August 14,
1995, the information requested on the due diligence request list provided prior
to the date of this Agreement by FBS to FFI in connection with such review. FBS
shall advise FFI at the conclusion of such pre-acquisition investigation of all
matters then known to FBS which involve credit risk, litigation, loss
contingencies or financial exposures, interest rate risk, operations or data
processing exposures or environmental exposures and, in the reasonable judgment
of the Board of Directors of FBS, are of such significance as to be reasonably
likely to materially and adversely affect the financial condition or the results
of operations of FFI and the Subsidiaries, taken as a whole. FBS shall have the
right to terminate this Agreement set forth in Section 7.1(g) hereof
notwithstanding the fact that such matters may have been disclosed in the
Schedules to this Agreement. The provisions of this Section 5.21 are in addition
to the rights of FBS pursuant to Section 5.6 hereof.
5.22. DISCLOSURE SCHEDULES. FFI will deliver to FBS all Schedules referred
to in the representations and warranties contained in Article 3 of this
Agreement containing exceptions to such representations and warranties and all
documents required to be delivered to FBS by FFI pursuant to such Article 3
(other than those required in Sections 3.3 and 3.8, and the Charter and Bylaws
of FFI and FFI's Annual Report on Form 10-K for the year ended December 31,
1994, which have been delivered prior to the execution of this Agreement) as
soon as practicable but in any event no later than August 14, 1995. Such
Schedules shall in each case describe the nature of each exception in reasonable
detail, and in a form reasonably acceptable to FBS. Such Schedules shall be
deemed to speak as of the date of delivery thereof to FBS and shall be true and
correct as of such date. Any document described or referred to in such Schedules
shall be delivered to FBS by FFI within two days after a request therefor by
FBS, which request shall be made no later than two days following receipt of
such Schedules.
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ARTICLE 6
CONDITIONS
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) REGULATORY APPROVAL. Regulatory approval for the consummation of
the transactions contemplated hereby shall have been obtained from the FRB,
the Nebraska Department of Banking and Finance, the Superintendent of
Banking of Iowa, the Banking Commissioner of Wyoming and any other
governmental authority from whom approval is required, the applicable
waiting period, if any, under the Bank Holding Company Act shall have
expired or been terminated, and all other statutory or regulatory waiting
periods shall have lapsed. None of such approvals shall contain any
conditions or restrictions, except as set forth on Schedule 6.1, that FBS
reasonably believes will materially restrict or limit the business or
activities of FBS or FFI and the Subsidiaries, taken as a whole, or have a
material adverse effect on, or would be reasonably likely to have a material
adverse effect on, the business, operations, results of operations or
financial condition of FBS and its subsidiaries, taken as a whole, on the
one hand, or FFI and the Subsidiaries, taken as a whole, on the other hand.
(b) NO INJUNCTION. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain in
effect which would impair the consummation of the transactions contemplated
hereby.
(c) NO TERMINATION. No party hereto shall have terminated this
Agreement as permitted herein.
(d) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall not be subject to a stop order of the SEC, and,
if the offer and sale of FBS Common Stock in the Merger pursuant to this
Agreement is required to be registered under the securities laws of any
state, the Registration Statement shall not be subject to a stop order of
securities commission in such state.
(e) FEDERAL TAX OPINION. An opinion of Wachtell, Lipton, Rosen & Katz
shall have been obtained with respect to the Merger, based on customary
reliance and subject to customary qualifications, to the effect that for
federal income tax purposes:
(i) The Merger will qualify as a "reorganization" under Section
368(a) of the Code;
(ii) No gain or loss will be recognized by any FFI shareholder
(except in connection with the receipt of cash) upon the exchange of FFI
Common Stock for FBS Common Stock in the Merger;
(iii) The basis of the FBS Common Stock received by a FFI shareholder
who exchanges FFI Common Stock for FBS Common Stock will be the same as
the basis of the FFI Common Stock surrendered in exchange therefor
(subject to any adjustments required as the result of receipt of cash in
lieu of a fractional share of FBS Common Stock);
(iv) The holding period of the FBS Common Stock received by a FFI
shareholder receiving FBS Common Stock will include the period during
which the FFI Common Stock surrendered in exchange therefor was held
(provided that the FFI Common Stock of such FFI shareholder was held as a
capital asset at the Effective Date); and
(v) Cash received by a FFI shareholder in lieu of a fractional share
interest of FBS Common Stock will be treated as having been received as a
distribution in full payment in
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exchange for the fractional share interest of FBS Common Stock which the
FFI shareholder would otherwise be entitled to receive, and will qualify
as capital gain or loss (assuming the FFI Common Stock was a capital
asset in his hands at the Effective Date).
Such opinion shall be delivered on and dated as of the Effective Date
and on and as of such earlier date as may be required by the SEC in
connection with the Registration Statement.
(f) The FBS Common Stock to be issued to holders of FFI Common Stock in
the Merger shall have been approved for listing on the NYSE on official
notice of issuance.
6.2. ADDITIONAL CONDITIONS TO OBLIGATION OF FFI. The obligation of FFI to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties
of FBS set forth in Article 2 shall have been true and correct as of the
date hereof, and shall be true and correct as of the Effective Date as if
made at and as of the Effective Date, except where the failure to be true
and correct would not have, or would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
operations, results of operations or financial condition of FBS and its
subsidiaries, taken as a whole; and FBS shall in all material respects have
performed each obligation and agreement and complied with each covenant to
be performed and complied with by it hereunder at or prior to the Effective
Date.
(b) OFFICER'S CERTIFICATE. FBS shall have furnished to FFI a
certificate of the Chief Financial Officer of FBS, dated as of the Effective
Date, in which such officer shall certify that he has no reason to believe
that the conditions set forth in Section 6.2(a) have not been fulfilled.
(c) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been approved by the affirmative vote of the holders of the percentage of
FFI capital stock required for such approval under the provisions of FFI's
Charter and Bylaws and the NBCA.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
has been no material adverse change in, and no event, occurrence or
development in the business of FBS or its subsidiaries that, taken together
with other events, occurrences and developments with respect to such
business, would have or would reasonably be expected to have a material
adverse effect on, the business, operations, results of operations or
financial condition of FBS and its subsidiaries, taken as a whole.
(e) FBS RIGHTS AGREEMENT. No event shall have occurred resulting in
the Rights (as defined in the FBS Rights Agreement) being distributed or
becoming exercisable or triggered.
6.3. ADDITIONAL CONDITIONS TO OBLIGATION OF FBS. The obligation of FBS to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement is also subject to the following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties
of FFI in this Agreement shall have been true and correct as of the date
hereof, and such representations and warranties shall be true and correct as
of the Effective Date as if made at and as of the Effective Date, except
where the failure to be true and correct would not have, or would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, operations, results of operations or
financial condition of FFI and the Subsidiaries taken as a whole; and FFI
shall in all material respects have performed each obligation and agreement
and complied with each covenant to be performed and complied with by it
hereunder at or prior to the Effective Date.
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(b) OFFICERS' CERTIFICATE OF FFI. FFI shall have furnished to FBS a
certificate of the Chief Executive Officer of FFI, dated as of the Effective
Date, in which such officer shall certify that such officer has no reason to
believe that the conditions set forth in Section 6.3(a) have not been
fulfilled.
(c) AFFILIATE LETTERS. FFI shall have delivered to FBS the letters
required to be delivered pursuant to Section 5.9.
(d) GOVERNMENTAL ACTION. There shall not be any action taken, or any
statute, rule, regulation, judgment, order (other than an order issued in
connection with the regulatory approvals described in Section 6.1) or
injunction proposed, enacted, entered, enforced, promulgated, issued or
deemed applicable to the transactions contemplated hereby by any federal,
state or other court, government or governmental authority or agency, which
would reasonably be expected to, directly or indirectly, (i) challenge or
seek to make illegal, or to delay or otherwise directly or indirectly to
restrain or prohibit, the consummation of the transactions contemplated
hereby or seek to obtain material damages in connection with the
transactions contemplated hereby, (ii) seek to prohibit direct or indirect
ownership or operation by FBS of all or a material portion of the business
or assets of FFI or any of the Subsidiaries or of FBS or any of its
subsidiaries, or to compel FBS or any of its subsidiaries or FFI or any of
the Subsidiaries to dispose of or to hold separately all or a material
portion of the business or assets of FBS or any of its subsidiaries or of
FFI and the Subsidiaries, taken as a whole, as a result of the transactions
contemplated hereby, or (iii) seek to require direct or indirect divestiture
by FBS of any material portion of its business or assets or of the business
or assets of FFI and the Subsidiaries, taken as a whole.
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
has been no material adverse change in, and no event, occurrence or
development in the business of FFI or the Subsidiaries that, taken together
with other events, occurrences and developments with respect to such
business, would have or would reasonably be expected to have a material
adverse effect on, the business, operations, results of operations or
financial condition of FFI and the Subsidiaries, taken as a whole.
(f) FFI RIGHTS AGREEMENT. No event shall have occurred resulting in
the Rights (as defined in the FFI Rights Agreement) being distributed or
becoming exercisable or triggered.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION. This Agreement may be terminated prior to the Effective
Date:
(a) by mutual consent of FBS and FFI;
(b) by either FBS or FFI, if any of the conditions to such party's
obligation to consummate the transactions contemplated in this Agreement
shall have become impossible to satisfy;
(c) by either FBS or FFI, if this Agreement and the Merger are not duly
approved by the shareholders of FFI at a meeting of shareholders (or any
adjournment thereof) duly called and held for such purpose;
(d) by FBS or FFI if the Effective Date is not on or before March 31,
1996 (unless the failure to consummate the Merger by such date shall be due
to the action or failure to act of the party seeking to terminate this
Agreement in breach of such party's obligations under this Agreement);
(e) by FBS if, after the date hereof, the Board of Directors of FFI
shall have withdrawn, modified or changed its recommendation of this
Agreement or the Merger;
(f) by FBS if after the date hereof, there shall have occurred a
"Subsequent Triggering Event" as defined in the Stock Option Agreement;
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(g) by FBS in the event that the pre-acquisition investigation and
review described in Section 5.21 of this Agreement discloses matters that
involve credit risk, litigation loss contingencies or financial exposures,
interest rate risk, operations or data processing exposures or environmental
exposures and that, in the reasonable judgment of the Board of Directors of
FBS, are of such significance as to materially and adversely affect, or be
reasonably likely to materially and adversely affect, the reasonable
expected financial or business benefits to FBS of the transactions
contemplated by this Agreement; or
(h) by FFI if there shall have occurred, since the date of this
Agreement, a Significant Decline (as defined below) in the Average Closing
Price (as defined below) of FBS Common Stock as compared to the price of
$43.0417 (the "Conversion Price"). The "Average Closing Price" of FBS Common
Stock shall mean the average of the closing price of FBS Common Stock as
reported on the NYSE for the 20 consecutive trading days ending on the date
the FRB issues an order approving the Merger (the "Final Calculation
Period"). A "Significant Decline" shall be deemed to have occurred if (i)
the FBS Average Closing Price is less than 80% of the Conversion Price and
(ii) the number obtained by dividing the FBS Average Closing Price by the
Conversion Price is less than the number obtained by dividing the average of
the closing prices of the Morgan Stanley 35-Bank Regional Peer Group during
the Final Calculation Period by the average of the closing prices of the
Morgan Stanley 35-Bank Regional Bank Peer Group for the 20 consecutive
trading days ending on the day prior to the date hereof and subtracting .20
from the quotient.
(i) by FBS if on the date following the execution and delivery of this
Agreement, FFI does not execute and deliver the Stock Option Agreement.
(j) by FBS if, within three business days of receipt of the Schedules
and documents required to be delivered pursuant to Section 5.22, the Board
of Directors of FBS determines in its reasonable judgment that such
Schedules or documents disclose matters that are of such significance as to
materially and adversely affect, or be reasonably likely to materially and
adversely affect, the reasonable expected financial or business benefits to
FBS of the transactions contemplated by this Agreement.
Any party desiring to terminate this Agreement shall give written notice of such
termination and the reasons therefor to the other party. Termination pursuant to
Section 7.1(g) shall only be effective if written notice thereof is given not
more than 21 days after the date FBS receives all of the information on the due
diligence list referenced in Section 5.21.
7.2. EFFECT OF TERMINATION. If this Agreement is terminated as permitted
by Section 7.1, such termination shall be without liability or obligation of any
party (or any shareholder, officer, employee, agent, consultant or
representative of such party) to any other party to this Agreement, except as
provided in Section 8.6 and except that neither party to this Agreement shall be
released from any liabilities or damages arising out of its willful and material
breach of any provision of this Agreement.
7.3. AMENDMENT. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
7.4. WAIVER. At any time prior to the Effective Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit.
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ARTICLE 8
GENERAL PROVISIONS
8.1. PUBLIC STATEMENTS. Neither FFI nor FBS shall make any public
announcement or statement with respect to the Merger, this Agreement or any
related transactions without the approval of the other party; provided, however,
that either FBS or FFI may, upon reasonable notice to the other party, make any
public announcement or statement that it believes is required by federal
securities law. To the extent practicable, each of FBS and FFI will consult with
the other with respect to any such public announcement or statement.
8.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
if to FBS:
First Bank System, Inc.
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Richard A. Zona, Vice Chairman
and Chief Financial Officer
Fax: (612) 973-0410
with a copy to:
Dorsey & Whitney P.L.L.P.
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Lee R. Mitau, Esq.
Fax: (612) 340-8738
if to FFI:
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102-2183
Attention: David A. Rismiller
Chairman, President and
Chief Executive Officer
Fax: (402) 348-6221
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Fax: (212) 403-2000
All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if delivered by mail;
when receipt acknowledged, if faxed or telecopied; and the next day after being
delivered to an overnight delivery service.
8.3. INTERPRETATION. When a reference is made in this Agreement to
subsidiaries of FBS, the word "subsidiary" means any "majority-owned subsidiary"
(as defined in Rule 12b-2 under the 1934
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Act) of FBS, as the context requires; provided, however, that neither FFI nor
any of the Subsidiaries shall at any time be considered a subsidiary of FBS for
purposes of this Agreement. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
8.4. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
8.5. MISCELLANEOUS. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; (b) is not
intended to confer upon any person other than each party hereto any rights or
remedies hereunder, except as provided in Section 5.14; (c) shall be governed in
all respects, including validity, interpretation and effect, by the internal
laws of the State of Minnesota, without giving effect to the principles of
conflict of laws thereof; and (d) shall not be assigned by operation of law or
otherwise. This Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
8.6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to
periods, activities or obligations subsequent to the Merger shall survive the
Merger. In addition, if this Agreement is terminated pursuant to Section 7.1,
the covenants contained in Sections 5.3, 5.6(c) and 7.2 shall survive such
termination.
IN WITNESS WHEREOF, FBS and FFI have caused this Agreement to be executed on
the date first written above by their respective officers.
FIRST BANK SYSTEM, INC.
By /s/ RICHARD A. ZONA
------------------------------------------
Its Vice Chairman and Chief
------------------------------------------
Financial Officer
------------------------------------------
FIRSTIER FINANCIAL, INC.
By /s/ DAVID A. RISMILLER
------------------------------------------
Its Chairman, President and
------------------------------------------
Chief Executive Officer
------------------------------------------
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APPENDIX B
[MORGAN STANLEY & CO. INCORPORATED LETTERHEAD]
January 19, 1996
Board of Directors
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102
Gentlemen:
We understand that FirsTier Financial, Inc. ("FirsTier") and First Bank
System, Inc. ("First Bank System"), have entered into an Agreement of Merger and
Consolidation, dated as of August 6, 1995 (the "Merger Agreement"), which
provides, among other things, for the merger of FirsTier with and into First
Bank System (the "Merger"). Pursuant to the Merger, each outstanding share of
common stock, par value $5.00 per share, of FirsTier (the "FirsTier Common
Stock"), other than shares held in treasury or held by First Bank System or any
wholly owned subsidiary of First Bank System, will be converted into 0.8829
shares (the "Exchange Ratio") of common stock, par value $1.25 per share, of
First Bank System (the "First Bank System Common Stock"). The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to holders of
FirsTier Common Stock (other than First Bank System and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) analyzed certain publicly available financial statements and other
information of FirsTier and First Bank System, respectively;
(ii) analyzed certain internal financial statements and other financial
and operating data concerning FirsTier and First Bank System prepared by the
managements of the FirsTier and First Bank System, respectively;
(iii) analyzed certain financial projections prepared by the management
of FirsTier;
(iv) reviewed certain public research reports concerning First Bank
System and discussed these research reports, including earnings estimates
contained therein, with the management of First Bank System;
(v) discussed the past and current operations and financial condition
and the prospects of FirsTier and First Bank System with senior executives
of FirsTier and First Bank System, respectively;
(vi) reviewed the reported prices and trading activity for the FirsTier
Common Stock and the First Bank System Common Stock;
(vii) compared the financial performance of FirsTier and the prices and
trading activity of the FirsTier Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable precedent transactions;
(ix) participated in discussions and negotiations among representatives
of the FirsTier and First Bank System and their legal advisors;
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(x) reviewed the Merger Agreement, and a certain Stock Option Agreement
dated as of August 6, 1995 among FirsTier and First Bank System and certain
other parties and certain related documents; and
(xi) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of
FirsTier. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals and we have not examined any loan files of FirsTier or First Bank
System. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of FirsTier in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for FirsTier and First Bank System and
have received fees for the rendering of these services. In September 1995,
Morgan Stanley acted as lead manager in connection with the offering of $250
million subordinated notes due 2007 of First Bank System.
It is understood that this letter is for the information of the Board of
Directors of FirsTier and may not be used for any other purpose without our
prior written consent.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to holders of FirsTier Common Stock (other than First Bank System and
its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ DONALD A. MOORE, JR.
-----------------------------------
Donald A. Moore, Jr.
Managing Director
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Delaware law, the directors and officers of First Bank System,
Inc. (the "Company") are entitled, under certain circumstances, to be
indemnified by the Company against all expenses and liabilities incurred or
imposed upon them as a result of suits brought against them as such directors
and officers, if they act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, have no reasonable cause
to believe their conduct was unlawful, except that no indemnification shall
be made against expenses in respect of any claim, issue or matter as to which
they shall have been adjudged to be liable to the Company, unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, they are fairly and reasonably
entitled to be indemnified for such expenses which such court shall deem
proper. Any such indemnification may be made by the Company only as
authorized in each specific case upon a determination by the stockholders or
disinterested directors that indemnification is proper because the indemnitee
has met the applicable statutory standard of conduct.
Article Ninth of the Company's Restated Certificate of Incorporation, as
amended, provides that a director shall not be liable to the Company or its
stockholders for monetary damages for a breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under the Delaware statutory provisions making directors
personally liable for unlawful dividends or unlawful stock repurchases or
redemptions or (iv) for any transaction from which the director derived an
improper personal benefit.
The Bylaws of the Company provide that the officers and directors of the
Company and certain others shall be indemnified substantially to the same
extent permitted by Delaware law.
The Company maintains a standard policy of officers' and directors'
liability insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
2.1 Agreement of Merger and Consolidation dated August 6,
1995, by and between First Bank System, Inc., and FirsTier
Financial, Inc. (Included in Proxy Statement/Prospectus as
Appendix A.) The registrant agrees to furnish supplementally a
copy of omitted schedules to the Commission upon request.
4.1 Restated Certificate of Incorporation, as amended, of
First Bank System, Inc. (Incorporated by reference to Exhibit 2.1
to the registrant's Form 8-A/A-2 dated October 6, 1994, File No.
1-6880.)
4.2 Certificate of Designation for First Bank System, Inc.
Series 1990A Preferred Stock. (Incorporated by reference to
Exhibit 4.4 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
<PAGE>
4.3 Certificate of Designation for First Bank System, Inc.
Series 1991A Convertible Preferred Stock. (Incorporated by
reference to Exhibit 4.3 to the registrant's Registration
Statement on Form S-4, File No. 33-50700.)
4.4 Certificate of Designation for First Bank System, Inc.
Series A Junior Participating Preferred Stock, as amended.
(Incorporated by reference to Exhibit 2.4 to the registrant's Form
8-A/A-2 dated October 6, 1994, File No. 1-6880.)
4.5 Bylaws of First Bank System, Inc. (Filed herewith.)
4.6 Rights Agreement dated as of December 21, 1988, between
First Bank System, Inc. and Morgan Shareholder Services
Trust Company (now known as First Chicago Trust Company
of New York), as amended by Amendment No. 1 dated as of
May 30, 1990, Amendment No. 2 dated as of February 17,
1993 and Amendment No. 3 dated November 9, 1995. (Filed
herewith.)
4.7 Stock Purchase Agreement, dated as of May 30, 1990,
among Corporate Partners, L.P., Corporate Offshore Partners, L.P.,
The State Board of Administration of Florida and First Bank
System, Inc. (without exhibits). (Incorporated by reference to
Exhibit 4.8 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
4.8 First Amendment, dated as of June 30, 1990, to Stock
Purchase Agreement among Corporate Partners, L.P., Corporate
Offshore Partners, L.P., The State Board of Administration of
Florida and First Bank System, Inc. (Incorporated by reference to
Exhibit 4.9 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
4.9 Second Amendment, dated July 18, 1990, to Stock Purchase
Agreement among Corporate Partners, L.P., Corporate Offshore
Partners, L.P., The State Board of Administration of Florida and
First Bank System, Inc. (Incorporated by reference to Exhibit
4.10 to Amendment No. 1 to the registrant's Registration Statement
on Form S-3, File No. 33-42650.)
4.10 Stock Purchase Agreement, dated as of May 30, 1990,
between The State Board of Administration of Florida and First
Bank System, Inc. (without exhibits). (Incorporated by reference
to Exhibit 4.11 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.11 Form of Periodic Stock Purchase Right. (Incorporated by
reference to Exhibit 4.12 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.12 Form of Risk Event Warrant. (Incorporated by reference
to Exhibit 4.13 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.13 Registration Rights Agreement, dated as of July 18,
1990, among Corporate Partners, L.P., Corporate Offshore Partners,
L.P., The State Board of Administration of Florida and First Bank
System, Inc. (Incorporated by reference to Exhibit 4.14 to
Amendment No. 1 to the registrant's Registration Statement on Form
S-3, File No. 33-42650.)
<PAGE>
4.14 Registration Rights Agreement, dated as of July 18,
1990, between The State Board of Administration of Florida and
First Bank System, Inc. (Incorporated by reference to Exhibit
4.14 to Amendment No. 1 to the registrant's Registration Statement
on Form S-3, File No. 33-42650.)
5.1 Opinion and consent of Dorsey & Whitney P.L.L.P. as to
legality of the securities being registered. (Filed herewith.)
8.1 Opinion and consent of Wachtell, Lipton, Rosen & Katz as
to certain federal income tax consequences described in the Proxy
Statement/Prospectus. (Filed herewith.)
10.1 Agreement and Plan of Merger dated November 5, 1995, by
and among First Bank System, Inc., Eleven Acquisition Corp. and
First Interstate Bancorp. (Incorporated by reference to Exhibit
2.1 to the registrant's Current Report on Form 8-K filed November
13, 1995, File No. 1-6880.) The registrant agrees to furnish
supplementally a copy of omitted schedules to the Commission upon
request.
10.2 Stock Option Agreement, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
10.3 Stock Option Agreement, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.3 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
10.4 Termination Fee Letter, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.4 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
10.5 Termination Fee Letter, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.5 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
23.1 Consent of Dorsey & Whitney P.L.L.P. (Included in
Exhibit 5.1.)
23.2 Consent of Wachtell, Lipton, Rosen & Katz. (Included in
Exhibit 8.1.)
23.3 Consent of Ernst & Young LLP (relating to financial
statements of First Bank System, Inc.). (Filed herewith.)
23.4 Consent of Ernst & Young LLP (relating to financial
statements of First Interstate Bancorp). (Filed herewith.)
23.5 Consent of Arthur Andersen LLP (relating to financial
statements of FirsTier Financial, Inc.). (Filed herewith.)
23.6 Consent of Morgan Stanley & Co. Incorporated. (Filed herewith.)
24.1 Powers of Attorney. (Filed herewith.)
99.1 Form of proxy for Special Meeting of shareholders of
FirsTier Financial, Inc. (Filed herewith.)
99.2 Articles of Incorporation of FirsTier Financial,
Inc., as amended. (Incorporated by reference to Exhibits 3(a) and
3(a)(1) to the Annual Report on Form 10-K of FirsTier Financial,
Inc. for the year ended December 31, 1994, File No. 0-4515.)
99.3 Bylaws of FirsTier Financial, Inc., as amended. (Incorporated
by reference to Exhibit 3 of Form 8 amending Form 10-Q
of FirsTier Financial, Inc. for the period ended March 31,
1993, File No. 0-4515.)
<PAGE>
99.4 Stock Option Agreement, dated as of August 6, 1995,
between First Bank System, Inc. and FirsTier Financial, Inc.
(Incorporated by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-K filed August 18, 1995, File No. 1-6880.)
99.5 Opinion of Morgan Stanley & Co. Incorporated. (Included in Proxy
Statement/Prospectus as Appendix B.)
99.6 Termination Agreement, dated as of November 29, 1995, between First
Bank System, Inc., FirsTier Financial Inc., and Jack R. McDonnell.
(Filed herewith.)
99.7 Employment Agreement dated August 4, 1995 by and between FirsTier
Financial, Inc. and David A. Rismiller. (Filed herewith.)
(b) Financial Statement Schedules.
None.
(c) Reports, Opinions and Appraisals.
Opinion of Morgan Stanley & Co. Incorporated is included in the
Proxy Statement/Prospectus as Appendix B and referred to above as Exhibit
99.5.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes: that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities
<PAGE>
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this registration statement, by any person
or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(d) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to its articles, bylaws or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on January 18, 1996.
FIRST BANK SYSTEM, INC.
By /s/ JOHN F. GRUNDHOFER
---------------------------------
John F. Grundhofer
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE AND TITLE DATE
------------------- ----
/s/ JOHN F. GRUNDHOFER January 18, 1996
---------------------------------------------
John F. Grundhofer,
Chairman, President, Chief Executive Officer
and Director (principal executive officer)
/s/ RICHARD A. ZONA January 18, 1996
---------------------------------------------
Richard A. Zona,
Vice Chairman and Chief Financial
Officer (principal financial officer)
/s/ DAVID J. PARRIN January 18, 1996
---------------------------------------------
David J. Parrin,
Senior Vice President and Controller
(principal accounting officer)
* January 18, 1996
---------------------------------------------
Roger L. Hale, Director
* January 18, 1996
---------------------------------------------
Delbert W. Johnson, Director
* January 18, 1996
---------------------------------------------
Norman M. Jones, Director
* January 18, 1996
---------------------------------------------
John H. Kareken, Director
<PAGE>
* January 18, 1996
---------------------------------------------
Richard L. Knowlton, Director
* January 18, 1996
---------------------------------------------
Jerry W. Levin, Director
* January 18, 1996
---------------------------------------------
Kenneth A. Macke, Director
* January 18, 1996
---------------------------------------------
Marilyn C. Nelson, Director
* January 18, 1996
---------------------------------------------
Edward J. Phillips, Director
---------------------------------------------
James J. Renier, Director
* January 18, 1996
---------------------------------------------
S. Walter Richey, Director
* January 18, 1996
---------------------------------------------
Richard L. Robinson, Director
---------------------------------------------
Richard L. Schall, Director
* January 18, 1996
---------------------------------------------
Lyle E. Schroeder, Director
* By /s/ DAVID J. PARRIN
---------------------------------------------
David J. Parrin,
Pro se and as Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ------------------------------------------------------------------ ------
<S> <C> <C>
2.1 Agreement of Merger and Consolidation dated August 6,
1995, by and between First Bank System, Inc., and FirsTier
Financial, Inc. (Included in Proxy Statement/Prospectus as
Appendix A.) The registrant agrees to furnish supplementally a
copy of omitted schedules to the Commission upon request.
4.1 Restated Certificate of Incorporation, as amended, of
First Bank System, Inc. (Incorporated by reference to Exhibit 2.1
to the registrant's Form 8-A/A-2 dated October 6, 1994, File No.
1-6880.)
4.2 Certificate of Designation for First Bank System, Inc.
Series 1990A Preferred Stock. (Incorporated by reference to
Exhibit 4.4 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
4.3 Certificate of Designation for First Bank System, Inc.
Series 1991A Convertible Preferred Stock. (Incorporated by
reference to Exhibit 4.3 to the registrant's Registration
Statement on Form S-4, File No. 33-50700.)
4.4 Certificate of Designation for First Bank System, Inc.
Series A Junior Participating Preferred Stock, as amended.
(Incorporated by reference to Exhibit 2.4 to the registrant's Form
8-A/A-2 dated October 6, 1994, File No. 1-6880.)
4.5 Bylaws of First Bank System, Inc. (Filed herewith.)
4.6 Rights Agreement dated as of December 21, 1988, between
First Bank System, Inc. and Morgan Shareholder Services
Trust Company (now known as First Chicago Trust Company
of New York), as amended by Amendment No. 1 dated as of
May 30, 1990, Amendment No. 2 dated as of February 17,
1993 and Amendment No. 3 dated November 9, 1995. (Filed
herewith.)
4.7 Stock Purchase Agreement, dated as of May 30, 1990,
among Corporate Partners, L.P., Corporate Offshore Partners, L.P.,
The State Board of Administration of Florida and First Bank
System, Inc. (without exhibits). (Incorporated by reference to
Exhibit 4.8 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
4.8 First Amendment, dated as of June 30, 1990, to Stock
Purchase Agreement among Corporate Partners, L.P., Corporate
Offshore Partners, L.P., The State Board of Administration of
Florida and First Bank System, Inc. (Incorporated by reference to
Exhibit 4.9 to Amendment No. 1 to the registrant's Registration
Statement on Form S-3, File No. 33-42650.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ------------------------------------------------------------------ ------
<S> <C> <C>
4.9 Second Amendment, dated July 18, 1990, to Stock Purchase
Agreement among Corporate Partners, L.P., Corporate Offshore
Partners, L.P., The State Board of Administration of Florida and
First Bank System, Inc. (Incorporated by reference to Exhibit
4.10 to Amendment No. 1 to the registrant's Registration Statement
on Form S-3, File No. 33-42650.)
4.10 Stock Purchase Agreement, dated as of May 30, 1990,
between The State Board of Administration of Florida and First
Bank System, Inc. (without exhibits). (Incorporated by reference
to Exhibit 4.11 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.11 Form of Periodic Stock Purchase Right. (Incorporated by
reference to Exhibit 4.12 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.12 Form of Risk Event Warrant. (Incorporated by reference
to Exhibit 4.13 to Amendment No. 1 to the registrant's
Registration Statement on Form S-3, File No. 33-42650.)
4.13 Registration Rights Agreement, dated as of July 18,
1990, among Corporate Partners, L.P., Corporate Offshore Partners,
L.P., The State Board of Administration of Florida and First Bank
System, Inc. (Incorporated by reference to Exhibit 4.14 to
Amendment No. 1 to the registrant's Registration Statement on Form
S-3, File No. 33-42650.)
4.14 Registration Rights Agreement, dated as of July 18,
1990, between The State Board of Administration of Florida and
First Bank System, Inc. (Incorporated by reference to Exhibit
4.14 to Amendment No. 1 to the registrant's Registration Statement
on Form S-3, File No. 33-42650.)
5.1 Opinion and consent of Dorsey & Whitney P.L.L.P. as to
legality of the securities being registered. (Filed herewith.)
8.1 Opinion and consent of Wachtell, Lipton, Rosen & Katz as
to certain federal income tax consequences described in the Proxy
Statement/Prospectus. (Filed herewith.)
10.1 Agreement and Plan of Merger dated November 5, 1995, by
and among First Bank System, Inc., Eleven Acquisition Corp. and
First Interstate Bancorp. (Incorporated by reference to Exhibit
2.1 to the registrant's Current Report on Form 8-K filed November
13, 1995, File No. 1-6880.) The registrant agrees to furnish
supplementally a copy of omitted schedules to the Commission upon
request.
10.2 Stock Option Agreement, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
10.3 Stock Option Agreement, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.3 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ------------------------------------------------------------------ ------
<S> <C> <C>
10.4 Termination Fee Letter, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.4 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
10.5 Termination Fee Letter, dated as of November 5, 1995,
between First Bank System, Inc. and First Interstate Bancorp.
(Incorporated by reference to Exhibit 2.5 to the registrant's
Current Report on Form 8-K filed November 13, 1995, File No.
1-6880.)
23.1 Consent of Dorsey & Whitney P.L.L.P. (Included in
Exhibit 5.1.)
23.2 Consent of Wachtell, Lipton, Rosen & Katz. (Included in
Exhibit 8.1.)
23.3 Consent of Ernst & Young LLP (relating to financial
statements of First Bank System, Inc.). (Filed herewith).
23.4 Consent of Ernst & Young LLP (relating to financial
statements of First Interstate Bancorp). (Filed herewith).
23.5 Consent of Arthur Andersen LLP (relating to financial
statements of FirsTier Financial, Inc.). (Filed herewith).
23.6 Consent of Morgan Stanley & Co. Incorporated. (Filed herewith).
24.1 Powers of Attorney. (Filed herewith).
99.1 Form of proxy for Special Meeting of shareholders of
FirsTier Financial, Inc. (Filed herewith).
99.2 Articles of Incorporation of FirsTier Financial,
Inc., as amended. (Incorporated by reference to Exhibits 3(a) and
3(a)(1) to the Annual Report on Form 10-k of FirsTier Financial,
Inc. for the year ended December 31, 1994, File No. 0-4515.)
99.3 Bylaws of FirsTier Financial, Inc., as amended. (Incorporated
by reference to Exhibit 3 of Form 8 amending Form 10-Q
of FirsTier Financial, Inc. for the period ended March 31,
1993, File No. 0-4515.)
99.4 Stock Option Agreement, dated as of August 6, 1995,
between First Bank System, Inc. and FirsTier Financial, Inc.
(Incorporated by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-k filed August 18, 1995 File No. 1-6880.)
99.5 Opinion of Morgan Stanley & Co. Incorporated. (Included in Proxy
Statement/Prospectus as Appendix B.)
99.6 Termination Agreement, dated as of November 29, 1995, between First
Bank System, Inc., FirsTier Financial Inc., and Jack R. McDonnell.
(Filed herewith.)
99.7 Employment Agreement dated August 4, 1995 by and between FirsTier
Financial, Inc. and David A. Rismiller. (Filed herewith.)
</TABLE>
<PAGE>
Exhibit 4.5
BYLAWS
OF
FIRST BANK SYSTEM, INC.
ARTICLE I.
OFFICES
Section 1. OFFICES.
The registered office of the Corporation in the State of Delaware shall be
in the City of Wilmington, County of New Castle, State of Delaware.
The Corporation shall have offices at such other places as the Board of
Directors may from time to time determine.
ARTICLE II.
STOCKHOLDERS
Section 1. ANNUAL MEETING.
---------------
The annual meeting of the stockholders for the election of Directors and
for the transaction of such other business as may properly come before the
meeting shall be held on such date as the Board of Directors shall each year
fix. Each such annual meeting shall be held at such place, within or without
the State of Delaware, and hour as shall be determined by the Board of
Directors. The day, place and hour of such annual meeting shall be specified in
the notice of annual meeting.
The meeting may be adjourned from time to time and place to place until its
business is completed.
Section 2. SPECIAL MEETING.
----------------
Special meetings of stockholders may be called by the Board of Directors or
the chief executive officer. The notice of such meeting shall state the purpose
of such meeting and no business shall be transacted thereat except as stated in
the notice thereof. Any such meeting may be held at such place within or
without the State of Delaware as may be fixed by the Board of Directors or the
Chief Executive Officer, and as may be stated in the notice of such meeting.
Section 3. NOTICE OF MEETING.
------------------
Notice of every meeting of the stockholders shall be given in the manner
prescribed by law.
<PAGE>
Section 4. QUORUM.
-------
Except as otherwise required by law, the Certificate of Incorporation or
these Bylaws, the holders of not less than one-third of the shares entitled to
vote at any meeting of the stockholders, present in person or by proxy, shall
constitute a quorum and the act of the majority of such quorum shall be deemed
the act of the stockholders.
If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting to another place, date, or time.
Section 5. QUALIFICATION OF VOTERS.
------------------------
The Board of Directors may fix a day and hour not more than sixty nor less
than ten days prior to the day of holding any meeting of the stockholders as the
time as of which the stockholders entitled to notice of and to vote at such
meeting shall be determined. Only those persons who were holders of record of
voting stock at such time shall be entitled to notice of and to vote at such
meeting.
Section 6. PROCEDURE.
----------
The presiding officer at each meeting of stockholders shall conclusively
determine the order of business, all matters of procedure and whether or not a
proposal is proper business to be transacted at the meeting and has been
properly brought before the meeting.
The Board shall appoint two or more inspectors of election to serve at
every meeting of the stockholders at which Directors are to be elected.
Section 7. NOMINATION OF DIRECTORS.
------------------------
Only persons nominated in accordance with the following procedures shall be
eligible for election by stockholders as Directors. Nominations of persons for
election as Directors at a meeting of stockholders called for the purpose of
electing Directors may be made (a) by or at the direction of the Board of
Directors or (b) by any stockholder in the manner herein provided. For a
nomination to be properly made by a stockholder, the stockholder must give
written notice to the Secretary of the Corporation so as to be received at the
principal executive offices of the Corporation not later than (i) with respect
to an annual meeting of stockholders, 90 days in advance of such meeting and
(ii) with respect to a special meeting of stockholders for the election of
directors, the close of business on the seventh day following the date on which
the notice of such meeting is first given to stockholders. Each such notice
shall set forth (a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understanding between the
stockholder and each nominee and any other person
2
<PAGE>
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated, or intended
to be nominated, by the Board; and (e) the consent of each nominee to serve as a
Director of the Corporation if so elected.
ARTICLE III.
DIRECTORS
Section 1. NUMBER AND ELECTION.
--------------------
The Board of Directors of the Corporation shall consist of sixteen
Directors. Commencing with the annual election of Directors by the stockholders
in 1986, the Directors shall be divided into three classes: Class I, Class II
and Class III, each such class, as nearly as possible, to have the same number
of Directors. The term of office of the initial Class I Directors shall expire
at the annual election of Directors by the stockholders in 1987, the term of
office of the initial Class II Directors shall expire at the annual election of
Directors by the stockholders in 1988, and the term of office of the initial
Class III Directors shall expire at the annual election of Directors by the
stockholders in 1989. At each annual election of Directors by the stockholders
held after 1985, the Directors chosen to succeed those whose terms have then
expired shall be identified as being of the same class as the Directors they
succeed and shall be elected by the stockholders for a term expiring at the
third succeeding annual election of Directors. In all cases, Directors shall
hold office until their respective successors are elected by the stockholders
and have qualified.
In the event that the holders of any class or series of stock of the
Corporation having a preference as to dividends or upon liquidation of the
Corporation shall be entitled, by a separate class vote, to elect Directors as
may be specified pursuant to Article Fourth of the Corporation's Restated
Certificate of Incorporation, then the provisions of such class or series of
stock with respect to their rights shall apply. The number of Directors that
may be elected by the holders of any such class or series of stock shall be in
addition to the number fixed pursuant to the preceding paragraph. Except as
otherwise expressly provided pursuant to Article Fourth of the Corporation's
Restated Certificate of Incorporation, the number of Directors that may be so
elected by the holders of any such class or series of stock shall be elected for
terms expiring at the next annual meeting of stockholders and without regard to
the classification of the remaining members of the Board of Directors and
vacancies among Directors so elected by the separate class vote of any such
class or series of stock shall be filled by the remaining Directors elected by
such class or series, or, if there are no such remaining Directors, by the
holders of such class or series in the same manner in which such class or series
initially elected a Director.
If at any meeting for the election of Directors, more than one class of
stock, voting separately as classes, shall be entitled to elect one or more
Directors and there shall be a quorum of only one such class of stock, that
class of stock shall be entitled to elect its quota of Directors notwithstanding
the absence of a quorum of the other class or classes of stock.
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<PAGE>
Section 2. VACANCIES.
----------
Vacancies and newly created directorships resulting from an increase in the
number of Directors shall be filled by a majority of the Directors then in
office, although less than a quorum, or by a sole remaining Director, and such
Directors so chosen shall hold office until the next election of the class for
which such Directors shall have been chosen, and until their successors are
elected and qualified.
Section 3. REGULAR MEETINGS.
-----------------
Regular meetings of the Board shall be held at such times and places as the
Board may from time to time determine.
Section 4. SPECIAL MEETINGS.
-----------------
Special meetings of the Board may be called at any time, at any place and
for any purpose by the Chairman of the Board, or the President, or by any
officer of the Corporation upon the request of a majority of the entire Board.
Section 5. NOTICE OF MEETINGS.
-------------------
Notice of regular meetings of the Board need not be given.
Notice of every special meeting of the Board shall be given to the
Directors at their usual places of business, or at such other addresses as shall
have been furnished by them for the purpose. Such notice shall be given at
least twelve hours (three hours if meeting is to be conducted by conference
telephone) before the meeting by telephone or by being personally delivered,
mailed, or telegraphed. Such notice need not include a statement of the
business to be transacted at, or the purpose of, any such meeting.
Section 6. QUORUM.
-------
Except as may be otherwise provided by law or in these Bylaws, the presence
of one-third of the entire Board shall be necessary and sufficient to constitute
a quorum for the transaction of business at any meeting of the Board, and the
act of a majority of such quorum shall be deemed the act of the Board.
Less than a quorum may adjourn any meeting of the Board from time to time
without notice.
Section 7. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
--------------------------------------------------
Members of the Board, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by
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<PAGE>
means of which all persons participating in the meeting can hear each other and
such participation shall constitute presence in person at such meeting.
Section 8. POWERS.
-------
The business, property, and affairs of the Corporation shall be managed by
or under the direction of its Board of Directors, which shall have and may
exercise all the powers of the Corporation to do all such lawful acts and things
as are not by law, or by the Certificate of Incorporation, or by these Bylaws,
directed or required to be exercised or done by the stockholders.
Section 9. COMPENSATION OF DIRECTORS.
--------------------------
Directors shall receive such compensation for their services as shall be
determined by a majority of the entire Board provided that Directors who are
serving the Corporation as officers or employees and who receive compensation
for their services as such officers or employees shall not receive any salary or
other compensation for their services as Directors.
Section 10. COMMITTEES OF THE BOARD.
-------------------------
A majority of the entire Board of Directors may designate one or more
standing or temporary committees consisting of one or more Directors. The Board
may invest such committees with such powers and authority, subject to the
limitations of law and such conditions as it may see fit.
ARTICLE IV.
EXECUTIVE COMMITTEE
Section 1. ELECTION.
---------
At any meeting of the Board, an Executive Committee, composed of the
Chairman of the Board, the President, and not less than three other members, may
be elected by a majority vote of the entire Board to serve until the Board shall
otherwise determine. Either the Chairman of the Board or the President,
whichever is the chief executive officer, shall be the Chairman of the Executive
Committee, and the other shall be the Vice Chairman thereof, unless the Board
shall otherwise determine. Members of the Executive Committee shall be members
of the Board.
Section 2. POWERS.
-------
The Executive Committee shall have and may exercise all of the powers of
the Board of Directors when the Board is not in session, except that, unless
specifically authorized by the Board of Directors, it shall have no power to (a)
elect directors or officers; (b) alter, amend, or repeal these Bylaws or any
resolution of the Board of Directors relating to the Executive Committee; (c)
declare any dividend or make any other distribution to the stockholders of the
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<PAGE>
Corporation; (d) appoint any member of the Executive Committee; or (e) take any
other action which legally may be taken only by the Board.
Section 3. RULES.
------
The Executive Committee shall adopt such rules as it may see fit with
respect to the calling of its meetings, the procedure to be followed thereat,
and its functioning generally. Any action taken with the written consent of all
members of the Executive Committee shall be as valid and effectual as though
formally taken at a meeting of said Executive Committee.
Section 4. VACANCIES.
----------
Vacancies in the Executive Committee may be filled at any time by a
majority vote of the entire board.
ARTICLE V.
OFFICERS
Section 1. NUMBER.
-------
The officers of the Corporation shall be appointed or elected by the Board
of Directors. The officers shall be a Chairman of the Board, a President, one
or more Vice Chairmen, such number of Vice Presidents or other officers as the
Board may from time to time determine, a Secretary, a Treasurer, and a
Controller. The Chairman of the Board shall be the Chief Executive Officer
unless the Board shall determine otherwise. The Chairman of the Board or, in
his absence or if such office be vacant, the President shall preside at all
meetings of the stockholders and of the Board. In the absence of the Chairman
of the Board and the President, any other Board member designated by the Board
may preside at all meetings of the stockholders and of the Board. The Board of
Directors may appoint or elect a person as a Vice Chairman without regard to
whether such person is a member of the Board of Directors.
Section 2. STAFF AND DIVISIONAL OFFICERS.
------------------------------
The Chief Executive Officer may appoint at his discretion such persons to
hold the title of staff vice president, divisional chairman, divisional
president, divisional vice president or other similar designation. Such persons
shall not be officers of the Corporation and shall retain such title at the sole
discretion of the Chief Executive Officer who may at his will and from time to
time make or revoke such designation.
Section 3. TERMS OF OFFICE.
----------------
All officers, agents, and employees of the Corporation shall hold their
respective offices or positions at the pleasure of the Board of Directors or the
appropriate appointing authority and may be removed at any time by such
authority with or without cause.
6
<PAGE>
Section 4. DUTIES.
-------
The officers, agents, and employees shall perform the duties and exercise
the powers usually incident to the offices or positions held by them
respectively, and/or such other duties and powers as may be assigned to them
from time to time by the Board of Directors or the Chief Executive Officer.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES
Section 1.
The Corporation shall indemnify to the full extent permitted by, and in the
manner permissible under the Delaware General Corporation Law, as amended from
time to time, any person made, or threatened to be made, a party to any action,
suit, or proceeding, whether criminal, civil, administrative, or investigative,
by reason of the fact that such person is or was a director, advisory director,
or officer of the Corporation or any predecessor of the Corporation, or served
any other enterprise as a director, advisory director or officer at the request
of the Corporation or any predecessor of the Corporation. The foregoing rights
of indemnification shall not be deemed exclusive of any other rights to which
any director, advisory director, or officer may be entitled apart from the
provisions of this Article.
The Board of Directors in its discretion shall have power on behalf of the
Corporation to indemnify any person, other than a director, advisory director or
officer, made a party to any action, suit, or proceeding by reason of the fact
that such person, or the testator or intestate of such person, is or was an
employee of the Corporation.
Section 2.
Expenses incurred by a director, advisory director or officer in defending
a civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director, advisory director or officer
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized by Delaware law.
Such expenses incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
ARTICLE VII.
STOCK
Section 1. STOCK CERTIFICATES.
-------------------
The interest of each stockholder of the Corporation shall be evidenced by a
certificate or certificates for shares of stock in such form as the Board of
Directors may from time to time
7
<PAGE>
prescribe. The shares of the stock of the Corporation shall be transferable on
the books of the Corporation by the holder thereof in person or by his attorney
upon surrender for cancellation of a certificate or certificates for the same
number of shares with an assignment and power of transfer endorsed thereon or
attached thereto, duly executed, and with such proof of the validity of the
signature as the Corporation or its agents may reasonably require.
Section 2. SIGNATURES.
-----------
The certificates of stock shall be signed by the Chairman, President, or a
Vice President and by the Secretary or an Assistant Secretary, provided that if
such certificates are signed by a transfer agent or transfer clerk and by a
registrar, the signatures of such Chairman, President, Vice President,
Secretary, or Assistant Secretary may be facsimiles, engraves, or printed.
Section 3. REPLACEMENT.
------------
No certificate for shares of stock in the Corporation shall be issued in
place of any certificate alleged to have been lost, stolen, or destroyed except
upon production of such evidence of such loss, theft, or destruction and upon
delivery to the Corporation of a bond of indemnity in such amount, and upon such
terms and secured by such surety as the Board of Directors or the Executive
Committee in its discretion may require.
ARTICLE VIII.
MISCELLANEOUS
Section 1. SEAL.
-----
The Corporation seal shall bear the name of the Corporation, the date 1929
and the words "Corporation Seal, Delaware".
Section 2. FISCAL YEAR.
------------
The fiscal year of the Corporation shall begin on the first day of January
in each year and shall end on the thirty-first day of December following.
ARTICLE IX.
AMENDMENTS
Section 1.
These Bylaws, or any of them, may from time to time be supplemented,
amended, or repealed (a) by a majority vote of the entire Board of Directors or
(b) at any annual or special meeting of the stockholders.
8
<PAGE>
ARTICLE X.
EMERGENCY BYLAW
Section 1. OPERATIVE EVENT.
----------------
The Emergency Bylaw provided in this Article X shall be operative during
any emergency resulting from an attack on the United States, any nuclear or
atomic incident, or other event which creates a state of disaster of sufficient
severity to prevent the normal conduct and management of the affairs and
business of the Corporation, notwithstanding any different provision in the
preceding articles of the Bylaws or in the Certificate of Incorporation of the
Corporation or in the General Corporation Law of Delaware. To the extent not
inconsistent with this Emergency Bylaw, the Bylaws provided in the preceding
Articles shall remain in effect during such emergency and upon the termination
of such emergency the Emergency Bylaw shall cease to be operative unless and
until another such emergency shall occur.
Section 2. NOTICE OF MEETING.
------------------
During any such emergency, any meeting of the Board of Directors may be
called by any officer of the Corporation or by any Director. Notice shall be
given by such person or by any officer of the Corporation. The notice shall
specify the place of the meeting, which shall be the head office of the
Corporation at the time if feasible and otherwise any other place specified in
the notice. The notice shall also specify the time of the meeting. Notice may
be given only to such of the Directors as it may be feasible to reach at the
time and by such means as may be feasible at the time, including publication or
radio. If given by mail, messenger, telephone, or telegram, the notice shall be
addressed to the Directors at their residences or business addresses, or such
other places as the person giving the notice shall deem most suitable. Notice
shall be similarly given, to the extent feasible, to the other persons serving
as Directors referred to in Section 3 below. Notice shall be given at least two
days before the meeting if feasible in the judgment of the person giving the
notice and otherwise on any shorter time he may deem necessary.
Section 3. QUORUM.
-------
During any such emergency, at any meeting of the Board of Directors, a
quorum shall consist of one-third of the number of Directors fixed at the time
pursuant to Article III of the Bylaws. If the Directors present at any
particular meeting shall be fewer than the number required for such quorum,
other persons present, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(a) All Executive Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
9
<PAGE>
(b) All Senior Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
(c) All Vice Presidents of the Corporation in order of their seniority of
first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their seniority in
age; and
(d) Any other persons that are designated on a list that shall have been
approved by the Board of Directors before the emergency, such persons to be
taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
Section 4. LINES OF MANAGEMENT SUCCESSION.
-------------------------------
The Board of Directors, during as well as before any such emergency, may
provide and from time to time modify lines of succession in the event that
during such an emergency any or all officers or agents of the Corporation shall
for any reason be rendered incapable of discharging their duties.
Section 5. OFFICE RELOCATION.
------------------
The Board of Directors, during as well as before any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers to do
so.
Section 6. LIABILITY.
----------
No officer, director, or employee acting in accordance with this Emergency
Bylaw shall be liable except for willful misconduct.
Section 7. REPEAL OR AMENDMENT.
--------------------
This Emergency Bylaw shall be subject to repeal or change by further action
of the Board of Directors or by action of the stockholders, except that no such
repeal or change shall modify the provisions of the next preceding paragraph
with regard to action or inaction prior to the time of such repeal or change.
Any such amendment of this Emergency Bylaw may make any further or different
provision that may be practical and necessary for the circumstances of the
emergency deems it to be in the best interest of the Corporation to do so.
10
<PAGE>
Exhibit 4.6
______________________________________________________
FIRST BANK SYSTEM, INC.
and
MORGAN SHAREHOLDER SERVICES TRUST COMPANY,
Rights Agent
Rights Agreement
Dated as of December 21, 1988
______________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 4
Section 3. Issue of Right Certificates 4
Section 4. Form of Right Certificates 6
Section 5. Countersignature and Registration 6
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates 7
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 8
Section 8. Cancellation and Destruction of Right Certificates 10
Section 9. Availability of Preferred Shares 10
Section 10. Preferred Shares Record Date 11
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights 11
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 21
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 21
Section 14. Fractional Rights and Fractional Shares 22
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 24
Section 17. Right Certificate Holder Not Deemed a Stockholder 25
Section 18. Concerning the Rights Agent 25
Section 19. Merger or Consolidation or Change of Name of Rights
Agent 26
<PAGE>
Section 20. Duties of Rights Agent 26
Section 21. Change of Rights Agent 28
Section 22. Issuance of New Right Certificates 29
Section 23. Redemption 30
Section 24. Exchange 30
Section 25. Notice of Certain Events 32
Section 26. Notices 33
Section 27. Supplements and Amendments 34
Section 28. Successors 34
Section 29. Benefits of this Agreement 34
Section 30. Severability 34
Section 31. Governing Law 35
Section 32. Counterparts 35
Section 33. Descriptive Headings 35
Signatures 35
Exhibit A - Form of Certificate of Designations of First Bank System, Inc.
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of December 21, 1988, between First Bank
System, Inc., a Delaware corporation (the "Company"), and Morgan Shareholder
Services Trust Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding on January 4, 1989
(the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms
and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Final
Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more of
the Common Shares of the Company then outstanding, but shall not include the
Company, any Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company, or
any entity holding Common Shares for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or
more of the Common Shares of the Company then outstanding; PROVIDED, HOWEVER,
that if a Person shall become the Beneficial Owner of 20% or more of the
Common Shares of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
<PAGE>
(c) A Person shall be deemed the Beneficial Owner" of and shall be
deemed to beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso to Section l(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
<PAGE>
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; PROVIDED, HOWEVER, that if such date is not
a Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall
mean the shares of Common Stock, par value $1.25 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting
power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Exchange Date" shall have the meaning set forth in Section 7
hereof.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(j) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(k) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00, of the Company having the
rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit A.
(l) "Redemption Date" shall have the meaning set forth in Section
7 hereof.
(m) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.
<PAGE>
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the date of the
first public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such or (ii) the tenth day (or such later date as
may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 20% or more of the
then outstanding Common Shares (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights; the earlier
of such dates being herein referred to as the Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates)
and not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto
(a "Right Certificate"), evidencing one Right for each Common Share so held.
As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights. Until the
Distribution Date (or the earlier of the Redemption Date, the Exchange Date
or the Final Expiration Date if occurring prior to the Distribution Date),
the surrender for transfer of any certificate for Common Shares outstanding
on the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
<PAGE>
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or
the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
First Bank System, Inc. and Morgan Shareholder Services
Trust Company, dated as of December 21, 1988 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of First Bank System, Inc. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. First Bank
System, Inc. will mail to the holder of this certificate a copy
of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights
Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to
be printed on the reverse thereof) shall be substantially the same as Exhibit
B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase
<PAGE>
such number of one one-hundredths of a Preferred Share as shall be set forth
therein at the price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one one-hundredths of
a Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Company by its Chairman, any
of its Vice Chairmen, its President, any of its Vice Presidents, its
Treasurer or its Controller either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent for purposes of authorization only and
shall not be valid for any purpose unless countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement
any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANQE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date, the Exchange Date or the
Final Expiration Date, any Right Certificate or Right Certificates (other
than Right Certificates representing Rights that have become void pursuant to
Section ll(a)(ii) hereof) may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a Preferred Share
as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Thereupon
the Rights Agent shall countersign and deliver to the person entitled thereto
a Right Certificate or Right
<PAGE>
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange
of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will issue,
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole
or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for each one
one-hundredth of a Preferred Share (or such other number of Preferred Shares,
Common Shares or equivalent preferred shares as shall then be issuable upon
exercise of such Right as provided in Sections 11 and 13 hereof) as to which
the Rights are exercised, at or prior to the earliest of (i) the close of
business on January 4, 1999 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof (the "Exchange Date").
(b) The Purchase Price for each one one-hundredth of a Preferred
Share (or such other number of Preferred Shares, Common Shares or equivalent
preferred shares as shall be issuable upon exercise of such Right as provided
in Sections 11 and 13 hereof) pursuant to the exercise of a Right shall
initially be $80.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall
<PAGE>
thereupon promptly (i) (A) requisition from any transfer agent for the
Preferred Shares (or such other number of Preferred Shares, Common Shares or
equivalent preferred shares as shall be issuable upon exercise of such Right
as provided in Sections 11 and 13 hereof) certificates for the number of
Preferred Shares (or such other number of Preferred Shares, Common Shares or
equivalent preferred shares as shall be issuable upon exercise of such Right
as provided in Sections 11 and 13 hereof) to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the Company or the depositary agent, as the
case may be, scrip or depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (and, in the case
of depositary receipts, the Company shall cause certificates for the
Preferred Shares represented by such receipts to be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates, scrip or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred
Shares or any Preferred Shares held in its treasury, the number of Preferred
Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Section 7.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right Certificates to
the Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
<PAGE>
Section 9. AVAILABILITY OF PREFERRED SHARES. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares (or Common Shares or equivalent preferred
shares, if applicable) delivered upon exercise of Rights shall, at the time
of delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or Common Shares or equivalent
preferred shares, if applicable) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates, scrip or depositary
receipts for the Preferred Shares (or Common Shares or equivalent preferred
shares, if applicable) in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates, scrip or depositary receipts for Preferred
Shares (or Common Shares or equivalent preferred shares, if applicable) upon
the exercise of any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose
name any certificate for Preferred Shares (or Common Shares or equivalent
preferred shares, if applicable) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the
Preferred Shares (or Common Shares or equivalent preferred shares, if
applicable) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the transfer books of the Company for the
Preferred Shares (or Common Shares or equivalent preferred shares, if
applicable) are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Shares (or
Common Shares or equivalent preferred shares, if applicable) for which the
Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
<PAGE>
each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller
number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the
Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; PROVIDED, HOWEVER, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event that
any Person shall become an Acquiring Person, each Right shall
thereafter entitle the holder to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the then
current number of one one-hundredths of a Preferred Share purchaseable
upon exercise of such Right, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share purchaseable upon exercise of such
Right and dividing that product by (y) 50% of the then current per
share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person became an
Acquiring Person. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish
the benefits intended to be afforded by the Rights.
From and after the time any Person becomes an Acquiring Person,
any Rights that are or were acquired or beneficially owned by
<PAGE>
such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void and any holder of such Rights shall thereafter
have no right to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring
Person (or any Associate or Affiliate thereof) whose Rights would be
void pursuant to the preceding sentence; no Right Certificate shall
be issued at any time upon the transfer of any Rights to an
Acquiring Person (or any Associate or Affiliate thereof) whose Rights
would be void pursuant to the preceding sentence or to any nominee of
such Acquiring Person (or Associate or Affiliate); and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring
Person (or any Associate or Affiliate thereof) whose Rights would be
void pursuant to the preceding sentence shall be cancelled.
(iii) In the event the Company is required to issue any Common
Shares pursuant to subparagraph (ii) of this paragraph (a), the
Company may, at its option, substitute Preferred Shares (or
equivalent preferred shares, as such term is defined in
Section 11(b) hereof) for Common Shares so issuable, at the initial
rate of one one-hundredth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the product of (A) the fraction
of a Preferred Share or equivalent preferred share delivered in lieu
of each Common Share multiplied by (B) the number of votes to which
a whole Preferred Share or equivalent preferred share is then entitled
shall equal the number of votes to which one Common Share is then
entitled.
(iv) In the event that there shall not be sufficient Common
Shares (or, if the Company has elected to make a substitution as
provided in subparagraph (iii) of this paragraph (a), Preferred
Shares or equivalent preferred shares of the Company) issued but not
outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with subparagraph (ii) (and
subparagraph (iii), if applicable) of this paragraph (a), the Company
shall (A) determine the excess of (1) the value of the Common Shares
(or Preferred Shares or equivalent preferred shares) issuable upon
the exercise of a Right (the "Current Value") over (2) the Purchase
Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Common Shares
(or Preferred Shares or equivalent preferred shares), upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the Company,
(4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been
<PAGE>
determined by the Board of Directors of the Company based upon the
advice of one or more investment or financial advisors selected by
the Board of Directors of the Company; PROVIDED, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the first
date on which any Person became an Acquiring Person, then the
Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (or Preferred Shares or equivalent preferred
shares), to the extent available, and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common Shares (or
Preferred Shares or equivalent preferred shares) could be authorized
for issuance upon exercise in full of the Rights, the 30-day period
set forth above may be extended to the extent necessary, but not
more than 90 days after the first date on which any Person became
an Acquiring Person, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To
the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this subparagraph
(iv), the Company (x) shall provide, subject to the second paragraph
of subparagraph (ii) of this paragraph (a), that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this subparagraph
(iv), the value of a Common Share (or Preferred Share or equivalent
preferred share) shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Common Share on the first date
on which any Person became an Acquiring Person.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than
the then current per share market price of the Preferred Shares (as defined
<PAGE>
in Section 11(d)) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price
of the total number of Preferred Shares and/or equivalent preferred shares so
to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price of
the Preferred Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent)
of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; PROVIDED, HOWEVER, that in no event
shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to
be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
<PAGE>
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of
such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed
or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed
or admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be conclusively deemed to
be the current per share market price of the Common Shares as
<PAGE>
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share
or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), subject to the provisions of Sections 11(a) and 13
hereof, upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to
such
<PAGE>
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of the-number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares at such adjusted Purchase Price.
<PAGE>
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Preferred Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares
or issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i)
the number of one one-hundredths of a Preferred Share purchasable after such
event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) each Common Share outstanding immediately after
such event shall have issued with respect to it that number of Rights which
each Common Share outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred
<PAGE>
Shares a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25 hereof.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. In the event, directly or indirectly, (a) the Company shall
consolidate with, or merge with and into, any other Person and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (b) any Person shall consolidate with, or merge with and into, the
Company and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with Such consolidation or
merger, all or part of the Common Shares of the Company shall be changed into
or exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power, respectively, of the
Company and its Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly owned Subsidiaries, then, and
in each such case, proper provision shall be made so that (i) each holder of
a Right (except as otherwise provided in this Agreement) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-hundredths of
a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of such other Person (including the Company as successor
thereto or as the surviving corporation) as shall equal the result obtained
by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price
of the Common Shares of such other Person (determined pursuant to Section
11(d) hereof) on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such issuer; and (iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. The Company shall
not consummate any such consolidation, merger, sale or transfer unless prior
thereto the Company and such issuer shall have executed and delivered to the
Rights Agent a supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this Section 13 if at
the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions
of this Section 13
<PAGE>
shall similarly apply to successive mergers or consolidations or sales or
other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it, or by scrip; PROVIDED,
that (i) if the Company issues such scrip, then such scrip shall not confer
upon the holder any voting or other rights of a stockholder of the Company,
but the Company shall from time to time, upon demand of any holder of such
scrip and the surrender of scrip for fractional Preferred Shares aggregating
one whole Preferred Share, issue one whole Preferred Share to such holder and
(ii) if the Company issues depositary receipts pursuant to any such
agreement, such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and
<PAGE>
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Preferred Share. For the purposes of this Section 14(b), the current market
value of a Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof
<PAGE>
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
in the premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares (or for scrip or
depositary receipts evidencing fractional interests in Preferred Shares) or
Common Shares or for other securities of the Company, instrument of
assignment or transfer, power if attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT, Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting
<PAGE>
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of
the predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned,
the Rights Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman,
any Vice Chairman, the President, any Vice President, the Treasurer, the
Secretary or the Controller of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
<PAGE>
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of actual notice from
the Company stating that a change or adjustment is required and specifying
the manner and amount thereof); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agents is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman, any Vice Chairman, the President, any Vice President,
the Secretary, the Treasurer or the Controller of the Company, and to apply
to such officers for advice of instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the
<PAGE>
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. CHANCE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of New
York (or of any other state of the United States so long as such corporation
is authorized to do business as a banking institution in the State of New
York, in good standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has or is a subsidiary of a corporation which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares or Preferred Shares, and mail a notice
<PAGE>
thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all of the then outstanding Rights at a redemption
price of $.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be made effective
at such time on such basis and with such conditions as the Board of Directors
in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; PROVIDED, HOWEVER,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights, the Company shall
mail a notice of redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. EXCHANGE.
<PAGE>
(a) The Board of Directors of the Company may, at its option, at
any time after any person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of outstanding and exercisable Rights
(other than Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares (or equivalent preferred shares,
as such term is defined in Section 11(b) hereof) for Common Shares
exchangeable for Rights, at the initial rate of one one-hundredth of a
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the product of (i)
the fraction of a Preferred Share delivered in lieu of each Common Share
multiplied by (ii) the number To votes to which a whole Preferred Share is
then entitled shall equal the number of votes to which one Common Share is
then entitled.
<PAGE>
(d) In the event that there shall not be sufficient Common Shares
or Preferred Shares (or equivalent preferred shares) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares or
Preferred Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Common Share.
For the purposes of this paragraph (e), the current market value of a whole
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable
in Common Shares or to effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares), then, in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the
<PAGE>
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under
Section 11(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
First Bank System, Inc.
1200 First Bank Place East
Minneapolis, Minnesota 55480
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Morgan Shareholder Services Trust Company
30 West Broadway
New York, NY 10007
Attention: Tenders & Exchange Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time
to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; PROVIDED, HOWEVER, that from and
after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner
<PAGE>
which would adversely affect the interests of the holders of Rights. Without
limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections l(a) and 3(a) to not less than the greater
of (i) any percentage greater than the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan) and (ii)
10%.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 31. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the day and year first above
written.
<PAGE>
FIRST BANK SYSTEM, INC.
Attest:
By ________________________ By ________________________
Its _____________________ Its _____________________
MORGAN SHAREHOLDER
SERVICES TRUST COMPANY
Attest:
By ________________________ By ________________________
Its ____________________ Its ____________________
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK
(Par Value $1.00)
of
FIRST BANK SYSTEM, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
------------------------------------
The undersigned DO HEREBY CERTIFY that the following resolution was
adopted by the Board of Directors of First Bank System, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), as required by Section 151
of the General Corporation Law at a meeting duly called and held on December
21, 1988:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation of the Corporation, the Board of Directors
hereby creates a series of Preferred Stock, par value $1.00 (the "Preferred
Stock"), of the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences and limitations thereof as
follows:
Series A Junior Participating Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Junior Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 700,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; PROVIDED,
that no decrease shall reduce the number of shares of Series A Junior
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
<PAGE>
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Junior Preferred Stock with respect to dividends, the holders
of shares of Series A Junior Preferred Stock, in preference to the holders of
Common Stock, par value $1.25 (the "Common Stock"), of the Corporation, and
of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Junior Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Junior Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A Junior Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Preferred Stock from the Quarterly
<PAGE>
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Junior Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis amount all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed for
the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A
Junior Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Junior Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Junior Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
<PAGE>
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Junior Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Preferred Stock, except dividends paid ratably on the Series A Junior
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding
up) to the Series A Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Junior Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Preferred Stock, except
in accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good
<PAGE>
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Junior
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock subject to the conditions and restrictions
on issuance set forth herein, in the Certificate of Incorporation, or in any
other Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Junior Preferred Stock unless, prior thereto, the holders of shares of Series
A Junior Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders of
shares of Series A Junior Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Preferred Stock, except distributions made ratably on the Series A Junior
Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Junior Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
<PAGE>
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Series A Junior Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series A Junior Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. NO REDEMPTION. The shares of Series A Junior Preferred
Stock shall not be redeemable.
Section 9. RANK. The Series A Junior Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Junior
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Series A
Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman and attested by its Secretary
this ____ day of December, 1988.
_________________________
Chairman
Attest:
________________________
Secretary
<PAGE>
EXHIBIT B
---------
Form of Right Certificate
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER JANUARY 4, 1999 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT
Right Certificate
FIRST BANK SYSTEM, INC.
This certifies that ______, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of December 21, 1988 (the "Rights Agreement"), between
First Bank System, Inc., a Delaware corporation (the "Company"), and Morgan
Shareholder Services Trust Company (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York City time, on January
4, 1999 at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $1.00 (the
"Preferred Shares"), of the Company, at a purchase price of $___ (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced by
this Right Certificate (and the number of one one-hundredths of a Preferred
Share which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of _______,
19__, based on the Preferred Shares as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the
Rights Agent.
<PAGE>
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in
part for Preferred Shares, equivalent preferred shares of the Company or
shares of the Company's Common Stock, par value $1.25.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by scrip or depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _____________, 19 __.
ATTEST: FIRST BANK SYSTEM, INC.
Attest:
By ________________________ By ________________________
Its ____________________ Its ____________________
Countersigned for purposes of
authentication only:
MORGAN SHAREHOLDER SERVICES
TRUST COMPANY
By ________________________
Its ___________________
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________ hereby sells, assigns and
transfers unto _____________________________________________________________
____________________________________________________________________________
(Please print name and address of transferee)
____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Please insert social security
number, taxpayer identification
number or other identifying number
Dated: ______________, 19 __
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- -----------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
_________________________
Signature
- -----------------------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Right Certificate.)
To FIRST BANK SYSTEM, INC.:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
number, taxpayer identification
number or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security,
taxpayer identification number
or other identifying number
______________________________________________________________________________
(Please print name and address)
Dated: ___________, 19 __
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- ------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_________________________
Signature
- -------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) and
such Assignment or Election to Purchase will not be honored.
<PAGE>
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On December 21, 1988, the Board of Directors of First Bank System,
lnc. (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $1.25
(the "Common Shares"), of the Company. The dividend is payable on January
4, 1989 (the "Record Date") to the stockholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 (the "Preferred Shares"), of the Company at a price of $80.00
(the "Purchase Price"), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement dated as of December 21, 1988
(the "Rights Agreement") between the Company and Morgan Shareholder Services
Trust Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 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 Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of such outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates outstanding as of the
Record Date, by such Common Share certificate.
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the Common Shares. Until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding as of the
Record Date (even without such notation), will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Right Certificates alone will
evidence the Rights.
<PAGE>
The Rights are not exercisable until the Distribution Date. The
Rights will expire on January 4, 1999 (the "Final Expiration Date"), unless
the Rights are earlier redeemed or exchanged by the Company, in each case, as
described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares
of certain rights or warrants to subscribe for or Purchase Preferred Shares
at a price, or securities convertible into Preferred Shares with a conversion
price, less than the then current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Preferred Shares) or
of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares
or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be
entitled to an aggregate dividend of 100 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred
Shares will be entitled to a minimum preferential liquidation payment of $100
per share but will be entitled to an aggregate payment of 100 times the
payment made per Common Share. Each Preferred Share will have 100 votes,
voting together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in
a Preferred Share purchasable upon exercise of each Right should approximate
the value of one Common Share.
In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 20% or more of the outstanding Common
Shares, proper provision shall be made so that each holder of a Right, other
than any person
<PAGE>
or group of affiliated or associated persons beneficially owning 20% or more
of the outstanding Common Shares (whose Rights will thereafter be void) will
thereafter have the right to receive upon exercise that number of Common
Shares having a market value of two times the exercise price of the Right
(or, at the option of the Company, an equivalent number of one one-hundredths
of a Preferred Share).
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold, proper provision will be made so that each holder of
a Right will thereafter have the right to receive, upon the exercise thereof
at the then current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Right.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of
the outstanding Common Shares and prior to the acquisition by any person or
group of affiliated or associated persons of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the
outstanding Rights (which does not include Rights owned by any person or
group which have become void), in whole or in part, for Common Shares or
Preferred Shares (or shares of any other class or series of the Company's
preferred stock having equivalent rights, preferences and privileges) at an
exchange ratio of one Common Share, or one one-hundredth of a Preferred
Share, per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
scrip or depositary receipts) and in lieu thereof, an adjustment in cash will
be made based on the market price of the Preferred Shares on the last trading
day prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of
the outstanding Common Shares, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective
at such time on such basis and with such conditions as the Board of Directors
in its sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights (including
amending the Rights to lower the 20% triggering thresholds described above to
not less than
<PAGE>
the greater of (i) any percentage greater than the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned
by any person or group of affiliated or associated persons and (ii) 10%),
except that, from and after such time as any person or group of affiliated or
associated persons becomes the beneficial owner of 20% (or any lesser
threshold previously established by the Board) of the outstanding Common
Shares, no such amendment may adversely affect the interests of the holders
of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A dated December 21, 1988. A copy of the Rights Agreement is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
<PAGE>
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1 dated as of May 30, 1990, to the Rights Agreement, dated
as of December 21, 1988 (the "Rights Agreement"), between First Bank System,
Inc., a Delaware corporation (the "Company"), and First Chicago Trust Company
of New York, a New York trust company, as Rights Agent (the "Rights Agent").
WITNESSETH:
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement specifying the terms of the Rights (as defined therein); and
WHEREAS, Section 27 of the Rights Agreement provides in relevant
part as follows:
"Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order .... to make any other provisions
with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent ... "; and .
WHEREAS, pursuant to certain Stock Purchase Agreements, each dated
May 30, 1990, one such agreement (the "Corporate Partners Purchase
Agreement"), being among Corporate Partners, L.P., Corporate Offshore
Partners, L.P. and The State Board of Administration of Florida (the "State
Board"), solely in its capacity as a managed account and not in its
individual capacity, as purchasers (collectively, the "Purchasers"),
Corporate Advisors, L.P., and the Company, and a second such agreement (the
"State Board Purchase Agreement") being between the State Board in its
individual capacity and the Company, pursuant to which the Company has agreed
to sell, and the Purchasers have agreed to purchase, a number of shares of
the Company's common stock and certain other securities of the Company; and
WHEREAS, it is a condition to the transactions contemplated by the
Corporate Partners Purchase Agreement and the State Board Purchase Agreement
that the Rights Agreement be amended as hereinafter provided; and
WHEREAS, all acts and things necessary to constitute this Amendment
as a valid agreement according to its terms, have been done and performed,
and the execution and signing by the Company and the Rights Agent of this
Amendment have in each and all respects been duly authorized by the Company
and the Rights Agent;
<PAGE>
NOW, THEREFORE, in consideration of the promises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereby agree as follows:
1. Section 1(a) of the Rights Agreement (which defines an
"Acquiring Person" for purposes of the Rights Agreement) is hereby amended by
deleting the first sentence thereof and inserting the following in place
thereof:
"(a) "Acquiring Person" shall mean any Person (as such term as
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall
be the Beneficial Owner (as such term is hereinafter defined) of 20% or
more of the Common Shares of the Company then outstanding, but shall not
include (i) the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan, (ii) either of the Corporate
Partnerships or Corporate Advisors (as such terms are hereinafter defined)
or any of their respective Affiliates or Associates, provided that none of
the Corporate Partnerships or Corporate Advisors are then in breach of the
covenant set forth in section 5.02 of the Corporate Partners Purchase
Agreement (as such term is hereinafter defined) and in receipt of a written
notice from the Company asserting such a breach or (iii) the State Board
(as such term is hereinafter defined) or any of its Affiliates or
Associates, provided that the State Board is not then in breach of its
covenant set forth in section 5.01 of the State Board Purchase Agreement
(as such term is hereinafter defined) and in receipt of a written notice
from the Company asserting such a breach.
2. The following terms are hereby added to Section 1 of the
Rights Agreement at the end thereof as additional terms defined thereby for
purposes of the Rights Agreement:
"(n) "Corporate Advisors" shall mean Corporate Advisors, L.P., a
Delaware limited partnership.
(o) "Corporate Partners Purchase Agreement" shall mean the
Stock Purchase Agreement, dated as of May 30, 1990 among each of the
Corporate Partnerships, the State Board (solely in its capacity as a
managed account and not in its individual capacity), Corporate Advisors
and the Company.
(p) "Corporate Partnerships" shall mean Corporate Partners,
L.P., a Delaware limited partnership, and Corporate Offshore Partners,
L.P., a
-2-
<PAGE>
Bermuda limited partnership, and "Corporate Partnership" shall mean either
of such Persons.
(q) "State Board" shall mean The State Board of Administration
of Florida, a body corporate organized under the constitution of the State
of Florida.
(r) "State Board Purchase Agreement" shall mean the Stock
Purchase Agreement, dated as of May 30, 1990 between the State Board in its
individual capacity and the Company.
3. Except as amended by this Amendment No. 1 to the Rights
Agreement, the Rights Agreement shall continue in full force and effect, and
the Company and the Rights Agent hereby ratify and confirm the Rights
Agreement as so amended hereby.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to the Rights Agreement to be duly executed and attested, all as of the
day and year first above written.
FIRST BANK SYSTEM, INC.
By: /s/ Michael J. O'Rourke
--------------------------------
Name:
Title: Sr. Vice President
Attest:
By: /s/ Ann Underbrink
----------------------------
Name:
Title: Assistant Secretary
FIRST CHICAGO TRUST
COMPANY OF NEW YORK
By: /s/ S. Russo
--------------------------------
Name: Sal Russo
Title: Assistant Vice President
Attest:
By: /s/ Joanne Gorostiola
------------------------------
Name: Joanne Gorostiola
Title: Customer Service Officer
-4-
<PAGE>
AMENDMENT NO. 2
TO
RIGHTS AGREEMENT
----------------
This Amendment No. 2 to Rights Agreement, dated as of February 17,
1993, between First Bank System, Inc., a Delaware corporation (the
"Company"), and First Chicago Trust Company of New York (formerly Morgan
Shareholder Services Trust Company), as Rights Agent (the "Rights Agent").
WITNESSETH:
WHEREAS, the Company and the Rights Agent have previously entered
into a Rights Agreement, dated as of December 21,1988 (the "Rights
Agreement"), to specify the terms of the Rights (as defined therein), and
have previously entered into Amendment No. 1 thereto dated as of May 30,
1990; and
WHEREAS, the Company now deems it desirable to amend the Rights
Agreement pursuant to the provisions of Section 27 of the Rights Agreement to
make certain modifications to the Rights Agreement, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Section 7(a) of the Rights Agreement is hereby amended to read in
its entirety as follows:
"(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal stock transfer
office of the Rights Agent, together with payment of the Purchase Price
for each one one-hundredth of a Preferred Share (or such other number of
Preferred Shares, Common Shares or equivalent preferred shares as shall
then be issuable upon exercise of such Right as provided in Sections 11
and 13 hereof) as to which the Rights are exercised, at or prior to the
earliest of (i) the earlier of (A) the date which is 24 months after the
first date upon which the Company can generally be acquired by bank
holding companies, and the Company is generally permitted to acquire banks,
principally located in at least fifteen of the twenty states which as of
September 30,1992 had the largest amount of bank deposits (which states are
listed on Exhibit D hereto) or (B) the close of business on January 4, 1999
(the earlier of such dates being hereinafter referred to as the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or
<PAGE>
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof (the "Exchange Date")."
2. Section 25 of the Rights Agreement is hereby amended by adding
subsection (c) thereto as follows:
"(c) The Company shall, as soon as practicable after the occurrence of
the first date upon which the Company can generally be acquired by bank
holding companies, and the Company is generally permitted to acquire banks,
principally located in at least 15 of the 20 states listed in Exhibit D
hereto, give to the Rights Agent and (if the Distribution Date shall have
occurred) to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such date, which notice
shall specify the date which is 24 months after such first date for
purposes of determining the Final Expiration Date."
3. The "Form of Right Certificate" which constitutes Exhibit B to
the Rights Agreement is hereby amended to read in its entirety as set
forth in Annex I hereto.
4. The Rights Agreement is hereby amended by adding Exhibit D
thereto as set forth in Annex II hereto.
5. All other provisions of the Rights Agreement will remain in full
force and effect as set forth in the Rights Agreement and are not affected
in any way by this Amendment No. 2 to Rights Agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to Rights Agreement to be duly executed and attested, all as of the day
and year first above written.
FIRST BANK SYSTEM, INC.
By /s/ R. Zona
-----------------------------
Its
-------------------------
Attest:
By /s/ Michael J. O'Rourke
----------------------------
Its Secretary
------------------------
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By /s/ John Baumbach
-----------------------------
Its Vice President
-------------------------
Attest:
By /s/ Joanne Gorostiola
------------------------------
Its Customer Service Officer
--------------------------
-3-
<PAGE>
ANNEX I TO AMENDMENT NO. 2 TO RIGHTS AGREEMENT
----------------------------------------------
EXHIBIT B
---------
Form of Right Certificate
Certificate No. R- ____ Rights
NOT EXERCISABLE AFTER THE EARLIER OF (A) THE DATE WHICH IS 24 MONTHS AFTER
THE FIRST DATE UPON WHICH THE COMPANY CAN BE ACQUIRED BY BANK HOLDING
COMPANIES, AND THE COMPANY IS GENERALLY PERMITTED TO ACQUIRE BANKS,
PRINCIPALLY LOCATED IN AT LEAST 15 OF THE 20 STATES LISTED ON EXHIBIT D TO
THE RIGHTS AGREEMENT OR (B) JANUARY 4, 1999 (THE EARLIER OF SUCH DATES BEING
HEREINAFTER REFERRED TO AS THE "FINAL EXPIRATION DATE") OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
FIRST BANK SYSTEM, INC.
This certifies that ____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, as amended (the "Rights Agreement"), between First
Bank System, Inc., a Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, as Rights Agent (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m., New York City time,
on the Final Expiration Date at the principal stock transfer office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, without par value (the "Preferred Shares"), of
the Company, at a purchase price of $__________ per one one-hundredth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
one one-hundredth of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of __________, 19__, based on the Preferred Shares
as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredth of a Preferred Share which
may be purchased upon the exercise of the
B-1
<PAGE>
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the
Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal corporate trust office of the Rights Agent,
may be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in
part for Preferred Shares, equivalent preferred shares of the Company or
shares of the Company's Common Stock, par value $1.25.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by scrip or depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced
B-2
<PAGE>
by this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________, 19_.
FIRST BANK SYSTEM, INC.
By
------------------------------
Its
---------------------------
Attest:
By
---------------------------
Its
-----------------------
Countersigned for purposes
of authentication only:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By
---------------------------
Its
-----------------------
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________________________
hereby sells, assigns and transfers unto______________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Please insert social security number,
taxpayer identification number or
other identifying number
Dated:_____________, 19_
____________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
____________________
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
B-4
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To FIRST BANK SYSTEM, INC.:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security number,
taxpayer identification number or
other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security number,
taxpayer identification number or
other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated: __________, 19_
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
B-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
__________________________
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) and
such Assignment or Election to Purchase will not be honored.
B-6
<PAGE>
ANNEX II TO AMENDMENT NO. 2 TO RIGHTS AGREEMENT
EXHIBIT D
---------
List of States
- --------------
1. New York
2. California
3. Illinois
4. Pennsylvania
5. Texas
6. Florida
7. Massachusetts
8. New Jersey
9. Ohio
10. Michigan
11. North Carolina
12. Virginia
13. Georgia
14. Missouri
15. Connecticut
16. Indiana
17. Minnesota
18. Maryland
19. Tennessee
20. Washington
D-1
<PAGE>
AMENDMENT NO. 3
TO
RIGHTS AGREEMENT
Amendment No. 3 to Rights Agreement, dated November 9, 1995, to
Rights Agreement, dated as of December 21, 1988 (as amended by Amendment No.
1, dated as of May 30, 1990, and by Amendment No. 2, dated as of February 17,
1993, the "Rights Agreement"), between First Bank System, Inc., a Delaware
corporation (the "Company"), and First Chicago Trust Company of New York
(formerly Morgan Shareholder Services Trust Company) (the "Rights Agent")
(all terms not otherwise defined herein shall have the meanings ascribed to
them in the Rights Agreement).
WITNESSETH:
WHEREAS, the Company and the Rights Agent have previously entered
into the Rights Agreement specifying the terms of the Rights;
WHEREAS, Section 27 of the Rights Agreement provides that the
Company may from time to time amend the Rights Agreement to make any
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such amendment to be evidenced by a writing signed by the
Company and the Rights Agent;
WHEREAS, the Company, First Interstate Bancorp, a Delaware
corporation ("First Interstate"), and Eleven Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of the Company ("Eleven"), have
entered into an Agreement and Plan of Merger, dated as of November 5, 1995
(the "Merger Agreement"), pursuant to which Eleven would merge with and into
First Interstate, with First Interstate as the surviving corporation in the
merger;
WHEREAS, in connection with the Merger Agreement the Company and
First Interstate have entered into a Stock Option Agreement, dated November
5, 1995 (the "Parent Stock Option Agreement"), pursuant to which the Company
has granted to First Interstate an option (the "Parent Stock Option") to
purchase certain shares of the Company's Common Stock under certain
circumstances and upon certain terms and conditions;
WHEREAS, the Parent Stock Option Agreement provides that in no
event shall (i) the number of shares of Common Stock for which the Parent
Stock Option is then exercisable, plus (ii) the number of Option Shares (as
defined in the Parent Stock Option Agreement) theretofore purchased
thereunder, plus (iii) the number of other shares of Common Stock of which
First Interstate is the Beneficial Owner exceed 19.9% of the issued and
outstanding shares of Common Stock of the Company (computed in accordance
with the procedures set forth in the Rights Agreement) until after such time
as the Rights Agreement is amended to provide that neither the execution of
the Parent Stock Option Agreement or the Merger Agreement
<PAGE>
nor the exercise of the Parent Stock Option shall result in First Interstate
becoming an Acquiring Person;
WHEREAS, as a result neither First Interstate nor any other Person
has become an Acquiring Person;
WHEREAS, in the Parent Stock Option Agreement the Company agreed
promptly to take all steps necessary to enter into such an amendment to the
Rights Agreement with the Rights Agent; and
WHEREAS, the Board of Directors of the Company has duly approved
amending the Rights Agreement to contain the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
1. AMENDMENT TO SECTION 1(a). Section 1(a) of the Rights
Agreement is hereby amended by replacing "or" before clause (iii) with ","
and by adding the following to the end of the first sentence thereof:
"or (iv) any First Interstate Party, but only if and for so long as (A)
First Interstate is in compliance with all material terms, conditions and
obligations imposed upon it by the Merger Agreement and the Parent
Stock Option Agreement and (B) no First Interstate Party is the Beneficial
Owner of any Common Shares of the Company then outstanding other
than: (u) Common Shares of the Company of which any First Interstate
Party is or becomes the Beneficial Owner by reason of the approval,
execution or delivery of the Merger Agreement or the Parent Stock Option
Agreement or by reason of the consummation of any transaction
contemplated in the Merger Agreement, the Parent Stock Option
Agreement or both; (v) Common Shares of the Company of which any
First Interstate Party is the Beneficial Owner on the date hereof;
(w) Common Shares of the Company of which any First Interstate Party
becomes the Beneficial Owner after the date hereof; PROVIDED, that the
aggregate number of Common Shares of the Company which may be
Beneficially Owned by the First Interstate Parties pursuant to this clause
(w) shall not exceed 5% of the Common Shares of the Company
outstanding; (x) Common Shares of the Company acquired in satisfaction
of debts contracted prior to the date hereof by any First Interstate Party
in good faith in the ordinary course of such First Interstate Party's
banking business; (y) Common Shares of the Company held by any First
Interstate Party in a BONA FIDE fiduciary or depository capacity; and
(z) Common Shares of the Company owned in the ordinary course of business
by either (A) an investment
-2-
<PAGE>
company registered under the Investment Company Act of 1940, as amended,
or (B) an investment account, for either of which any First Interstate
Party acts as investment advisor."
2. ADDITIONS TO SECTION 1. The following terms are hereby added
to Section 1 of the Rights Agreement as additional defined terms under the
Rights Agreement:
"(s) "First Interstate" shall mean First Interstate Bancorp, a
Delaware corporation.
(t) "First Interstate Parties" shall mean, collectively, First
Interstate and its Affiliates and Associates. "First Interstate Party"
shall have a correlative meaning.
(u) "Merger Agreement" shall mean the Plan and Agreement of
Merger, dated as of November 5, 1995, by and among the Company,
Eleven Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of the Company, and First Interstate, as the same may be
amended from time to time.
(v) "Parent Stock Option Agreement" shall mean the Stock
Option Agreement, dated November 5, 1995, between First Interstate, as
grantee, and the Company, as issuer, as the same may be amended from
time to time."
3. OTHER PROVISIONS. The other provisions of the Rights
Agreement shall continue in full force and effect as set forth in the Rights
Agreement and are not affected in any way by this Amendment No. 3.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 3 to be duly executed and attested on the day and year first set forth
above.
FIRST BANK SYSTEM, INC.
By: /s/ David J. Parrin
--------------------------------
Name: David J. Parrin
Title: Senior Vice President &
Controller
Attest:
By: /s/ Howell D. McCullough
------------------------------
Name: Howell D. McCullough
Title: Senior Vice President
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ Ralph Persico
---------------------------------
Name: Ralph Persico
Title: Customer Service Officer
Attest:
By: /s/ Al Diorio
-------------------------------
Name: Al Diorio
Title: Assistant Vice President
-4-
<PAGE>
EXHIBIT 5.1
[Dorsey & Whitney P.L.L.P. Letterhead]
January 18, 1996
First Bank System, Inc.
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to First Bank System, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on
Form S-4 (the "Registration Statement") relating to shares of the Company's
common stock, $1.25 par value (the "Common Stock"), to be issued in
connection with the merger (the "Merger") of FirsTier Financial, Inc., a
Nebraska corporation, with and into the Company, as described in the Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus") constituting part of
the Registration Statement.
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our
opinions set forth below.
In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness
of all signatures, and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all
parties to agreements or instruments relevant hereto other than the Company,
that such parties had the requisite power and authority (corporate or
otherwise) to execute, deliver and perform such agreements or instruments,
that such agreements or instruments have been duly authorized by all
requisite action (corporate or otherwise), executed
<PAGE>
First Bank System, Inc.
January 18, 1996
Page 2
and delivered by such parties, and that such agreements or instruments are
the valid, binding and enforceable obligations of such parties. As to
questions of fact material to our opinions, we have relied upon certificates
of officers of the Company and of public officials.
Based on the foregoing, we are of the opinion that the shares of the
Common Stock to be issued in connection with the Merger, when issued in
accordance with the terms of the Merger Agreement (as defined in the Proxy
Statement/Prospectus), will be duly authorized, validly issued, fully paid
and nonassessable.
Our opinions expressed above are limited to the Delaware General
Corporation Law.
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement, and to the reference to this firm under the heading
"Legal Opinions" in the Proxy Statement/Prospectus.
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
PFC
<PAGE>
Exhibit 8.1
[Wachtell, Lipton, Rosen & Katz Letterhead]
January 10, 1996
FirstTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102
Ladies/Gentlemen:
We have acted as special counsel to FirsTier Financial, Inc., a Nebraska
corporation ("FirsTier"), in connection with the proposed merger (the
"Merger") of FirsTier with and into First Bank System Inc., a Delaware
corporation ("FBS"), upon the terms and conditions set forth in the
Agreement of Merger and Consolidation (the "Agreement") dated as of August 6,
1995 by and between FBS and FirsTier. At your request, and pursuant to the
Agreement, we are rendering our opinion concerning the material federal
income tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of FBS and the consent of FirsTier, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of FBS and of FirsTier
(copies of which are attached hereto and which are incorporated herein by
reference), and we have assumed that such certificates will be complete and
accurate as of the Effective Time. Any capitalized term used and not defined
herein has the meaning given to it in the Proxy Statement-Prospectus of FBS
and FirsTier, as amended through the date hereof (the "Proxy
Statement-Prospectus").
<PAGE>
FirsTier Financial, Inc.
January 10, 1996
Page 2
We have also assumed that the transactions contemplated by the Agreement
will be consummated in accordance with the Agreement and as described in the
Proxy Statement-Prospectus and that the Merger will qualify as a statutory
merger under the applicable laws of the States of Nebraska and Delaware.
Based upon and subject to the foregoing, it is our opinion that, under
presently applicable law, the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and that accordingly the following will be all the material federal
income tax consequences of the Merger:
(i) No gain or loss will be recognized by the stockholders of
FirsTier upon the conversion of their shares of FirsTier Common
Stock into shares of FBS Common Stock pursuant to the terms of the
Merger to the extent of such conversion.
(ii) The tax basis of the shares of FBS Common Stock into which shares
of FirsTier Common Stock are converted pursuant to the Merger,
including any fractional interest, will be the same as the basis of
the shares of FirsTier Common Stock exchanged therefor.
(iii) The holding period for shares of FBS Common Stock, including any
fractional interest, into which shares of FirsTier Common Stock
are converted will include the period that such shares of FirsTier
Common Stock were held by the holder, provided such shares were a
capital asset of the holder.
(iv) The receipt of cash in lieu of the fractional share of FBS Common
Stock will be treated as if an FirsTier shareholder were issued
such stock and then had such stock redeemed, and will generally
result in recognition of gain or loss equal to the difference
between the amount of cash received and the holder's basis in the
fractional share, as determined above. The gain or loss will be
capital gain or loss if the FirsTier Common Stock were held as
capital assets, and will be long-term capital gain or loss if the
holding period for the fractional shares, as determined above, was
more than one year.
(v) No gain or loss will be recognized by FBS or FirsTier solely as a
result of the Merger.
<PAGE>
FirsTier Financial, Inc.
January 10, 1996
Page 3
This opinion may not be appliable to FirsTier stockholders who received
their FirsTier Common Stock pursuant to the exercise of employee stock
options or otherwise as compensation or who are not citizens or residents of
the United States.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an Exhibit to the Registration Statement on Form S-4
in respect of the shares of FBS Common Stock to be issued in connection with
the Merger, and to the reference to this opinion under the caption "Certain
Federal Income Tax Consequences to FirsTier Shareholders" and elsewhere in
the Proxy Statement-Prospectus included therein. In giving such consent, we
do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of First Bank System,
Inc. for the registration of 16,950,057 shares of its common stock and to
the incorporation by reference therein of our report dated January 24, 1995,
with respect to the consolidated financial statements of First Bank System,
Inc. included in its Current Report on Form 8-K dated March 3, 1995, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
January 17, 1996
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of First Bank
System, Inc. for the registration of 16,950,057 shares of its common stock
and to the incorporation by reference therein of our report dated January 16,
1995, with respect to the consolidated financial statements of First
Interstate Bancorp included in First Bank System, Inc.'s Current Report on
Form 8-K dated November 16, 1995, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Los Angeles, California
January 17, 1996
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 Registration Statement of our report dated
August 28, 1995, of FirsTier Financial, Inc. and Subsidiaries 1994 Financial
Statements included in First Bank System, Inc.'s Amendment No. 1 on Form 8-K/A
filed August 30, 1995, and all references to our firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
Omaha, Nebraska
January 17, 1996
<PAGE>
EXHIBIT 23.6
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
January 19, 1996
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102
Dear Sirs:
We hereby consent to the use in this Registration Statement on Form S-4
of First Bank System, Inc. of our letter to the Board of Directors of
FirsTier Financial, Inc. included as Appendix B to the Joint Proxy
Statement/Prospectus that is a part of this Registration Statement, and to
the references to such letter and to our firm in such Joint Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, or the rules and regulations of the Securities
and Exchange Commission thereunder (as amended, the "33 Act") nor do we admit
that we are experts with respect to any part of such Registration Statement
within the meaning of the term "experts" as used in the 33 Act.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Donald A. Moore, Jr.
------------------------------
Donald A. Moore, Jr.
Managing Director
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Lee R. Mitau, Richard A. Zona
and David J. Parrin, and each of them, his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign a Registration
Statement on Form S-4 of First Bank System, Inc., and any and all amendments
thereto, including post-effective amendments, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or the substitutes for such attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John F. Grundhofer Chairman, President, Chief December 29, 1995
- -------------------------- Executive Officer and Director
John F. Grundhofer (principal executive officer)
/s/ R.A. Zona Vice Chairman and December 29, 1995
- -------------------------- Chief Financial Officer
Richard A. Zona (principal financial officer)
Senior Vice President and , 1995
- -------------------------- Controller (principal -----------
David J. Parrin accounting officer)
/s/ Roger L. Hale
- -------------------------- Director December 29, 1995
Roger L. Hale
/s/ Delbert W. Johnson
- -------------------------- Director December 29, 1995
Delbert W. Johnson
/s/ Norman M. Jones
- -------------------------- Director December 29, 1995
Norman M. Jones
/s/ J.H. Kareken
- -------------------------- Director December 29, 1995
John H. Kareken
/s/ R.L. Knowlton
- -------------------------- Director December 29, 1995
Richard L. Knowlton
/s/ J.W. Levin
- -------------------------- Director December 29, 1995
Jerry W. Levin
/s/ Kenneth Macke
- -------------------------- Director December 29, 1995
Kenneth A. Macke
<PAGE>
/s/ Marilyn C. Nelson
- -------------------------- Director December 29, 1995
Marilyn C. Nelson
/s/ Edward J. Phillips
- -------------------------- Director December 29, 1995
Edward J. Phillips
- -------------------------- Director , 1995
James J. Renier -----------
/s/ S. Walter Richey
- -------------------------- Director December 29, 1995
S. Walter Richey
/s/ R. Robinson
- -------------------------- Director December 29, 1995
Richard L. Robinson
- -------------------------- Director , 1995
Richard L. Schall -----------
/s/ Lyle E. Schroeder
- -------------------------- Director December 29, 1995
Lyle E. Schroeder
-2-
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS EXHIBIT 99.1
FIRSTIER FINANCIAL, INC.
SPECIAL MEETING OF SHAREHOLDERS
, 1996
The undersigned hereby appoints and , and each of
them, as attorneys and proxies, each with full power of substitution, and hereby
authorizes each of them to represent and vote all shares of Common Stock of
FirsTier Financial, Inc. ("FirsTier") held of record by the undersigned on
, 1996, at , Omaha, Nebraska, at .m.
local time, on , 1996 and at any and all postponements or
adjournments thereof, as set forth below.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY BELOW AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. THIS PROXY WILL BE VOTED AS DIRECTED,
BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS STATED. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
1. PROPOSAL TO APPROVE THE AGREEMENT OF MERGER AND CONSOLIDATION, dated August
6, 1995 (the "Merger Agreement"), among First Bank System, Inc. ("FBS") and
FirsTier, and the transactions contemplated thereby. Pursuant to the Merger
Agreement, among other things, FirsTier will be merged with and into FBS,
and each issued and outstanding share of the Common Stock, $5.00 par value,
of FirsTier, will be exchanged for .8829 share of the Common Stock, $1.25
par value, of FBS.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
2. To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
The undersigned hereby revokes any other proxy or proxies heretofore given
to vote or act with respect to such Common Stock of FirsTier, and hereby
ratifies and confirms all action that said attorneys and proxies, their
substitutes, or any of them may lawfully take by virtue hereof.
Please sign this card exactly as your name appears below. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
Dated: _____________________, 1996
__________________________________
__________________________________
Signature(s)
<PAGE>
EXHIBIT 99.6
November 29, 1995
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102-2183
Ladies and Gentlemen:
This letter agreement is being entered into in connection with the
execution of an Agreement of Merger and Consolidation (the "Agreement"),
dated as of August 6, 1995, between First Bank System, Inc. (the "Acquiror")
and FirsTier Financial, Inc. (the "Company"), pursuant to which, among other
things, the Company will merge with and into the Acquiror (the "Merger"),
subject to the terms and conditions set forth in the Agreement. Capitalized
terms which are used but not defined herein shall have the meanings ascribed
to such terms in the Agreement.
The purpose of this letter agreement is to confirm our mutual
understandings and agreements with regard to the Amended and Restated
Employment Agreement between FirsTier Financial, Inc. and Jack R. McDonnell
(the "Executive"), dated March 20, 1995 (the "Employment Agreement") and the
other matters described in the Consent to Unanimous Action of the Executive
Committee of the Board of Directors of FirsTier Financial, Inc., dated
November 29, 1995 (the "Resolutions") (attached hereto as Exhibit 1) as it
relates to the Executive.
Each of the Company and the Acquiror hereby certifies to each other
as of the date hereof (the "Payment Date") that it is not now aware of any
facts applicable to it that would be likely to prevent approval of the Merger
by any governmental entity. The Company agrees to pay on the Payment Date, and
the Executive agrees to accept payment of, the amounts described in the
Resolutions, including, without limitation, (i) the amounts due pursuant to
the Employment Agreement and (ii) the amount due under the Company's Change
of Control Bonus Pool Plan, as modified by the Resolutions (the "Bonus Pool")
(it being acknowledged that the aggregate of all payments owing by the
Company pursuant to the Bonus Pool shall total $7 million in accordance with
Schedule A attached to the Resolutions), in each case as if a Change of
Control had taken place on the Payment Date and the Company had terminated
the Executive's employment (without cause and without the Executive's
consent) on such date. The Acquiror agrees that the total of all such
payments to the Executive will equal the total payment as set forth on the
schedule attached hereto as Exhibit 2 (the "Total Payments").
<PAGE>
FirsTier Financial, Inc.
November 29, 1995
Page 2
The Executive agrees, on his behalf and on behalf of his heirs,
assigns, executors, administrators and legal representatives, that (i) the
Company's payment of the amounts described in clauses (i) and (ii) of the
preceding paragraph shall be in full satisfaction of the Company's
obligations to make such payments to the Executive pursuant to the Employment
Agreement and the Bonus Pool and (ii) upon the Executives' receipt of such
payments, the Company will be released from any further obligation, liability
or claim under or relating to the obligation to make such payments to the
Executive pursuant to the Employment Agreement and the Bonus Pool whenever
arising; provided, that such satisfaction and release shall be without
prejudice to any other provision of the Employment Agreement, including,
without limitation, rights to payment of death benefits or supplemental
retirement benefits; and provided further, however, that nothing in this
letter agreement shall have any effect whatsoever on the rights of the
Executive to receive from the Company reimbursement with respect to taxes as
set forth in the penultimate paragraph of Section 5 of the Employment
Agreement.
In the event that the Merger is not consummated pursuant to the
Agreement after the Payment Period, the Acquiror shall, within five days
following termination of the Agreement in accordance with its terms, promptly
reimburse the Company for the Total Payments. In the event that the Company
becomes liable for any Taxes (including, without limitation, any interest or
penalties imposed with respect to such Taxes) as a result of the payments
made by the Acquiror to the Company pursuant to the preceding sentence (any
such liability being referred to herein as a "Company Tax Liability"), the
Acquiror shall pay to the Company such additional amounts as may be necessary
to make the Company whole on an after-tax basis (taking into account any
deductions actually utilized by the Company as a result of making the Total
Payments) as if such Company Tax Liability had never been incurred (after
taking into account any additional liability for Taxes imposed on the Company
as a result of any of the payments made by the Acquiror pursuant to this
sentence). In the event that the Executive becomes liable for any Taxes
(including, without limitation, any interest or penalties imposed with
respect to such Taxes) as a result of the Total Payments being paid hereunder
that would not have been payable had such payments been made immediately
after the consummation of the Merger (an "Executive Tax Liability"), the
Acquiror shall indemnify the Executive on an after-tax basis from and against
any such Executive Tax Liability. Acquiror shall indemnify the Company and
the Executive for reasonable expenses (including, without limitation,
reasonable attorneys' and accountants' fees) incurred as a result of any
audit or other proceeding relating to the defense of a Company Tax Liability
or Executive Tax Liability (together a "Tax Liability"). The Acquiror shall
make any payments required pursuant to this paragraph within five days after
it receives written notice that a Tax Liability or related expense actually
has been incurred.
<PAGE>
FirsTier Financial, Inc.
November 29, 1995
Page 3
In addition, the Acquiror acknowledges that, in accordance with the
Resolutions, and without any resulting reimbursement obligation being imposed
on the Acquiror, the Company shall cause all outstanding Incentive Stock
Options, Discounted Non-Qualified Stock Options (collectively, the
"Options"), Restricted Stock Options and Phantom Stock Options, if any,
granted to the Executive under the Company's Omnibus Equity Plan or any
predecessor plan to become immediately vested and exercisable as of the
Payment Date. The Executive agrees to exercise the Options prior to December
31, 1995.
Except as expressly set forth herein, this letter agreement shall
not be deemed to affect or modify any provision of the Employment Agreement.
This letter agreement may not be amended or terminated without
the prior written consent of the Company, the Executive and the Acquiror.
This letter agreement may be executed in any number of counterparts
which together shall constitute but one agreement.
This letter agreement may not be assigned by any party hereto and
shall be binding on and inure to the benefit of their respective successors
and, in the case of the Executive, heirs and other legal representatives.
Each of the Acquiror, the Company and the Executive has caused this
letter agreement to be duly executed as of the date first above written.
FIRST BANK SYSTEM, INC.
by: /s/ LEE R. MITAU
-------------------------------------
Executive Vice President, General
Counsel & Secretary
FIRSTIER FINANCIAL, INC.
by: /s/ DAVID A. RISMILLER
-------------------------------------
/s/ JACK R. McDONNELL
-------------------------------------
Jack R. McDonnell
<PAGE>
Exhibit 2
PAYMENT TO JACK McDONNELL
Base salary $ 672,750
Incentive 448,500
Average of last 3 years' incentives 146,667
Accrued vacation 17,308
Tax equalization payment 140,000
Salary replacement 28,125
Consulting payment 250,000
401(k) forfeiture 70,000
Health coverage estimate 255,000
CIC Bonus Pool 1,920,000
----------
Total Payment $3,948,350
----------
----------
<PAGE>
EXHIBIT 99.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made by and between FirsTier Financial, Inc., a Nebraska
corporation (the "Corporation"), and David A. Rismiller (the "Executive") dated
the fourth day of August, 1995.
WHEREAS, the Corporation has entered into an Agreement of Merger and
Consolidation (the "Merger Agreement") with First Bank System, Inc. of even
date herewith;
WHEREAS, the Executive has served as Chairman, President and Chief
Executive Officer of the Corporation, and has gained significant and valuable
knowledge and experience with respect to the Corporation in such capacities; and
WHEREAS, the Executive and the Corporation have entered into an Employment
Agreement dated as of the 20th day of March, 1995 (the "Prior Agreement"); and
WHEREAS, the Corporation wishes to provide for the continued involvement
of the Executive in the business of the Corporation following the consummation
of the Merger (as such term is defined in the Merger Agreement) and the
Executive desires to perform such services;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
provisions herein contained, the Executive and the Corporation agree with each
other as follows:
<PAGE>
1. EMPLOYMENT PERIOD. The Corporation hereby retains the Executive for
the period commencing on the Effective Date (as such term is defined in the
Merger Agreement) and ending on December 31, 1996 (the "Employment Period"),
during which time the Executive shall serve as Chairman and Chief Executive
Officer of First Bank Nebraska and shall be available to aid the Corporation in
the transition period following the acquisition of the Corporation with respect
to (a) general corporate and personnel organizational matters; (b) the
retention of employees and employee relations; (c) the retention of customers;
and (d) cost reduction and organizational efficiencies. During the Employment
Period, the Executive shall be an employee of the Corporation for all purposes,
including for purposes of the FirsTier Financial, Inc. Omnibus Executive
Benefit Plan (the "Omnibus Plan") as well as the Corporation's Restricted Stock
Bonus Plan, Discounted Nonqualified Stock Option Plan and Phantom Stock Unit
Plan (collectively, the "Stock Plans"). Except as specifically provided herein,
this Agreement shall not affect the Executive's rights under the Prior
Agreement.
2. SALARY AND BENEFITS. In consideration of the services and duties
agreed to be rendered and performed by the Executive hereunder, the Corporation
hereby covenants and agrees to pay the Executive a monthly salary at the rate
of one-twelfth of three hundred fifty thousand dollars ($350,000). During the
Employment Period, the Executive
-2-
<PAGE>
shall be entitled: to receive health and welfare and similar benefits
substantially the same as those provided by the Corporation to the Executive's
peer executives; to continued coverage under UNUM policy number LAD318392
providing for disability income (the "Disability Income Policy") as in effect
immediately prior to the Effective Date; and to continuation of the fringe
benefits provided by the Corporation to the Executive immediately prior to the
Effective Date (including, without limitation, providing and paying for: all
fees and charges associated with the Executive's membership at the Omaha
Country Club; an automobile (the "Automobile") comparable to the automobile
currently available for the Executive's use; and home security system) (the
"Fringe Benefits").
3. BONUS POOL. On the business day immediately preceding the date set
for the closing of the Merger Agreement, the Executive shall be entitled to
receive a cash Bonus as set forth in the FirsTier Financial, Inc. Change of
Control Bonus Pool Plan (the "Bonus Pool Plan"). The Corporation hereby
covenants and agrees that the Bonus awarded to the Executive pursuant to the
terms of the Bonus Pool Plan shall in no event be in an amount comprising less
than fifty per cent (50%) of the total available Bonus Pool.
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4. CHANGE IN CONTROL PAYMENT. Upon consummation of the Merger the
Corporation shall immediately pay to the Executive the termination benefit
provided by the Prior Agreement as if the Executive had been terminated by the
Corporation as a result of a Change in Control pursuant to Section 5 thereof
whether or not the Executive is then employed by the Corporation and regardless
of the reason for any such cessation of employment.
5. TERMINATION
(a) During the Employment Period the Corporation may not terminate the
Executive's employment other than for "Cause." For purposes of this Agreement,
Cause means either:
i. Conviction of a felony involving moral turpitude; or
ii. Conduct willfully injurious to the Corporation.
(b) At the end of the Employment Period or if, during the Employment
Period, the Corporation shall terminate the Executive's employment other than
for Cause or the Executive shall terminate employment for any reason:
i. The Executive shall be entitled to receive retirement benefits
under Article V of the Omnibus Plan payable as if the Executive were sixty-two
(62) years of age on the date of such cessation of employment, and for purposes
of
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calculating such retirement benefits the Executive shall be deemed to have
continued his employment with the Corporation through the attainment of
sixty-two (62) years of age at a base annual salary equal to the greater of
three hundred fifty thousand dollars ($350,000) and the Executive's base annual
salary immediately prior to such cessation of employment; the retirement
benefits payable to the Executive shall be calculated in accordance with the
assumptions underlying Exhibit A;
ii. The Executive shall be entitled to receive retiree life and
medical benefits no less favorable than those provided by the Corporation
immediately prior to the date of the signing of the Merger Agreement, and for
purposes of calculating the retiree benefits to which the Executive shall be
entitled the Executive shall be deemed to have continued his employment with
the Corporation through the attainment of sixty-two (62) years of age at a base
annual salary equal to the greater of three hundred fifty thousand dollars
($350,000) and the Executive's base annual salary immediately prior to such
cessation of employment;
iii. The Executive shall be entitled to the continuation of the
Fringe Benefits until the earlier of his death or the attainment of sixty-two
(62) years of age;
iv. All stock options, Bonus Shares, Phantom Stock Units and any
other rights and benefits granted to the Executive pursuant to the Stock Plans
shall immediately become
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fully vested and/or exercisable as set forth in Section 7 of the Prior
Agreement;
v. Effective as of the first premium date following such cessation
of employment, the Executive shall be entitled to assume and to continue his
coverage under the Disability Income Policy as in effect immediately prior to
such cessation of employment to the extent permissible under the terms of such
policy; such assumption and continuation of the Disability Income Policy shall
be at the Executive's own expense, provided, however, that the Corporation
shall be liable for and shall pay all premiums and other costs payable with
respect to such Disability Income Policy through the first premium date
following such cessation of employment;
vi. In accordance with the provisions of Section 6.2(d) of the
Omnibus Plan, the Executive shall be deemed to have reached his Normal
Retirement Date prior to such cessation of employment for purposes of
determining the Survivor Benefit to which the Executive and his beneficiary are
entitled pursuant to Article VI of the Omnibus Plan; and
vii. The Executive shall be entitled to purchase the Automobile from
the Corporation at a price not to exceed the Automobile's book value for
financial reporting purposes as of the date of such cessation of employment.
(c) In addition to the foregoing, in the event that, during the employment
period, the Corporation shall terminate
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the Executive's employment (other than for Cause) without the Executive's
written consent, the Executive shall be entitled to receive a termination
payment equal to the balance of his annual salary (no less than three hundred
fifty thousand dollars ($350,000)) that would be payable if his employment had
continued through the end of the calendar year during which such cessation of
employment occurs.
6. FULL SETTLEMENT. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not the Executive obtains other
employment. The Corporation agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Corporation, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case
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interest on any delayed payment at the applicable Federal rate provided for
in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
7. CERTAIN ADDITIONAL PAYMENTS. In the event it shall be determined that
any payment (within the meaning of Section 280G of the Code) or distribution to
or for the benefit of the Executive (determined without regard to any
additional payments required under this Section 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive from the Corporation an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. All determinations under this
Section 6 shall be made by a nationally recognized accounting firm selected by
the Executive.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall limit or
otherwise affect such rights as the
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Executive may have under any other agreements with, or plans or programs of,
the Corporation or any of its affiliated companies, including, without
limitation, the Prior Agreement, the Omnibus Plan or the Stock Plans. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Corporation or any of their affiliated
companies at or subsequent to the Effective Date including, but not limited to,
the Executive's entitlement to severance under the Prior Agreement shall be
payable in accordance with such plan or program, except as otherwise expressly
provided herein.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Corporation shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit or and be binding upon the
Corporation and its successors.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the
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same extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, "Corporation" shall mean
the Corporation as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Nebraska, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
David A. Rismiller
1223 South 113th Court
Omaha, Nebraska 68144
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IF TO THE CORPORATION:
FirsTier Financial, Inc.
1700 Farnam Street
Omaha, Nebraska 68102-2183
Attention: General Counsel
Fax: (402) 348-6221
with a copy to:
First Bank System, Inc.
First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Richard A Zona, Vice Chairman
and Chief Financial Officer
Fax: (612) 973-0410
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Corporation may withhold from any amounts payable under this
Agreement such amounts as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Corporation
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ David A. Rismiller
------------------------------------------
David A. Rismiller
FIRSTIER FINANCIAL, INC.
By /s/ Walter Scott
----------------------------------------
Walter Scott, Jr., Chairman of the
Executive Committee of the
Board of Directors
Acknowledged and Agreed to:
FIRST BANK SYSTEM INC.
By /s/ R.A. Zona
------------------------------
Richard A. Zona, Vice Chairman
and Chief Financial Officer
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