-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O143C4kXes2RFo1CCRVEBdeDzJ4FLZ1ZydXtk7awkKr2Q+szeFh9BIcQPF37j67t 5+wkEUeg0m1IjwhD0+NtBg== 0000950130-95-002591.txt : 19951130 0000950130-95-002591.hdr.sgml : 19951130 ACCESSION NUMBER: 0000950130-95-002591 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19951127 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO & CO CENTRAL INDEX KEY: 0000105598 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132553920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06214 FILM NUMBER: 95596524 BUSINESS ADDRESS: STREET 1: 420 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94163 BUSINESS PHONE: 4154771000 MAIL ADDRESS: STREET 1: 343 SANSOME ST 3RD FL STREET 2: WELLS FARGO BANK CITY: SAN FRANCISCO STATE: CA ZIP: 94163 DEFA14A 1 SOLICITING MATERIAL PURSUANT TO RULE 14A-12 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the registrant / / Filed by party other than the registrant /x/ Check the appropriate box: / / Preliminary proxy statement / / Confidential, for Use of the / / Definitive proxy statement Commission Only (as permitted by / / Definitive additional materials Rule 14a-6(e)(2)) /x/ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 FIRST INTERSTATE BANCORP (Name of Registrant as Specified In Its Charter) WELLS FARGO & COMPANY (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): /x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a- 6(j)(2). / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)4 and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: (2) Form Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: [LETTERHEAD OF WELLS FARGO & CO.] NEWS RELEASE FOR IMMEDIATE RELEASE Kim Kellogg 415-396-3606 - --------------------- Mon., Nov. 27, 1995 Steve Bruce 212-371-5999 __________________________________________ Public Relations Department (415) 396-3606 343 Sansome Street, 2nd Floor San Francisco, CA 94163 WELLS FARGO FILES EXCHANGE OFFER WITH SEC Wells Fargo & Company (NYSE: WFC) today announced that it has filed its Exchange Offer with the Securities and Exchange Commission (SEC) for the acquisition of all outstanding shares of First Interstate Bancorp (NYSE: I) "For First Interstate shareholders, this filing means that our offer will stand side by side against First Bank System's offer," said Paul Hazen, chairman of Wells Fargo & Company. "First Interstate shareholders can be assured that if they reject the First Bank System merger, they will be able to exchange their shares for Wells Fargo & Company stock within the same time frame that applied to the First Bank System proposal." Wells Fargo said it plans to file proxy solicitation materials with the SEC to solicit proxies against the First Bank System merger within the next week. Wells Fargo anticipates initiating its proxy solicitation at the same time as First Interstate begins a proxy solicitation for its special meeting to consider First Bank System's proposal. If the First Interstate shareholders reject the First Bank System merger, Wells Fargo will complete the exchange offer and accept First Interstate shares as soon as it receives regulatory approvals and acceptance of its offer by First Interstate's board of directors. If First Interstate board approval is not forthcoming, Wells Fargo will use written consents to remove the First Interstate board. All these actions can take place within the same time schedule as First Bank System would require to obtain regulatory approvals. Although the time period cannot be certain, Wells Fargo believes that it would be in a position to consummate its merger with First Interstate in the second quarter of 1996. -more- SHARES OF FIRST INTERSTATE COMMON STOCK HELD BY WELLS FARGO, ITS DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES OF WELLS FARGO WHO MAY ALSO SOLICIT PROXIES, AND CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND FIRST INTERSTATE Wells Fargo may solicit proxies against the First Interstate/First Bank System merger. The participants in this solicitation may include Wells Fargo, the directors of Wells Fargo (H. Jesee Arnelle, William R. Breuner, William S. Davila, Rayburn S. Dezember, Paul Hazen, Robert K. Jaedicke, Ellen M. Newman, Philip J. Quigley, Carl E. Reichardt, Donald B. Rice, Susan G. Swenson, Chang-Lin Tien, John A. Young and William F. Zuendt), and the following executive officers and employees of Wells Fargo: Michael J. Gillfillan (Vice Chairman), Charles M. Johnson (Vice Chairman), Clyde W. Ostler (Vice Chairman), Rodney L. Jacobs (Vice Chairman and Chief Financial Officer), Leslie L. Altick (Executive Vice President and Director of Corporate Communications), Patricia R. Callahan (Executive Vice President and Personnel Director), Frank A. Moeslein (Executive Vice President and Controller), Guy Rounsaville, Jr. (Executive Vice President, Chief Counsel and Secretary), Ross J. Kari (Executive Vice President and General Auditor) and Eric D. Shand (Executive Vice President and Chief Loan Examiner). As of November 20, 1995, Wells Fargo owned beneficially 100 shares of First Interstate Common Stock. Additionally, as of October 20, 1995, Wells Fargo held 1,961,095 shares of First Interstate Common Stock (or approximately 2.6% of the outstanding shares) in a fiduciary capacity. Wells Fargo disclaims beneficial ownership of the shares owned in such fiduciary capacity and any other shares held by any pension plan of Wells Fargo or any affiliates of Wells Fargo. Philip J. Quigley beneficially owns 500 shares of First Interstate Common Stock through the Philip J. Quigley Trust. As of November 1, 1995, Rayburn S. Dezember had outstanding a loan from First Interstate in a principal amount of $365,000. As the Chancellor of the University of California, Berkeley, Chang-Lin Tien is an officer of the Regents of the University of California (the "Regents"), the legal entity which encompasses the University of California. The Regents' business relationships with First Interstate Bank of California ("FICAL"), a subsidiary of First Interstate, include: (i) FICAL's acting as trustee under $1.9 billion in debt issued by the Regents (for which the Regents paid FICAL $231,800 in trustee fees from the period from January 1, 1994, through September 30, 1995), (ii) FICAL's acting as lender of certain construction and other loans made to the Regents (for which there was $122 million outstanding as of September 30, 1995), and (iii) the maintenance of two deposit accounts with FICAL (for which the Regents incurred $671,000 in service fees and other charges since January 1, 1994, through September 30, 1995). Although CS First Boston Corporation and Montgomery Securities, financial advisors to Wells Fargo, do not admit that they or any of their directors, officers, employees or affiliates are a "participant," as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934 by the Securities Exchange Commission, or that such Schedule 14A requires the disclosure of certain information concerning CS First Boston Corporation and Montgomery Securities, they may assist Wells Fargo in such a solicitation. Each of CS First Boston Corporation and Montgomery Securities engages in a full range of investment banking, securities trading, market-making and brokerage services for institutional and individual clients. In the normal course of their businesses, CS First Boston Corporation and Montgomery Securities may trade securities of First Interstate for their own account and the account of their customers and, accordingly, may at any time hold a long or short position in such securities. Except as disclosed above, to the knowledge of Wells Fargo, none of Wells Fargo, the directors or executive officers of Wells Fargo or the employees or other representatives of Wells Fargo named above has any interest direct or indirect, by security holdings or otherwise, in First Interstate. # # # AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 27, 1995. REGISTRATION NO. 33- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- WELLS FARGO & COMPANY (Exact name of registrant as specified in its charter) DELAWARE 6021 13-2553920 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 420 MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94163 (415) 477-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) GUY ROUNSAVILLE, JR. EXECUTIVE VICE PRESIDENT, CHIEF COUNSEL AND SECRETARY WELLS FARGO & COMPANY 420 MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94163 (415) 477-1000 (Name and address, including zip code, and telephone number, including area code, of agent for service) --------------- COPY TO: ALAN J. SINSHEIMER SULLIVAN & CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 (212) 558-4000 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. --------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] --------------- CALCULATION OF REGISTRATION FEE
=================================================================================================== PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) REGISTRATION FEE(2) - --------------------------------------------------------------------------------------------------- Common stock, par value $5.00 per share 50,496,170 Shares Not applicable $10,135,520,000 $3,495,010 ===================================================================================================
(1) Represents the maximum number of shares of common stock of Wells Fargo & Company issuable upon consummation of the exchange offer for shares of common stock, par value $2.00 per share, of First Interstate Bancorp (the "Shares"), based upon the number of Shares outstanding on October 31, 1995. (2) Pursuant to Rules 457(f)(1) and 457(c) of the Securities Act of 1933, as amended, and solely for purposes of calculating the registration fee, the registration fee was computed on the basis of the average of the high and low prices of Shares as reported on the New York Stock Exchange Composite Tape on November 17, 1995. 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. ================================================================================ WELLS FARGO & COMPANY CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(b) OF REGULATION S-K
FORM S-4 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS -------------------------------- ---------------------- 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus................... Outside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus.............................. Table of Contents; Available Information; Incorporation of Certain Information by Reference 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information.................... Prospectus Summary 4. Terms of the Transaction.......................... Prospectus Summary; Background of the Offer; The Offer; Description of Wells Fargo Capital Stock; Comparison of Rights of Holders of Shares and Wells Fargo Common Stock; Market Prices and Dividends 5. Pro Forma Financial Information................... Pro Forma Combined Financial Data 6. Material Contacts with the Company Being Acquired......................................... Background of the Offer; The Offer 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters..................................... * 8. Interests of Named Experts and Counsel............ Validity of Wells Fargo Common Stock; Experts 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities... * 10. Information with Respect to S-3 Registrants....... Incorporation of Certain Information by Reference 11. Incorporation of Certain Information by Reference..................................... Incorporation of Certain Information by Reference; Description of Wells Fargo Capital Stock 12. Information with Respect to S-2 or S-3 Registrants.................................. * 13. Incorporation of Certain Information by Reference..................................... * 14. Information with Respect to Registrants Other Than S-2 or S-3 Registrants...................... * 15. Information with Respect to S-3 Companies......... Incorporation of Certain Information by Reference; Background of the Offer 16. Information with Respect to S-2 or S-3 Companies.................................... * 17. Information with Respect to Companies Other than S-2 or S-3 Companies........................ * 18. Information if Proxies, Consents or Authorizations are to be Solicited.............................. * 19. Information if Proxies, Consents or Authorizations are not to be Solicited or in an Exchange Offer.. Outside Front Cover Page; Prospectus Summary; The Offer; Incorporation of Certain Information by Reference
- -------- *Indicates that Item is not applicable or answer is in the negative. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED NOVEMBER 27, 1995 PROSPECTUS OFFER TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) OF FIRST INTERSTATE BANCORP FOR TWO-THIRDS OF A SHARE OF COMMON STOCK OF WELLS FARGO & COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1996, UNLESS EXTENDED. SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER. Wells Fargo & Company, a Delaware corporation (the "Purchaser"), hereby offers, upon the terms and subject to the conditions set forth herein and in the related Letter of Transmittal (collectively, the "Offer"), to exchange two- thirds of a share of Common Stock, par value $5.00 per share, of the Purchaser ("Wells Fargo Common Stock") for each outstanding share of Common Stock, par value $2.00 per share (each, a "Share" and collectively, the "Shares"), of First Interstate Bancorp (the "Company"), including the associated common stock purchase rights (each, a "Right" and collectively, the "Rights") issued pursuant to the Rights Agreement, dated as of November 21, 1988, between the Company and First Interstate Bank of California, as successor Rights Agent, validly tendered on or prior to the Expiration Date and not withdrawn. Unless the context otherwise requires and unless and until the Rights are redeemed, all references to Shares shall include the associated Rights. On , 199 , the closing price of the Shares on the New York Stock Exchange was $ per Share. Based on the closing price of Wells Fargo Common Stock on the same date, the value of the Offer was $ per Share. The value of the Offer will change as the market price of the Wells Fargo Common Stock changes. THE PURCHASER'S OBLIGATION TO EXCHANGE SHARES OF WELLS FARGO COMMON STOCK FOR SHARES PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER AND ITS AFFILIATES FOR THEIR OWN RESPECTIVE ACCOUNTS, WILL CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS (I.E., AS THOUGH ALL OPTIONS OR OTHER SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR SHARES, OTHER THAN THE RIGHTS, HAD BEEN SO CONVERTED, EXERCISED OR EXCHANGED) AS OF THE DATE THE SHARES ARE ACCEPTED FOR EXCHANGE BY THE PURCHASER (cover 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 PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- THE DEALER MANAGER[S] FOR THE OFFER IS[ARE]: [TO COME] , 1996 PURSUANT TO THE OFFER (THE "MINIMUM TENDER CONDITION"), (ii) APPROVAL OF THE ISSUANCE OF SHARES OF WELLS FARGO COMMON STOCK PURSUANT TO THE OFFER BY A MAJORITY VOTE OF THE HOLDERS OF WELLS FARGO COMMON STOCK VOTING AT A MEETING OF SUCH HOLDERS (THE "WELLS FARGO STOCKHOLDER APPROVAL CONDITION"), (iii) THE BOARD OF DIRECTORS OF THE COMPANY HAVING REDEEMED THE RIGHTS AND, PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW (THE "DGCL"), APPROVED THE ACQUISITION OF SHARES PURSUANT TO THE OFFER, OR THE PURCHASER BEING OTHERWISE SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS AND THE PROVISIONS OF SECTION 203 RESTRICTING CERTAIN BUSINESS COMBINATIONS ARE INVALID OR ARE NOT APPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE MERGER (THE "RIGHTS PLAN AND DGCL 203 CONDITION"), (iv) THE STOCKHOLDERS OF THE COMPANY NOT HAVING APPROVED THE AGREEMENT AND PLAN OF MERGER BETWEEN THE COMPANY, FIRST BANK SYSTEM, INC. AND ELEVEN ACQUISITION CORP. (THE "FIB/FBS MERGER AGREEMENT CONDITION"), AND (v) ALL REGULATORY APPROVALS REQUIRED TO CONSUMMATE THE OFFER AND THE MERGER HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT, ALL STATUTORY WAITING PERIODS IN RESPECT THEREOF HAVING EXPIRED AND NO SUCH APPROVAL CONTAINING ANY CONDITIONS OR RESTRICTIONS WHICH THE BOARD OF DIRECTORS OF THE PURCHASER REASONABLY DETERMINES IN GOOD FAITH WILL HAVE OR REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT (AS DEFINED HEREIN) ON THE PURCHASER, THE COMPANY AND THEIR RESPECTIVE SUBSIDIARIES TAKEN AS A WHOLE (THE "REGULATORY APPROVAL CONDITION"). ---------------- THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A SOLICITATION OF ANY PROXIES OR CONSENTS. ANY SUCH SOLICITATIONS WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934. ---------------- IMPORTANT Any stockholder desiring to tender all or any portion of his Shares and the associated Rights should either (a) complete and sign the Letter of Transmittal or a facsimile copy thereof in accordance with the instructions in the Letter of Transmittal, and mail or deliver the Letter of Transmittal or such facsimile and any other required documents to the Exchange Agent and either deliver the certificates for such Shares and Rights to the Exchange Agent along with the Letter of Transmittal, deliver such Shares and Rights pursuant to the procedures for book-entry transfer set forth herein (in the case of Rights, only if such procedures are available) or comply with the guaranteed delivery procedures set forth below or (b) request his broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him. A stockholder having Shares and Rights registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if he desires to tender such Shares and Rights. Stockholders will be required to tender one Right for each Share tendered in order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203 Condition (insofar as it relates to the Rights) has been satisfied or waived. Unless the Company Distribution Date (as defined herein) occurs, a tender of Shares will constitute a tender of the associated Rights. Questions and requests for assistance may be directed to the Information Agent or to the Dealer Manager[s] at [its] [their respective] address[es] and telephone numbers set forth on the back cover of this Prospectus. Requests for additional copies of this Prospectus and the Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. ii TABLE OF CONTENTS
PAGE ---- Available Information..................................................... iv Incorporation of Certain Information by Reference......................... iv Company Information....................................................... v Prospectus Summary........................................................ 1 Background of the Offer................................................... 14 General.................................................................. 14 Comparison of the Proposals.............................................. 16 Litigation............................................................... 24 FIB/FBS Merger Agreement................................................. 25 The Offer................................................................. 33 General.................................................................. 33 Extension, Termination and Amendment..................................... 34 Exchange of Shares; Delivery of Wells Fargo Common Stock................. 35 Cash in Lieu of Fractional Shares of Wells Fargo Common Stock............ 35 Withdrawal Rights........................................................ 36 Procedure for Tendering ................................................. 36 Certain Federal Income Tax Consequences.................................. 39 Effect of Offer on Market for Shares; Registration Under the Exchange Act........................................................... 41 Purpose of the Offer; the Merger......................................... 42 Minimum Tender Condition................................................. 43 Wells Fargo Stockholder Approval Condition............................... 44 Rights Plan and DGCL 203 Condition....................................... 44 FIB/FBS Merger Agreement Condition....................................... 46 Regulatory Approval Condition............................................ 46 Certain Other Conditions of the Offer.................................... 48 Relationships with the Company........................................... 50 Fees and Expenses........................................................ 50 Accounting Treatment..................................................... 51 Stock Exchange Listing................................................... 51
PAGE ---- Business of Wells Fargo.................................................... 52 Pro Forma Combined Financial Information................................... 53 Description of Wells Fargo Capital Stock................................... 61 Wells Fargo Common Stock.................................................. 61 Repurchases of Wells Fargo Common Stock................................... 61 Wells Fargo Preferred Stock............................................... 61 Certain Regulatory Considerations......................................... 63 Comparison of Rights of Holders of Shares and Wells Fargo Common Stock..... 68 Special Meetings of Stockholders.......................................... 68 Number of Directors....................................................... 68 Advance Notice of Stockholder Nominations of Directors.................... 68 Stockholder Proposal Procedures........................................... 69 Indemnification........................................................... 69 Certain Voting Rights for Mergers......................................... 69 Cumulative Voting......................................................... 69 Removal of Directors; Filling Vacancies on the Board of Directors......... 69 Stockholder Action by Written Consent..................................... 70 Amendment of Bylaws....................................................... 70 Classification of Board of Directors...................................... 70 Market Prices and Dividends................................................ 71 Wells Fargo............................................................... 71 The Company............................................................... 72 Validity of Wells Fargo Common Stock....................................... 73 Experts.................................................................... 73 Schedule A--Directors and Executive Officers of the Purchaser................................................. A-1 Schedule B--Section 203 of the Delaware General Corporation Law............ B-1
iii AVAILABLE INFORMATION The Purchaser and the Company are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, file reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). The reports, proxy statements and other information filed by the Purchaser and the Company with the Commission may be inspected and copied at the Commission's public reference room located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the public reference facilities in the Commission's regional offices located at: 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material may be obtained at prescribed rates by writing to the Securities and Exchange Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The Shares and the Wells Fargo Common Stock are listed on the New York Stock Exchange (the "NYSE") and the Pacific Stock Exchange (the "PSE"). The periodic reports, proxy statements and other information filed by the Purchaser and the Company with the Commission may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and at the offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104. This Prospectus does not contain all of the information set forth in the Registration Statement on Form S-4 (the "Registration Statement") covering the Wells Fargo Common Stock offered hereby which has been filed with the Commission, certain portions of which have been omitted pursuant to the rules and regulations of the Commission, and to which portions reference is hereby made for further information with respect to the Purchaser, the Company and the securities offered hereby. Statements contained herein concerning any documents are not necessarily complete and, in each instance, reference is made to the copies of such documents filed as exhibits to the Registration Statement. Each such statement is qualified in its entirety by such reference. Not later than the date of commencement of the Offer, the Purchaser will file with the Commission a statement on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act furnishing certain information with respect to the Offer. Pursuant to Rules 14d-9 and 14e-2 under the Exchange Act, the Company filed on November 20, 1995 a statement on Schedule 14D-9 (the "Company Schedule 14D-9") regarding its position concerning the Offer. Such Schedules and any amendments thereto should be available for inspection and copying as set forth above (except that such Schedules and any amendments thereto will not be available at the regional offices of the Commission). Pursuant to Rule 409 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), and Rule 12b-21 promulgated under the Exchange Act, the Purchaser will request that the Company provide to the Purchaser the information required for complete disclosure concerning the business, operations, financial condition and management of the Company. The Purchaser will provide any and all information which it receives from the Company prior to the expiration of the Offer and which the Purchaser deems material, reliable and appropriate in a subsequently prepared amendment or supplement hereto. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO SECRETARY, WELLS FARGO & COMPANY, 420 MONTGOMERY STREET, SAN FRANCISCO, CALIFORNIA 94163. TELEPHONE REQUESTS MAY BE DIRECTED TO THE CORPORATE SECRETARY'S DEPARTMENT AT (415) 396-4386. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST FOR DOCUMENTS SHOULD BE SUBMITTED NOT LATER THAN SEVEN BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE OFFER. The following documents filed with the Commission by the Purchaser (File No. 1-6214) are incorporated herein by reference: (a) the Purchaser's Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994 Wells Fargo 10-K"); (b) the portions of the Purchaser's Proxy Statement for the Annual Meeting of iv Stockholders held on April 18, 1995 that have been incorporated by reference in the 1994 Wells Fargo 10-K; (c) the Purchaser's Quarterly Reports on Form 10-Q for the periods ended March 31, 1995, June 30, 1995 and September 30, 1995; (d) the Purchaser's Current Reports on Form 8-K dated January 17, 1995, April 18, 1995, June 21, 1995, July 18, 1995, October 17, 1995, October 18, 1995 and October 23, 1995; and (e) the description of Wells Fargo Common Stock contained in the Purchaser's Registration Statement on Form 8-B filed with the Commission June 17, 1987. The following documents filed with the Commission by the Company (File No. 1-4114) are incorporated herein by reference: (a) the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994 Company 10-K") (excluding the report of the Company's independent accountants included therein); (b) the portions of the Company's Proxy Statement for the Annual Meeting of Stockholders held on April 28, 1995 that have been incorporated by reference in the 1994 Company 10-K; (c) the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1995, June 30, 1995 and September 30, 1995; and (d) the Company's Current Reports on Form 8-K or 8-K/A dated February 15, 1995, March 24, 1995, May 1, 1995, May 26, 1995 and November 5, 1995. All documents filed by either the Purchaser or the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the date the Offer is terminated or Shares are accepted for exchange shall be deemed to be incorporated herein by reference and to be a part hereof from the date of such filing. Any statement contained herein or in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated herein by reference modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part hereof, except as so modified or superseded. COMPANY INFORMATION While the Purchaser has included information concerning the Company insofar as it is known or reasonably available to the Purchaser, the Company is not affiliated with the Purchaser and the Company has not to date permitted access by the Purchaser to the Company's books and records. Therefore, information concerning the Company which has not been made public is not available to the Purchaser. Although the Purchaser has no knowledge that would indicate that statements relating to the Company contained or incorporated by reference in this Prospectus in reliance upon publicly available information are inaccurate or incomplete, the Company was not involved in the preparation of such information and statements and, for the foregoing reasons, is not in a position to verify any such information or statements. ---------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE PURCHASER OR THE DEALER MANAGER[S]. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, THE PURCHASER MAY, IN ITS SOLE DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF SHARES IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PURCHASER OR THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED OR THE DATE HEREOF. IN ACCORDANCE WITH VARIOUS STATE SECURITIES LAWS APPLICABLE TO THE OFFER WHICH REQUIRE THE OFFER TO BE MADE TO THE PUBLIC BY A LICENSED BROKER OR DEALER, THE OFFER IS HEREBY MADE TO THE COMPANY'S STOCKHOLDERS RESIDING IN EACH SUCH STATE BY , AS DEALER MANAGER[S], ON BEHALF OF THE PURCHASER. v PROSPECTUS SUMMARY The information below is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Prospectus, including the documents incorporated in this Prospectus by reference. As used in this Prospectus, the term "Purchaser" refers to Wells Fargo & Company and, unless the context otherwise requires, its subsidiaries, and the term "Company" refers to First Interstate Bancorp and, unless the context otherwise requires, its subsidiaries. WELLS FARGO & COMPANY The Purchaser is a bank holding company incorporated in the State of Delaware and registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"). Based on total consolidated assets at December 31, 1994, it was the 15th largest bank holding company in the United States, having total deposits of $42.3 billion and total assets of $53.4 billion. The Purchaser's principal subsidiary is Wells Fargo Bank, N.A., which is the seventh largest bank in the United States and is the successor to the banking portion of the business founded by Henry Wells and William G. Fargo in 1852. Today, the Purchaser operates one of the largest banking businesses in the United States. The bank provides a broad range of financial products and services through electronic and traditional channels. Customers can access accounts electronically seven days a week, 24 hours a day. Besides serving as banker to millions of California households, the Purchaser provides a full range of banking and financial services to commercial, corporate, real estate and small business customers across the nation. Its primary lines of business are summarized under "Business of Wells Fargo." The Purchaser has its principal executive offices at 420 Montgomery Street, San Francisco, California 94163, telephone number (415) 477-1000. FIRST INTERSTATE BANCORP The following information concerning the Company is excerpted from the 1994 Company 10-K: "The [Company] was incorporated under the laws of the State of Delaware and began operations in 1958. . . The [Company] is a bank holding company registered under the [BHCA]. At December 31, 1994, it owned directly all of the shares of capital stock of 16 banks . . . which operated approximately 1,100 banking offices in 13 states. Ranked according to assets, the [Company] was the fourteenth largest commercial banking organization in the United States at December 31, 1994, having total deposits of $48.4 billion and total assets of $55.8 billion. . ." The Company has its principal executive offices at 633 West Fifth Street, Los Angeles, California 90071, telephone number (213) 614-3001. BACKGROUND OF THE OFFER On September 7, 1995, Paul Hazen, Chairman and Chief Executive Officer of the Purchaser, met with William Siart, Chairman and Chief Executive Officer of the Company, to discuss the possibility of a merger of the two companies. No conclusions were reached, but Mr. Siart indicated that the Company would probably not be prepared to consider a merger in the immediate future. On the afternoon of October 17, 1995, Mr. Hazen telephoned Mr. Siart to inform him that the Purchaser intended to deliver a letter containing a merger proposal to the Company and that Mr. Hazen would like to meet with Mr. Siart later that day to deliver the letter in person and to discuss the proposal. Mr. Siart asked for some time to consider the request, but called Mr. Hazen back shortly thereafter to say that he saw no reason for the two of them to meet. The Purchaser's letter was then delivered to the Company. On October 18, 1995, the Company and, shortly thereafter, the Purchaser publicly announced that the Purchaser had made a proposal (the "Original Proposal") to the Company for a tax-free merger in which the Company's stockholders would receive 0.625 of a share of Wells Fargo Common Stock for each Share. The market reacted favorably to the announcement, with the Wells Fargo Common Stock closing on that date at $229 per share, an increase of $15.375 (7.2%) from its closing price the day before. Based on that market price, the Original Proposal represented a $37.13 per Share, or 35%, premium to the closing price per Share on the preceding day. On October 26, 1995, Mr. Siart and Mr. Hazen met again. At that meeting, Mr. Siart acknowledged that a merger of the Company and the Purchaser would enhance stockholder value. Mr. Hazen explained the cost savings estimates being used by the Purchaser and offered to have the individuals at the Purchaser who had prepared those estimates meet with their counterparts at the Company in order to demonstrate that the expected cost savings were achievable. After discussion, Mr. Siart declined that offer and stated that the Company agreed with the Purchaser's cost savings estimates. Mr. Hazen then offered to raise the exchange ratio in the Purchaser's proposal to 0.65 of a share of Wells Fargo Common Stock for each Share if the Company would enter into a merger agreement with the Purchaser. Mr. Siart rejected this increased offer, but indicated that the Purchaser might accept a merger with a 0.70 exchange ratio. Mr. Hazen stated that the Purchaser was unwilling to raise its bid any further at that time. On October 31, 1995, Mr. Siart and Mr. Hazen again met. Mr. Hazen again offered to have the individuals at the Purchaser who had prepared the cost savings estimates meet with their counterparts at the Company in order to demonstrate that the expected cost savings were achievable. Mr. Siart again declined that offer and stated that the Company agreed with the Purchaser's cost savings estimates. Mr. Siart indicated that he would be prepared to recommend a merger with the Purchaser if the Purchaser would increase the exchange ratio in its proposal to a 0.68 exchange ratio. Mr. Hazen replied that he believed that an exchange ratio of 0.65 was a bid that was fair to the stockholders of the Company and the Purchaser. On November 1, 1995, Messrs. Siart and Hazen talked again, this time by telephone, but made no further progress towards an agreement. Mr. Hazen attempted to reach Mr. Siart on November 2nd and November 3rd by telephone, but his calls were not returned. On November 5, 1995, the Company, First Bank System, Inc. ("FBS") and Eleven Acquisition Corp., a subsidiary of FBS ("FBS Sub"), entered into an Agreement and Plan of Merger (the "FIB/FBS Merger Agreement") pursuant to which FBS Sub and the Company would merge (the "FIB/FBS Merger") and each Share would be converted into the right to receive 2.60 shares of common stock, par value $1.25 per share, of FBS (the "FBS Common Stock"). Under the terms of the FIB/FBS Merger Agreement, following the consummation of that merger, FBS would change its name to First Interstate Bancorp and there would be an even split of the Board of the combined company. The FIB/FBS Merger is subject to a number of conditions which are identical in all material respects to the conditions of the Offer, including among others that all regulatory and stockholder approvals be obtained, although it is also subject to an additional condition which is not a condition to the Offer, namely that each of the Company and FBS shall have received a letter from its accountants to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. Based on discussions with its advisors, the Purchaser believes there is a significant question as to whether the FIB/FBS Merger will qualify for pooling of interests accounting treatment in light of the increased share repurchase program FBS announced in connection with the FIB/FBS Merger. See "Background of the Offer-- Comparison of the Proposals--Purchase Versus Pooling of Interests Accounting" and "--FIB/FBS Merger Agreement." The Company entered into the FIB/FBS Merger Agreement (as well as certain "lock-up" arrangements set forth in the Reciprocal Fee Letters and Reciprocal Stock Option Agreements referred to below) despite the fact that, based on the last available closing prices per share prior to doing so, the FIB/FBS Merger produced a value (at the 2.60 exchange ratio) of $132.28 per Share while the then current Purchaser proposal produced a value (at the 0.65 exchange ratio) of $137.96 per Share, or $5.68 per Share higher. In fact, based on the averages of the closing prices per share on the 15 trading days (which 15 day trading period encompasses the announcements of 2 both proposals) prior to entering into the FIB/FBS Merger Agreement, the FIB/FBS Merger produced a value of $132.15 per Share while the then current Purchaser proposal produced a value of $139.41 per Share, or $7.26 per Share higher. Moreover, according to the Company Schedule 14D-9, the Company entered into the FIB/FBS Merger Agreement (and "lock-up" arrangements) despite the finding by one of its financial advisors (Morgan Stanley & Co. Incorporated) that the Purchaser's Original Proposal (at a 0.625 exchange ratio, or 6.3% below the exchange ratio being offered pursuant to the Offer) was also fair from a financial point of view to the stockholders of the Company. On November 13, 1995, the Purchaser announced its intention to offer to exchange two-thirds of a share of Wells Fargo Common Stock for each Share. In a publicly released letter setting forth such offer, Mr. Hazen again stated that the Purchaser would be prepared to enter into a merger agreement with the Company providing for the same consideration as the Offer. In the event that the Company did not elect to terminate the FIB/FBS Merger Agreement, the Purchaser offered to agree to a process pursuant to which both FBS and the Purchaser would each have 10 days to submit their best and final merger proposals, which proposals would together be presented to the Company's stockholders, who could decide for themselves which proposal was in their best interest. The Company did not respond to this proposal. As part of the November 13, 1995 announcement, the Purchaser also stated that it anticipated filing (a) preliminary proxy solicitation materials with the Commission for use in soliciting proxies from stockholders of the Company against approval of the FIB/FBS Merger and (b) preliminary consent solicitation materials with the Commission for use in soliciting written consents from stockholders of the Company to replace the current members of the Board of Directors of the Company (the "Company Board") with nominees who are committed to removing any obstacles to the merger of the Company with the Purchaser. THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A SOLICITATION OF ANY PROXIES OR CONSENTS FROM THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(a) OF THE EXCHANGE ACT. The Purchaser also announced on November 13, 1995 the filing of a complaint against the Company, the Company Board, FBS and FBS Sub in the Delaware Chancery Court, which, among other things, seeks to invalidate the FIB/FBS Merger Agreement and the break-up fees and stock option arrangements (commonly referred to as "lock-up" arrangements) granted to FBS pursuant to the Reciprocal Fee Letters (as defined herein) and the Reciprocal Stock Option Agreements (as defined herein), respectively, and seeks injunctive relief requiring the Company Board to redeem the Rights and to prevent the Company from using anti-takeover devices or taking other actions intended to impede or delay the acquisition of the Company by the Purchaser. See "Background of The Offer--Litigation." On November 13, 1995, the Purchaser also filed an application with the Federal Reserve Bank of San Francisco seeking approval of, among other things, the Offer and the Merger. The Purchaser subsequently filed or will soon file additional applications and notices with various governmental authorities seeking all approvals required to permit consummation of the Offer and the Merger. The Purchaser anticipates that it will obtain regulatory approvals on a timely basis and believes that the regulators will consider the Purchaser's applications for approval of the Offer and the Merger in a time frame substantially identical to that of the FBS applications for approval of the FIB/FBS Merger. See "The Offer--Regulatory Approval Condition." In this regard, the Company Schedule 14D-9 states that the Company Board determined "it was likely that each of FBS and Wells would ultimately receive all [regulatory] approvals." On November 20, 1995, the Company Schedule 14D-9 was filed with the Commission stating, among other things, that the Company Board was committed to completing the FIB/FBS Merger and recommending that the Company's stockholders not tender their Shares in the Offer. In the Company Schedule 14D-9, there is a detailed list of 16 factors considered by the Company Board as material in selecting the FBS merger proposal over the Purchaser's merger proposal. Conspicuously absent from that list is any consideration of the implied purchase price produced by each of the two proposals. At all times during the Company Board's consideration of each Purchaser proposal and FBS proposal, the then current 3 Purchaser proposal has produced an implied purchase price significantly higher than the implied purchase price produced by the then current FBS proposal. At the time the two proposals were first considered by the Company Board, the then current Purchaser proposal produced an implied purchase price of between $9.14 and $19.14 per Share higher (based on statements in the Company Schedule 14D- 9). At the time the FBS proposal was accepted, the differential was $5.68 per Share. On November 22, 1995 (the last full trading day prior to the date of this preliminary prospectus) the differential was $8.02 per Share. For more detailed information concerning the background of the Offer, and for a comparison of the Offer and the FIB/FBS Merger, see "Background of the Offer" below. THE OFFER The Purchaser hereby offers, upon the terms and subject to the conditions set forth herein and in the related Letter of Transmittal (which together constitute the "Offer"), to exchange two-thirds of a share of Wells Fargo Common Stock for each outstanding Share validly tendered on or prior to the Expiration Date and not withdrawn. The term "Expiration Date" shall mean 12:00 midnight, New York City time, on , 1996, unless and until the Purchaser extends the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. See "The Offer--General." The purpose of the Offer is for the Purchaser to acquire control of, and ultimately the entire common equity interest in, the Company. The Purchaser intends, as soon as practicable after consummation of the Offer, to seek to have the Company consummate a merger with the Purchaser pursuant to which each outstanding Share (except for treasury shares of the Company and Shares held by the Purchaser or any subsidiary of the Purchaser other than in a fiduciary capacity) would be converted into the right to receive two-thirds of a share of Wells Fargo Common Stock (the "Merger"). See "The Offer--Purpose of the Offer; the Merger." The Purchaser's obligation to exchange shares of Wells Fargo Common Stock for Shares pursuant to the Offer is conditioned upon satisfaction of the Minimum Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights Plan and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition and the Regulatory Approval Condition (in each case as defined on the cover page of this Prospectus) and the other conditions set forth under "The Offer--Certain Other Conditions of the Offer." The conditions to the Offer are identical in all material respects to a number of the conditions to the competing proposal to effect the FIB/FBS Merger, including among others that all regulatory and stockholder approvals be obtained, although the competing proposal is also subject to an additional condition which is not a condition to the Offer, namely that each of the Company and FBS shall have received a letter from its accountants to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. Subject to the applicable rules and regulations of the Commission, the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to delay acceptance for exchange or, regardless of whether such Shares were theretofore accepted for exchange, exchange of any Shares pursuant to the Offer or to amend or terminate the Offer and not accept for exchange or exchange any Shares not theretofore accepted for exchange, or exchanged, upon the failure of any of the conditions of the Offer to be satisfied. The Purchaser reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in the tender of any securities. See "The Offer--Minimum Tender Condition," "--Wells Fargo Stockholder Approval Condition, "--Rights Plan and DGCL 203 Condition," "--FIB/FBS Merger Agreement Condition," "--Regulatory Approval Condition" and "--Certain Other Conditions of the Offer." Waiver or amendment of any of these conditions may require an extension of the Offer. Stockholders will be required to tender one Right for each Share tendered in order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203 Condition (insofar as it relates to the Rights) has been satisfied 4 or waived. Unless the Company Distribution Date occurs, a tender of Shares will constitute a tender of the associated Rights. Extension, Termination and Amendment The Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is to remain open by giving oral or written notice of such extension to the Exchange Agent, which extension must be announced no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. There can be no assurance that the Purchaser will exercise its right to extend the Offer. However, it is the Purchaser's current intention to extend the Offer until all conditions have been satisfied or waived. See "The Offer--Extension, Termination and Amendment." During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw his Shares. See "The Offer--Withdrawal Rights." Exchange of Shares; Delivery of Wells Fargo Common Stock Upon the terms and subject to the conditions of the Offer, the acceptance for exchange and the exchange of all outstanding Shares validly tendered and not withdrawn will be made promptly after the Expiration Date. See "The Offer-- Exchange of Shares; Delivery of Wells Fargo Common Stock." Withdrawal Rights Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date, and, unless theretofore accepted for exchange by the Purchaser pursuant to the Offer, may also be withdrawn at any time after , 1996. See "The Offer--Withdrawal Rights." Procedure for Tendering For a stockholder to validly tender Shares pursuant to the Offer, (i) a properly completed and duly executed Letter of Transmittal (or manually executed facsimile thereof), together with any required signature guarantees and any other required documents, must be transmitted to and received by the Exchange Agent at one of its addresses set forth on the back cover of this Prospectus and certificates for tendered Shares must be received by the Exchange Agent at such address or such Shares must be tendered pursuant to the procedures for book-entry tender set forth under "The Offer--Procedure for Tendering" (and a confirmation of receipt of such tender received), in each case prior to the Expiration Date, or (ii) such stockholder must comply with the guaranteed delivery procedure set forth under "The Offer--Procedure for Tendering." As noted above, stockholders will be required to tender one Right for each Share tendered in order to effect a valid tender of Shares, unless the Rights Plan and DGCL 203 Condition (insofar as it relates to the Rights) has been satisfied or waived. Unless the Company Distribution Date occurs, a tender of Shares will constitute a tender of the associated Rights. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 5 Certain Federal Income Tax Consequences In the opinion of Sullivan & Cromwell, counsel for the Purchaser, exchanges of Shares for Wells Fargo Common Stock pursuant to the Offer and the Merger should be treated for federal income tax purposes as exchanges pursuant to a plan of reorganization within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"). Consequently, no gain or loss should be recognized by holders of Shares upon such exchanges, except with respect to the receipt of cash in lieu of fractional shares of Wells Fargo Common Stock and the surrender of Rights that have become exercisable. This opinion is based on Sullivan & Cromwell's view that the Offer and the Merger should be treated as a single transaction and on certain assumptions, including that (a) the continuity of shareholder interest requirement applicable to corporate reorganizations (which requires a continuing equity interest in the Purchaser by holders owning a significant percentage of the Shares prior to the consummation of the Offer) will be satisfied, taking into account any holders that exercise dissenters' rights, if any, (b) the Purchaser will continue the Company's historic business or will use a significant portion of the Company's historic business assets in a business and (c) the Offer and the Merger will generally be consummated as contemplated by this Prospectus. In rendering their opinion, Sullivan & Cromwell have further assumed that (a) upon consummation of the Offer, there will be no significant contingencies preventing the prompt consummation of the Merger, (b) upon consummation of the Offer, the Purchaser will not have waived any of the conditions relating to its obligation to consummate the Offer in a manner that could prevent a prompt consummation of the Merger and (c) the Merger will in fact be consummated promptly after the consummation of the Offer. A significant delay in the consummation of the Merger would substantially increase the risk that the Offer will not qualify as part of a reorganization within the meaning of Section 368(a)(1)(A) of the Code and the absence of the Merger would mean that the Offer was not part of a reorganization. Assuming that the Merger qualifies as a reorganization under the Code, no gain or loss will be recognized by the Purchaser or the Company as a result of the Offer and the Merger. If the Offer and the Merger together qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Code, no gain or loss will be recognized by a U.S. Holder (as defined under "The Offer--Certain Federal Income Tax Consequences"), except with respect to a U.S. Holder who receives cash in lieu of fractional shares of Wells Fargo Common Stock or surrenders Rights that have become exercisable. If the Merger is not consummated, or if the Merger is consummated but the Offer is treated as a separate transaction for federal income tax purposes, exchanges pursuant to the Offer will be taxable transactions for federal income tax purposes. In that case, each U.S. Holder exchanging Shares for shares of Wells Fargo Common Stock pursuant to the Offer will recognize gain or loss for federal income tax purposes measured by the difference between such U.S. Holder's adjusted basis in the Shares exchanged and the sum of the fair market value of Wells Fargo Common Stock received by such U.S. Holder pursuant to the Offer and any cash received by such U.S. Holder in lieu of fractional shares of Wells Fargo Common Stock. If the Offer is a taxable transaction, the Merger itself should be considered a reorganization within the meaning of Section 368(a)(1)(A) of the Code if the continuity of interest requirement is satisfied in the Merger. For advanced ruling purposes, guidelines published by the Internal Revenue Service would require that stockholders of the Company receive in the Merger stock of the Purchaser having a value equal to at least 50% of the value of all of the stock of the Company outstanding prior to the Merger. In that event, a U.S. Holder receiving Wells Fargo Common Stock in the Merger would be subject to the rules concerning reorganizations described above with respect to such Wells Fargo Common Stock, but not with respect to any Wells Fargo Common Stock received by such U.S. Holder pursuant to the Offer. All stockholders should carefully read the discussion under "The Offer-- Certain Federal Income Tax Consequences" and are urged to consult with their own tax advisors. 6 Effect of Offer on Market for Shares; Registration Under the Exchange Act The exchange of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Shares held by the public. The Shares are listed on the NYSE and the PSE. Depending on the number of Shares acquired pursuant to the Offer, the Shares may no longer meet the requirements of such exchanges for continued listing, and the Shares may no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin regulations, in which event the Shares could no longer be used as collateral for margin loans made by brokers. See "The Offer--Effect of Offer on Market for Shares; Registration Under the Exchange Act." DESCRIPTION OF WELLS FARGO CAPITAL STOCK The authorized capital stock of the Purchaser consists of 150,000,000 shares of Wells Fargo Common Stock, par value $5.00 per share, and 25,000,000 shares of preferred stock, par value $5.00 per share. As of October 31, 1995, there were 46,966,721 shares of Wells Fargo Common Stock, 1,500,000 shares of Adjustable Rate Cumulative Preferred Stock, Series B, 477,500 shares of 9% Preferred Stock, Series C, and 350,000 shares of 8 7/8% Preferred Stock, Series D, issued and outstanding. Holders of shares of Wells Fargo Common Stock are entitled to one vote per share for each share held. Subject to the rights of holders of shares of the Purchaser's outstanding preferred stock, holders of shares of Wells Fargo Common Stock have equal rights to participate in dividends when declared and, in the event of liquidation, in the net assets of the Purchaser available for distribution to stockholders. The Purchaser may not declare any dividends on the Wells Fargo Common Stock unless full preferential amounts to which holders of the Purchaser's preferred stock are entitled have been paid or declared and set apart for payment. The Purchaser is also subject to certain contractual and regulatory restrictions on the payment of dividends. For additional information concerning the capital stock of the Purchaser, see "Description of Wells Fargo Capital Stock." MARKET PRICES The following table sets forth the market price per share of Wells Fargo Common Stock and per Share and the equivalent market price per Share on (i) October 17, 1995, the last trading day preceding public announcement of the Original Proposal, (ii) October 18, 1995, the trading day of the announcement of the Original Proposal, (iii) November 10, 1995, the last trading day preceding public announcement of the Offer and (iv) November 22, 1995, the last full trading day prior to the date of this preliminary prospectus. The historical market prices represent the closing prices per share on such dates on the NYSE Composite Tape. The equivalent market prices per Share represent the closing price per share of Wells Fargo Common Stock multiplied by two- thirds, the fraction of a share of Wells Fargo Common Stock which is exchangeable in the Offer for each Share. See "Market Prices and Dividends."
FIRST INTERSTATE WELLS FARGO -------------------- ACTUAL ACTUAL EQUIVALENT ----------- --------- ---------- October 17, 1995................................ $213 5/8 $106 $142.42 October 18, 1995................................ 229 140 1/4 152.67 November 10, 1995............................... 215 3/8 134 3/4 143.58 November 22, 1995............................... 213 3/8 134 1/8 142.25
7 THE EXCHANGE AGENT has been appointed exchange agent (the "Exchange Agent") in connection with the Offer. The Letter of Transmittal (or facsimile copies thereof) and certificates for Shares should be sent by each tendering stockholder of Shares or his broker, dealer, bank or other nominee to the Exchange Agent at the addresses set forth on the back cover of this Prospectus. REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES Requests for information or assistance concerning the Offer may be directed to the Dealer Manager[s] or the Information Agent at their addresses set forth on the back cover of this Prospectus. Requests for additional copies of this Prospectus and the Letter of Transmittal should be directed to the Information Agent. 8 CAPITALIZATION OF WELLS FARGO & COMPANY The following table sets forth the capitalization of the Purchaser and its subsidiaries as of September 30, 1995 and as adjusted to give effect to (a) the exchange of approximately 75,727,000 Shares for shares of Wells Fargo Common Stock pursuant to the Offer and the Merger (collectively, the "Acquisition"), assuming that none of the Company's existing stock options are exercised, and (b) the conversion of preferred stock of the Company into preferred stock of the Purchaser pursuant to the Acquisition.
SEPTEMBER 30, 1995 -------------------- ACTUAL ADJUSTED -------- ---------- (IN MILLIONS) SENIOR AND SUBORDINATED DEBT Floating Rate Subordinated Note Due 2000................ $ 118 $ 118 8.20% Notes Due 1996.................................... 200 200 Fixed Rate Medium-Term Notes............................ 35 35 Floating Rate Medium Term Notes......................... 1,228 1,228 8.75% Subordinated Notes Due 2002....................... 199 199 8.375% Subordinated Notes Due 2002...................... 149 149 6.875% Subordinated Notes Due 2003...................... 150 150 6.125% Subordinated Notes Due 2003...................... 249 249 Floating Rate Subordinated German Mark Notes Due 1995... 210 210 Floating Rate Subordinated Notes Due 1997............... 101 101 Floating Rate Subordinated Euro Notes Due 1997.......... 100 100 Floating Rate Subordinated Capital Notes Due 1998....... 200 200 Senior and subordinated debt of First Interstate........ -- 1,368 Other................................................... 81 81 -------- --------- TOTAL SENIOR AND SUBORDINATED DEBT........................ 3,020 4,388 -------- --------- STOCKHOLDERS' EQUITY Preferred Stock Cumulative adjustable rate preferred stock.............. 75 75 Cumulative perpetual preferred stock(1)................. 414 764 -------- --------- Total preferred stockholders' equity...................... 489 839 -------- --------- Common Stock Common stock, par value $5 per share; authorized 150,000,000 shares; issued and outstanding 47,465,721 shares (actual) and 97,950,388 (adjusted).................................. 237 489 Additional paid-in capital.............................. 1,221 11,754 Retained earnings....................................... 1,932 1,932 Other................................................... (5) (5) -------- --------- Total common stockholders' equity......................... 3,385 14,170 -------- --------- TOTAL STOCKHOLDERS' EQUITY................................ 3,874 15,009 -------- --------- TOTAL CAPITALIZATION...................................... $ 6,894 $ 19,397 ======== =========
- -------- (1) The adjusted amount includes $350 million of the Company's preferred stock that will be converted into preferred stock of the Purchaser pursuant to the Acquisition. 9 COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA The following table sets forth certain historical, pro forma combined and pro forma equivalent per share financial information for the common stock of the Purchaser and of the Company. The pro forma amounts included in the table assume completion of the Acquisition and are based on the purchase method of accounting, a preliminary determination and allocation of the total purchase price and the assumptions described under "Pro Forma Combined Financial Information." The information should be read in conjunction with and is qualified in its entirety by the consolidated financial statements and accompanying notes of the Purchaser and the Company included in the documents described under "Incorporation of Certain Information by Reference" (but which, in the case of the Company, are not covered by the report of the Company's independent accountants for purposes of this Prospectus) and the pro forma combined financial statements and accompanying discussion and notes set forth under "Pro Forma Combined Financial Information." The pro forma amounts in the table below are presented for informational purposes and are not necessarily indicative of the financial position or the results of operations of the combined company that would have actually occurred had the Acquisition been consummated as of the dates or for the periods presented. The pro forma amounts are also not necessarily indicative of the future financial position or future results of operations of the combined company. In particular, the Purchaser expects to achieve significant operating cost savings as a result of the Acquisition. See "Background of the Offer--Comparison of the Proposals." No adjustment has been included in the pro forma amounts for the anticipated operating cost savings.
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1995 DECEMBER 31, 1994 ------------------ ----------------- WELLS FARGO & COMPANY COMMON STOCK EARNINGS PER COMMON SHARE: Historical............................. $ 14.14 $14.78 Pro forma combined..................... 10.85 10.69 DIVIDENDS DECLARED PER COMMON SHARE: Historical............................. $ 3.45 $ 4.00 Pro forma combined(1).................. 3.45 4.00 BOOK VALUE PER COMMON SHARE (AT PERIOD END): Historical............................. $ 71.32 $66.77 Pro forma combined(2).................. 144.67 N/A FIRST INTERSTATE BANCORP COMMON STOCK EARNINGS PER COMMON SHARE: Historical............................. $ 8.36 $ 8.71 Pro forma equivalent(3)................ 7.23 7.13 DIVIDENDS DECLARED PER COMMON SHARE: Historical............................. $ 2.30 $ 2.75 Pro forma equivalent(3)................ 2.30 2.67 BOOK VALUE PER COMMON SHARE (AT PERIOD END): Historical............................. $ 47.95 $41.59 Pro forma equivalent(3)................ 96.45 N/A
- -------- (1) Amounts represent historical dividends per common share. (2) Amount is calculated by dividing total pro forma common stockholders' equity by the sum of total outstanding shares of Wells Fargo Common Stock plus new shares of Wells Fargo Common Stock to be issued in the Acquisition (based on the number of Shares outstanding at period end). (3) Amounts are calculated by multiplying the Purchaser's pro forma combined amounts by the exchange ratio. 10 SELECTED CONSOLIDATED FINANCIAL DATA OF WELLS FARGO & COMPANY The selected consolidated financial data of the Purchaser set forth below have been derived from the consolidated financial statements of the Purchaser for each of the years in the five-year period ended December 31, 1994 and the unaudited nine-month period ended September 30, 1995. The selected consolidated financial data set forth below should be read in conjunction with and is qualified in its entirety by the financial statements and accompanying notes contained in the 1994 Wells Fargo 10-K and the Purchaser's Quarterly Report on Form 10-Q for the period ended September 30, 1995, which are incorporated by reference herein. See "Incorporation of Certain Information by Reference."
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------------- 1995 1994 1993 1992 1991 1990 ------------- ------- ------- ------- ------- ------- (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES) CONSOLIDATED SUMMARY OF INCOME Net interest income.... $ 1,987 $ 2,610 $ 2,657 $ 2,691 $ 2,520 $ 2,314 Provision for loan losses................ -- 200 550 1,215 1,335 310 Noninterest income..... 890 1,200 1,093 1,059 889 909 Noninterest expense.... 1,638 2,156 2,162 2,035 2,020 1,717 Net income............. 726 841 612 283 21 712 PER COMMON SHARE Net income............. $ 14.14 $ 14.78 $ 10.10 $ 4.44 $ 0.04 $ 13.39 Dividends declared..... 3.45 4.00 2.25 1.50 3.50 3.90 AVERAGE COMMON SHARES OUTSTANDING............ 49.2 53.9 55.6 52.9 51.8 51.2 CONSOLIDATED PERIOD-END BALANCE SHEET DATA Investment securities.. $ 9,436 $11,608 $13,058 $ 9,338 $ 3,833 $ 1,387 Loans.................. 34,298 36,347 33,099 36,903 44,099 48,977 Assets................. 49,934 53,374 52,513 52,537 53,547 56,199 Deposits............... 38,948 42,332 41,644 42,244 43,719 42,685 Senior and subordinated debt.................. 3,020 2,853 4,221 4,040 4,220 2,417 Stockholders' equity... 3,874 3,911 4,315 3,809 3,271 3,360 CONSOLIDATED AVERAGE BALANCE SHEET DATA Loans.................. $34,538 $34,039 $34,304 $40,406 $46,736 $44,061 Assets................. 51,306 51,849 51,110 52,497 55,022 51,109 Deposits............... 39,072 40,821 40,727 42,266 42,642 37,075 NET INTEREST MARGIN(1).. 5.72% 5.55% 5.74% 5.70% 5.18% 5.12% CONSOLIDATED PROFITABILITY RATIOS(2) Net income to average total assets (ROA).... 1.89% 1.62% 1.20% 0.54% 0.04% 1.39% Net income applicable to common stock to average common stockholders' equity (ROE)................. 27.91 22.41 16.74 7.93 0.07 25.07 CONSOLIDATED PERIOD-END CAPITAL RATIOS(3) Common stockholders' equity to assets...... 6.78% 6.41% 7.00% 6.03% 5.24% 5.26% Stockholders' equity to assets................ 7.76 7.33 8.22 7.25 6.11 5.98 CONSOLIDATED PERIOD-END LOAN DATA Allowance for loan losses................ $ 1,872 $ 2,082 $ 2,122 $ 2,067 $ 1,646 $ 885 Allowance for loan losses as a percentage of total loans........ 5.46% 5.73% 6.41% 5.60% 3.73% 1.81% Nonaccrual and restructured loans.... $ 600 $ 582 $ 1,200 $ 2,142 $ 1,981 $ 1,013 Nonaccrual and restructured loans as a percentage of total loans................. 1.8% 1.6% 3.6% 5.8% 4.5% 2.1% CONSOLIDATED LOAN CHARGE-OFF DATA Net loan charge-offs... $ 210 $ 240 $ 495 $ 798 $ 572 $ 168 Net loan charge-offs as a percentage of average total loans(2).............. 0.81% 0.70% 1.44% 1.97% 1.22% 0.38%
- -------- (1) Net interest margin is defined as net interest income on a taxable- equivalent basis divided by average total earning assets. (2) Ratios for the nine months ended September 30, 1995 have been annualized. (3) Based on the Federal Reserve Board's 1992 capital adequacy guidelines, the Purchaser's total risk-based capital ratio was 12.25%, 13.16%, 15.12%, 13.15%, 10.19% and 9.27% at September 30, 1995, December 31, 1994, 1993, 1992, 1991 and 1990, respectively. The Purchaser's Tier 1 risk-based capital ratio was 8.56%, 9.09%, 10.48%, 8.22%, 5.78% and 5.03% at September 30, 1995, December 31, 1994, 1993, 1992, 1991 and 1990, respectively. 11 SELECTED CONSOLIDATED FINANCIAL DATA OF FIRST INTERSTATE BANCORP The following is a summary of selected consolidated financial data of the Company for each of the years in the five-year period ended December 31, 1994 and the unaudited nine-month period ended September 30, 1995. This information is derived from the financial statements of the Company contained in the 1994 Company 10-K (which, for purposes of this Prospectus, are not covered by the report of the Company's independent accountants) and the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1995, which are incorporated by reference herein. See "Incorporation of Certain Information by Reference." The summary should be read in conjunction with and is qualified in its entirety by reference to such financial statements.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------------------- 1995 1994 1993 1992 1991 1990 ------------- ------- ------- ------- ------- ------- (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA AND PERCENTAGES) CONSOLIDATED SUMMARY OF INCOME Net interest income.... $ 1,905 $ 2,327 $ 2,072 $ 2,015 $ 2,092 $ 2,303 Provision for loan losses................ -- -- 113 314 810 499 Noninterest income..... 823 1,054 954 912 1,184 1,204 Noninterest expense.... 1,638 2,197 2,032 2,209 2,732 2,562 Income (loss) before extraordinary items and cumulative effect of accounting changes............... 670 734 562 282 (288) 439 Extraordinary items.... -- -- (25) -- -- -- Cumulative effect of accounting changes.... -- -- 200 -- -- 30 Net income (loss)...... 670 734 737 282 (288) 469 PER COMMON SHARE Income (loss) before extraordinary items and cumulative effect of accounting changes............... $ 8.36 $ 8.71 $ 6.68 $ 3.23 $ (5.24) $ 6.79 Net income (loss)...... 8.36 8.71 8.96 3.23 (5.24) 7.30 Dividends declared..... 2.30 2.75 1.60 1.20 1.80 3.00 AVERAGE COMMON SHARES OUTSTANDING(1)......... 77.2 80.4 77.0 69.1 62.5 58.9 CONSOLIDATED PERIOD-END BALANCE SHEET DATA Investment Securities.. $ 9,432 $13,851 $16,542 $13,913 $ 8,496 $ 6,975 Loans.................. 35,967 33,222 25,988 24,201 28,182 33,007 Assets................. 55,067 55,813 51,461 50,863 48,922 51,356 Deposits............... 48,236 48,427 44,701 43,675 41,433 43,141 Senior and subordinated debt.................. 1,368 1,388 1,533 2,702 3,108 3,178 Stockholders' equity... 3,981 3,436 3,548 3,251 2,639 2,868 CONSOLIDATED AVERAGE BALANCE SHEET DATA Loans.................. $35,157 $28,644 $24,128 $25,694 $30,691 $35,708 Assets................. 55,629 52,979 49,319 49,031 49,126 54,205 Deposits............... 47,792 46,313 42,540 41,196 41,051 43,982 NET INTEREST MARGIN(2)(3)........... 5.41% 5.14% 4.91% 4.89% 5.04% 5.06% CONSOLIDATED PROFITABILITY RATIOS(3) Net income (loss) to average total assets (ROA)................. 1.61% 1.38% 1.49% 0.57% (0.59)% 0.86% Net income (loss) applicable to common stock to average common stockholders' equity (ROE).......... 25.40 21.56 23.24 9.63 (13.96) 19.56 CONSOLIDATED PERIOD-END CAPITAL RATIOS(4)(5) Common stockholders' equity to assets...... 6.59% 5.53% 6.21% 5.18% 4.18% 4.82% Stockholders' equity to assets................ 7.23 6.16 6.89 6.39 5.39 5.58 CONSOLIDATED PERIOD-END LOAN DATA Allowance for loan losses................ $ 847 $ 934 $ 1,001 $ 1,068 $ 1,273 $ 1,011 Allowance for loan losses as a percentage of total loans........ 2.35% 2.81% 3.85% 4.41% 4.52% 3.06% Nonaccrual and restructured loans.... $ 140 $ 186 $ 227 $ 578 $ 1,095 $ 929 Nonaccrual and restructured loans as a percentage of total loans................. 0.4% 0.6% 0.9% 2.4% 3.9% 2.8% CONSOLIDATED LOAN CHARGE-OFF DATA Net loan charge-offs... $ 111 $ 133 $ 218 $ 460 $ 547 $ 874 Net loan charge-offs as a percentage of average total loans(3).............. 0.42% 0.46% 0.90% 1.79% 1.78% 2.45%
- -------- (1) Includes dilutive effect of outstanding stock options (as determined by application of the treasury stock method). (2) Net interest margin is defined as net interest income on a taxable- equivalent basis divided by average total earning assets. (3) Ratios for the nine months ended September 30, 1995 have been annualized. (4) Based on the Federal Reserve Board's 1992 capital adequacy guidelines, the Company's total risk-based capital ratio was 10.48%, 10.22%, 13.08%, 13.87%, 10.61% and 9.40% at September 30, 1995, December 31, 1994, 1993, 1992, 1991 and 1990, respectively. The Company's Tier 1 risk-based capital ratio was 7.48%, 7.20%, 9.88%, 9.40%, 6.28% and 5.63% at September 30, 1995, December 31, 1994, 1993, 1992, 1991 and 1990, respectively. (5) Calculated using period-end data derived from the information incorporated by reference to provide information comparable to that of the Purchaser. This information is disclosed by the Company in its Form 10-Q and 10-K, using average balances. 12 SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following table sets forth certain selected historical financial data for the Purchaser and the Company and selected pro forma combined financial data. The pro forma amounts included in the table below assume completion of the Acquisition and are based on the purchase method of accounting, a preliminary determination and allocation of the total purchase price and the assumptions described under "Pro Forma Combined Financial Information." This information should be read in conjunction with and is qualified in its entirety by the consolidated financial statements and accompanying notes of Purchaser and Company included in the documents described under "Incorporation of Certain Information by Reference" (but which, in the case of the Company, are not covered by the report of the Company's independent accountants for purposes of this Prospectus) and the pro forma combined financial statements and accompanying discussion and notes set forth under "Pro Forma Combined Financial Information." The pro forma amounts in the table below are presented for informational purposes and are not necessarily indicative of the financial position or the results of operations of the combined company that would have actually occurred had the Acquisition been consummated as of the dates or for the periods presented. The pro forma amounts are also not necessarily indicative of the future financial position or future results of operations of the combined company. In particular, the Purchaser expects to achieve significant operating cost savings as a result of the Acquisition. See "Background of the Offer--Comparison of the Proposals." No adjustment has been included in the pro forma amounts for the anticipated operating cost savings.
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1995 DECEMBER 31, 1994 -------------------------------------- -------------------------------------- HISTORICAL HISTORICAL ---------------------------- ---------------------------- WELLS FARGO FIRST INTERSTATE PRO FORMA WELLS FARGO FIRST INTERSTATE PRO FORMA & COMPANY BANCORP COMBINED & COMPANY BANCORP COMBINED ----------- ---------------- --------- ----------- ---------------- --------- (IN MILLIONS, EXCEPT PER SHARE DATA) CONSOLIDATED SUMMARY OF INCOME Net interest income............... $1,987 $1,905 $3,892 $2,610 $2,327 $4,937 Provision for loan losses......... -- -- -- 200 -- 200 Noninterest income................ 890 823 1,713 1,200 1,054 2,254 Noninterest expense............... 1,638 1,638 3,618 2,156 2,197 4,835 Net income........................ 726 670 1,137 841 734 1,215 PER COMMON SHARE Net income........................ $14.14 $ 8.36 $10.85 $14.78 $ 8.71 $10.69 Dividends declared................ 3.45 2.30 3.45 4.00 2.75 4.00 AVERAGE COMMON SHARES OUTSTANDING... 49.2 77.2(1) 99.6 53.9 80.4(1) 106.5
SEPTEMBER 30, 1995 -------------------------------------- HISTORICAL ---------------------------- --------- WELLS FARGO FIRST INTERSTATE PRO FORMA & COMPANY BANCORP COMBINED ----------- ---------------- --------- CONSOLIDATED PERIOD-END BALANCE SHEET DATA Investment securities................ $ 9,436 $ 9,432 $ 18,868 Loans................................ 34,298 35,967 70,265 Assets............................... 49,934 55,067 112,155 Deposits............................. 38,948 48,236 87,184 Senior and subordinated debt......... 3,020 1,368 4,388 Stockholders' equity................. 3,874 3,981 15,009
- -------- (1) Includes dilutive effect of outstanding stock options (as determined by application of the treasury stock method) for 1.5 million shares. 13 BACKGROUND OF THE OFFER GENERAL On a number of occasions during the past several years, the Purchaser and the Company have informally discussed the possibility of a merger of the two companies. Following several meetings between the then Chief Executive Officers of the Purchaser and the Company, on February 11, 1994, the Purchaser submitted to the Company for its consideration a tax-free merger proposal. The Company rejected this proposal. On September 7, 1995, Paul Hazen, Chairman and Chief Executive Officer of the Purchaser, met with William Siart, Chairman and Chief Executive Officer of the Company, to discuss the possibility of a merger of the two companies again. No conclusions were reached, but Mr. Siart indicated that the Company would probably not be prepared to consider a merger in the immediate future. On the afternoon of October 17, 1995, Mr. Hazen telephoned Mr. Siart to inform him that the Purchaser intended to deliver a letter containing a new merger proposal to the Company and that Mr. Hazen would like to meet with Mr. Siart later that day to deliver the letter in person and to discuss the proposal. Mr. Siart asked for some time to consider the request, but called Mr. Hazen back shortly thereafter to say that he saw no reason for the two of them to meet. The Purchaser's letter was then delivered to the Company. On October 18, 1995, the Company and, shortly thereafter, the Purchaser publicly announced that the Purchaser had made its Original Proposal to the Company for a tax-free merger in which the Company's stockholders would receive 0.625 of a share of Wells Fargo Common Stock for each Share. The market reacted favorably to the announcement, with the Wells Fargo Common Stock closing on that date at $229 per share, an increase of $15.375 (7.2%) from its closing price the day before. Based on that market price, the Original Proposal represented a $37.13 per Share, or 35%, premium to the closing price per Share on the preceding day. On October 26, 1995, Mr. Siart and Mr. Hazen met again. At that meeting, Mr. Siart acknowledged that a merger of the Company and the Purchaser would enhance stockholder value. Mr. Hazen explained the cost savings estimates being used by the Purchaser and offered to have the individuals at the Purchaser who had prepared those estimates meet with their counterparts at the Company in order to demonstrate that the expected cost savings were achievable. After discussion, Mr. Siart declined that offer and stated that the Company agreed with the Purchaser's cost savings estimates. Mr. Hazen then offered to raise the exchange ratio in the Purchaser's proposal to 0.65 of a share of Wells Fargo Common Stock for each Share if the Company would enter into a merger agreement with the Purchaser. Mr. Siart rejected this increased offer but indicated that the Purchaser might accept a merger with a 0.70 exchange ratio. Mr. Hazen stated that the Purchaser was unwilling to raise its bid any further at that time. On October 31, 1995, Mr. Siart and Mr. Hazen again met. Mr. Hazen again offered to have the individuals at the Purchaser who had prepared the cost savings estimates meet with their counterparts at the Company in order to demonstrate that the expected cost savings were achievable. Mr. Siart again declined that offer and stated that the Company agreed with the Purchaser's cost savings estimates. Mr. Siart indicated that he would be prepared to recommend a merger with the Purchaser if the Purchaser would increase the exchange ratio in its proposal to a 0.68 exchange ratio. Mr. Hazen replied that he believed that an exchange ratio of 0.65 was a bid that was fair to the stockholders of the Company and the Purchaser. On November 1, 1995, Messrs. Siart and Hazen talked again, this time by telephone, but made no further progress towards an agreement. Mr. Hazen attempted to reach Mr. Siart on November 2nd and November 3rd by telephone, but his calls were not returned. On November 5, 1995, the Company, FBS and FBS Sub entered into the FIB/FBS Merger Agreement pursuant to which FBS Sub and the Company would effect the FIB/FBS Merger and each Share would be converted into the right to receive 2.60 shares of FBS Common Stock. Under the terms of the FIB/FBS Merger Agreement, following the consummation of that merger, FBS would change its name to First Interstate Bancorp and there would be an even split of the Board of the combined company. The FIB/FBS Merger is subject to a number of conditions which are identical in all material respects to the conditions of the Offer, including among 14 others that all regulatory and stockholder approvals be obtained, although it is also subject to an additional condition which is not a condition to the Offer, namely that each of the Company and FBS shall have received a letter from its accountants to the effect that the FIB/FBS Merger will qualify for pooling of interests accounting treatment. Based on discussions with its advisors, the Purchaser believes there is a significant question as to whether the FIB/FBS Merger will qualify for pooling of interests accounting treatment in light of the increased share repurchase program FBS announced in connection with the FIB/FBS Merger. See "--Comparison of the Proposals--Purchase Versus Pooling of Interests Accounting." As a further condition to the execution and delivery of the FIB/FBS Merger Agreement, FBS and the Company executed reciprocal transaction termination fee letter agreements providing for the payment of "break-up" fees in certain circumstances (the "Reciprocal Fee Letters") and reciprocal stock option agreements providing for the grant of options to purchase each other's common stock in certain circumstances (the "Reciprocal Stock Option Agreements"). The Company Board is permitted to terminate the FIB/FBS Merger Agreement in a number of circumstances, including if there exists a Takeover Proposal (as defined herein) for the Company and the Company Board reasonably determines in good faith that termination is necessary in the exercise of its fiduciary duties under applicable law. See "--FIB/FBS Merger Agreement." The Company entered into the FIB/FBS Merger Agreement and certain "lock-up" arrangements set forth in the Reciprocal Fee Letters and Reciprocal Stock Option Agreements despite the fact that, based on the last available closing prices per share prior to doing so, the FIB/FBS Merger produced a value (at the 2.60 exchange ratio) of $132.28 per Share while the then current Purchaser proposal produced a value (at the 0.65 exchange ratio) of $137.96 per Share, or $5.68 per Share higher. In fact, based on the averages of the closing prices per share on the 15 trading days (which 15 day trading period encompasses the announcements of both proposals) prior to entering into the FIB/FBS Merger Agreement, the FIB/FBS Merger produced a value of $132.15 per Share while the then current Purchaser proposal produced a value of $139.41 per Share, or $7.26 per Share higher. Moreover, according to the Company Schedule 14D-9, the Company entered into the FIB/FBS Merger Agreement (and "lock-up" arrangements) despite the finding by one of its financial advisors (Morgan Stanley & Co. Incorporated) that the Purchaser's Original Proposal (at a 0.625 exchange ratio, or 6.3% below the exchange ratio being offered pursuant to the Offer) was also fair from a financial point of view to the stockholders of the Company. According to the Company Schedule 14D-9, FBS and certain other potential merger candidates were afforded an opportunity to discuss with the Company's financial advisors a possible business combination with the Company. The Purchaser was not contacted by the Company's financial advisors and was not afforded an opportunity to conduct due diligence on the Company or to receive any confidential information. Despite these obstacles, on November 13, 1995, the Purchaser announced its intention to offer to exchange two-thirds of a share of Wells Fargo Common Stock for each Share. In a publicly released letter setting forth such offer, Mr. Hazen again stated that the Purchaser would be prepared to enter into a merger agreement with the Company providing for the same consideration as the Offer. In the event that the Company did not elect to terminate the FIB/FBS Merger Agreement, the Purchaser offered to agree to a process pursuant to which both FBS and the Purchaser would each have 10 days to submit their best and final merger proposals, which proposals would together be presented to the Company's stockholders who could decide for themselves which proposal was in their best interest. The Company did not respond to this proposal. As part of the November 13, 1995 announcement, the Purchaser also stated that it anticipated filing (a) preliminary proxy solicitation materials with the Commission for use in soliciting proxies from stockholders of the Company against approval of the FIB/FBS Merger and (b) preliminary consent solicitation materials with the Commission for use in soliciting written consents from stockholders of the Company to replace the current members of the Company Board with nominees who are committed to removing any obstacles to the merger of the Company with the Purchaser. THIS PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A SOLICITATION OF ANY PROXIES OR CONSENTS FROM THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT. The Purchaser also announced on November 13, 1995 the filing of a complaint against the Company, the Company Board, FBS and FBS Sub in the Delaware Chancery Court which, among other things, seeks to 15 invalidate the FIB/FBS Merger Agreement and the break-up fees and stock option arrangements (commonly referred to as "lock-up" arrangements) granted to FBS pursuant to the Reciprocal Fee Letters and the Reciprocal Stock Option Agreements, respectively, and seeks injunctive relief requiring the Company Board to redeem the Rights and to prevent the Company from using anti-takeover devices or taking other actions intended to impede or delay the acquisition of the Company by the Purchaser. For a further description of this litigation as well as certain class action litigation brought against the Company, the Company Board and FBS, see "--Litigation." On November 13, 1995, the Purchaser also filed an application with the Federal Reserve Bank of San Francisco seeking approval of, among other things, the Offer and the Merger. The Purchaser subsequently filed or will soon file additional applications and notices with various governmental authorities seeking all approvals required to permit consummation of the Offer and the Merger. The Purchaser anticipates that it will obtain regulatory approvals on a timely basis and believes that the regulators will consider the Purchaser's applications for approval of the Offer and the Merger in a time frame substantially identical to that of the FBS applications for approval of the FIB/FBS Merger. See "The Offer--Regulatory Approval Condition." In this regard, the Company Schedule 14D-9 states that the Company Board determined "it was likely that each of FBS and Wells would ultimately receive all [regulatory] approvals." On November 20, 1995, the Company Schedule 14D-9 was filed with the Commission stating, among other things, that the Company Board was committed to completing the FIB/FBS Merger and recommending that the Company's stockholders not tender their Shares in the Offer. In the Company Schedule 14D-9, there is a detailed list of 16 factors considered by the Company Board as material in selecting the FBS merger proposal over the Purchaser's merger proposal. Conspicuously absent from that list is any consideration of the implied purchase price produced by each of the two proposals. At all times during the Company Board's consideration of each Purchaser proposal and FBS proposal, the then current Purchaser proposal has produced an implied purchase price significantly higher than the implied purchase price produced by the then current FBS proposal. See "--Comparison of the Proposals--Purchase Price." COMPARISON OF THE PROPOSALS The Purchaser believes that the Company's stockholders, in comparing the Purchaser's proposal to FBS's proposal, should concentrate on the two components of value which characterize any stock for stock transaction with a fixed exchange ratio, namely (i) the purchase price implied by the exchange ratio and (ii) the value at which the acquiror's stock is expected to trade when an agreement is announced or appears likely. The Purchaser is convinced that its Offer is demonstrably superior on both counts. In addition, the Purchaser believes the FBS proposal suffers from a significant contingency not shared by the Offer (namely, the condition relating to pooling of interests accounting treatment referred to below), and that many of the reasons why the Company says it continues to support the FBS proposal rather than the Purchaser's proposal are subject to serious question. Purchase Price The closing price per Share on October 17, 1995 (the day before the announcement of the Original Proposal) was $106 and the average closing price per Share for the 20 trading days preceding October 17, 1995 was $102.59. The Offer provides a substantial premium to stockholders in relation to those levels, as shown by the following table.
PURCHASE PRICE PER SHARE IMPLIED BY PURCHASER'S OFFER* ------------------ October 17, 1995 (day before announcement of Original Proposal).................................................. $142.42 October 18, 1995 (day of announcement of Original Proposal). 152.67 November 22, 1995 (last full trading day before the date of this preliminary prospectus)............................... 142.25
- -------- * Based on the closing price per share of Wells Fargo Common Stock on the indicated dates and an exchange ratio of two-thirds of a share of Wells Fargo Common Stock per Share. 16 At each point when the Company Board considered the relative merits of an FBS proposal against that of a Purchaser proposal, the then current Purchaser proposal provided a significant premium to the then current FBS proposal, as shown by the following table.
IMPLIED PURCHASE PRICE PER SHARE* ----------------------------------------------------- RELEVANT RELEVANT PURCHASER PROPOSAL FBS PROPOSAL DIFFERENTIAL ------------------ --------------------- ------------ October 30, 1995 $134.14 $115 to $125 $19.14 (date of Company Board (at a 0.65 (at an exchange ratio to $9.14 meeting at which exchange ratio) of 2.3 to possibly proposals from the 2.5 as then Purchaser and FBS were indicated by FBS) first considered) November 3, 1995 137.96 132.28 5.68 (trading day before (at a 0.65 (at a 2.60 announcement of exchange ratio) exchange ratio) FIB/FBS Merger Agreement) November 17, 1995 141.17 137.80 3.37 (last trading day (at a two-thirds (at a 2.60 before the Company's exchange ratio) exchange ratio) rejection of the Offer) November 22, 1995 142.25 134.23 8.02 (last full trading day (at a two-thirds (at a 2.60 before date of this exchange ratio) exchange ratio) preliminary prospectus)
- -------- * Based on the closing price per share of the common stock of the Purchaser or FBS, as the case may be, on the indicated dates. Moreover, based on published reports, the market value of FBS's stock may have been supported by an active stock repurchase program being maintained by FBS. If so, the implied purchase price of FBS's proposal on various dates as set forth above may be overstated and the differential between the implied purchase price of the Purchaser's proposal and that of the FBS proposal on various dates as set forth above may be understated. In addition, as shown by the following table, the exchange ratio offered by the Purchaser pursuant to the Offer--two-thirds of a share of Wells Fargo Common Stock for each Share--consistently demonstrates greater value for stockholders than the FIB/FBS Merger.
IMPLIED PURCHASE PRICE PER SHARE* --------------------------------------- PURCHASER'S OFFER AT A FIB/FBS MERGER TWO-THIRDS AT A 2.60 BASED ON CLOSING EXCHANGE EXCHANGE PRICES ON: RATIO RATIO DIFFERENTIAL - ---------------- ----------- -------------- ------------ October 17, 1995 $142.42 $135.20 $ 7.22 (trading day before announcement of Original Proposal) October 18, 1995 152.67 134.23 18.44 (trading day of announcement of Original Proposal) November 22, 1995 142.25 134.23 8.02 (last full trading day before date of this preliminary prospectus) Average of indicated number of trading days preceding November 22, 1995: 10 Trading Days....................... 140.98 136.24 4.74 20 Trading Days....................... 140.52 133.45 7.07 30 Trading Days....................... 141.69 133.23 8.46
- -------- * Based on the closing price per share of the common stock of the Purchaser or FBS, as the case may be, for the indicated dates or periods. 17 Value of Acquiror's Stock Following Acquisition On October 18, 1995, the day that the Purchaser publicly announced that it had made a proposal to acquire the Company at an exchange ratio of 0.625 of a share of Wells Fargo Common Stock per Share, the Purchaser's common stock closed at $229.00 per share, an increase of $15.375, or 7.2% over its closing price of $213 5/8 the day before. Since that time, Wells Fargo Common Stock has declined, closing at $213 3/8 per share on November 22, 1995. The Purchaser believes that such decline is largely due to market uncertainty about whether the Purchaser will be able to overcome the obstacles to the Offer being raised by the Company, and that such decline will be largely reversed if the market recognizes that the Offer will be successful. The market's strong positive reaction to the Purchaser's October 18, 1995 announcement is in sharp contrast to the market's reaction to FBS's announcement on November 6, 1995 that it had entered into the FIB/FBS Merger Agreement. On November 6, 1995, the FBS Common Stock closed at $49.875 per share, a decline of $1.00 per share or 2.0% from its prior close on November 3, 1995 of $50.875. As mentioned above, the increase in the FBS Common Stock market price from $49.875 per share on November 6 to $51.625 on November 22, 1995 may be, at least in part, due to a substantial stock repurchase program undertaken by FBS during this period. The Purchaser believes that the market's initial reactions to the announcement of the Purchaser's Original Proposal and to the FIB/FBS Merger Agreement are indicative of the values at which the respective stocks might trade following the consummation of a merger with the Company. The Purchaser further believes these reactions are based on a belief that an acquisition of the Company by the Purchaser (as compared to an acquisition of the Company by FBS) would (i) result in significantly more cost savings, (ii) be significantly more accretive to earnings before amortization of intangibles ("Cash Earnings") per share and (iii) have a significantly more valuable franchise going forward. Cost Savings. The Purchaser believes that if it were assumed to merge with the Company on January 1, 1996, the cost to the Purchaser in 1996 to manage the Company as part of a combined entity would be approximately $1.2 billion. The Purchaser based that figure on a business line analysis of the Company's noninterest expenses for the quarter ended June 30, 1995 after adjusting for items such as (i) restructuring charges, (ii) lower Federal Deposit Insurance Corporation ("FDIC") expenses, (iii) lower costs expected from a mortgage alliance program recently announced by the Company, and (iv) amortization of intangibles. The difference between the assumed $2.02 billion annual adjusted noninterest expense of the Company on a stand alone basis (calculated by annualizing the adjusted noninterest expenses of the Company for the quarter ended June 30, 1995) and the expected $1.2 billion cost to manage the Company as part of a combined entity represents the approximately $800 million in annual cost savings that the Purchaser anticipates achieving within 18 months of a merger with the Company. These savings are expected to result from (i) the significant overlap which exists between the Purchaser's operations and those of the Company in California, (ii) the proximity of the Purchaser's operations in California and those of the Company in neighboring states, (iii) the greater level of efficiency with which the Purchaser runs its franchise when compared to the Company, and (iv) economies of scale. The Purchaser estimates that it could experience up to $100 million of losses in revenue as a result of combining the two companies, resulting in net cost savings of approximately $700 million. As mentioned under "Background of the Offer-- General," Mr Siart, Chairman and Chief Executive Officer of the Company, agreed with the Purchaser's cost savings estimates. By contrast, and in spite of having virtually no geographic overlap and little proximity with the Company's franchise, FBS has projected expense savings of approximately $500 million with no concurrent revenue loss. FBS projects being able to achieve all those cost savings within six months of consummating a transaction (only one-third of the time estimated by the Purchaser). In addition, FBS has used as its starting point an estimate of the noninterest expenses it expected the Company to incur in 1996 on a stand alone basis (after adjusting for the amortization of intangibles) of $2.2 billion. Deducting FBS's projected cost savings from that figure, the cost projected by FBS to manage the Company as part of a combined entity can be estimated at approximately $1.7 billion as compared to the $1.2 billion the Purchaser is projecting, or a difference of approximately $500 million. 18 Viewed another way, the difference between the $2.2 billion estimate used by FBS for the Company's 1996 standalone expenses and the $1.2 billion estimate used by the Purchaser for the cost to manage the Company as part of a combined entity translates into a cost savings estimate of $1 billion resulting from a Purchaser combination with the Company. It is this $1 billion cost savings estimate which is directly comparable to the FBS cost savings estimate of $500 million resulting from an FBS combination with the Company. While both the Purchaser and FBS have represented that their cost savings estimates are "conservative," the degree to which cost savings impacts the creation of stockholder value requires that the Company's stockholders weigh the likelihood of each acquiror's being able to achieve its respective cost savings estimates. To assist the Company's stockholders in that analysis, the table below compares those estimates to estimates in recent bank acquisitions, although clearly no two transactions are identical. As shown by the table below, cost savings projected by FBS, when taken as a percentage of the combined operating expenses of the Company and FBS (or of the operating expenses of the smaller company), are two to three times greater than those projected by other acquirors in similar market extension transactions. This discrepancy is even more pronounced in light of the six month timetable which FBS has projected for achieving the full cost savings (which is considerably shorter than the time which other acquirors in similar transactions have projected as being necessary). In marked contrast, the Purchaser's estimated cost savings and implementation schedule are considerably more consistent with those in similar in-market acquisitions. 19 COST SAVINGS ESTIMATES FOR BANK TRANSACTIONS ANNOUNCED IN 1995 WITH VALUES GREATER THAN $1 BILLION(1)
COST SAVINGS ESTIMATES --------------------------------- AS A PERCENTAGE OF SMALLER (IN TERMS AS A OF ASSETS) PERCENTAGE TIME TO OWNERSHIP COMPANY'S OF COMBINED ACHIEVE SPLIT OF OPERATING OPERATING 100% ANNOUNCE- COMBINED DEAL VALUE EXPENSE EXPENSE COST MENT DATE ENTITY(2) (IN BILLIONS)(3) BASE(4) BASE(4) SAVINGS(2) --------- --------- ---------------- ---------- ----------- ---------- MARKET EXTENSION TRANSACTIONS US Bancorp/West One..... 05/08 64/36 $ 1.6 23% 7% 12-15Mos. First Union/First Fidelity............... 06/19 61/39 5.6 18 5 24 First Chicago/NBD....... 07/12 50/50 5.1 15 6 6-12 Boatmen's/Fourth Financial.............. 08/25 80/20 1.2 24 4 21 National City/Integra... 08/28 70/30 2.1 21 5 6 AVERAGE 20% 5% 14-16MOS.(5) FIRST BANK SYSTEM/ FIRST INTERSTATE....... 11/06 42/58 $10.3 42% 15% 6MOS. IN-MARKET ACQUISITIONS Fleet/Shawmut........... 02/21 59/41 $ 3.6 44% 14% 15Mos. PNC/Midlantic........... 07/10 67/33 3.0 30 7 12 Chemical/Chase.......... 08/28 58/42 9.9 35 16 21 UJB/Summit.............. 09/11 64/36 1.1 48 12 9 CoreStates/Meridian..... 10/10 63/37 3.2 35 11 6 AVERAGE 38% 12% 13MOS.(5) WELLS FARGO/FIRST INTERSTATE............. 11/13 48/52 $10.9 37% 18% 18MOS.
- -------- (1) The NationsBank/Bank South transaction has been omitted because one party was far larger (in terms of assets) than the other and the pro forma ownership split was 90/10. (2) Source: Investor presentations. (3) Source: SNL Securities. The Chemical/Chase transaction excludes the preferred stock. (4) Cost savings estimates as a percentage of operating expense base for US Bancorp/West One, UJB/Summit, and CoreStates/Meridian were based on investor presentations. Other cost savings estimates as a percentage of operating expense base were obtained by dividing cost savings estimates from investor presentations by second quarter 1995 annualized noninterest expense, with the exception of Fleet/Shawmut which is based on the annualized first quarter 1995 noninterest expense base and First Bank System/First Interstate and Wells Fargo/First Interstate which are based on the annualized third quarter 1995 noninterest expense base where First Interstate's expense base is adjusted for restructuring charges and other items. (5) Among the transactions in the table, the larger, and therefore presumably more complex transactions (i.e., those with a deal value in excess of $5.0 billion), average 17-19 months as the estimated time to achieve 100% cost savings. In addition, FBS's projections do not appear to provide for a special assessment on Savings Association Insurance Fund ("SAIF") deposits, notwithstanding pending legislation which would impose such an assessment on FBS's SAIF deposits. The Purchaser has no SAIF deposits and, therefore, would not be affected by such legislation. Also, the FBS estimates do not make any allowances for revenue loss despite the fact that 32% of the cost reductions projected by FBS come directly from business lines, where cost reductions will have a direct impact on customers. The Purchaser's estimates, in contrast, make appropriate allowances for possible revenue loss in keeping with the Purchaser's goal of ensuring that its overall estimates are conservative. 20 The Company's and FBS's claim that a merger with the Purchaser would involve greater revenue loss than $100 million is, once again, at odds with the projections in other bank mergers (banks have generally not projected material revenue loss in connection with acquisitions, even where divestitures are expected to be required) and is also at odds with the Company's assertion that there would be no material revenue loss as a result of the proposed FIB/FBS Merger. In addition, the claim is at odds with the Purchaser's own acquisition experience, particularly its experience with the Crocker National acquisition described below. Moreover, FBS has no proven track record at successfully integrating large acquisitions. Although the acquisition of the Company by FBS and a pending FBS merger with FirsTier Financial would mean that FBS would be simultaneously integrating institutions with assets aggregating over 178% of FBS's total assets, the largest bank acquisition which FBS has undertaken to date represented less than 20% of its total assets at the time of announcement (Metropolitan Financial, a thrift institution, represented 30% of total assets at the time of announcement). By contrast, the Purchaser's only pending acquisition is its Offer for the Company, and the Purchaser has a proven track record of successfully completing a similar integration when it acquired Crocker National in 1986 (Crocker National represented approximately 70% of the Purchaser's total assets at that time). FBS has claimed that the Purchaser would experience greater revenue loss than estimated, because deposit attrition of 15% to 40% has occurred in California in-market acquisitions such as the Purchaser's acquisition of Crocker National. The Purchaser's experience with respect to its Crocker National acquisition was materially different than that claimed by FBS. The following table sets forth the Purchaser's and Crocker National's deposits in California (excluding time deposits greater than $100,000), branches remaining and branches closed (as a percentage of the original number of branches of Crocker National) at March 31, 1986 and at various dates following the May 31, 1986 acquisition of Crocker National. Demand deposits are also shown because the usual quarter end fluctuations in these deposits (typically with offsetting fluctuations in float) can produce variations in the trend line. Deposits grew by 3.4% by year end 1987, despite the closure of 182 branches (a 29% reduction of all branches, or a 57% decline of branches relative to the Crocker National totals at the time of that merger). The deposit growth numbers are conservative because approximately $200 million of deposits divested for antitrust reasons were not subtracted from the starting base level of deposits. The table excludes time deposits greater than $100,000 because Crocker National had a significant amount of these deposits sourced through their funding desk which were allowed to run off following the acquisition. Even if these deposits over $100,000 were included, total deposits would have experienced no significant decrease.
PURCHASER'S AND CROCKER NATIONAL'S CALIFORNIA DEPOSITS -------------------------------------------------- CALIFORNIA DEPOSITS (EXCLUDING TIME CUMULATIVE NUMBER DEPOSITS GREATER OF BRANCHES CLOSED THAN $100,000) AS PERCENTAGE OF --------------------- ORIGINAL NUMBER OF DEMAND NUMBER OF CROCKER NATIONAL DEPOSITS OTHER TOTAL* BRANCHES BRANCHES -------- ----- ------ --------- ------------------ (DOLLARS IN BILLIONS) March 31, 1986............... $6.7 $19.8 $26.5 621 -- June 30, 1986................ 7.0 19.7 26.6 619 1% September 30, 1986........... 6.9 20.7 27.7 568 17 December 31, 1986............ 8.0 21.0 28.9 513 34 March 31, 1987............... 6.4 21.3 27.7 458 51 June 30, 1987................ 6.3 21.1 27.4 449 54 September 30, 1987........... 6.2 21.0 27.1 442 56 December 31, 1987............ 6.3 21.1 27.4 439 57
- -------- * Components may not sum to total due to rounding. Accretion Projections. Both the Purchaser and FBS have publicly disclosed the pro forma impact of their respective proposed transactions on their future earnings per share, given their base case assumptions. Because of the different accounting treatments sought by the Purchaser and FBS, the Purchaser believes that its projected accretion in Cash Earnings per share is most comparable to FBS's projected accretion in reported earnings per share. 21 In its investor presentation materials dated November 6, 1995, FBS estimates that a merger with the Company would result in accretion in its reported earnings per share in 1996, 1997 and 1998 of 1%, 18% and 22%, respectively. However, even beyond the uncertainty over the level of operating cost savings achievable by FBS as described above, the Purchaser believes that the methodology used by FBS in arriving at its accretion projections is questionable. In projecting accretion to earnings from a base (i.e. stand alone) case, FBS and the Company assume no share repurchases in that base case for 1996 and 1997, and presumably thereafter. (See pages 23-25 of FBS's investor presentation materials dated November 6, 1995.) The Purchaser believes that it would be more appropriate for the base case to assume a continuation of FBS's current buyback program. If that premise were adopted, FBS's base earnings per share would be higher in the future and the accretion percentages would be lower than suggested by FBS. The magnitude of the differences between earnings per share accretion over a base case with and without the leverage of an established share repurchase program is pronounced. FBS has suggested its earnings per share accretion resulting from the FIB/FBS Merger will be 18% in 1997 rising to 25% in the year 2000. If, however, share repurchases were assumed in the stand alone FBS case, the results would be markedly different. Assuming, as the Purchaser did in its estimates, that sufficient stock would be repurchased to keep capital constant after a constant percentage dividend payout ratio, the base case would rise and the accretion above that base case would be lower. The Purchaser estimates that the accretion for FBS would drop to 12% and 6%, respectively, for the years 1997 and 2000, instead of the 18% and 25% FBS has claimed. The Purchaser has estimated its earnings accretion from a base case which assumes a share repurchase program and uses the same base revenue and expense assumptions for the Company as were used by FBS. Based on these assumptions, the Purchaser estimates that the Merger with the Company would result in accretion to its Cash Earnings per share in 1996, 1997 and 1998 of 14%, 38% and 42%, respectively, and to its reported earnings per share in 1996, 1997 and 1998 of (2)%, 18% and 23%, respectively. Value of Franchise. At the base of every banking institution's operations is the institution's relationship with its present and prospective customers, individuals and corporations doing business as borrowers and depositors or obtaining other services from the institution. A banking institution's opportunities for the future necessarily depend on the economic base and economic potential of the territory it serves, which can be measured in terms such as population and population growth, retail sales, households, industrial production and employment, as well as the institution's market share in the territory it serves. The Purchaser has a history of success with individual and small business customers. The Purchaser is also known for its expertise in the area of alternative delivery as it conducts business with many of its customers via phone, ATMs, supermarkets and electronically through the Internet. The Purchaser currently ranks as the second largest California based bank with total deposits of approximately $37 billion and with a market presence that is geographically broad based as the Purchaser operates throughout the entire state. With the proposed combination with the Company, the Purchaser will solidify its position in California with deposits of approximately $58 billion. Additionally, through the presence of the Company in other western states, the new company will rank number one, two, or three in terms of deposits in four states (California, Oregon, Arizona and Nevada). The population of California (approximately 31 million), coupled with the population of the Company's territory outside California (approximately 43 million), represent 28% of the country's population and the states represented are some of the fastest growing in the country. The combination of the Purchaser and the Company would benefit not only from the current economic turnaround of California but also from the above average growth of the other western states in which the combined entity would be doing business. FBS's territory, by contrast, is much smaller and less populous and has growth prospects that are lower than the geographic region in which the Company operates. Thus, when viewing the two respective franchises, the Purchaser believes a Purchaser/Company combination with its deeper penetration of the populous California market coupled with the rapid growing western states covered by the Company is preferable to an FBS/Company combination with its diversification into a geographical area which would dilute the economic growth prospects for Company stockholders. Put differently, a combination of the Purchaser and the Company would span fewer states than would a combination of FBS and the Company, but the population of the states where the Purchaser and the Company combined would rank number one, two or three in terms of deposits would be approximately 22 40 million while the population of the states where FBS and the Company combined would rank number one, two or three in terms of deposits would be only approximately 21 million. Purchase Versus Pooling of Interests Accounting. The Purchaser's and FBS's proposals differ in that the Purchaser contemplates using the purchase method of accounting to account for the acquisition of the Company while FBS's proposal is conditioned upon the receipt from FBS's accountants of an opinion to the effect that the acquisition will qualify for pooling of interests accounting treatment. Based on discussions with its advisors, the Purchaser believes there is a significant question as to whether the FIB/FBS Merger will qualify for pooling of interests accounting treatment in light of the increased share repurchase program that FBS has announced in connection with the FIB/FBS Merger. FBS's investor presentation of November 6, 1995 contemplates that up to approximately 14% of its pro forma outstanding shares will be repurchased in the 18 months that follow the transaction. In addition, FBS has stated that approximately 8% of the outstanding Shares will be tainted Shares (i.e., certain Shares which it has repurchased within the preceding two years) at the acquisition date. The Purchaser believes there is no meaningful economic difference between purchase accounting and pooling of interests accounting. The pro forma levels of tangible capital are identical, regardless of whether purchase or pooling of interests accounting is utilized. Although under purchase accounting goodwill and other intangibles will be recorded in the transaction and amortized over time (with the result that reported net income will be lower), amortization is not a cash expense and thus the true earnings power of the institution, as represented by reported earnings before amortization of intangibles (i.e., Cash Earnings), is completely unaffected. The Purchaser determined to use purchase accounting because it does not require the reissuance of previously repurchased shares and allows greater flexibility in repurchasing shares after completion of the transaction than that which is available given current accounting practices under pooling of interests accounting. The Purchaser has historically had a share repurchase program designed to return excess capital being generated by its operations to stockholders. The Purchaser believes that utilizing pooling of interests accounting would limit its ability to continue to return excess capital to stockholders by way of share repurchases for a significant period of time after completion of the transaction. Response to Certain Assertions in the Company Schedule 14D-9. The Company has set forth in the Company Schedule 14D-9 the reasons why the Company Board continues to support the FBS proposal rather than the Purchaser's proposal. Many of these reasons are, in the Purchaser's opinion, subject to serious question. . Although the Company stresses that a combined FBS/Company entity would gain a top three ranking (in terms of deposits) in seven additional states, five of these states are Montana, Nebraska, North Dakota, South Dakota and Wyoming, which have a combined population of less than 4.5 million. In fact, the population of the states where the Purchaser and the Company combined would have a top three ranking (in terms of deposits) is approximately 40 million while the population of the states where FBS and the Company combined would have such a ranking is only approximately 21 million. . Although the Company maintains that diversification of assets outside California reduces risk and therefore is an important consideration, the Company's serious financial problems in the early 1990's were widely attributed to credit quality and other problems in its units outside California, primarily Arizona and Texas. . The Company claims to have had a "longstanding desire" to achieve greater geographic diversification, but four out of its five most recent significant acquisitions (based on asset size as set forth on page 32 of the Company's 1994 Annual Report) have been in California. Further, the Company has sold its operations in Oklahoma and part of its operations in New Mexico. The Company expressed specific concern about the Purchaser's real estate loan concentration in California, but between 1993 and 1994 the Company increased its total California real estate loans by 151% and its California commercial real estate loans by 78%. . The Company expresses concern that the trading price of the Wells Fargo Common Stock in relation to book value and earnings is among the highest in the banking industry, but this is also true of FBS's common stock. 23 . The Company expresses concern about revenue loss in a Purchaser/Company combination because of significant divestiture requirements. However, the Purchaser is convinced that the proposed divestiture amount of $905 million would not lead to any material net revenue loss from divestitures. In fact, banks have generally not projected material revenue loss in connection with acquisitions, even where divestitures are expected to be required. . The Company suggests that the cost savings projected for the FIB/ FBS Merger are achievable without significant revenue loss (in purported contrast to the Purchaser's proposal), but the comparable transactions noted above would suggest that the level of cost savings projected by FBS is highly ambitious and, at least recently, unprecedented for a large out of market transaction. . The Company attempts to contrast FBS's acquisition integration record with that of the Purchaser on the basis that the Purchaser has not managed the process of consummating a "significant" bank acquisition since 1988. However, the current FBS management has never consummated an acquisition comparable to the Purchaser's acquisition of Crocker National, which represented 70% of assets at the time, and none of FBS's recent acquisitions represented more than 30% of FBS's total assets at the time of announcement. . The Company suggests that the Purchaser has fewer product lines and lower revenue growth opportunities. However, the Purchaser funded a number of growth initiatives in 1995 which translated into substantial revenue growth between the second and third quarters of this year, while the Company and FBS (after subtracting a non-recurring gain) had declining revenue between such periods. The growth initiatives for the Purchaser included supermarket banking, small business lending, consumer lending and direct distribution. The Purchaser sees substantial revenue growth opportunities in a merger with the Company, both in these areas and in commercial lending, trust and investment management. In addition, the Purchaser notes that FBS's noninterest income in relation to assets is currently lower than the comparable ratio for the Purchaser. . The Company expresses concern about the Purchaser's greater exposure to real estate lending, which "is inconsistent with First Interstate's credit philosophy." However, between 1993 and 1994 the Company's total real estate loans increased by 61% and its commercial real estate loans increased by 33%. . Although the Company expresses concern that the Purchaser's proposed transaction would be accounted for as a purchase rather than a pooling of interests, (a) in the twelve acquisitions announced by the Company since 1991, ten were accounted for as purchases and only two were accounted for as poolings of interests, and (b) in the eleven acquisitions announced by FBS since 1991 for which information is available, ten were accounted for as purchases and only one was accounted for as a pooling of interests. . The Company claims that it shares a common deposit system with FBS, while the Purchaser utilizes a system which is incompatible with the Company's. However, the Purchaser also has a number of systems in common with the Company. The Purchaser believes that these common systems between FBS and the Company and the Purchaser and the Company would merely simplify initial customer conversions and do not impact overall systems efficiency which depends on interactions between systems and systems architecture. The Purchaser believes that its systems architecture which is based on an open network and distributed computing provides it with a substantial systems advantage with respect to new product development and ongoing operating efficiency. LITIGATION On November 13, 1995, the Purchaser filed a complaint in the Delaware Court of Chancery against the Company, the Company Board, FBS and FBS Sub. The complaint seeks, among other things, (i) a declaration that the Company Board's approval of the FIB/FBS Merger Agreement, the agreement to pay FBS $100 million in break-up fees pursuant to the Reciprocal Fee Letters and the grant to FBS of a lock-up stock option with a value of up to $100 million pursuant to the Reciprocal Stock Option Agreements constituted breaches of the Company Board's fiduciary duties and, therefore, that the FIB/FBS Merger Agreement, break-up fees and the lock-up stock option granted to FBS are void and unenforceable; (ii) an injunction compelling the Company 24 Board to terminate the FIB/FBS Merger Agreement and such fees and option and prohibiting the Company Board from including such fees and option or any similar provision in any modified or future agreement with FBS; (iii) an injunction compelling the Company Board to declare the Offer to be a "Qualified Offer," as defined in the Rights Agreement, or, alternatively, compelling the Company to redeem the Rights or to amend the Rights to make them inapplicable to the Offer and the Merger; (iv) an injunction against the adoption by the Company of any defensive measures to thwart the Offer or the consummation of the Merger; and (v) a declaration that the Offer and any subsequent merger are exempt from Section 203 of the DGCL pursuant to Section 203(b)(6) of the DGCL or, alternatively, an injunction compelling the Company Board to approve the Offer for purposes of Section 203 of the DGCL. Certain present and former members of the Company Board have been named as defendants in several stockholder class action suits filed in California, and certain present members of the Company Board and the Company have been named as defendants in several stockholder class action suits filed in Delaware, alleging that the Company Board will breach or has breached its fiduciary duties to the stockholders of the Company in responding to the Purchaser's Original Proposal. Five Delaware actions were filed on October 18 and 19, 1995 in Delaware Chancery Court. On October 27, 1995, these five actions were consolidated into a single action. On November 13, 1995, the Delaware plaintiffs sought leave to file a Second Amended and Supplemental Class Action Complaint (the "Second Amended Complaint"). Among other things, the proposed Second Amended Complaint seeks to add FBS as a defendant and to assert aiding and abetting claims against it. Among other claims, the proposed Second Amended Complaint alleges that the Company defendants breached their fiduciary duties by failing to conduct a fair bidding contest for the Company. In addition, it alleges that the defendants have implemented certain measures which may impede any proxy solicitation or consent solicitation that the Purchaser may undertake. The plaintiffs seek a variety of injunctive and other relief, including an order enjoining the FIB/FBS Merger and a declaration that the break-up fees and the lock-up stock option granted to FBS pursuant to the Reciprocal Fee Letters and Reciprocal Stock Option Agreements, respectively, are null and void. Six class actions have been filed in the Superior Court of the State of California, County of Los Angeles. The complaints filed in the six California actions are similar and allege that the members of the Company Board will breach or have breached their fiduciary duty in responding to the Purchaser's Original Proposal and the Offer. In addition, these complaints allege negligent breach of fiduciary duty, abuse of control and tortious interference with prospective economic advantage. The plaintiffs in the California actions seek declaratory relief as well as permanent and preliminary injunctive relief enjoining the defendants from taking steps to prevent or frustrate the sale of the Company to the Purchaser. In addition, the plaintiffs seek compensatory damages of an unspecified amount and costs including attorneys fees. FIB/FBS MERGER AGREEMENT The FIB/FBS Merger. According to the Current Report on Form 8-K of the Company dated November 5, 1995 (the "First Interstate 8-K"), the FIB/FBS Merger Agreement provides that FBS Sub would be merged with and into the Company, with the Company being the surviving corporation as a wholly owned subsidiary of FBS. The FIB/FBS Merger would become effective at the time specified in the certificate of merger (the "Effective Time"), which must be filed with the Secretary of State of the State of Delaware no later than two business days after the satisfaction or waiver of the latest to occur of the conditions summarized below under "--Conditions to the FIB/FBS Merger." Consideration. Under the terms of the FIB/FBS Merger Agreement, each outstanding Share (excluding Shares held in treasury by the Company or directly or indirectly by FBS, the Company or any of their respective subsidiaries, but including Shares (i) held directly or indirectly by FBS or the Company or any of their respective subsidiaries in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity that are 25 beneficially owned by third parties or (ii) held by FBS or the Company or any of their respective subsidiaries in respect of a debt previously contracted), including the Rights attached thereto, would be converted into the right to receive 2.60 shares (the "Common Exchange Ratio") of the FBS Common Stock, together with the number of rights (the "FBS Rights") issued pursuant to the Rights Agreement, dated as of December 21, 1988, between FBS and Morgan Shareholder Services Trust Company, as Rights Agent, as amended (the "FBS Rights Agreement"). In addition, pursuant to the FIB/FBS Merger Agreement, each outstanding option granted by the Company to purchase Shares would be converted into an option to purchase FBS Common Stock in the number and at an exercise price consistent with the Common Exchange Ratio. In addition, pursuant to the FIB/FBS Merger Agreement, each outstanding share of 9 7/8% preferred stock, Series F, and each outstanding share of 9.00% preferred stock, Series G, of the Company (collectively, the "First Interstate Preferred Stock"), would be converted into one share of 9 7/8% preferred stock and 9.00% preferred stock, respectively, of FBS (collectively, the "New FBS Preferred Stock") with substantially the same terms as the corresponding series of First Interstate Preferred Stock, provided that the New FBS Preferred Stock shall have the voting rights necessary to ensure that FIB/FBS Merger constitutes a reorganization within the meaning of Section 368(a) of the Code. Representations and Warranties. The FIB/FBS Merger Agreement contains certain representations and warranties of the Company including, among other things: (a) that no consents or approvals of any governmental entity or third party which is not a governmental entity are necessary to consummate the FIB/FBS Merger and the other transactions contemplated by the FIB/FBS Merger Agreement, except as disclosed in the FIB/FBS Merger Agreement or, in the case of consents or approvals from third parties which are not governmental entities, the failure of which to obtain will not have and would not be reasonably expected to have a material adverse effect on the Company; (b) that the Company and each of its subsidiaries have timely filed all material reports, registrations and statements required to be filed since January 1, 1993 with certain specified regulatory agencies, and that except for normal examinations conducted by the foregoing regulatory agencies in the regular course of the Company's business and except as disclosed in FIB/FBS Merger Agreement, no regulatory agency has initiated any proceeding or investigation into the business or operations of the Company or its subsidiaries since January 1, 1993; (c) as to brokers; (d) that there has been no event since June 30, 1995, except as disclosed in its documents filed with the Commission prior to the date of the FIB/FBS Merger Agreement, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (as defined in the FIB/FBS Merger Agreement and as used in this paragraph, a "Material Adverse Effect") on the Company or the surviving corporation; (e) as to employee compensation; (f) as to actions and proceedings pending or threatened against the Company; (g) as to employee benefit plans; (h) that the documents filed by the Company with the Commission since January 1, 1994 did not contain any untrue statement of material fact and did not omit any material fact necessary to make the statements therein not misleading; (i) as to governmental licenses and permits, and compliance with laws, including relevant tax laws; (j) as to material contracts; (k) as to agreements with regulatory agencies; (l) that neither the Company nor any of its subsidiaries has incurred since June 30, 1995, except as disclosed in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1995 and for liabilities in the ordinary course of business consistent with past practice, any liability of any nature whatsoever that, either alone or when combined with all similar liabilities, has had, or would reasonably be expected to have, a Material Adverse Effect on the Company; (m) as to state takeover laws; (n) that the information to be provided by the Company and its subsidiaries in the registration statement and the joint proxy statement in connection with the FIB/FBS Merger Agreement will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading; (o) as to compliance with environmental laws and worker safety laws; and (p) that all interest rate risk management arrangements have been entered into in accordance with prudent banking practices and are legal, valid and binding obligations of the Company or its subsidiaries and, to the Company's knowledge, there are no breaches, violations or defaults or allegations thereof by any party thereunder which would have or would be reasonably be expected to have a Material Adverse Effect on the Company. In addition, the FIB/FBS Merger Agreement contains representations and warranties by the Company as to, among other things, its organization, capitalization, ownership of its material subsidiaries and authority to enter into the FIB/FBS Merger Agreement and the binding effect of the FIB/FBS Merger Agreement. The FIB/FBS Merger Agreement also contains similar representations and warranties of FBS. 26 Conditions to the FIB/FBS Merger. (a) The respective obligations of each party to effect the FIB/FBS Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: (i) The FIB/FBS Merger shall have been approved by the holders of a majority of the Shares. In addition, the issuance of FBS Common Stock pursuant to the FIB/FBS Merger Agreement shall have been approved by the affirmative vote of the holders of a majority of the shares of FBS Common Stock voting at a meeting of stockholders and the amendment of the FBS Certificate of Incorporation to (A) increase the number of authorized shares of the FBS Common Stock to 500,000,000 and increase the number of authorized shares of FBS Preferred Stock to 15,000,000 and (B) change the name of FBS to First Interstate Bancorp, shall have been approved by the affirmative vote of the holders of a majority of the outstanding shares of FBS Common Stock. (ii) The shares of FBS Common Stock issuable upon consummation of the FIB/FBS Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance. (iii) All regulatory approvals required to consummate the transactions contemplated by the FIB/FBS Merger shall have been obtained and shall remain in full force and effect, all statutory waiting periods in respect thereof shall have expired and no such approval shall contain any conditions or restrictions which the Board of Directors of either FBS or the Company reasonably determines in good faith will have or reasonably be expected to have a Material Adverse Effect on the combined company and its subsidiaries taken as a whole. The required regulatory approvals would be substantially the same as those required by the Purchaser for the Offer and the Merger. See "The Offer--Regulatory Approval Condition." (iv) The registration statement on Form S-4 for the FBS Common Stock shall have become effective under the Securities Act and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Commission. (v) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the FIB/FBS Merger or any of the other transactions contemplated by the FIB/FBS Merger Agreement shall be in effect, and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any governmental entity which prohibits, restricts or makes illegal the consummation of the FIB/FBS Merger. (b) The obligation of FBS to effect the FIB/FBS Merger is also subject to the satisfaction or waiver by FBS at or prior to the Effective Time of the following conditions: (i) The representations and warranties of the Company set forth in the FIB/FBS Merger Agreement shall be true and correct in all respects (or, in certain enumerated cases, in all material respects) as of the date of the FIB/FBS Merger Agreement and, except to the extent such representations and warranties speak as of an earlier date, as of the Closing Date (as defined in the FIB/FBS Merger Agreement), provided that such representations and warranties shall be deemed to be true and correct in all respects unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect on the Company and its subsidiaries taken as a whole. (ii) The Company shall have performed in all material respects all of its obligations under the FIB/FBS Merger Agreement at or prior to the Closing Date. (iii) The Rights shall not have become nonredeemable, exercisable, distributed or triggered pursuant to the terms of the Rights Agreement. (iv) FBS shall have received a letter from Ernst & Young LLP to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. 27 (v) FBS shall have received an opinion of Dorsey & Whitney P.L.L.P., in form and substance reasonably satisfactory to FBS, that the FIB/FBS Merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. (c) The obligation of the Company to effect the FIB/FBS Merger is also subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following conditions: (i) The representations and warranties of FBS set forth in the FIB/FBS Merger Agreement shall be true and correct in all respects (or, in certain enumerated cases, in all material respects) as of the date of the FIB/FBS Merger Agreement and, except to the extent such representations and warranties speak as of an earlier date, as of the Closing Date, provided that such representations and warranties shall be deemed to be true and correct in all respects unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect on FBS and its subsidiaries taken as a whole. (ii) FBS shall have performed in all material respects all of its obligations under the FIB/FBS Merger Agreement at or prior to the Closing Date. (iii) The FBS Rights shall not have become nonredeemable, exercisable, distributed or triggered pursuant to the terms of the FBS Rights Agreement. (iv) The Company shall have received a letter from Ernst & Young LLP to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. (v) The Company shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom, in form and substance reasonably satisfactory to the Company, that the FIB/FBS Merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. Certain Covenants. The FIB/FBS Merger Agreement provides for certain covenants pending the Effective Time. Generally, FBS and the Company shall, and shall cause their respective subsidiaries to, (i) conduct their businesses in the usual, regular and ordinary course consistent with past practices, (ii) use their reasonable best efforts to maintain and preserve intact their respective business organizations, employees and business relationships and (iii) take no action which would reasonably be expected to adversely affect the ability to obtain the regulatory approvals required to consummate the transactions contemplated by the FIB/FBS Merger Agreement. The FIB/FBS Merger Agreement also restricts, among other things, the ability of FBS and the Company and their respective subsidiaries to (i) increase dividends or redeem, repurchase or reclassify capital stock, (ii) dispose of or encumber assets, (iii) make any material acquisitions (other than in the ordinary course of business consistent with past practice or acquisitions of businesses having assets not exceeding 10% of the consolidated assets on a pro forma basis of FBS or the Company, as the case may be), (iv) increase employee compensation (other than in the ordinary course of business consistent with past practice or in an aggregate amount not exceeding $10 million), (v) settle any claim that is material to FBS or the Company, as the case may be, (vi) take actions that would prevent or impede qualification of the FIB/FBS Merger as a pooling transaction or a reorganization under Section 368(a) of the Code, (vii) amend their respective certificates of incorporation, bylaws and rights agreements or (viii) change their respective investment securities portfolio policies. FBS and the Company have also agreed not to, and cause their respective subsidiaries not to, authorize or permit any of their officers, directors, employees or agents to directly or indirectly solicit, initiate or encourage any inquiries relating to, or the making of any proposal which constitutes, a Takeover Proposal (as defined below), or recommend or endorse any Takeover Proposal, or participate in any discussions or negotiations, or provide third parties with any nonpublic information, relating to any such inquiry or proposal or otherwise facilitate any effort or attempt to make or implement a Takeover Proposal, unless (except in the case of the solicitation, initiation or encouragement of inquiries relating to a Takeover Proposal) the Board of Directors of FBS or the Company, as the case may be, after having consulted with and considered the advice of outside counsel, has reasonably determined in good faith that the failure to do so would cause the members of such Board of Directors to breach 28 their fiduciary duties. Each of FBS and the Company shall immediately advise the other following the receipt by it of any Takeover Proposal and the details thereof, and advise the other of any developments with respect to such Takeover Proposal, immediately upon the occurrence thereof. The term "Takeover Proposal," as defined in the FIB/FBS Merger Agreement, means, with respect to any person, any tender or exchange offer, proposal for a merger, consolidation or other business combination involving FBS or the Company or any of their respective subsidiaries or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the assets of, FBS or the Company or any of their respective subsidiaries. According to the First Interstate 8-K, the Company considers the Offer to be a Takeover Proposal. Each of the Company and FBS has also agreed to hold a meeting of its shareholders for the purpose of obtaining the approvals of such shareholders required in connection with the FIB/FBS Merger Agreement and to cause its Board of Directors to recommend that its shareholders approve the matters to be voted on by such shareholders in connection with the FIB/FBS Merger, except that the Board of Directors of either party may fail to make such recommendation (or withdraw, modify or change such recommendation in a manner adverse to the other party) if such Board of Directors, after having consulted with and considered the advice of outside counsel, reasonably determines in good faith that the making of such recommendation (or the failure to so withdraw, modify or change such recommendation) would constitute a breach of the fiduciary duties of the members of such Board of Directors under applicable law. Management; Board of Directors; Name. The FIB/FBS Merger Agreement provides that at the Effective Time, Mr. Siart would become President and Chief Operating Officer of the combined company and John F. Grundhofer, the current Chairman, President and Chief Executive Officer of FBS, would become the Chairman of the Board and Chief Executive Officer of the combined company. In addition, at the Effective Time, FBS would change its name to First Interstate Bancorp and increase the number of persons serving on its Board of Directors to 20, ten of whom would be selected by the Company from among the members of its Board of Directors immediately prior to the FIB/FBS Merger (the "First Interstate Directors") and ten of whom would be selected by FBS from among the members of its Board of Directors immediately prior to the FIB/FBS Merger (the "FBS Directors"). During the three-year period following the Effective Time, FBS, subject to the fiduciary duties of the directors, has agreed to take such steps to assure that there will be an equal number of FBS Directors and First Interstate Directors. Termination; Fees and Expenses. The FIB/FBS Merger Agreement may be terminated at any time prior to the Effective Time: (a) by mutual consent of FBS and the Company in a written instrument, if the Board of Directors of each so determines; (b) by either the Board of Directors of FBS or the Board of Directors of the Company if (i) any governmental entity which must grant a requisite regulatory approval has denied approval of the FIB/FBS Merger and such denial has become final and nonappealable or (ii) any governmental entity of competent jurisdiction shall have issued a final nonappealable order enjoining or otherwise prohibiting the consummation of the transactions contemplated by the FIB/FBS Merger Agreement; (c) by either the Board of Directors of FBS or the Board of Directors of the Company if the FIB/FBS Merger shall not have been consummated on or before December 31, 1996 (or, if at such date the FIB/FBS Merger shall not have been consummated as a result of the existence of an order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the FIB/FBS Merger or any of the other transactions contemplated by the FIB/FBS Merger Agreement, the earlier of (i) the date on which such legal restraint is no longer in effect and (ii) June 30, 1997), unless the failure of the Closing to occur by such date shall be due to the failure of the party seeking to terminate the FIB/FBS Merger Agreement to perform or observe the covenants and agreements of such party set forth therein; (d) by either the Board of Directors of FBS or the Board of Directors of the Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement 29 contained in the FIB/FBS Merger Agreement) if the other party shall have breached (i) any of the covenants or agreements made by such other party therein or (ii) any of the representations or warranties made by such other party therein, and in either case, such breach (x) is not cured within thirty (30) days following written notice to the party committing such breach, or which breach, by its nature, cannot be cured prior to the Closing and (y) would entitle the non-breaching party not to consummate the transactions contemplated by the FIB/FBS Merger Agreement; (e) by either the Board of Directors of FBS or the Board of Directors of the Company if any approval of the stockholders of FBS or the Company contemplated by the FIB/FBS Merger Agreement shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or at any adjournment or postponement thereof; (f) prior to the approval of (x) the FIB/FBS Merger Agreement by the requisite vote of the Company's shareholders (if the Company is the terminating party) or (y) the transactions contemplated by the FIB/FBS Merger Agreement by FBS' shareholders (if FBS is the terminating party), by either the Board of Directors of FBS or the Board of Directors of the Company, if there exists at such time a Takeover Proposal for the party whose Board of Directors is seeking to terminate the FIB/FBS Merger Agreement pursuant to this paragraph (f) and such Board of Directors, after having consulted with and considered the advice of outside legal counsel, reasonably determines in good faith that such action is necessary in the exercise of its fiduciary duties under applicable laws; or (g) by either the Board of Directors of FBS or the Board of Directors of the Company, if the Board of Directors of the other party shall have withdrawn, modified or changed in a manner adverse to the terminating party its approval or recommendation of the FIB/FBS Merger Agreement (in the case of the Company) or the transactions contemplated thereby (in the case of FBS). As a further condition to the execution and delivery of the FIB/FBS Merger Agreement, FBS and the Company executed the Reciprocal Fee Letters. Pursuant to the Reciprocal Fee Letters, unless a Nullifying Event (as such term is defined below) shall have occurred and be continuing at the time the FIB/FBS Merger Agreement is terminated, in the event that the FIB/FBS Merger Agreement is terminated pursuant to the foregoing provisions and prior to or concurrently with such termination a First Trigger Event (as such term is defined below) shall have occurred, the terminating party shall pay to the other party a cash fee of $25 million. The terminating party shall pay an additional cash fee of $75 million if prior to, concurrently with or within 18 months after such termination an Acquisition Event (as such term is defined below) shall have occurred. A "First Trigger Event" shall mean the occurrence of any of the following events: (i) either party's Board of Directors shall have failed to approve or recommend the FIB/FBS Merger Agreement or the transactions contemplated thereby, as the case may be, or shall have withdrawn or modified in a manner adverse to the other party its approval or recommendation of such transactions, or shall have resolved or publicly announced an intention to do either of the foregoing; (ii) either party or any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the Commission) thereof, or the Board of Directors of such party or a Significant Subsidiary, shall have recommended that the stockholders of such party approve any Acquisition Proposal (as such term is defined below) or shall have entered into an agreement with respect to, authorized, approved, proposed or publicly announced its intention to enter into, any Acquisition Proposal; (iii) the FIB/FBS Merger Agreement or the transactions contemplated thereby, as the case may be, shall not have been approved at a meeting of either party's stockholders which has been held for that purpose prior to termination of the FIB/FBS Merger Agreement in accordance with its terms, if prior thereto it shall have been publicly announced that any person (other than the other party or one of its subsidiaries) shall have made, or disclosed an intention to make, an Acquisition Proposal; 30 (iv) any person or group (other than the other party or its subsidiaries) shall have acquired beneficial ownership or the right to acquire beneficial ownership of 50% or more of the then outstanding shares of the stock then entitled to vote generally in the election of directors of either FBS, the Company or any Significant Subsidiary thereof; or (v) following the making of an Acquisition Proposal, either party shall have breached any covenant or agreement contained in the FIB/FBS Merger Agreement such that the other party would be entitled to terminate the FIB/FBS Merger Agreement unless such breach is promptly cured without jeopardizing consummation of the FIB/FBS Merger pursuant to the terms of the FIB/FBS Merger Agreement. An "Acquisition Event" shall mean the consummation of any event described in the definition of "Acquisition Proposal" below, except that the percentage reference contained in clause (C) of such definition shall be 50% instead of 20%. An "Acquisition Proposal" shall mean any (i) publicly announced proposal, (ii) regulatory application or notice (whether in draft or final form), (iii) agreement or understanding, (iv) disclosure of an intention to make a proposal, or (v) amendment to any of the foregoing, made or filed on or after the date hereof, in each case with respect to any of the following transactions with a third party: (A) a merger or consolidation, or any similar transaction, involving either party or any Significant Subsidiary thereof (other than mergers, consolidations or similar transactions involving solely one of the parties and/or one or more wholly owned subsidiaries of the parties and other than a merger or consolidation as to which the common shareholders of one of the parties immediately prior thereto in the aggregate own at least 70% of the common stock of the publicly held surviving or successor corporation (or any publicly held ultimate parent company thereof) immediately following consummation thereof); (B) a purchase, lease or other acquisition of all or substantially all of the assets or deposits of either FBS or the Company, or any Significant Subsidiary thereof; or (C) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of securities representing 20% or more of the voting power of FBS or the Company or any Significant Subsidiary thereof. A "Nullifying Event" shall mean any of the following events occurring and continuing at a time when FBS or the Company, as the case may be, is not in material breach of any of its covenants or agreements contained in the FIB/FBS Merger Agreement: (i) the other party shall be in breach of any of its covenants or agreements contained in the FIB/FBS Merger Agreement such that FBS or the Company, as the case may be, shall be entitled to terminate the FIB/FBS Merger Agreement, (ii) the stockholders of the other party shall have voted and failed to approve the transactions contemplated by the FIB/FBS Merger Agreement at a meeting of such stockholders which has been held for the purpose or at any adjournment or postponement thereof (unless the FIB/FBS Merger Agreement or the transactions contemplated thereby, as the case may be, shall not have been approved at a meeting of the stockholders of the other party which was held on or prior to such date for the purpose of voting with respect to the FIB/FBS Merger Agreement) or (iii) the Board of Directors of either FBS or the Company, as the case may be, shall have failed to approve or recommend the FIB/FBS Merger Agreement or the transactions contemplated thereby or shall have withdrawn, modified or changed in any manner adverse to the other party its approval or recommendation of the transactions contemplated by the FIB/FBS Merger Agreement or shall have resolved or publicly announced its intention to do any of the foregoing. Except as provided in the Reciprocal Fee Letters and the Reciprocal Stock Option Agreements referred to below, all costs and expenses incurred in connection with the FIB/FBS Merger Agreement and the transactions contemplated thereby shall be paid by the party incurring such expense, provided, however, that (i) the costs and expenses of printing and mailing the joint proxy statement, and all filing and other fees paid to the Commission in connection with the FIB/FBS Merger, shall be borne equally by FBS and the Company and (ii) notwithstanding anything to the contrary contained in the FIB/FBS Merger Agreement, neither FBS nor the Company shall be relieved or released from any liabilities or damages arising out of its willful breach of any provision of the FIB/FBS Merger Agreement. 31 Stock Option Agreements. As a further condition to the execution and delivery of the FIB/FBS Merger Agreement, FBS and the Company entered into the Reciprocal Stock Option Agreements. Pursuant to the Reciprocal Stock Option Agreements, the Company granted FBS an unconditional, irrevocable option to purchase up to 15,073,106 Shares (approximately 19.9% of the currently outstanding Shares) at a price of $127.75 per Share (the closing price of the Shares on the NYSE on November 3, 1995) and FBS granted the Company an unconditional, irrevocable option to purchase up to 25,829,983 shares of FBS Common Stock (approximately 19.9% of the currently outstanding shares) at a price of $50.875 per share (the closing price of the FBS Common Stock on the NYSE on November 3, 1995), in each case subject to certain adjustments and limitations. Each option is exercisable, in whole or in part, only upon the occurrence of certain events that create the potential for a third party to acquire control of FBS or the Company. Such events include (i) the acquisition by any person other than FBS or the Company, as the case may be, of beneficial ownership of 20% or more of the outstanding Shares or FBS Common Stock, as the case may be, and (ii) the agreement by FBS or the Company to enter into certain acquisition transactions. Each option terminates upon the earlier of (i) the Effective Time, (ii) the termination of the FIB/FBS Merger Agreement in accordance with the provisions thereof if such termination occurs prior to the occurrence of an Initial Triggering Event (as defined in the Reciprocal Stock Option Agreements), which is similar to a First Triggering Event (defined above), (iii) the passage of 18 months after termination of the FIB/FBS Merger Agreement if such termination is concurrent with or follows an Initial Triggering Event and (iv) the date on which there has been a failure to obtain the requisite stockholder votes required pursuant to the FIB/FBS Merger Agreement. The option may not be exercised at any time when the grantee of the option is in breach of any of its covenants or agreements such that the other party is entitled to terminate the FIB/FBS Merger Agreement. Notwithstanding any other provisions of the Reciprocal Stock Option Agreements, the Total Profit (as defined therein) which either FBS or the Company may, as grantee of the option issued by the other party, respectively, realize from the option may not exceed $100 million. Exercise of a Reciprocal Stock Option Agreement to acquire 5% or more of the outstanding common stock of the issuer of the option would require, among other things, receipt of the prior approval of the Federal Reserve Board under Section 3 of the BHCA. The standards applicable to such an approval are described generally under "The Offer--Regulatory Approval Condition" below. The foregoing descriptions of the FIB/FBS Merger Agreement, the Reciprocal Fee Letters and the Reciprocal Stock Option Agreements are qualified in their entirety by reference to the texts of such Agreements, copies of which have been filed by the Company as exhibits to the First Interstate 8-K and are incorporated by reference herein. 32 THE OFFER GENERAL The Purchaser hereby offers, upon the terms and subject to the conditions of the Offer, to exchange two-thirds of a share of Wells Fargo Common Stock for each outstanding Share validly tendered on or prior to the Expiration Date and not withdrawn. The term "Expiration Date" shall mean 12:00 midnight, New York City time, on , 1996, unless and until the Purchaser extends the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Tendering stockholders will not be obligated to pay any charges or expenses of the Exchange Agent or any brokerage commissions. Except as set forth in the Instructions to the Letter of Transmittal, transfer taxes on the exchange of Shares pursuant to the Offer will be paid by or on behalf of the Purchaser. The purpose of the Offer is for the Purchaser to acquire control of, and ultimately the entire common equity interest in, the Company. The Purchaser intends, as soon as practicable after consummation of the Offer, to seek to have the Company consummate the Merger with the Purchaser pursuant to which each outstanding Share (except for treasury shares of the Company and Shares held by the Purchaser or any subsidiary of the Purchaser other than in a fiduciary capacity) would be converted into the right to receive two-thirds of a share of Wells Fargo Common Stock. See "--Purpose of the Offer; the Merger." In the event that the Purchaser acquires all the Shares pursuant to the Offer and/or the Merger, former stockholders of the Company would own approximately 51.8% of the outstanding shares of Wells Fargo Common Stock, based on the number of Shares outstanding on October 31, 1995. If 51% of the Shares are exchanged, such ownership percentage would be approximately 35%. The Purchaser's obligation to exchange shares of Wells Fargo Common Stock for Shares pursuant to the Offer is conditioned upon satisfaction of the Minimum Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights Plan and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition and the Regulatory Approval Condition (in each case as defined on the cover page of this Prospectus) and the other conditions set forth under "--Certain Other Conditions of the Offer." The conditions to the Offer are identical in all material respects to a number of the conditions to the competing proposal to effect the FIB/FBS Merger, although that competing proposal is also subject to an additional condition which is not a condition to the Offer, namely that each of the Company and FBS shall have received a letter from its accountants to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. Based on discussions with its advisors, the Purchaser believes there is a significant question as to whether the FIB/FBS Merger will qualify for pooling of interests accounting treatment in light of the increased share repurchase program FBS announced in connection with the FIB/FBS Merger. See "--Rights Plan and DGCL 203 Condition," "--Regulatory Approval Condition" and "--Certain Other Conditions of the Offer." Rights are presently evidenced by the certificates for the Shares and the tender by a stockholder of his Shares prior to the Company Distribution Date will also constitute a tender of the associated Rights. No separate payment will be made by the Purchaser for the Rights pursuant to the Offer. Upon the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated persons (a "Company Acquiring Person") has acquired beneficial ownership of 20% or more of the outstanding Shares or (ii) 10 business days (or such later date as may be determined by action of the Company Board prior to such time as any person becomes a Company Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 20% or more of such outstanding Shares (the earlier of such dates being called the "Company Distribution Date"), separate certificates evidencing the Rights will be mailed to holders of record of the Shares as of the close of business on the Company Distribution Date and such separate Rights certificates alone will 33 evidence the Rights. According to the Company Schedule 14D-9, the Company Board determined to postpone the occurrence of the Company Distribution Date as a result of the public announcement of the Offer until such later date as determined by the Company Board. If the Company Distribution Date occurs and separate certificates representing the Rights are distributed by the Company or the Rights Agent to holders of Shares prior to the time a holder's Shares are tendered pursuant to the Offer, certificates representing a number of Rights equal to the number of Shares tendered must be delivered to the Exchange Agent, or, if available, a book-entry confirmation received by the Exchange Agent with respect thereto, in order for such Shares to be validly tendered. If the Company Distribution Date occurs and separate certificates representing the Rights are not distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a stockholder receiving the certificates for Rights by use of the guaranteed delivery procedure described under "-- Procedure for Tendering" below. According to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1995, as of October 31, 1995, there were 75,744,254 Shares outstanding. As of November 20, 1995, the Purchaser owned beneficially 100 Shares. Additionally, as of October 20, 1995, the Purchaser held 1,961,095 Shares (or approximately 2.6% of the outstanding Shares) in a fiduciary capacity. The Purchaser disclaims beneficial ownership of the Shares owned in such fiduciary capacity and any other Shares held by any pension plan of the Purchaser or any affiliates of the Purchaser. Requests will be made to the Company for use of the Company's stockholder list and security position listings for the purpose of communications with stockholders and disseminating the Offer to holders of Shares. The Prospectus and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares by the Purchaser following receipt of such list or listings from the Company. EXTENSION, TERMINATION AND AMENDMENT The Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is to remain open by giving oral or written notice of such extension to the Exchange Agent, which extension must be announced no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. There can be no assurance that the Purchaser will exercise its right to extend the Offer. However, it is the Purchaser's current intention to extend the Offer until all conditions have been satisfied or waived. See "--Extension, Termination and Amendment." During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw his Shares. See "--Withdrawal Rights." Subject to the applicable rules and regulations of the Commission, the Purchaser also reserves the right, in its sole discretion, at any time or from time to time, (i) to delay acceptance for exchange of or, regardless of whether such Shares were theretofore accepted for exchange, exchange of any Shares pursuant to the Offer or to terminate the Offer and not accept for exchange or exchange any Shares not therefore accepted for exchange, or exchanged, upon the failure of any of the conditions of the Offer to be satisfied and (ii) to waive any condition other than the Regulatory Approval Condition or otherwise amend the Offer in any respect, by giving oral or written notice of such delay, termination or amendment to the Exchange Agent and by making a public announcement thereof. Any such extension, termination, amendment or delay will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be issued no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which requires that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change) 34 and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. The Purchaser confirms that if it makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Purchaser will extend the Offer to the extent required under the Exchange Act. If, prior to the Expiration Date, the Purchaser shall increase or decrease the percentage of Shares being sought or the consideration offered to holders of Shares, such increase or decrease shall be applicable to all holders whose Shares are accepted for exchange pursuant to the Offer, and, if at the time notice of any such increase or decrease is first published, sent or given to holders of Shares, the Offer is scheduled to expire at any time earlier than the tenth business day from and including the date that such notice is first so published, sent or given, the Offer will be extended until the expiration of such ten business-day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through 12:00 midnight, New York City time. EXCHANGE OF SHARES; DELIVERY OF WELLS FARGO COMMON STOCK Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for exchange, and will exchange, Shares validly tendered and not withdrawn as promptly as practicable after the Expiration Date. In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for exchange or the exchange of Shares in order to comply with any applicable law. In all cases, exchange of Shares tendered and accepted for exchange pursuant to the Offer will be made only after timely receipt by the Exchange Agent of certificates for such Shares (or a confirmation of a book-entry transfer of such Shares in the Exchange Agent's account at The Depository Trust Company, the Midwest Securities Trust Company, or the Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities")), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. For purposes of the Offer, the Purchaser will be deemed to have accepted for exchange Shares validly tendered and not withdrawn as, if and when the Purchaser gives oral or written notice to the Exchange Agent of its acceptance of the tenders of such Shares pursuant to the Offer. Delivery of Wells Fargo Common Stock in exchange for Shares pursuant to the Offer and cash in lieu of fractional shares of Wells Fargo Common Stock will be made by the Exchange Agent as soon as practicable after receipt of such notice. The Exchange Agent will act as agent for tendering stockholders for the purpose of receiving Wells Fargo Common Stock and cash to be paid in lieu of fractional shares of Wells Fargo Common Stock from the Purchaser and transmitting such Wells Fargo Common Stock and cash to tendering stockholders. Under no circumstances will interest with respect to fractional shares be paid by the Purchaser by reason of any delay in making such exchange. If any tendered Shares are not accepted for exchange pursuant to the terms and conditions of the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unexchanged Shares will be returned without expense to the tendering stockholder or, in the case of Shares tendered by book-entry transfer of such Shares into the Exchange Agent's account at a Book-Entry Transfer Facility pursuant to the procedures set forth below under "--Procedure for Tendering," such Shares will be credited to an account maintained within such Book-Entry Transfer Facility, as soon as practicable following expiration or termination of the Offer. CASH IN LIEU OF FRACTIONAL SHARES OF WELLS FARGO COMMON STOCK No certificates representing fractional shares of Wells Fargo Common Stock will be issued pursuant to the Offer. In lieu thereof, each tendering stockholder who would otherwise be entitled to a fractional share of Wells Fargo Common Stock will receive cash in an amount equal to such fraction (expressed as a decimal and rounded 35 to the nearest 0.01 of a share) times the closing price for shares of Wells Fargo Common Stock on the NYSE Composite Tape on the date such stockholder's Shares are accepted for exchange by the Purchaser. WITHDRAWAL RIGHTS Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date, and, unless theretofore accepted for exchange by the Purchaser pursuant to the Offer, may also be withdrawn at any time after , 1996. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Exchange Agent at one of its addresses set forth on the back cover of this Prospectus and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (an "Eligible Institution") unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry tender as set forth below under "Procedure for Tendering," any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with such Book-Entry Transfer Facility's procedures. If certificates have been delivered or otherwise identified to the Exchange Agent, the name of the registered holder and the serial numbers of the particular certificates evidencing the Shares withdrawn must also be furnished to the Exchange Agent as aforesaid prior to the physical release of such certificates. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. Neither the Purchaser, the Exchange Agent, the Information Agent, the Dealer Manager[s] nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any such notification. Any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures described under "--Procedure for Tendering" at any time prior to the Expiration Date. A withdrawal of Shares shall also constitute a withdrawal of the associated Rights. Rights may not be withdrawn unless the associated Shares are also withdrawn. PROCEDURE FOR TENDERING For a stockholder to validly tender Shares pursuant to the Offer, (i) a properly completed and duly executed Letter of Transmittal (or manually executed facsimile thereof), together with any required signature guarantees and any other required documents, must be transmitted to and received by the Exchange Agent at one of its addresses set forth on the back cover of this Prospectus and certificates for tendered Shares must be received by the Exchange Agent at such address or such Shares must be tendered pursuant to the procedures for book-entry tender set forth below (and a confirmation of receipt of such tender received (such confirmation, a "Book-Entry Confirmation")), in each case prior to the Expiration Date, or (ii) such stockholder must comply with the guaranteed delivery procedure set forth below. Stockholders will be required to tender one Right for each Share tendered in order to effect a valid tender of shares, unless the Rights Plan and DGCL 203 Condition (insofar as it relates to the Rights) has been satisfied or waived. Unless the Company Distribution Date occurs, a tender of Shares will constitute a tender of the associated Rights. If the Company Distribution Date occurs and separate certificates representing the Rights are distributed by the Company or the Rights Agent to holders of Shares prior to the time a holder's Shares are 36 tendered pursuant to the Offer, certificates representing a number of Rights equal to the number of Shares tendered must be delivered to the Exchange Agent, or, if available, a Book-Entry Confirmation received by the Exchange Agent with respect thereto, in order for such Shares to be validly tendered. If the Company Distribution Date occurs and separate certificates representing the Rights are not distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a stockholder receiving the certificates for Rights by use of the guaranteed delivery procedure described below. If Rights certificates are distributed but are not available to a stockholder prior to the time Shares are tendered pursuant to the Offer, a tender of Shares constitutes an agreement by the tendering stockholder to deliver to the Exchange Agent pursuant to the guaranteed delivery procedure described below, prior to the expiration of the period to be specified in the Notice of Guaranteed Delivery and the related Letter of Transmittal for delivery of Rights certificates or a Book-Entry Confirmation for Rights (the "Rights Delivery Period"), Rights certificates representing a number of Rights equal to the number of Shares tendered. If Rights certificates are distributed, the Purchaser will distribute a separate letter of transmittal for such Rights certificates. If Rights certificates are tendered separately from Shares, then a properly completed letter of transmittal for Rights certificates (or manually executed facsimile thereof) must be submitted with respect to such Rights. The Purchaser reserves the right to require that it receive such Rights certificates (or a Book-Entry Confirmation with respect to such Rights) prior to accepting Shares for exchange. Nevertheless, the Purchaser will be entitled to accept for exchange Shares tendered by a stockholder prior to receipt of the Rights certificates required to be tendered with such Shares or a Book-Entry Confirmation with respect to such Rights and either (i) subject to complying with applicable rules and regulations of the Commission, withhold payment for such Shares pending receipt of the Rights certificates or a Book-Entry Confirmation for such Rights or (ii) exchange Shares accepted for exchange pending receipt of the Rights certificates or a Book-Entry Confirmation for such Rights in reliance upon the guaranteed delivery procedure described below. In addition, after expiration of the Rights Delivery Period, the Purchaser may instead elect to reject as invalid a tender of Shares with respect to which Rights certificates or a Book-Entry Confirmation for an equal number of Rights have not been received by the Exchange Agent. Any determination by the Purchaser to make payment for Shares in reliance upon such guaranteed delivery procedure or, after expiration of the Rights Delivery Period, to reject a tender as invalid, shall be made, subject to applicable law, in the sole and absolute discretion of the Purchaser. The Exchange Agent will establish accounts with respect to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in any of the Book-Entry Transfer Facilities' systems may make book-entry delivery of the Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Exchange Agent's account in accordance with such Book-Entry Transfer Facility's procedure for such transfer. However, although delivery of Shares may be effected through book-entry at the Book- Entry Transfer Facilities, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at one or more of its addresses set forth on the back cover of this Prospectus prior to the Expiration Date, or the guaranteed delivery procedure described below must be complied with. No assurance can be given, however, that book-entry delivery of Rights will be available. If book-entry delivery is not available, a tendering stockholder will be required to tender Rights by means of delivery of Rights certificates or pursuant to the guaranteed delivery procedure set forth below. Signatures on all Letters of Transmittal must be guaranteed by an Eligible Institution, except in cases in which Shares are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. If the certificates for Shares or Rights (if any) are registered in the name of a person other than the signer of the Letter of Transmittal, or if certificates for unexchanged Shares or Rights (if any) are to be issued to a person other than the registered holder(s), the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates, with the signature(s) on the certificates or stock powers guaranteed as aforesaid. 37 THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH RECEIVED IN LIEU OF FRACTIONAL SHARES THEREOF, A STOCKHOLDER MUST PROVIDE THE EXCHANGE AGENT WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER SUCH STOCKHOLDER IS SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. CERTAIN STOCKHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST SUBMIT A FORM W-8, SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates are not immediately available or such stockholder cannot deliver the certificates and all other required documents to the Exchange Agent prior to the Expiration Date or such stockholder cannot complete the procedure for book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (a) such tenders are made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received by the Exchange Agent as provided below on or prior to the Expiration Date; and (c) the certificates for all tendered Shares (or a confirmation of a book- entry transfer of such securities into the Exchange Agent's account at a Book-Entry Transfer Facility as described above), in proper form for transfer, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three NYSE trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Exchange Agent and must include a guarantee by an Eligible Institution in the form set forth in such Notice. In all cases, exchanges of Shares tendered and accepted for exchange pursuant to the Offer will be made only after timely receipt by the Exchange Agent of certificates for Shares (or timely confirmation of a book-entry transfer of such securities into the Exchange Agent's account at a Book-Entry Transfer Facility as described above), properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof) and any other required documents. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or confirmations of book-entry transfers of such Shares are actually received by the Exchange Agent. By executing a Letter of Transmittal as set forth above, the tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's attorneys-in-fact and proxies, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for exchange by the Purchaser and with respect to any and all other Shares and other securities 38 issued or issuable in respect of the Shares on or after , 199 . Such appointment is effective, and voting rights will be affected, when and only to the extent that the Purchaser deposits the shares of Wells Fargo Common Stock for Shares tendered by such stockholder with the Exchange Agent. All such proxies shall be considered coupled with an interest in the tendered Shares and therefore shall not be revocable. Upon the effectiveness of such appointment, all prior proxies given by such stockholder will be revoked, and no subsequent proxies may be given (and, if given, will not be deemed effective). The Purchaser's designees will, with respect to the Shares for which the appointment is effective, be empowered, among other things, to exercise all voting and other rights of such stockholder as they, in their sole discretion, deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's exchange of such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any and all tenders of Shares determined by it not to be in proper form or the acceptance of or exchange for which may, in the opinion of Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer, other than the Regulatory Approval Condition, or any defect or irregularity in the tender of any Shares. No tender of Shares will be deemed to have been validly made until all defects and irregularities in tenders of Shares have been cured or waived. Neither the Purchaser, the Exchange Agent, the Information Agent, the Dealer Manager[s] nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any Shares or will incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and instructions thereto) will be final and binding. The tender of Shares and Rights (if any) pursuant to any of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. CERTAIN FEDERAL INCOME TAX CONSEQUENCES In the opinion of Sullivan & Cromwell, counsel to the Purchaser, exchanges of Shares for Wells Fargo Common Stock pursuant to the Offer and the Merger should be treated for federal income tax purposes as exchanges pursuant to a plan of reorganization within the meaning of the Code. Consequently, no gain or loss should be recognized by holders of Shares upon such exchanges, except as described below under "Tax Consequences to Holders of Shares if the Offer and the Merger Qualify as a Reorganization." This opinion is based on Sullivan & Cromwell's view that the Offer and the Merger should be treated as a single transaction and on certain assumptions, including that (a) the continuity of shareholder interest requirement applicable to corporate reorganizations (which requires a continuing equity interest in the Purchaser by holders owning a significant percentage of the Shares prior to the consummation of the Offer) will be satisfied, taking into account any holders that exercise dissenters' rights, if any, (b) the Purchaser will continue the Company's historic business or will use a significant portion of the Company's historic business assets in a business and (c) the Offer and the Merger will generally be consummated as contemplated by this Prospectus. In rendering their opinion, Sullivan & Cromwell have further assumed that (a) upon consummation of the Offer, there will be no significant contingencies preventing the prompt consummation of the Merger, (b) upon consummation of the Offer, the Purchaser will not have waived any of the conditions relating to its obligation to consummate the Offer in a manner that could prevent a prompt consummation of the Merger and (c) the Merger will in fact be consummated promptly after the consummation of the Offer. A significant delay in the consummation of the Merger would substantially increase the risk that the Offer will not qualify as part of a reorganization within the meaning of Section 368(a)(1)(A) of the Code and the absence of the Merger would 39 mean that the Offer was not part of a reorganization. The consequences of a failure to so qualify are discussed below under "Tax Consequences to Holders of Shares if the Offer Does Not Qualify as Part of a Reorganization." In deciding whether two steps are part of a single transaction qualifying as a reorganization, some courts have applied the so-called "binding commitment" test. Under that test, two steps will be integrated only if, at the time that the first step is consummated, there is a binding commitment to consummate the second step. If the "binding commitment" test were applied to the Offer and the Merger and the Company has not at the time the Offer is consummated entered into an agreement with the Purchaser requiring the Purchaser to effect the Merger, the Offer and the Merger would not be treated as a single transaction, and the Offer would not qualify as part of a reorganization. Although the matter is not free from doubt, Sullivan & Cromwell do not believe that the "binding commitment" test should be applied to determine whether the Offer and the Merger should be treated as a single transaction. Assuming that the Merger qualifies as a reorganization under the Code, no gain or loss will be recognized by the Purchaser or the Company as a result of the Offer and the Merger. This summary does not address any tax consequences of the Offer or the Merger to U.S Holders who exercise dissenters' rights, if any. It may not apply to certain classes of taxpayers, including, without limitation, insurance companies, tax-exempt organizations, financial institutions, dealers in securities, foreign persons, persons who acquired Shares pursuant to an exercise of employee stock options or rights or otherwise as compensation and persons who hold Shares as part of a straddle or conversion transaction. Also, the summary does not address state, local or foreign tax consequences of the Offer or the Merger. Consequently, each holder should consult such holder's own tax advisor as to the specific tax consequences of the Offer and the Merger to such holder. This summary is based on current law and the opinion of Sullivan & Cromwell. Future legislative, judicial or administrative changes or interpretations, which may be retroactive, could alter or modify the statements set forth herein. The opinion of Sullivan & Cromwell set forth in this summary is based, among other things, on assumptions relating to certain facts and circumstances of, and the intentions of the parties to, the Offer and the Merger, which assumptions have been made with the consent of the Purchaser. The Purchaser will not request any ruling from the Internal Revenue Service as to the United States federal income tax consequences of the Offer and the Merger. An opinion of counsel is not binding on the Internal Revenue Service, and the Internal Revenue Service is not precluded from taking contrary positions. Tax Consequences to Holders of Shares if the Offer and the Merger Qualify as a Reorganization If the Offer and the Merger together qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Code, the material federal income tax consequences to holders who are (a) citizens or residents of the United States, (b) domestic corporations or (c) otherwise subject to United States federal income tax on a net income basis in respect of the Shares ("U.S. Holders") who hold Shares as capital assets and who exchange such Shares pursuant to the Offer or the Merger, or both, will be as follows: (i) no gain or loss will be recognized by a U.S. Holder on the exchange of Shares for Wells Fargo Common Stock, except as described below with respect to the receipt of cash in lieu of fractional shares of Wells Fargo Common Stock, and subject to the discussion below of the surrender of Rights that have become exercisable; (ii) the aggregate adjusted tax basis of shares of Wells Fargo Common Stock received by a U.S. Holder (including fractional shares of Well Fargo Common Stock deemed received and redeemed as described below) will be the same as the aggregate adjusted tax basis of the Shares exchanged therefor; 40 (iii) the holding period of shares of Wells Fargo Common Stock (including the holding period of fractional shares of Wells Fargo Common Stock) received by a U.S. Holder will include the holding period of the Shares exchanged therefor; and (iv) a U.S. Holder of Shares who receives cash in lieu of fractional shares of Wells Fargo Common Stock will be treated as having received such fractional shares and then as having received such cash in redemption of such fractional shares. Under Section 302 of the Code, provided that such deemed distribution is "substantially disproportionate" with respect to such U.S Holder or is "not essentially equivalent to a dividend" after giving effect to the constructive ownership rules of the Code, the U.S. Holder will generally recognize capital gain or loss equal to the difference between the amount of cash received and the U.S. Holder's adjusted tax basis in the fractional share interest in Wells Fargo Common Stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. Holder's holding period in the fractional shares is more than one year. Sullivan & Cromwell express no opinion as to the federal income tax consequences of the surrender pursuant to the Offer or the Merger of Rights that have become exercisable. Tax Consequences to Holders of Shares if the Offer Does Not Qualify as Part of a Reorganization If the Merger is not consummated, or if the Merger is consummated but the Offer is treated as a separate transaction for federal income tax purposes, exchanges pursuant to the Offer will be taxable transactions for federal income tax purposes. In that case, each U.S. Holder exchanging Shares for shares of Wells Fargo Common Stock pursuant to the Offer will recognize gain or loss for federal income tax purposes measured by the difference between such U.S. Holder's adjusted basis in the Shares exchanged and the sum of the fair market value of Wells Fargo Common Stock received by such U.S. Holder pursuant to the Offer and any cash received by such U.S. Holder in lieu of fractional shares of Wells Fargo Common Stock. If the Offer is a taxable transaction, the Merger itself should be considered a reorganization within the meaning of Section 368(a)(1)(A) of the Code if the continuity of interest requirement is satisfied in the Merger. For advanced ruling purposes, guidelines published by the Internal Revenue Service would require that stockholders of the Company receive in the Merger stock of the Purchaser having a value equal to at least 50% of the value of all of the stock of the Company outstanding prior to the Merger. In that event, a U.S. Holder receiving Wells Fargo Common Stock in the Merger would be subject to the rules concerning reorganizations described above with respect to such Wells Fargo Common Stock, but not with respect to any Wells Fargo Common Stock received by such U.S. Holder pursuant to the Offer. EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT The exchange of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Shares held by the public. The Shares are listed and principally traded on the NYSE and are also listed on the Boston Stock Exchange, Cincinnati Stock Exchange, Midwest Stock Exchange, Philadelphia-Baltimore-Washington Stock Exchange and the PSE. Depending upon the number of Shares acquired pursuant to the Offer, the Shares may no longer meet the requirements of such exchanges for continued listing. For example, published guidelines of the NYSE indicate that the NYSE would consider delisting the outstanding Shares if, among other things, (i) the number of publicly held Shares (exclusive of holdings of officers, directors and members of their immediate families and other concentrated holdings of 10 percent or more) should fall below 600,000, (ii) the number of record holders of 100 or more Shares should fall below 1,200 or (iii) the aggregate market value of publicly held Shares should fall below $5 million. According to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1995, there were, as of October 31, 1995, 75,744,254 Shares outstanding, and according to the 1994 Company 10-K, there were, as of February 28, 1995, 24,976 holders of record of Shares. 41 If such exchanges were to delist the Shares, the market therefor could be adversely affected. It is possible that the Shares would be traded on other securities exchanges or in the over-the-counter market, and that price quotations would be reported by such exchanges, or through Nasdaq or by other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders and/or the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration Shares under the Exchange Act, as described below, and other factors. The Shares are presently "margin securities" under the regulations of the Federal Reserve Board, which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending on factors similar to those described above with respect to listing and market quotations, the Shares may no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations in which event the Shares would be ineligible as collateral for margin loans made by brokers. The Shares are currently registered under the Exchange Act. Such registration may be terminated by the Company upon application to the Commission if the outstanding Shares are not listed on a national securities exchange and if there are fewer than 300 holders of record of Shares. Termination of registration of the Shares under the Exchange Act would reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) and the requirement of furnishing a proxy statement in connection with stockholders' meetings pursuant to Section 14(a) and the related requirement of furnishing an annual report to stockholders, no longer applicable with respect to the Shares. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 under the Securities Act, may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be eligible for Nasdaq reporting or for continued inclusion on the Federal Reserve Board's list of "margin securities." The Rights currently are registered under the Exchange Act and are listed on the NYSE and the PSE, but currently are attached to the outstanding Shares and are not separately transferable. The Rights may become transferable apart from the Shares, unless previously redeemed. If the Rights are not redeemed or invalidated and the Purchaser waives the Rights Plan and DGCL 203 Condition, then the foregoing discussion with respect to the effect of the Offer on the Shares would be similarly applicable to the Rights (although the continued listing criteria are different). PURPOSE OF THE OFFER; THE MERGER The purpose of the Offer is to enable the Purchaser to acquire control of, and the entire common equity interest in, the Company. The Offer, as the first step in the acquisition of the Company, is intended to facilitate the acquisition of all Shares. The Purchaser intends, as soon as practicable after consummation of the Offer, to seek to have the Company consummate the Merger with the Purchaser. Assuming the Minimum Tender Condition is satisfied, the Purchaser would have sufficient voting power to effect the Merger without the vote of any other stockholder of the Company. The purpose of the Merger is to acquire all Shares not tendered and purchased pursuant to the Offer or otherwise. Pursuant to the Merger, each then outstanding Share (except for Shares owned by the Purchaser or any subsidiary of the Purchaser other than in a fiduciary capacity) would be converted into the right to receive two-thirds of a share of Wells Fargo Common Stock. Holders of Shares do not have appraisal rights as a result of the Offer and, assuming the Shares remain listed on a national securities exchange or Nasdaq or a similar market, will not have appraisal rights as a result of the Merger. However, in the event the Merger is consummated, and if, on the date fixed to determine stockholders entitled to vote on the Merger, the Shares are no longer listed on a national securities exchange or Nasdaq or a similar market, holders of Shares will have certain rights pursuant to the provisions of Section 262 of the DGCL to dissent and to demand appraisal of their Shares. Under Section 262, dissenting stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the 42 fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. Any such judicial determination of the fair value of Shares could be based upon factors other than, or in addition to, the price per Share to be paid in the Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the Merger. Rule 13e-3 of the General Rules and Regulations under the Exchange Act, which the Purchaser does not believe would be applicable to the Merger if the Merger occurred within one year of consummation of the Offer, would require, among other things, that certain financial information concerning the Company, and certain information relating to the fairness of the proposed transaction and the consideration offered to stockholders of the Company therein, be filed with the Commission and disclosed to stockholders of the Company prior to consummation of the Merger. In addition, the Purchaser reserves the right to acquire, following the consummation or termination of the Offer, additional Shares through open market purchases, privately negotiated transactions, a tender offer or exchange offer, or otherwise, upon such terms and at such prices as it shall determine, which may be more or less favorable than those of the Offer. The Purchaser and its affiliates also reserve the right to dispose of any or all Shares acquired by them pursuant to the Offer or otherwise, upon such terms and at such prices as they shall determine. In connection with the Offer, the Purchaser has reviewed, and will continue to review, on the basis of available information, various possible business strategies that it might consider in the event that it acquires all or substantially all of the common equity interest in the Company. Upon the completion of the Offer, the Purchaser intends to elect nominees of its choice to the Company Board if it has not already done so. The Purchaser also intends to conduct a detailed review of the Company and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel and consider what, if any, changes would be desirable in light of the circumstances which then exist. Such strategies could include, among other things, changes in the Company's business, corporate structure, certificate of incorporation, bylaws, capitalization, Company Board or management, and consideration of disposition of certain assets or lines of business of the Company. See "Background of the Offer--Comparison of the Proposals." Except as noted herein, the Purchaser does not have any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization or liquidation, or sale or transfer of a material amount of assets, involving the Company or any of its subsidiaries, or any material changes in the Company's corporate structure or business or any change in its management. However, because the Purchaser has not had access to the Company's books and records, additional changes may be made after a full review of the Company's operations is completed. MINIMUM TENDER CONDITION The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date a number of Shares which, together with the Shares beneficially owned by the Purchaser and its affiliates for their own respective accounts, will constitute at least a majority of the total number of outstanding Shares on a fully diluted basis (i.e., as though all options or other securities convertible into or exercisable or exchangeable for Shares, other than the Rights, had been so converted, exercised or exchanged) as of the date the Shares are accepted by the Purchaser pursuant to the Offer. According to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1995, there were 75,744,254 Shares outstanding as of October 31, 1995. According to the First Interstate 8-K, there were 4,133,320 shares reserved for issuance pursuant to employee stock options, the Company's dividend reinvestment plan and the Company's stock purchase plan as of October 31, 1995 (the "Options"). In addition, there are currently 15,073,106 Shares purported to be issuable to FBS under certain circumstances pursuant to the Reciprocal Stock Option Agreements. Assuming no options, warrants, rights or other securities convertible into or exercisable or 43 exchangeable for Shares were issued or granted) after October 31, 1995, (other than pursuant to the Reciprocal Stock Option Agreement), the Purchaser believes there would be 94,950,680 Shares outstanding on a fully diluted basis (i.e., as though all options or other securities convertible into or exercisable or exchangeable for Shares, other than the Rights, had been so converted, exercised or exchanged). Accordingly, the Purchaser believes that the Minimum Tender Condition would be satisfied if at least an aggregate of 47,475,341 Shares are validly tendered pursuant to the Offer and not withdrawn. The Purchaser reserves the right (but shall not be obligated), subject to the rules and regulations of the Commission, to waive or amend the Minimum Tender Condition and to purchase fewer than such number of Shares as would satisfy the Minimum Tender Condition pursuant to the Offer. WELLS FARGO STOCKHOLDER APPROVAL CONDITION The Offer is conditioned, among other things, upon the satisfaction of the Wells Fargo Stockholder Approval Condition. Pursuant to the rules of the NYSE (on which the Wells Fargo Common Stock is listed), the issuance of Wells Fargo Common Stock must be approved by a majority vote of the holders of Wells Fargo Common Stock voting at a meeting of such holders if the number of shares of Wells Fargo Common Stock to be issued will be equal to or in excess of 20% of the shares outstanding prior to such issuance. The Purchaser intends to seek such approval at a special stockholders meeting to be called in early 1996. It is contemplated that such meeting will be held prior to the time that the respective stockholders of the Company and FBS meet to vote upon the FIB/FBS Merger Agreement and the transaction contemplated thereby. RIGHTS PLAN AND DGCL 203 CONDITION Insofar as the Rights Plan and DGCL 203 Condition relates to the Rights, this condition may be satisfied in a number of ways, including the following: (i) the Company Board may determine that the Offer is a Qualified Offer (as defined below) or may redeem or amend the Rights so they would not be triggered by the Offer and the Merger, (ii) pursuant to a consent solicitation of a type referred to under "Background of the Offer--General," the Purchaser could succeed in replacing the Company Board with new directors who would (subject to fiduciary duties) take such actions as may be necessary with respect to the Rights so that they would not be triggered by the Offer or the Merger or (iii) the Purchaser could be successful in its litigation seeking, among other things, invalidation of the Rights or an injunction requiring the Company Board to redeem the Rights. See "Background of the Offer--Litigation." Insofar as the Rights Plan and DGCL 203 Condition relates to Section 203 of the DGCL, this condition may be satisfied in a number of ways, including the following: (i) the Company Board may approve the Offer for purposes of Section 203, (ii) pursuant to a consent solicitation of a type referred to under "Background of the Offer--General," the Purchaser could succeed in replacing the Company Board with new directors who would (subject to fiduciary duties) approve the Offer for purposes of Section 203, or (iii) the Purchaser could be successful in its litigation seeking, among other things, a declaratory judgment that the exemption afforded by Section 203(b)(6) of the DGCL is applicable to the Offer or, alternatively, an injunction requiring the Company Board to approve the Offer for purposes of Section 203. (Since the Offer was announced after the Company approved the FIB/FBS Merger, the Purchaser believes that such exemption is applicable to the Offer and Merger.) See "Background of the Offer--Litigation" and Section 203, a copy of which is attached hereto as Schedule B. Set forth below is certain additional information concerning the Rights and Section 203 of the DGCL: Rights Agreement On November 21, 1988, the Company Board declared a dividend of one common share purchase right (a "Right") for each outstanding Share, to the holders of record on December 30, 1988 and authorized and directed the issuance of one Right with respect to each Share that shall become outstanding after December 30, 1988 and before the earliest to occur of (i) December 31, 1998, (ii) the date the Rights are redeemed or (iii) the Distribution Date (as defined below). 44 The terms of the Rights are set forth in a Rights Agreement, dated November 21, 1988 (the "Rights Agreement"), between the Company and First Interstate Bank of California, as successor Rights Agent. The following description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement. Each Right entitles the registered holder thereof to purchase from the Company one Share at a price of $170, subject to adjustment. The Rights will expire on December 31, 1998, unless such date is extended or unless such Rights are redeemed earlier, and will not be exercisable or transferable separately from the Shares until (i) 10 days following a public announcement that a person or group of persons (other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of the Company or any entity holding Shares pursuant to the terms of any such plan) has become the beneficial owner of 20% or more of the outstanding Shares (a "Company Acquiring Person"), or (ii) 10 business days (or such later date as may be determined by action of the Company Board) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer by any person or group of persons (other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of the Company or any entity holding Shares pursuant to the terms of any such plan) the consummation of which would result in the beneficial ownership by a person of 20% or more of such outstanding Shares (the earlier of such dates being the "Company Distribution Date"). According to the Company Schedule 14D-9, the Company Board determined to postpone the occurrence of the Company Distribution Date as a result of the public announcement of the Offer until such later date as determined by the Company Board. On November 5, 1995, the Company amended the Rights Agreement so that FBS and its affiliates are excluded from the definition of Company Acquiring Person. At any time prior to the time a person or group of persons becomes a Company Acquiring Person, the Company Board may redeem the Rights in whole, but not in part, at a price of $.001 per Right, rounded upward for each holder to the nearest $.01. In the event that (i) the Company is acquired in a merger or other business combination transaction other than a merger which follows a tender or exchange offer for all outstanding Shares at a price and on terms determined to be adequate and otherwise in the best interests of the Company and its stockholders by at least a majority of the members of the Company Board who are not officers of the Company (a "Qualified Offer") or (ii) 50% or more of the Company's consolidated assets or earning power are sold, proper provision will be made so that each holder of a Right, except as otherwise provided in the Rights Agreement, will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring corporation which at the time of such transaction will have a market value of two times the exercise price of the Right. In the event that any person becomes a Company Acquiring Person (other than pursuant to a Qualified Offer) or during such time as there is a Company Acquiring Person, except upon terms disclosed in a Qualified Offer, there occurs any reclassification of securities, recapitalization, reorganization, or merger of the Company or issuance of securities by the Company which increases by more than 1% the proportionate share of any class of equity securities of the Company beneficially owned by any Company Acquiring Person, each holder of a Right, other than Rights beneficially owned by the Company Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise that number of Shares having a market value of two times the exercise price of the Right. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. At any time after a person or group of persons becomes a Company Acquiring Person prior to the acquisition by a Company Acquiring Person of 50% or more of the outstanding Shares, the Company's Board may exchange the Rights other than Rights owned by such Company Acquiring Person (which shall have become void), in whole or in part, at an exchange ratio of one Share per Right (subject to adjustment). The terms of the Rights may be amended by the Company Board without the consent of the holders of the Rights; provided, however, that from and after such time as any person becomes a Company Acquiring Person, 45 the terms of the Rights may not be amended in any manner which adversely affect the interests of the holder of the Rights. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group of persons that attempts to acquire the Company in a manner which causes the Rights to become exercisable. DGCL 203 Section 203 of the DGCL, in general, prohibits a Delaware corporation such as the Company from engaging in a Business Combination (as defined in Section 203) with an Interested Stockholder (as defined in Section 203) for a period of three years following the date that such person became an Interested Stockholder unless (a) prior to the date that such person became an Interested Stockholder, the board of directors of the corporation approved either the Business Combination or the transaction that resulted in the stockholder becoming an Interested Stockholder, (b) upon consummation of the transaction that resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding stock held by directors who are also officers of the corporation and employee stock plans that do not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, (c) a business combination is proposed by an Interested Stockholder prior to the consummation or abandonment of and subsequent to the public announcement of a proposed transaction which (i) constitutes a merger or consolidation of the corporation, (ii) is with or by a person who either was not an interested stockholder during the previous 3 years or who became an interested stockholder with the approval of the corporation's board of directors and (iii) is approved or not opposed by a majority of the board of directors then in office who were directors prior to any person becoming an Interested Stockholder during the previous three years, or (d) on or subsequent to the date such person became an Interested Stockholder, the Business Combination is approved by the board of directors of the corporation and authorized at a meeting of stockholders, and not by written consent, by the affirmative vote of the holders of at least 66 2/3% of the outstanding voting stock of the corporation not owned by the Interested Stockholder. A copy of Section 203 of the DGCL has been annexed as Schedule B hereto. FIB/FBS MERGER AGREEMENT CONDITION The Offer is conditioned upon, among other things, the stockholders of the Company not having approved the FIB/FBS Merger Agreement, which requires the approval of the holders of a majority of the Shares. The FIB/FBS Merger Agreement Condition shall not have been satisfied if such approval shall have been obtained. REGULATORY APPROVAL CONDITION The Offer is conditioned upon, among other things, all regulatory approvals required to consummate the Offer and Merger having been obtained and remaining in full force and effect, all statutory waiting periods in respect thereof having expired and no such approval containing any conditions or restrictions which the Board of Directors of the Purchaser reasonably determines in good faith will have or reasonably be expected to have a Material Adverse Effect. The Regulatory Approval Condition is virtually identical to the regulatory condition for consummating the FIB/FBS Merger. As used in this Prospectus, the term "Material Adverse Effect" has the same substantive meaning as given to that term in the FIB/FBS Merger Agreement. Specifically, the term "Material Adverse Effect" means material adverse effect on the business, results of operations or financial condition of the Purchaser, the Company and their respective subsidiaries taken as a whole or a material adverse effect on the Purchaser's ability to consummate the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred there shall be excluded any effect the cause of which is (i) any change in banking and similar laws, rules or regulations of general applicability or interpretations thereof by courts or governmental authorities, (ii) any change in generally accepted accounting principles or regulatory accounting requirements applicable to banks, thrifts or their holding companies generally, (iii) any action or omission of the Purchaser or any subsidiary of the Purchaser in contemplation of the Merger, (iv) any 46 changes in general economic conditions affecting banks, thrifts or their holding companies generally and (v) in the case of members of the Savings Association Insurance Fund ("SAIF") of the FDIC, the funding of the SAIF. The Purchaser will use its reasonable best efforts to obtain the requisite regulatory approvals (the "Requisite Regulatory Approvals"), which include approval from the Federal Reserve Board and various state and foreign regulatory authorities. (The obligation to use reasonable best efforts to obtain the Requisite Regulatory Approvals is the same obligation that FBS has agreed to under the FIB/FBS Merger Agreement.) Applications seeking the Requisite Regulatory Approvals have been or soon will be filed. The Offer and/or the Merger cannot proceed in the absence of the Requisite Regulatory Approvals. Although no assurances can be given, the Purchaser anticipates that it will receive all regulatory approvals on a timely basis. In this regard, the Company Schedule 14D-9 states that the Company Board determined "it was likely that each of FBS and Wells would ultimately receive all [regulatory] approvals." As mentioned above, the Purchaser believes that consummation of the FIB/FBS Merger is subject to the making of substantially identical filings and the receipt of identical regulatory approvals as the Offer and the Merger and believes that the regulators will consider the Purchaser's applications for approval of the Offer and the Merger in a time frame substantially identical to that of the FBS applications for approval of the FIB/FBS Merger. The Offer and the Merger are subject to approval by the Federal Reserve Board pursuant to Sections 3 and 4 of the BHCA. Assuming Federal Reserve Board approval, the Offer may not be consummated until 30 days after such approval, during which time the Department of Justice may challenge the Offer on antitrust grounds and seek the divestiture of certain assets and liabilities. With the approval of the Federal Reserve Board and the Department of Justice, the waiting period may be reduced to no less than 15 days. The Federal Reserve Board is prohibited from approving any transaction under the applicable statutes which: (i) would result in a monopoly or which would be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the United States; or (ii) may have the effect in any section of the United States of substantially lessening competition, or tending to create a monopoly, or resulting in a restraint of trade, unless the Federal Reserve Board finds that the anti-competitive effects of the transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the communities to be served. In reviewing the Offer and the Merger, the Department of Justice could analyze their effect on competition differently than the Federal Reserve Board, and thus it is possible that the Department of Justice could reach a different conclusion than the Federal Reserve Board regarding their competitive effects. The Federal Reserve Board will also consider the financial and managerial resources of the companies and their subsidiary banks. In addition, under the Community Reinvestment Act of 1977, as amended (the "CRA"), the Federal Reserve Board must take into account the record of performance of each of the Purchaser and the Company in meeting the credit needs of the entire community, including low and moderate income neighborhoods, served by each company. As part of the review process, the Federal Reserve Board frequently receives comments and protests from community groups and others. The Purchaser's principal bank, Wells Fargo Bank, N.A. (which represents approximately 90% of the Purchaser's consolidated assets), has received an "Outstanding" rating, the CRA's highest rating. The Company's principal subsidiary bank has a "Satisfactory" rating; its other subsidiary banks have "Satisfactory" or "Outstanding" ratings. FBS's principal subsidiary bank has a "Satisfactory" rating. The Federal Reserve Board will furnish notice and a copy of the application for approval of the Offer and the Merger to the Office of the Comptroller of the Currency (the "OCC"), the FDIC and the appropriate state 47 regulatory authorities. These agencies have 30 days to submit their views and recommendations to the Federal Reserve Board. The Federal Reserve Board is required to hold a public hearing in the event it receives a written recommendation of disapproval of the application from any of these agencies within such 30-day period. Furthermore, Federal Reserve Board regulations require publication of notice of, and the opportunity for public comment on, the application submitted by the Purchaser for approval of the Offer and the Merger and authorize the Federal Reserve Board to hold a public hearing in connection therewith if the Federal Reserve Board determines that such a hearing would be appropriate. The Purchaser expects that the Federal Reserve Board and the Department of Justice will require that the Purchaser divest certain operations in order to alleviate what such agencies believe would be an adverse competitive effect. In its application filed with the Federal Reserve Bank of San Francisco, the Purchaser committed to divest approximately $905 million in deposits to alleviate adverse competitive effects. It is possible that the Federal Reserve and/or the Department of Justice will request a more substantial divestiture. Although any potential divestitures may affect certain pro forma combined financial statement amounts, merger and restructuring costs, cost savings and revenues, the Purchaser believes that the aggregate amount and financial impact of any such divestitures will not be material and will not have a Material Adverse Effect. Under Section 4 of the BHCA and related regulations, the Federal Reserve Board must consider whether the performance of the Purchaser's and the Company's nonbanking activities on a combined basis can reasonably be expected to produce benefits to the public (such as greater convenience, increased competition and gains in efficiency) that outweigh possible adverse effects (such as undue concentration of resources, decreased or unfair competition, conflicts of interest and unsound banking practices). This consideration includes an evaluation of the financial and managerial resources of the Purchaser and the Company and the effect of the proposed transaction on those resources. In addition, the Merger will require certain approvals, notices or exemptions in California and in certain other states and foreign jurisdictions where the Purchaser and the Company are engaged in business. The Purchaser does not currently anticipate any significant difficulties in obtaining such approvals or any material impact on the operations of the combined entity if any such approvals are not obtained. CERTAIN OTHER CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for exchange or exchange any Shares, may postpone the acceptance for exchange of or exchange for tendered Shares, and may, in its sole discretion, terminate or amend the Offer as to any Shares not then exchanged for if at the Expiration Date, any of the Minimum Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights Plan and DGCL 203 Condition, the FIB/FBS Merger Agreement Condition or the Regulatory Approval Condition (in each case as defined on the cover page of this Prospectus) has not been satisfied or, with respect to the Minimum Tender Condition, the Wells Fargo Stockholder Approval Condition, the Rights Plan and DGCL 203 Condition and the FIB/FBS Merger Agreement Condition, waived, or if on or after , 199 and at or prior to the time of exchange of any such Shares (whether or not any Shares have theretofore been accepted for exchange or exchanged pursuant to the Offer), any of the following events shall not have occurred: (a) The shares of Wells Fargo Common Stock which shall be issued to the stockholders of the Company in the Offer and the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance. (b) The Registration Statement shall have become effective under the Securities Act, and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Commission. (c) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Offer and/or the Merger or any of the other 48 transactions contemplated by this Prospectus shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any court, administrative agency or commission or other governmental authority or instrumentality which prohibits, restricts or makes illegal the consummation of the Offer and/or the Merger. (d) (i) The representations and warranties of the Company in the FIB/FBS Merger Agreement with respect to capitalization, authority, financial statements, and absence of certain changes or events shall be true and correct in all material respects as of the date of this Prospectus and (except to the extent such representations and warranties speak as of an earlier date) as of the Expiration Date as though made on and as of the Expiration Date and (ii) the representations and warranties of the Company set forth in the FIB/FBS Merger Agreement other than those specifically enumerated in clause (i) hereof shall be true and correct in all respects as of the date of this Prospectus and (except to the extent such representations and warranties speak as of an earlier date) as of the Expiration Date as though made on and as of the Expiration Date; provided, however, that for purposes of determining the satisfaction of the condition contained in this clause (ii), no effect shall be given to any exception in such representations and warranties relating to materiality or a Material Adverse Effect, and provided, further, however, that, for purposes of this clause (ii), such representations and warranties shall be deemed to be true and correct in all respects unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, results or would reasonably be expected to result in a Material Adverse Effect on the Company and its subsidiaries taken as a whole. The foregoing conditions are for the sole benefit of the Purchaser and may be asserted by the Purchaser regardless of the circumstances giving rise to any such conditions (including any action or inaction by the Purchaser) or may be waived by the Purchaser in whole or in part. The determination as to whether any condition has occurred shall be in the sole judgment of the Purchaser and will be final and binding on all parties. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed a continuing right which may be asserted at any time and from time to time. Notwithstanding the fact that the Purchaser reserves the right to assert the occurrence of a condition following acceptance for payment but prior to payment in order to delay payment or cancel its obligation to exchange properly tendered Shares, the Purchaser will either promptly exchange such Shares or promptly return such Shares. The conditions to the Offer set forth herein are identical in all material respects to the conditions of FBS to effect the FIB/FBS Merger, except that: (a) FBS does not have to effect the FIB/FBS Merger unless FBS receives a letter from its accountants to the effect that the FIB/FBS Merger will qualify for "pooling of interests" accounting treatment. (b) FBS does not have to effect the FIB/FBS Merger unless it receives an opinion of its counsel to the effect that the FIB/FBS Merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that accordingly no gain or loss will be recognized by FBS or the Company as a result of the FIB/FBS Merger and no gain or loss will be recognized by the stockholders of the Company who exchange their Shares solely for FBS Common Stock pursuant to the FIB/FBS Merger. (c) FBS does not have to effect the FIB/FBS Merger unless the Company has performed in all material respects its obligations required to be performed by it under the FIB/FBS Merger Agreement at or prior to the closing of the FIB/FBS Merger, and FBS shall have received a certificate signed on behalf of the Company by the Chief Executive Officer and the Chief Financial Officer to such effect. (d) The Purchaser does not have to accept for exchange or exchange any Shares pursuant to the Offer and can terminate or amend the Offer if the stockholders of the Company have approved the FIB/FBS Merger Agreement. 49 RELATIONSHIPS WITH THE COMPANY On November 1, 1995, the Purchaser acquired 100 Shares at a price of $124 5/8 per Share (excluding mark-ups or commissions) in an open market purchase. Additionally, as of October 20, 1995, the Purchaser held 1,961,095 Shares (or approximately 2.6% of the outstanding Shares) in a fiduciary capacity. The Purchaser disclaims beneficial ownership of the Shares owned in such fiduciary capacity and any other Shares held by any pension plan of the Purchaser or any affiliates of the Purchaser. Except as set forth herein, and except for Philip J. Quigley, Director of the Purchaser, who beneficially owns 500 Shares, neither the Purchaser nor, to the best of its knowledge, any of the persons listed in Schedule A hereto nor any associate or majority-owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire any equity securities of the Company. Except as set forth above, neither the Purchaser nor, to the best of its knowledge, any of the persons or entities referred to above, nor any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in such equity securities during the past 60 days. Except as set forth herein, neither the Purchaser nor, to the best of its knowledge, any of the persons listed in Schedule A hereto has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as described herein, there have been no contacts, negotiations or transactions since November 1, 1995, between the Purchaser or, to the best of its knowledge, any of the persons listed in Schedule A hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Neither the Purchaser, nor, to the best of its knowledge, any of the persons listed in Schedule A hereto, has since November 1, 1995 had any transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the Commission applicable to the Offer. FEES AND EXPENSES [ is acting as Dealer Manager in connection with the Offer pursuant to a Dealer Manager Agreement (the "Dealer Manager Agreement"). The Purchaser has agreed to pay , as compensation for its financial advisory service (including services as Dealer Manager) in connection with the Offer, a fee of $ . Upon the effectiveness of the Registration Statement, of which this Prospectus forms a part, the Purchaser has agreed to pay an additional fee of $ . If the Purchaser consummates the Offer and the Merger, the Purchaser has agreed to pay an additional fee of $ . In addition, the Purchaser has agreed to reimburse for its reasonable out-of-pocket expenses, including the fees and expenses of its counsel, in connection with the Offer, and has agreed to indemnify against certain liabilities and expenses in connection with the Offer, including liabilities under the federal securities laws. The Purchaser has also retained D.F. King & Co., Inc. to act as Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers and other nominee stockholders to forward the Offer materials to beneficial owners of Shares. The Information Agent will receive a fee estimated not to exceed $200,000 for such services, plus reimbursement of out-of-pocket expenses and the Purchaser will indemnify the Information Agent against certain liabilities and expenses in connection with the Offer, including liabilities under federal securities laws. The Purchaser will pay the Exchange Agent reasonable and customary compensation for its services in connection with the Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the Exchange Agent against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding material to their customers.] 50 ACCOUNTING TREATMENT Upon consummation of the Offer, the Purchaser will account for the acquisition of the Shares using the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16, "Business Combinations," as amended. See "Background of the Offer--Comparison of the Proposals--Purchase Versus Pooling of Interests Accounting." Accordingly, the purchase price will be allocated to assets acquired and liabilities assumed based on their estimated fair values at the consummation date. Income (or loss) of the Company prior to the consummation date will not be included in income of the combined company. STOCK EXCHANGE LISTING The Wells Fargo Common Stock is listed on the NYSE, the PSE, the London Stock Exchange and the Frankfurt Stock Exchange. Application will be made to list the shares of Wells Fargo Common Stock to be issued pursuant to the Offer on the NYSE. 51 BUSINESS OF WELLS FARGO Today, the Purchaser operates one of the largest banking businesses in the United States. The Purchaser provides a broad range of financial products and services through electronic and traditional channels. Customers can access accounts electronically seven days a week, 24 hours a day. Besides serving as banker to millions of California households, the Purchaser provides a full range of banking and financial services to commercial, corporate, real estate and small business customers across the nation. Its primary lines of business are highlighted below. The Retail Distribution Group sells and services a complete line of retail financial products for consumers and small businesses. It encompasses a branch network (including supermarket branches and banking centers), the 24-hour Customer Sales and Service Centers (telephone banking), the ATM network and Wells Fargo ON-LINE, the Purchaser's personal computer banking service. In addition, Retail Distribution includes product management for the consumer checking business, which primarily uses the branches as a source of new customers. As part of the ongoing effort to provide higher-convenience, lower-cost service to customers, the Purchaser has opened supermarket branches, which are a more efficient delivery channel for a full line of retail banking services, and banking centers throughout California. The supermarket banking centers (modularly-designed kiosks equipped with ATMs and a customer service telephone and staffed by a banking officer) are capable of providing substantially all consumer services. The Business Banking Group provides a full range of financial services to small businesses, including credit, deposits, investments, payroll services, retirement programs and credit and debit card services. Business Banking customers include small businesses with annual sales up to $10 million in which the owner of the business is also the principal financial decision maker. The Investment Group is responsible for the sales and management of savings and investment products, investment management and brokerage services, including the Stagecoach and Overland Express Funds and personal trust, employee benefit trust and agency assets. It also includes product management for market rate accounts, savings deposits, Individual Retirement Accounts and time deposits. Real Estate products and services include construction loans for commercial and residential development, land acquisition and development loans, secured and unsecured lines of credit, interim financing arrangements for completed buildings, rehabilitation loans, affordable housing loans and letters of credit. Secondary market services are provided through the Real Estate Capital Markets Group, whose business includes purchases of distressed loans at a discount, mezzanine financing, acquisition financing, origination of permanent loans for securitization, syndications, commercial real estate loan servicing and real estate pension fund advisory services. The Wholesale Products Group includes the Commercial Banking Group, which serves businesses with annual sales of $5 million to $250 million, and the Corporate Banking Group, which maintains relationships with major corporations throughout the United States. The group is responsible for soliciting and maintaining credit and noncredit relationships with businesses by offering a variety of products and services including traditional commercial loans and lines of credit, letters of credit, trade facilities and cash management. Consumer Lending offers a full array of consumer loan products ranging from credit card loans and auto financing and leases to other installment loans and lines of credit. 52 PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED) The following unaudited pro forma combined financial statements were prepared in connection with Purchaser's Offer to exchange each outstanding Share for two-thirds of a share of Wells Fargo Common Stock and give effect to the purchase accounting adjustments and other assumptions described in the accompanying notes. The unaudited pro forma combined balance sheet is based upon the unaudited consolidated balance sheets of the Purchaser and the Company as of September 30, 1995. The unaudited pro forma combined statements of income are based on the consolidated statements of income of the Purchaser and the Company for the nine-month period ended September 30, 1995 (unaudited) and the year ended December 31, 1994. Certain information was derived from the audited consolidated financial statements of the Company contained in its Annual Report on Form 10-K that, for purposes of this Prospectus, are not covered by reports of the Company's independent accountants. The pro forma combined financial statements do not give effect to the anticipated cost savings, the disposition of certain yet-to-be identified assets or the effects of any required regulatory divestitures. Divestitures may affect certain pro forma combined financial statement amounts, but the net effect of any required divestitures is not expected to be material. In its application filed with the Federal Reserve Bank of San Francisco, the Purchaser has committed to divest $905 million in deposits to alleviate adverse competitive effects. The resolution of the pending matters pertaining to the assets and liabilities of the Company described above, as well as the operations of the Company subsequent to September 30, 1995, will affect the allocation of the purchase price. In addition, changes to the adjustments already included in the unaudited pro forma combined financial statements are expected as valuations of assets and liabilities are completed and as additional information becomes available. An increase in the unallocated portion of the purchase price remaining after fair value adjustments will result in a greater final allocation to goodwill which will have a corresponding impact on amortization expense and will reduce tangible common equity. A decrease in the unallocated portion of the purchase price remaining after fair value adjustments will have the opposite effects. Accordingly, the final pro forma combined amounts will differ from those set forth in the unaudited pro forma combined financial statements. The information shown below should be read in conjunction with the consolidated historical financial statements of the Purchaser and the Company, including the respective notes, which are incorporated by reference in this Prospectus (but which, in the case of the Company, are not covered by the report of the Company's independent accountants for purposes of this Prospectus) and the unaudited pro forma combined per share financial information which appear elsewhere in this Prospectus. The pro forma data are presented for comparative purposes only and are not necessarily indicative of the combined financial position or results of operations in the future. The pro forma data are also not necessarily indicative of the combined financial position or results of operations which would have been realized had the Acquisition been consummated during the periods or as of the dates for which the pro forma financial statements are presented. 53 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 1995(A) (UNAUDITED)
HISTORICAL ---------------------------- WELLS FARGO FIRST INTERSTATE PRO FORMA PRO FORMA & COMPANY BANCORP ADJUSTMENTS COMBINED ----------- ---------------- ----------- --------- (NOTES B&C) (IN MILLIONS) ASSETS Cash and due from banks..... $ 3,183 $ 5,916 $ -- $ 9,099 Investment securities....... 9,436 9,432 -- 18,868 Loans....................... 34,298 35,967 -- 70,265 Allowance for loan losses... 1,872 847 -- 2,719 ------- ------- ------ -------- Net loans................. 32,426 35,120 -- 67,546 ------- ------- ------ -------- Goodwill.................... 391 697 5,679(D) 6,767 Other assets................ 4,498 3,902 1,475(E) 9,875 ------- ------- ------ -------- Total assets.............. $49,934 $55,067 $7,154 $112,155 ======= ======= ====== ======== LIABILITIES Noninterest-bearing depos- its........................ $ 9,627 $17,044 $ -- $ 26,671 Interest-bearing deposits... 29,321 31,192 -- 60,513 ------- ------- ------ -------- Total deposits.............. 38,948 48,236 -- 87,184 Federal funds purchased and securities sold under re- purchase agreements........ 2,554 -- (1) -- 2,554 Senior and subordinated debt....................... 3,020 1,368 -- 4,388 Other liabilities........... 1,538 1,482 -- 3,020 ------- ------- ------ -------- Total liabilities......... 46,060 51,086 -- 97,146 ------- ------- ------ -------- STOCKHOLDERS' EQUITY Preferred stock............. 489 350 -- 839 Common stock................ 237 169 83 489 Additional paid-in capital.. 1,221 1,667 8,866 11,754 Retained earnings........... 1,932 2,436 (2,436) 1,932 Other....................... (5) 1 (1) (5) Less: Treasury stock........ -- (642) 642 -- ------- ------- ------ -------- Total stockholders' equi- ty....................... 3,874 3,981 7,154(F) 15,009 ------- ------- ------ -------- Total liabilities and stockholders' equity..... $49,934 $55,067 $7,154 $112,155 ======= ======= ====== ========
- -------- (1) The balance of federal funds purchased and securities sold under repurchase agreements at September 30, 1995, if any, is presumed to be included in other liabilities. See notes to pro forma combined financial statements. 54 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP PRO FORMA COMBINED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995(A) (UNAUDITED)
HISTORICAL ---------------------------- WELLS FARGO FIRST INTERSTATE PRO FORMA PRO FORMA & COMPANY BANCORP ADJUSTMENTS COMBINED ----------- ---------------- ----------- --------- (IN MILLIONS) INTEREST INCOME Investment securities...... $ 460 $ 480 $ -- $ 940 Loans...................... 2,536 2,283 -- 4,819 Other...................... 78 26 -- 104 ------ ------ ----- ------ Total interest income.... 3,074 2,789 -- 5,863 ------ ------ ----- ------ INTEREST EXPENSE Deposits................... 750 722 -- 1,472 Federal funds purchased and securities sold under repurchase agreements..... 160 -- -- 160 Senior and subordinated debt...................... 152 90 -- 242 Other...................... 25 72 -- 97 ------ ------ ----- ------ Total interest expense... 1,087 884 -- 1,971 ------ ------ ----- ------ NET INTEREST INCOME........ 1,987 1,905 -- 3,892 Provision for loan losses.. -- -- -- -- ------ ------ ----- ------ Net interest income after provision for loan losses.................... 1,987 1,905 -- 3,892 ------ ------ ----- ------ NONINTEREST INCOME Service charges on deposit accounts.................. 357 446 -- 803 Fees and commissions....... 316 151 -- 467 Trust and investment services income........... 176 123 -- 299 Other...................... 41 103 -- 144 ------ ------ ----- ------ Total noninterest income.................. 890 823 -- 1,713 ------ ------ ----- ------ NONINTEREST EXPENSE Salaries and employee benefits.................. 765 804 -- 1,569 Net occupancy.............. 159 294 -- 453 Equipment.................. 139 -- (1) -- 139 Federal deposit insurance.. 47 58 -- 105 Other...................... 528 482 342 (G) 1,352 ------ ------ ----- ------ Total noninterest expense................. 1,638 1,638 342 3,618 ------ ------ ----- ------ INCOME BEFORE INCOME TAXES..................... 1,239 1,090 (342) 1,987 Income tax expense......... 513 420 (83)(G) 850 ------ ------ ----- ------ NET INCOME................. $ 726 $ 670 $(259) $1,137 ====== ====== ===== ====== NET INCOME APPLICABLE TO COMMON STOCK.............. $ 695 $ 645 $(259) $1,081 ====== ====== ===== ====== PER COMMON SHARE Net income................. $14.14 $10.85 ====== ====== Dividends declared......... $ 3.45 $ 3.45 ====== ====== Average common shares outstanding............... 49.2 50.4 99.6 ====== ===== ======
- -------- (1) Equipment expense for the Company is included in net occupancy. See notes to pro forma combined financial statements. 55 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP PRO FORMA COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1994(A) (UNAUDITED)
HISTORICAL ---------------------------- WELLS FARGO FIRST INTERSTATE PRO FORMA PRO FORMA & COMPANY BANCORP ADJUSTMENTS COMBINED ----------- ---------------- ----------- --------- (IN MILLIONS) INTEREST INCOME Investment securities...... $ 740 $ 844 $ -- $1,584 Loans...................... 3,015 2,304 -- 5,319 Other...................... 10 44 -- 54 ------ ------ ----- ------ Total interest income.... 3,765 3,192 -- 6,957 ------ ------ ----- ------ INTEREST EXPENSE Deposits................... 854 725 -- 1,579 Federal funds purchased and securities sold under repurchase agreements..... 99 -- -- 99 Senior and subordinated debt...................... 192 106 -- 298 Other...................... 10 34 -- 44 ------ ------ ----- ------ Total interest expense... 1,155 865 -- 2,020 ------ ------ ----- ------ NET INTEREST INCOME........ 2,610 2,327 -- 4,937 Provision for loan losses.. 200 -- -- 200 ------ ------ ----- ------ Net interest income after provision for loan losses.................... 2,410 2,327 -- 4,737 ------ ------ ----- ------ NONINTEREST INCOME Service charges on deposit accounts.................. 473 562 -- 1,035 Fees and commissions....... 387 172 -- 559 Trust and investment services income........... 203 193 -- 396 Other...................... 137 127 -- 264 ------ ------ ----- ------ Total noninterest income.................. 1,200 1,054 -- 2,254 ------ ------ ----- ------ NONINTEREST EXPENSE Salaries and employee benefits.................. 1,027 1,080 -- 2,107 Net occupancy.............. 215 228 -- 443 Equipment.................. 174 128 -- 302 Federal deposit insurance.. 101 103 -- 204 Other...................... 639 658 482(G) 1,779 ------ ------ ----- ------ Total noninterest expense................. 2,156 2,197 482 4,835 ------ ------ ----- ------ INCOME BEFORE INCOME TAXES..................... 1,454 1,184 (482) 2,156 Income tax expense......... 613 450 (122)(G) 941 ------ ------ ----- ------ NET INCOME................. $ 841 $ 734 $(360) $1,215 ====== ====== ===== ====== NET INCOME APPLICABLE TO COMMON STOCK.............. $ 798 $ 701 $(360) $1,139 ====== ====== ===== ====== PER COMMON SHARE Net income............... $14.78 $10.69 ====== ====== Dividends declared....... $ 4.00 $ 4.00 ====== ====== Average common shares outstanding............... 53.9 52.6 106.5 ====== ===== ======
See notes to pro forma combined financial statements. 56 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED) NOTE A: BASIS OF PRESENTATION The unaudited pro forma combined balance sheet combines the historical consolidated balance sheets of the Purchaser and the Company as if the Acquisition had been effective on September 30, 1995. The pro forma combined statements of income for the nine-month period ended September 30, 1995 and the year ended December 31, 1994 combine the historical consolidated statements of income of the Purchaser and the Company as if the Acquisition had been effective on January 1, 1994. Certain amounts in the historical financial statements of the Company have been reclassified in the unaudited pro forma combined financial statements to conform to the Purchaser's historical financial statements. The Acquisition is accounted for as a purchase. Under this method of accounting, assets and liabilities of the Company are adjusted to their estimated fair value and combined with the recorded values of the assets and liabilities of the Purchaser. Applicable income tax effects of such adjustments are included as a component of the Purchaser's net deferred tax asset. Certain transactions conducted in the ordinary course of business between the Purchaser and the Company are immaterial and, accordingly, have not been eliminated. The Purchaser has not had access to the Company's records in order to make its determination of the fair value of their assets and liabilities. For purposes of the pro forma financial statements, it has been assumed that the net book value of the Company's assets (excluding intangibles) minus liabilities approximates fair value. Following the Acquisition, the Purchaser intends to combine the operations of and, subject to regulatory approvals, to merge the California subsidiary banks of both institutions as well as certain other operations. In its application with the Federal Reserve Bank of San Francisco, the Purchaser has committed to divest $905 million in deposits to alleviate adverse competitive effects. As of the date of this statement, no final determination with respect to such matters has been made. The impact of any required divestitures is not expected to be material. The Purchaser expects to achieve significant operating cost savings as a result of the Acquisition. See "Background of the Offer--Comparison of the Proposals." No adjustment has been included in the unaudited pro forma combined financial statements for the anticipated operating cost savings. NOTE B: PURCHASE PRICE The purchase price is based on exchanging two-thirds of a share of Wells Fargo Common Stock for each outstanding Share at the closing price per share of Wells Fargo Common Stock on October 17, 1995, the last full business day before announcement of the Original Proposal. Exercise of the Company's stock options are not included in the number of outstanding Shares of the Company on the assumption that all options will become equivalent options on Wells Fargo Common Stock. In addition, the number of the Shares used in calculating the total market value of Wells Fargo Common Stock to be issued in connection with the Offer reflects an exchange of Wells Fargo Common Stock for the outstanding Shares, exclusive of the Company's common stock equivalents. The total market value of the Wells Fargo Common Stock to be issued in connection with the Acquisition is calculated as follows: The Company's common shares outstanding on September 30, 1995 (in thousands)........................................................ 75,727 Exchange ratio..................................................... 2/3 -------- Wells Fargo Common Stock to be issued (in thousands)............... 50,485 Market price per share of Wells Fargo Common Stock at October 17, 1995.............................................................. $213.625 -------- Total market value of Wells Fargo Common Stock to be issued (in millions)....................................................... $ 10,785 ========
57 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) In addition to the above market value of the Wells Fargo Common Stock to be issued, the total purchase price will include other direct acquisition costs, such as legal, investment banking and other professional fees. NOTE C: ALLOCATION OF PURCHASE PRICE Certain matters are still pending that will have an effect on the ultimate allocation of the purchase price. Accordingly, the allocation of the purchase price has not been finalized and the portion of the purchase price allocated to goodwill and the identifiable intangibles (discussed below) is subject to change. The purchase price has been allocated as described in the table below:
(IN MILLIONS) Net assets applicable to the Company's common stock at Sep- tember 30, 1995........................................... $ 3,631 Increase to the Company's net asset value at September 30, 1995 as a result of estimated fair value adjustments, net of applicable income tax effects: Purchased Credit Card Relationships*..................... $ 100 Purchased Mortgage Servicing Rights*..................... 50 Core Deposit Intangibles*................................ 1,350 ------ Total estimated fair value adjustments................. 1,500 Elimination of the Company's existing goodwill and identi- fiable intangibles........................................ (722) ------- Total preliminary allocation of purchase price......... 4,409 Goodwill due to the Acquisition............................ 6,376 ------- Total purchase price................................... $10,785 =======
- -------- * Amounts are adjusted to a net-of-tax basis using an estimated marginal tax rate of 42.4%. It is expected that about $700 million of costs related to premises, severance and other restructuring charges will be incurred in connection with the Acquisition. To the extent that this amount includes costs related to the Company's premises, employees and operations, they will affect the final amount of goodwill as of the consummation of the Acquisition. The remaining costs related to the Purchaser's premises, employees and operations as well as all costs relating to systems conversions and other indirect, integration costs will be expensed, either upon consummation of the Acquisition or as incurred. In addition, goodwill does not include the effect of a potential $200 million purportedly payable to FBS pursuant to the Reciprocal Stock Option Agreements and the Reciprocal Fee Letters. The Purchaser believes that the Reciprocal Stock Option Agreements and the Reciprocal Fee Letters are not permissible and should be invalidated. See "Background of the Offer-- Litigation." NOTE D: CALCULATION OF GOODWILL ADJUSTMENT AND TOTAL GOODWILL DUE TO ACQUISITION
(IN MILLIONS) Purchase price...................................................... $10,785 Company total common stockholders' equity........................... (3,631) Net-of-tax identifiable intangibles................................. (1,500) Company net-of-tax existing identifiable intangibles................ 25 ------- Goodwill adjustment................................................. 5,679 Company existing goodwill........................................... 697 ------- Total goodwill due to Acquisition................................... $ 6,376 =======
58 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) For purposes of the pro forma combined balance sheet, it has been assumed that the net book value of the Company's assets (excluding intangibles) minus liabilities approximates fair value. NOTE E: OTHER ASSETS This amount includes an adjustment for identifiable intangibles of $2,562 million less a reduction in the Purchaser's net deferred tax asset of $1,087 million. The identifiable intangible adjustment represents a gross identifiable intangibles balance of $2,605 million less the Company's existing intangibles balance of $43 million. The net deferred tax asset adjustment represents the deferred tax liability related to the gross identifiable intangibles of $1,105 million partially offset by the reversal of the Company's deferred tax liability of $18 million related to existing identifiable intangibles. The net-of-tax identifiable intangibles of $1,500 million are amortized over their estimated period of benefit (not exceeding 15 years) on an accelerated basis. NOTE F: STOCKHOLDERS' EQUITY The purchase price of $10,785 million is reduced by the Company's common stockholders' equity of $3,631 million. The Purchaser will issue two-thirds of a share of the Purchaser's common stock in exchange for each of the 75,727 thousand shares of the Company's outstanding common stock (based on the number of Shares outstanding as of September 30, 1995). The price of the Purchaser's stock on October 17, 1995 was $213 5/8; total par value of new common stock of the Purchaser is $252 million. The remaining $10,533 million represents additional paid-in capital. The Company's preferred stock will be converted into the Purchaser's preferred stock and the Company's treasury stock will be eliminated. Adjustments to stockholders' equity are as follows:
PURCHASE COMPANY PRICE COMMON EQUITY ADJUSTMENT -------- ------------- ---------- (IN MILLIONS) Common stock.............................. $ 252 $ (169) $ 83 Additional paid-in capital................ 10,533 (1,667) 8,866 Retained earnings......................... (2,436) (2,436) Treasury stock............................ 642 642 Net unrealized (gains) losses on avail- able-for-sale securities................. (1) (1) ------- ------- ------- Total common stockholders' equity....... $10,785 $(3,631) $ 7,154 ======= ======= =======
59 WELLS FARGO & COMPANY AND FIRST INTERSTATE BANCORP NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONCLUDED) (UNAUDITED) NOTE G: PURCHASE ACCOUNTING ADJUSTMENTS Adjustments are made to reflect the recording of intangibles as well as to eliminate any intangible balances previously recorded by the Company in accordance with the purchase method of accounting. It has been assumed that the net book value of the Company's assets (excluding intangibles) minus liabilities approximates fair value. The following purchase accounting adjustments are based on the best available information and are subject to change as new information becomes available. Purchase accounting adjustments will be booked on a gross basis with related adjustments to the Purchaser's net deferred tax asset as follows:
AMORTIZATION ------------------ 9 MONTHS YEAR ENDED ENDED NET OF TAX GROSS 9/30/95* 12/31/94* ---------- ------- -------- --------- (IN MILLIONS) DEBIT (CREDIT) Goodwill and identifiable intangibles of the Company............................ $ (722) $ (740) $(45) $ (60) Goodwill due to the Acquisition......... 6,376 6,376 191 255 Identifiable intangibles due to the Ac- quisition.............................. 1,500 2,605 196 287 ------ ------- ---- ----- 7,154 8,241 342 482 Adjustment to Wells Fargo net deferred tax asset related to purchase account- ing adjustments........................ -- (1,087) (83) (122) ------ ------- ---- ----- Total................................. $7,154 $ 7,154 $259 $ 360 ====== ======= ==== =====
- -------- * Goodwill due to the Acquisition is amortized on a straight-line basis over 25 years. Identifiable intangibles due to the Acquisition are amortized over their estimated period of benefit (not exceeding 15 years) on an accelerated basis. 60 DESCRIPTION OF WELLS FARGO CAPITAL STOCK WELLS FARGO COMMON STOCK The Restated Certificate of Incorporation of the Purchaser (the "Wells Fargo Certificate") provides that the Purchaser has authority to issue 150,000,000 shares of Wells Fargo Common Stock. On October 31, 1995, the Purchaser had 46,966,721 shares of Wells Fargo Common Stock issued and outstanding. In 1995, the Purchaser authorized the continuation of certain stock repurchase programs. For a full description of these programs see "--Repurchases of Wells Fargo Common Stock." Holders of shares of Wells Fargo Common Stock are entitled to one vote per share for each share held. Subject to the rights of holders of shares of the Purchaser's outstanding preferred stock ("the Wells Fargo Preferred Stock") (as described below), holders of shares of Wells Fargo Common Stock have equal rights to participate in dividends when declared and, in the event of liquidation, in the net assets of the Purchaser available for distribution to stockholders. The Purchaser may not declare any dividends on the Wells Fargo Common Stock unless full preferential amounts to which holders of Wells Fargo Preferred Stock are entitled have been paid or declared and set apart for payment upon all outstanding shares of Wells Fargo Preferred Stock. The Purchaser is also subject to certain contractual and regulatory restrictions on the payment of dividends. See "Certain Regulatory Considerations." The holders of shares of Wells Fargo Common Stock do not have preemptive rights or preferential rights of subscription for any shares of Wells Fargo Common Stock or other securities of the Purchaser. Outstanding shares of Wells Fargo Common Stock are, and shares to be issued pursuant to the Offer will be, fully paid and nonassessable. First Chicago Trust Company of New York is the transfer agent and registrar for the Wells Fargo Common Stock. REPURCHASES OF WELLS FARGO COMMON STOCK In April, 1995, the Wells Fargo Board of Directors authorized the repurchase of up to 4,957,991 shares of Wells Fargo Common Stock, representing 10 percent of the Purchaser's outstanding Common Stock as of March 31, 1995. This authorization continues a repurchase program which the Purchaser began in 1994, and is supplemental to the shares of Wells Fargo Common Stock the Purchaser routinely buys to offset stock issued or expected to be issued under its employee benefit and dividend reinvestment plans. There is no scheduled date for completion of the repurchase program and it is expected that the Purchaser will purchase shares from time to time, subject to market conditions. During the nine months ended September 30, 1995, the Purchaser repurchased 3,785,927 shares (net of issuances of 720,627 shares) of Wells Fargo Common Stock. For the year ended December 31, 1994, the Purchaser repurchased 4,560,944 shares (net of issuances of 561,653 shares) of Wells Fargo Common Stock. WELLS FARGO PREFERRED STOCK The Wells Fargo Certificate provides that the Purchaser is authorized to issue 25,000,000 shares of Wells Fargo Preferred Stock. The Wells Fargo Preferred Stock may be issued from time to time in one or more series and the Wells Fargo Board is authorized to determine or alter the powers, preferences and rights, and the qualifications, limitations or restrictions to be granted to or imposed upon the Wells Fargo Preferred Stock or any series thereof with respect to any wholly unissued class or series of Wells Fargo Preferred Stock, and to fix the number of shares constituting any such series and the designation thereof, or any of them. Thus, the Wells Fargo Board is authorized to establish, designate and fix with respect to each series of Wells Fargo Preferred Stock the specific designation of that series, the number of shares, the dividend rate, right of redemption and the price, terms and manner of redemption, special and relative rights on liquidation, sinking fund provisions, conversion rights and voting rights, all without further action by the holders of Wells Fargo Common Stock. 61 Because the Purchaser is a holding company, its rights, the rights of its creditors and of its stockholders, including the holders of the shares of the Wells Fargo Preferred Stock, to participate in any distribution of the assets of any subsidiary upon the latter's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors, except to the extent that the Purchaser may itself be a creditor with recognized claims against the subsidiary. The principal source of the Purchaser's revenues are dividends received from its banking and other subsidiaries. Various statutory provisions limit the amount of dividends its bank subsidiaries and certain nonbank subsidiaries can pay without regulatory approval, and various regulations can also restrict the payment of dividends. In addition, federal statutes limit the ability of its bank subsidiaries to make loans to the Purchaser. See "--Certain Regulatory Considerations." The following is a brief description of certain terms of the outstanding series of Wells Fargo Preferred Stock. This description does not purport to be complete and is qualified in its entirety by reference to the Wells Fargo Certificate, including the certificate of designations with respect to each such series. The shares of Wells Fargo Preferred Stock now outstanding have preference over Wells Fargo Common Stock with respect to the payment of dividends and the distribution of assets in the event of liquidation, winding up or dissolution of the Purchaser. Each of such series ranks on a parity with one another as to dividends and the distribution of assets upon liquidation, winding up or dissolution. Generally, the holders of each series of Wells Fargo Preferred Stock have no voting rights. However, if the equivalent of six quarterly dividends payable on a series of Wells Fargo Preferred Stock are in default, the number of directors of the Purchaser will be increased by two and the holders of such outstanding series of Wells Fargo Preferred Stock together with the holders of shares of every other series of Wells Fargo Preferred Stock similarly entitled to vote for the election of two directors, acting together as a single class, will be entitled to elect two of the authorized number of members of the Wells Fargo Board at the next annual meeting and at each subsequent annual meeting of stockholders to serve until all dividends accumulated have been fully paid or set apart for payment. Each series of Wells Fargo Preferred Stock is listed on the NYSE. Wells Fargo Series B Preferred Stock. As of November 15, 1995, there were issued and outstanding 1,500,000 shares of Adjustable Rate Cumulative Preferred Stock, Series B, par value $5.00 per share (the "Wells Fargo Series B Preferred Stock"). The Wells Fargo Series B Preferred Stock is redeemable at the option of the Purchaser, in whole or in part, through May 14, 1996 at a price of $51.50 per share and, thereafter, at $50 per share, plus accrued and unpaid dividends to the redemption date. Dividends on the Wells Fargo Series B Preferred Stock are cumulative and payable quarterly on the fifteenth day of February, May, August and November of each year at the rate of 76% of the highest of the three-month Treasury Bill discount rate, 10-year constant maturity Treasury security yield or 20- year constant maturity Treasury security yield, but in no event shall be less than 5.5% per annum or greater than 10.5% per annum. The average dividend rate was 5.7%, 5.6% and 6.2% during 1994, 1993 and 1992, respectively. Wells Fargo Series C Preferred Stock. As of November 15, 1995, there were issued and outstanding 477,500 shares of 9% Preferred Stock, Series C, par value $5.00 per share (the "Wells Fargo Series C Preferred Stock"), evidenced by 9,550,000 depositary shares, each representing a one-twentieth interest in a share of Wells Fargo Series C Preferred Stock. The Wells Fargo Series C Preferred Stock is redeemable at the option of the Purchaser, in whole or in part, on and after October 24, 1996 at a price of $500 per share (equivalent to $25 per depositary share) plus accrued and unpaid dividends to the redemption date. Dividends on the Wells Fargo Series C Preferred Stock of $11.25 per share (9% annualized rate) are cumulative and are paid quarterly on the last day of each March, June, September and December (equivalent to $0.56 per annum per depositary share). Wells Fargo Series D Preferred Stock. As of November 15, 1995, there were issued and outstanding 350,000 shares of 8 7/8% Preferred Stock, Series D, par value $5.00 per share (the "Wells Fargo Series D 62 Preferred Stock"), evidenced by 7,000,000 depositary shares, each representing a one-twentieth interest in a share of Wells Fargo Series D Preferred Stock. The Wells Fargo Series D Preferred Stock is redeemable at the option of the Purchaser, in whole or in part, on and after March 5, 1997 at a price of $500 per share (equivalent to $25 per depositary share) plus accrued and unpaid dividends to the redemption date. Dividends on the Wells Fargo Series D Preferred Stock of $11.09 per share (8 7/8% annualized rate) are cumulative and are paid quarterly on the last day of each March, June, September and December (equivalent to $0.55 per annum per depositary share). CERTAIN REGULATORY CONSIDERATIONS SUPERVISION AND REGULATION. The following discussion addresses the regulatory framework applicable to bank holding companies and their subsidiaries, and provides certain specific information relevant to the Purchaser. Regulation of financial institutions such as the Purchaser and its subsidiaries is intended primarily for the protection of depositors, the deposit insurance funds of the FDIC and the banking system as a whole, and generally is not intended for the protection of stockholders or other investors. In the following discussion, references to statutes and regulations are brief summaries thereof and are qualified in their entirety by reference to such statutes and regulations. In addition, there are other statutes and regulations that apply to the operation of banking institutions. Changes in the applicable laws, and in their application by regulatory agencies, cannot necessarily be predicted, but they may have a material effect on the business and results of the Purchaser. As a bank holding company, the Purchaser is subject to regulation, supervision and examination by the Federal Reserve Board under the BHCA. Under the BHCA, bank holding companies may not, in general, directly or indirectly acquire ownership or control of more than 5% of the voting shares of any company, including a bank or bank holding company, without the prior approval of the Federal Reserve Board. In addition, bank holding companies are generally prohibited from engaging in nonbanking (i.e., commercial or industrial) activities, subject to certain exceptions under the BHCA. The Purchaser's banking subsidiaries, as national banking associations, are subject to regulation, supervision and examination by the OCC. Depository institutions are also affected by various state and Federal laws, including those relating to consumer protection and similar matters, as well as by the fiscal and monetary policies of the Federal government and its agencies, including the Federal Reserve Board. An important purpose of these policies is to curb inflation and control recessions through control of the supply of money and credit. The Federal Reserve Board uses its powers to establish reserve requirements of depository institutions and to conduct open market operations in United States government securities so as to influence the supply of money and credit. These policies have a direct effect on the availability of bank loans and deposits and on interest rates charged on loans and paid on deposits, with the result that Federal policies have a material effect on the earnings of the banking subsidiaries, and, hence, the Purchaser. The Purchaser also has other financial services subsidiaries that are subject to regulation, supervision and examination by the Federal Reserve Board, as well as other applicable state and Federal regulatory agencies. For example, the Purchaser's discount brokerage and asset management subsidiaries are subject to supervision and regulation by the Commission, the National Association of Securities Dealers, Inc. and state securities regulators; and the Purchaser's insurance subsidiaries are subject to regulation by the insurance regulatory authorities of the various states. Other nonbank subsidiaries of the Purchaser are subject to other laws and regulations of both the Federal government and the various states in which they are authorized to do business. DIVIDEND RESTRICTIONS. The Purchaser is a legal entity separate and distinct from its banking and other subsidiaries. The principal source of cash flow of the Purchaser, including cash flow to pay dividends on the 63 Purchaser's common and preferred stock and debt service on the Purchaser's debt, is dividends from its banking and other subsidiaries. Various Federal and state statutes and regulations limit the amount of dividends that may be paid to the Purchaser by its banking subsidiaries without regulatory approval. The approval of the OCC is required for the payment of any dividend by a national bank if the total of all dividends declared by the board of directors of such bank in any calendar year would exceed the total of (i) the bank's retained net profits (as defined and interpreted by regulation) for the current year plus (ii) the retained net profits (as defined and interpreted by regulation) for the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock. In addition, a national bank can pay dividends only to the extent that retained net profits (including the portion transferred to surplus) exceed bad debts (as defined and interpreted by regulation). In addition, if, in the opinion of the applicable Federal banking agency, a depository institution under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the institution, could include the payment of dividends) the agency may require, after notice and hearing, that such institution cease and desist from such practice. The OCC has indicated that paying dividends that would deplete a depository institution's capital base to an inadequate level would be an unsafe and unsound practice. Moreover, under the Federal Deposit Insurance Act (the "FDI Act"), an insured depository institution may not pay any dividend if payment would cause it to become undercapitalized or once it is undercapitalized. See "--Regulatory Capital Standards and Related Matters." Also, the Federal bank regulatory agencies have issued policy statements which provide that FDIC-insured depository institutions and their holding companies should generally pay dividends only out of current operating earnings. HOLDING COMPANY STRUCTURE. Transactions Involving Banking Subsidiaries. The Purchaser's banking subsidiaries are subject to Federal Reserve Act restrictions which limit the transfer of funds or other items of value from such subsidiaries to the Purchaser and (with certain exceptions) to the Purchaser's nonbanking subsidiaries (together, "affiliates") in so-called "covered transactions." In general, covered transactions include loans and other extensions of credit, investments and asset purchases, as well as other transactions involving the transfer of value from a banking subsidiary to an affiliate or for the benefit of an affiliate. Unless an exemption applies, each covered transaction by a banking subsidiary with one of its affiliates is limited in amount to 10% of that banking subsidiary's capital and surplus (as defined and interpreted by regulation) and, with respect to all covered transactions with affiliates, in the aggregate, to 20% of that banking subsidiary's capital and surplus. Furthermore, loans and extensions of credit are required to be secured in specified amounts. Source of Strength Doctrine. Under Federal Reserve Board policy, a bank holding company is expected to serve as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required by the Federal Reserve Board at times when the Purchaser may not have the resources to provide it or, for other reasons, would not otherwise be inclined to provide it. Certain loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits in, and certain other indebtedness of, the subsidiary bank. In addition, in the event of a bank holding company's bankruptcy, any commitment by a bank holding company to a Federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. Depositor Preference. The FDI Act provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of such institution (including claims by the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver would be afforded a priority over other general unsecured claims against such an institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will be placed ahead of unsecured, nondeposit creditors, including a parent holding company, in order of priority of payment. Liability of Commonly Controlled Institutions. Under the FDI Act, an insured depository institution that is under common control with another insured depository institution is generally liable for any loss incurred, or 64 reasonably anticipated to be incurred, by the FDIC in connection with the default of such commonly controlled institution, or any assistance provided by the FDIC to any such commonly controlled institution that is in danger of default. The term "default" is defined generally to mean the appointment of a conservator or receiver and the term "in danger of default" is defined generally as the existence of certain conditions indicating that a "default" is likely to occur in the absence of regulatory assistance. REGULATORY CAPITAL STANDARDS AND RELATED MATTERS. Capital Guidelines. The Federal Reserve Board, the FDIC and the OCC have adopted substantially similar risk-based and leverage capital guidelines for United States banking organizations. The guidelines establish a systematic, analytical framework that makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposure into account in assessing capital adequacy and reduces disincentives to holding liquid, low-risk assets. The risk-based capital ratio is determined by classifying assets and specified off-balance sheet financial instruments into weighted categories with higher levels of capital being required for categories perceived as representing greater risk. The Federal bank regulatory agencies have indicated that in assessing the capital adequacy of a banking organization they will consider, among other things, interest rate risk, and are each considering a proposal to incorporate an explicit mechanism by which interest rate risk would be incorporated into the risk-based capital standards. Federal Reserve Board policy also provides that banking organizations generally, and, in particular, those that are experiencing internal growth or actively making acquisitions, are expected to maintain capital positions that are substantially above the minimum supervisory levels, without significant reliance on intangible assets. Under these risk-based capital standards, the minimum consolidated ratio of total capital to risk-adjusted assets (including certain off-balance sheet items, such as standby letters of credit) required by the Federal Reserve Board for bank holding companies, such as the Purchaser, is currently 8%. At least one-half of the total capital must be comprised of common equity, retained earnings, qualifying noncumulative perpetual preferred stock, a limited amount of qualifying cumulative perpetual preferred stock and minority interests in the equity accounts of consolidated subsidiaries, less certain items such as goodwill and certain other intangible assets ("Tier I capital"). The remainder may consist of qualifying hybrid capital instruments, perpetual debt, mandatory convertible debt securities, a limited amount of subordinated debt, preferred stock that does not qualify as Tier I capital and a limited amount of loan and lease loss reserves ("Tier II capital"). As of September 30, 1995, the Purchaser's Tier I and total capital to risk-adjusted assets ratios were 8.56% and 12.25%, respectively. At September 30, 1995, on a pro forma combined basis after giving effect to the Offer and the Merger on a purchase accounting basis, the Purchaser's estimated consolidated Tier I capital and total capital to risk-adjusted assets ratios would be 8.07% and 11.31%, respectively. In addition to the risk-based standard, the Purchaser is subject to minimum leverage ratio guidelines. The leverage ratio is defined to be the ratio of a bank holding company's Tier I capital to its total consolidated quarterly average assets less goodwill and certain other intangible assets (the "Leverage Ratio"). These guidelines provide for a minimum Leverage Ratio of 3% for bank holding companies that have the highest supervisory rating. All other bank holding companies must maintain a minimum Leverage Ratio of at least 4% to 5%. Neither the Purchaser nor any of its banking subsidiaries has been advised by the appropriate Federal banking regulator of any specific Leverage Ratio applicable to it. As of September 30, 1995, the Purchaser's Leverage Ratio was 6.93%. At September 30, 1995, on a pro forma combined basis after giving effect to the Offer and the Merger on a purchase accounting basis, the Purchaser's estimated consolidated Leverage Ratio would be 6.56%. The reductions in the Purchaser's pro forma combined capital ratios are due to the effect of the Company's capital ratios, which are lower than the Purchaser's. The Purchaser's banking subsidiaries are also subject to capital requirements substantially similar to those imposed by the Federal Reserve Board on bank holding companies. As of September 30, 1995, each of the Purchaser's banking subsidiaries had capital in excess of the foregoing minimum regulatory ratio requirements. Prompt Corrective Action. The FDI Act requires the federal banking agencies to take "prompt corrective action" in respect of depository institutions that do not meet minimum capital requirements. A depository 65 institution's treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation. The OCC has adopted regulations establishing relevant capital measures and relevant capital levels. The relevant capital measures are the total capital ratio, Tier 1 capital ratio and the Leverage Ratio. Under the regulations, a national bank will be: (i) "well capitalized" if it has a total capital ratio of 10% or greater, a Tier 1 capital ratio of 6% or greater and a Leverage Ratio of 5% or greater and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) "adequately capitalized" if it has a total capital ratio of 8% or greater, a Tier 1 capital ratio of 4% or greater and a Leverage Ratio of 4% or greater (3% in certain circumstances) and is not "well capitalized," (iii) "undercapitalized" if it has a total capital ratio of less than 8%, a Tier 1 capital ratio of less than 4% or a Leverage Ratio of less than 4% (3% in certain circumstances); (iv) "significantly undercapitalized" if it has a total capital ratio of less than 6%, a Tier 1 capital ratio of less than 3% or a Leverage Ratio of less than 3%; and (v) "critically undercapitalized" if its tangible equity is equal to or less than 2% of average quarterly tangible assets. In addition, a bank's primary federal banking agency is authorized to downgrade the bank's capital category to the next lower category upon a determination that the bank is in an unsafe or unsound condition or is engaged in an unsafe or unsound practice. An unsafe or unsound practice can include receipt by the institution of a less than satisfactory rating on its most recent examination with respect to its asset quality, management, earnings or liquidity. As of September 30, 1995, all of the Purchaser's subsidiary banks had capital levels that qualify them as being "well capitalized" under such regulations. The FDI Act generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would therefore be "undercapitalized". "Undercapitalized" depository institutions are subject to limitations on, among other things, asset growth; acquisitions; branching; new business lines; acceptance of brokered deposits; and borrowings from the Federal Reserve System and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of (i) an amount equal to 5% of the depository institution's total assets at the time it became "undercapitalized", and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is "significantly undercapitalized". "Significantly undercapitalized" depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become "adequately capitalized", requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator. FDIC Insurance. On August 8, 1995, the FDIC amended its regulations on insurance assessments to establish a new assessment rate schedule of 4 to 31 cents per $100 of insured deposits in replacement of the previous schedule of 23 to 31 cents (based on each institution's assigned risk classification) per $100 of insured deposits for institutions whose deposits are subject to assessment by the Bank Insurance Fund ("BIF"). All of the Purchaser's insured deposits are subject to assessments payable to BIF. The new BIF schedule became effective on June 1, 1995, the first day of the month after the month in which BIF reached its "designated reserve ratio" of 1.25% of total estimated insured deposits. Assessments collected under the previous assessment schedule in excess of the amount due under the new schedule were refunded, with interest, from the effective date of the new schedule. The Purchaser's subsidiary banks received an aggregate refund of approximately $23 million. An institution's risk classification is based on an assignment of the institution by the FDIC to one of three capital groups and to one of three supervisory subgroups. The capital groups are "well capitalized," "adequately capitalized" and "undercapitalized." The three supervisory subgroups are Group "A" (for 66 financially solid institutions with only a few minor weaknesses), Group "B" (for those institutions with weaknesses which, if uncorrected, could cause substantial deterioration of the institution and increase the risk to the deposit insurance fund) and Group "C" (for those institutions with a substantial probability of loss to the fund absent effective corrective action). On November 14, 1995, the Board of Directors of the FDIC approved a further reduction in the assessment schedule for BIF deposits. Effective January 1, 1996, the assessment schedule will range from 0 to 27 cents per $100 of deposits subject to BIF assessments, based on each institution's risk classification. Various legislative proposals regarding the future of BIF and the SAIF have recently been reported, which generally provide for a special assessment on SAIF deposits. While the ultimate outcome of the legislative process cannot be predicted, the Purchaser does not expect these proposals to have an effect on its financial condition. The Purchaser's bank subsidiaries currently hold no deposits subject to assessments payable to SAIF. As part of the currently pending Budget Reconciliation Act for fiscal year 1996, the House-Senate Conference Committee has proposed an assessment on all FDIC-insured depository institutions to provide funds for payment of interest on Financing Corporation debt when due. If enacted, this proposal would result in minimum BIF insurance premiums, which are expected to be approximately 2.5 cents on each $100 in deposits subject to BIF assessments. Interstate Banking and Other Recent Legislation. Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act"), which became effective on September 29, 1995, bank holding companies are permitted to acquire banks located in any state regardless of the state law in effect at the time. The Interstate Act also provides for the nationwide interstate branching of banks. Under the Interstate Act, both national and state-chartered banks will be permitted to merge across state lines (and thereby create interstate branches) commencing on June 1, 1997. States are permitted to "opt-out" of the interstate branching authority by taking action prior to the commencement date. States may also "opt-in" early (i.e., prior to June 1, 1997) to the interstate branching provisions. In addition to the matters discussed above, there have been proposed a number of legislative and regulatory proposals designed to strengthen the Federal deposit insurance system and to improve the overall financial stability of the U.S. banking system, and to provide for other changes in the bank regulatory structure, including proposals to reduce regulatory burdens on banking organizations and to expand the nature of products and services banks and bank holding companies may offer. It is impossible to predict whether or in what form these proposals may be adopted in the future, and, if adopted, what their effect will be on the Purchaser. 67 COMPARISON OF RIGHTS OF HOLDERS OF SHARES AND WELLS FARGO COMMON STOCK Pursuant to the Offer, stockholders of the Company who elect to receive Wells Fargo Common Stock in exchange for Shares will become stockholders of the Purchaser. The following is a summary of certain similarities and material differences between the rights of holders of Shares and the rights of holders of Wells Fargo Common Stock. As each of the Company and the Purchaser is organized under the laws of Delaware, these differences arise solely from various provisions of the certificate of incorporation and by-laws of each of the Company and the Purchaser and the Rights Agreement. The following summary does not purport to be a complete statement of the rights of stockholders under the the Company's Composite Certificate of Incorporation (the "Company Certificate"), the Bylaws of the Company (the "Company Bylaws") and the Rights Agreement as compared with the rights of the Purchaser's stockholders under the Wells Fargo Certificate and the Bylaws of Wells Fargo, as amended April 18, 1995 (the "Wells Fargo Bylaws"), or a complete description of the specific provisions referred to herein. The identification of specific differences is not meant to indicate that other equally or more significant differences do not exist. The summary is qualified in its entirety by reference to the DGCL and the governing corporate instruments of the Company and the Purchaser, to which stockholders are referred. SPECIAL MEETINGS OF STOCKHOLDERS Under Delaware law, special meetings of the stockholders may be called by the board of directors or such other persons as may be authorized by the certificate of incorporation or bylaws. The Company Bylaws provide that a special meeting may also be called by the Chairman of the Board, or in his absence or when the office of Chairman of the Board is vacant, by the President, and shall be called by the Chairman of the Board, or in his absence or when the office of Chairman of the Board is vacant, by the President, or the Secretary, at the request in writing of stockholders owning a majority of the outstanding capital stock entitled to vote. The Wells Fargo Bylaws provide that a special meeting may also be called by the Chairman of the Board, the President, the Chief Executive Officer (if other than the Chairman of the Board or the President), or one or more stockholders holding not less than 10% of the voting power of the corporation. NUMBER OF DIRECTORS Under Delaware law, the number of directors shall be fixed by or in the manner provided in the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment to the certificate. The Company Bylaws provide that the Company Board is to consist of not less than three nor more than 26 directors, as shall be determined by resolution of the Board. The Wells Fargo Bylaws provide that the Wells Fargo Board of Directors is to consist of not less than ten nor more than 20 directors, the exact number to be fixed from time to time by a bylaw adopted by the stockholders or by the Board of Directors, but until some other number is so fixed, the number of directors shall be 14. ADVANCE NOTICE OF STOCKHOLDER NOMINATIONS OF DIRECTORS Under the Company Bylaws, nominations of persons for election to the Company Board may be made at a meeting of stockholders by any stockholder, provided that the Secretary of the Company receives written notice not less than 30 days nor more than 60 days prior to the meeting. If less than 40 days' notice or prior public disclosure of the date of the meeting is given or made by the Company to stockholders, the notice of a nomination must be received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or public disclosure was made. Notices of nominations, among other things, must state the nominee's name, age, business and residential address and principal occupation and employment, as well as the class and number of Shares of the Company beneficially owned by such nominee and any other information about the nominee required to be disclosed in solicitations for proxies for the election 68 of directors pursuant to Rule 14a of the Exchange Act. In addition, the notice must state the name and record address of the nominating stockholder and the class and number of shares of the Company beneficially owned by the stockholder. The Wells Fargo Bylaws do not contain any similar advance notice provisions for the nomination of directors. STOCKHOLDER PROPOSAL PROCEDURES Under the Company Bylaws, business is properly brought before an annual meeting if the Secretary of the Company receives written notice not less than 30 days nor more than 60 days prior to the annual meeting. If less than 40 days' notice or prior public disclosure of the date of the annual meeting is given or made by the Company to stockholders, notice by the stockholder must be received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or public disclosure was made. Stockholder notices must state, among other things, a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, the name and record address of the stockholder proposing the business, the class and number of shares of the Company beneficially owned by the stockholder and any material interest in such business. The Wells Fargo Bylaws do not contain any similar advance notice provisions for stockholder proposals. INDEMNIFICATION Both the Company Bylaws and the Wells Fargo Bylaws provide for the indemnification of directors, officers and persons serving at the request of the respective corporations as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise to the fullest extent authorized by the DGCL. The Wells Fargo Bylaws also mandatorily extend this right to indemnification to all employees of Wells Fargo, whereas the Company Bylaws provide that this right to indemnification may only be extended to employees and agents by action of the Company Board of Directors. CERTAIN VOTING RIGHTS FOR MERGERS Under Delaware law, any merger, consolidation or sale of all or substantially all of the assets of a corporation requires the approval of the holders of a majority (unless the certificate of incorporation requires a higher percentage) of the outstanding shares of such corporation entitled to vote thereon. Neither the Company Certificate nor the Wells Fargo Certificate requires a higher percentage. CUMULATIVE VOTING Under Delaware law, stockholders of a corporation are not entitled to cumulate their votes in the election of directors unless the corporation's certificate of incorporation so provides. Neither the Company Certificate nor the Wells Fargo Certificate provides for cumulative voting. REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS Under Delaware law, any or all directors of a corporation which does not have cumulative voting or a classified board may be removed, with or without cause, by the holders of a majority of the shares entitled to vote at an election of directors, unless such corporation's certificate of incorporation provides otherwise. Neither the Company Certificate nor the Wells Fargo certificate provides otherwise. Under Delaware law, vacancies and newly-created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors in office. Under both the Company Bylaws and the Wells Fargo Bylaws, such vacancies and newly-created directorships may also be filled by the stockholders of the respective corporations. 69 STOCKHOLDER ACTION BY WRITTEN CONSENT Under Delaware law, unless otherwise provided in the certificate of incorporation, any action which may be taken at any annual or special meeting may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Neither the Company Certificate nor the Wells Fargo Certificate contains provisions to the contrary. AMENDMENT OF BYLAWS Under Delaware law, the power to adopt, amend or repeal bylaws is vested in the stockholders unless the certificate of incorporation confers the power to adopt, amend or repeal bylaws upon the directors as well. Both the Company Certificate and the Wells Fargo Certificate confer such power on their respective boards of directors. CLASSIFICATION OF BOARD OF DIRECTORS Delaware law permits (but does not require) a certificate of incorporation to provide that a board of directors be divided into classes, with each class having a term of office longer than one year but not longer than three years. Neither the Company Certificate nor the Wells Fargo Certificate provides for classes of directors. 70 MARKET PRICES AND DIVIDENDS WELLS FARGO The Wells Fargo Common Stock is listed and principally traded on the NYSE and is also listed on the PSE, London Stock Exchange and Frankfurt Stock Exchange. The following table sets forth the range of high and low sales prices as reported on the NYSE Composite Tape, together with the per share dividends declared by the Purchaser, during the periods indicated.
PRICE RANGE ----------------- QUARTER HIGH LOW DIVIDENDS - ------- -------- -------- --------- 1993: First............................................. $109 1/2 $ 75 1/2 $0.50 Second............................................ 120 95 3/4 0.50 Third............................................. 127 3/8 107 1/4 0.50 Fourth............................................ 133 105 7/8 0.75 1994: First............................................. $147 1/2 $127 5/8 $1.00 Second............................................ 159 1/2 136 5/8 1.00 Third............................................. 160 3/8 145 1/8 1.00 Fourth............................................ 149 5/8 141 1.00 1995: First............................................. $160 5/8 $143 3/8 $1.15 Second............................................ 185 7/8 157 1.15 Third............................................. 189 177 3/4 1.15 Fourth (through November 22, 1995)................ 230 1/4 186 7/8 1.15
On October 17, 1995, the last trading day prior to public announcement of the Original Proposal, the closing sales price per share of Wells Fargo Common Stock was $213 5/8. On October 18, 1995, the trading day of the announcement of the Original Proposal, such price was $229. On November 10, 1995, the last trading day prior to announcement of the Offer, such price was $215 3/8. On November 22, 1995, the last full trading day prior to the date of this preliminary prospectus, such price was $213 3/8. Past price performance is not necessarily indicative of likely future price performance. Holders of Shares are urged to obtain current market quotations for shares of Wells Fargo Common Stock. In January 1995, the Purchaser increased the quarterly dividend on the Wells Fargo Common Stock to $1.15 per share. Holders of Wells Fargo Common Stock are entitled to receive dividends from funds legally available therefor when, as and if declared by the Board of Directors of the Purchaser. The Board of Directors of the Purchaser presently intends to continue the policy of paying quarterly cash dividends. Future dividends of the Purchaser will depend upon the earnings of the Purchaser and its subsidiaries, their financial condition and other factors including applicable governmental regulations and policies. See "Description Of Wells Fargo Capital Stock--Certain Regulatory Considerations." 71 THE COMPANY The Shares are listed and principally traded on the NYSE and are also listed on the Boston Stock Exchange, Cincinnati Stock Exchange, Midwest Stock Exchange, Philadelphia-Baltimore-Washington Stock Exchange and the PSE. The following table sets forth the range of high and low sales prices as reported on the NYSE Composite Tape, together with the per Share dividends declared by the Company, during the periods indicated.
PRICE RANGE ----------------- QUARTER HIGH LOW DIVIDENDS - ------- -------- -------- --------- 1993: First............................................. $ 58 7/8 $ 44 1/2 $0.30 Second............................................ 64 1/2 52 1/2 0.40 Third............................................. 67 58 3/8 0.40 Fourth............................................ 68 53 1/2 0.50 1994: First............................................. $ 79 1/8 $ 62 3/8 $0.50 Second............................................ 85 71 3/4 0.75 Third............................................. 84 1/8 72 0.75 Fourth............................................ 81 1/2 66 7/8 0.75 1995: First............................................. $ 82 1/8 $ 68 5/8 $0.75 Second............................................ 88 1/4 75 1/8 0.75 Third............................................. 103 79 3/4 0.80 Fourth (through November 22, 1995)................ 141 3/8 100 1/8 0.80
On October 17, 1995, the last trading day prior to public announcement of the Original Proposal, the closing sales price was $106 per Share. On October 18, 1995, the trading day of the announcement of the Original Proposal, such price was $140 1/4. On November 10, 1995, the last trading day prior to the announcement of the Offer, such price was $134 3/4. On November 22, 1995, the last full trading day prior to the date of this preliminary prospectus, such price was $134 1/8. Past price performance is not necessarily indicative of likely future price performance. Holders of Shares are urged to obtain current market quotations for Shares. In July 1995, the Company increased the quarterly dividend on the Shares to $0.80 per Share. Holders of Shares are entitled to receive dividends from funds legally available therefor when, as and if declared by the Company Board. Future dividends of the Company will depend upon the earnings of the Company and its subsidiaries, their financial condition and other factors including applicable governmental regulations and policies. The Rights are listed on the NYSE, but are currently attached to all outstanding Shares and may not be traded separately. As a result, the sales prices per Share set forth above are also the high and low sales prices per Share and associated Right during such periods. Upon occurrence of the Company Distribution Date, the Rights are to trade separately from the Shares. According to the Company Schedule 14D-9, the Company Board determined to postpone the occurrence of the Company Distribution Date as a result of the public announcement of the Offer until such later date as determined by the Company Board. 72 VALIDITY OF WELLS FARGO COMMON STOCK The validity of the shares of Wells Fargo Common Stock offered hereby will be passed upon for the Purchaser by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. EXPERTS The consolidated financial statements of Wells Fargo & Company as of December 31, 1994 and 1993, and for each of the years in the three-year period ended December 31, 1994, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 73 SCHEDULE A DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER The following table sets forth the name, business address and the present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is carried on, of the directors and executive officers of Wells Fargo. DIRECTORS AND EXECUTIVE OFFICERS OF WELLS FARGO
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER BUSINESS ADDRESS* PRINCIPAL OCCUPATION OR EMPLOYMENT - -------------------------------------------- ------------------------------------------- H. Jesse Arnelle............................ Director; Senior Partner of Arnelle, Hastie, McGee, Arnelle, Hastie, McGee, Willis & Greene Willis & Greene 1 Market Plaza Spear Street Tower, 39th Floor San Francisco, California 94105 William R. Breuner.......................... Director; Retired Chairman of the Board of the John The Moraga Professional Center Breuner Company 1042 Country Club Drive, Suite 2C Moraga, California 94556 William S. Davila........................... Director; President Emeritus of The Vons The Vons Companies, Inc. Companies, Inc. 618 Michillinda Avenue Arcadia, California 91007 Rayburn S. Dezember......................... Director; Retired Chairman of the Board of Central 5401 California Avenue Pacific Corp. Bakersfield, California 93309 Paul Hazen.................................. Chairman of the Board and Chief Executive Officer Robert K. Jaedicke.......................... Director; Professor (Emeritus) of Accounting and Graduate School of Business, Former Dean of the Graduate School of Business, Room 289 Stanford University Stanford University Stanford, California 94305 Ellen M. Newman............................. Director; President, Ellen Newman Associates Ellen Newman Associates 323 Geary Street, Suite 507 San Francisco, California 94102 Philip J. Quigley........................... Director; Chairman, President and Chief Executive Pacific Telesis Group Officer of Pacific Telesis Group 130 Kearney Street, 37th Floor San Francisco, California 94108 Carl E. Reichardt........................... Director; Retired Chairman of the Board Donald B. Rice.............................. Director; President and Chief Operating Officer of Teledyne, Inc. Teledyne, Inc. 2049 Century Park East, 15th Floor Los Angeles, California 90067
A-1
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER BUSINESS ADDRESS* PRINCIPAL OCCUPATION OR EMPLOYMENT - -------------------------------------------- ------------------------------------------- Susan G. Swenson............................ Director; President and Chief Executive Officer of Cellular One Cellular One 651 Gateway Boulevard, Suite 1500 South San Francisco, California 94080 Chang-Lin Tien.............................. Director; Chancellor of the University of California, Office of the Chancellor Berkeley 200 California Hall University of California Berkeley, California 94720 John A. Young............................... Director; Retired President and Chief Executive Hewlett-Packard Company Officer of Hewlett-Packard Company 3200 Hillview Avenue Palo Alto, California 94304 William F. Zuendt........................... Director; President and Chief Operating Officer Michael J. Gillfillan....................... Vice Chairman Charles M. Johnson.......................... Vice Chairman 2030 Main Street, Suite 900 Irvine, California 92714 Clyde W. Ostler............................. Vice Chairman Rodney L. Jacobs............................ Vice Chairman and Chief Financial Officer Leslie L. Altick............................ Executive Vice President and Director of Corporate 343 Sansome Street Communications San Francisco, California 94104 Patricia R. Callahan........................ Executive Vice President and Personnel Director Frank A. Moeslein........................... Executive Vice President and Controller 343 Sansome Street San Francisco, California 94104 Guy Rounsaville, Jr......................... Executive Vice President, Chief Counsel and Secretary Ross J. Kari................................ Executive Vice President and General Auditor Eric D. Shand............................... Executive Vice President and Chief Loan Examiner 111 Sutter Street San Francisco, California 94104
- -------- * Unless otherwise indicated, the principal business address of each director and executive officer is Wells Fargo & Company, 420 Montgomery Street, San Francisco, California 94104. A-2 SCHEDULE B SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW (a) Notwithstanding any other provisions of this chapter, a corporation shall not engage in any business combination with any interested stockholder for a period of 3 years following the time that such stockholder became an interested stockholder, unless: (1) prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or (2) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (3) At or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. (b) The restrictions contained in this section shall not apply if: (1) the corporation's original certificate of incorporation contains a provision expressly electing not be governed by this section; (2) the corporation, by action of its board of directors, adopts an amendment to its bylaws within 90 days of the effective date of this section, expressly electing not to be governed by this section, which amendment shall not be further amended by the board of directors; (3) the corporation, by action of its stockholders, adopts an amendment to its certificate of incorporation or bylaws expressly electing not to be governed by this section, provided that, in addition to any other vote required by law, such amendment to the certificate of incorporation or bylaws must be approved by the affirmative vote of a majority of the shares entitled to vote. An amendment adopted pursuant to this paragraph shall be effective immediately in the case of a corporation that both (i) has never had a class of voting stock that falls within any of the three categories set out in subsection (b)(4) hereof, and (ii) has not elected by a provision in its original certificate of incorporation or any amendment thereto to be governed by this section. In all other cases, an amendment adopted pursuant to this paragraph shall not be effective until 12 months after the adoption of such amendment and shall not apply to any business combination between such corporation and any person who became an interested stockholder of such corporation on or prior to such adoption. A bylaw amendment adopted pursuant to this paragraph shall not be further amended by the board of directors; (4) the corporation does not have a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on The NASDAQ Stock Market or (iii) held of record by more than 2,000 stockholders, unless any of the foregoing results from action taken, directly or indirectly, by an interested stockholder or from a transaction in which a person becomes an interested stockholder; (5) a stockholder becomes an interested stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an interested stockholder and (ii) would not, at any time within the 3 year period immediately prior to a business combination between the corporation and such stockholder, have been an interested stockholder but for the inadvertent acquisition of ownership; B-1 (6) the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this paragraph; (ii) is with or by a person who either was not an interested stockholder during the previous 3 years or who became an interested stockholder with the approval of the corporation's board of directors or during the period described in paragraph (7) of this subsection (b); and (iii) is approved or not opposed by a majority of the members of the board of directors then in office (but not less than 1) who were directors prior to any person becoming an interested stockholder during the previous 3 years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the corporation (except for a merger in respect of which, pursuant to section 251(f) of the chapter, no vote of the stockholders of the corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as a part of a dissolution or otherwise, of assets of the corporation or of any direct or indirect majority-owned subsidiary of the corporation (other than to any direct or indirect wholly- owned subsidiary or to the corporation) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; or (z) a proposed tender or exchange offer for 50% or more of the outstanding voting stock of the corporation. The corporation shall give not less than 20 days notice to all interested stockholders prior to the consummation of any of the transactions described in clauses (x) or (y) of the second sentence of this paragraph; or (7) The business combination is with an interested stockholder who became an interested stockholder at a time when the restrictions contained in this section did not apply by reason of any paragraphs (1) through (4) of this subsection (b), provided, however, that this paragraph (7) shall not apply if, at the time such interested stockholder became an interested stockholder, the corporation's certificate of incorporation contained a provision authorized by the last sentence of this subsection (b). Notwithstanding paragraphs (1), (2), (3) and (4) of this subsection, a corporation may elect by a provision of its original certificate of incorporation or any amendment thereto to be governed by this section; provided that any such amendment to the certificate of incorporation shall not apply to restrict a business combination between the corporation and an interested stockholder of the corporation if the interested stockholder became such prior to the effective date of the amendment. (c) As used in this section only, the term: (1) "affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or in controlled by, or is under common control with, another person. (2) "associate," when used to indicate a relationship with any person, means (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock, (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person. (3) "business combination," when used in reference to any corporation and any interested stockholder of such corporation, means: (i) any merger or consolidation of the corporation or any direct or indirect majority-owned subsidiary of the corporation with (A) the interested stockholder, or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation subsection (a) of this section is not applicable to the surviving entity; B-2 (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of such corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the corporation or of any direct or indirect majority-owned subsidiary of the corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; (iii) any transaction which results in the issuance or transfer by the corporation or by any direct or indirect majority-owned subsidiary of the corporation of any stock of the corporation or of such subsidiary to the interested stockholder, except (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of such corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such, (B) pursuant to a merger under Section 251(g) of this title; (C) pursuant to a dividend to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of such corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of such corporation subsequent to the time the interested stockholder became such, (D) pursuant to an exchange offer by the corporation to purchase stock made on the same terms to all holders of said stock, or (E) any issuance or transfer of stock by the corporation, provided however, that in no case under (C)-(E) above shall there be an increase in the interested stockholder's proportionate share of the stock of any class or series of the corporation or of the voting stock of the corporation; (iv) any transaction involving the corporation or any direct or indirect majority-owned subsidiary of the corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or (v) any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of such corporation) of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) above) provided by or through the corporation or any direct or indirect majority owned subsidiary. (4) "control," including the term "controlling," "controlled by" and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this section, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity. (5) "interested stockholder" means any person (other than the corporation and any direct or indirect majority-owned subsidiary of the corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the corporation, or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; provided, however, that the term "interested stockholder" shall not include (x) any person who (A) owned shares in excess of the 15% limitation set forth herein as of, or acquired such shares pursuant to a tender offer commenced prior to, December 23, 1987, or pursuant to an exchange offer announced prior to the aforesaid date and commenced within 90 days thereafter and either (I) continued to own shares in B-3 excess of such 15% limitation or would have but for action by the corporation or (II) is an affiliate or associate of the corporation and so continued (or so would have continued but for action by the corporation) to be the owner of 15% or more of the outstanding voting stock of the corporation at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such a person is an interested stockholder or (B) acquired said shares from a person described in (A) above by gift, inheritance or in a transaction in which no consideration was exchanged; or (y) any person whose ownership of shares in excess of the 15% limitation set forth herein in the result of action taken solely by the corporation provided that such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of paragraph (8) of this subsection but shall not include any other unissued stock of such corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (6) "person" means any individual, corporation, partnership, unincorporated association or other entity. (7) "Stock" means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest. (8) "Voting stock" means, with respect to any corporation, stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. (9) "owner" including the terms "own" and "owned" when used with respect to any stock means a person that individually or with or through any of its affiliates or associates: (i) beneficially owns such stock, directly or indirectly; or (ii) has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person's right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or (iii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of clause (ii) of this paragraph), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. (d) No provision of a certificate of incorporation or bylaw shall require, for any vote of stockholders required by this section a greater vote of stockholders than that specified in this section. (e) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all matters with respect to this section. (Last amended by Ch. 79, L. '95, eff. 7-1-95.) B-4 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and Rights and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Exchange Agent at one of its addresses set forth below. THE EXCHANGE AGENT: [Insert Name] TELEPHONE NUMBER: [ ] (call collect) By Mail: [To Come] Facsimile Transmission By Hand or Copy Numbers: Overnight Courier: [ ] [To Come] [ ] Confirm Facsimile by Telephone: [ ] [ ] Any questions or requests for assistance or additional copies of the Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or the Dealer Manager[s] at their respective telephone numbers and locations listed below. You may also contact your local broker, commercial bank, trust company or nominee for assistance concerning the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street, 20th Floor New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: 1-800-431-9646 The Dealer Manager[s] for the Offer [is] [are]: [To Come] PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS As permitted by Section 102(b)(7) of the DGCL, Article Fifth of the Wells Fargo Certificate (Exhibit 3.1 hereto) eliminates the monetary liability of a director to the corporation or its stockholders for breach of fiduciary duty as a director, with the following exceptions, as required by Delaware law: (i) breach of the director's duty of loyalty to the corporation or its stockholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) payment of unlawful dividends or the making of unlawful stock purchases or redemptions; or (iv) any transaction from which the director derived an improper personal benefit. In addition, under Section 145 of the DGCL, a corporation may indemnify a director, officer, employee or agent of the corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed Proceeding (other than an action by or in the right of the corporation) if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of an action brought by or in the right of the corporation, the corporation may indemnify a director, officer, employee or agent of the corporation against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of any threatened, pending or completed action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that a court determines upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Article IV of the Wells Fargo By-laws (Exhibit 3.2 hereto) provides for indemnification of its directors, officers, employees, and other agents to the fullest extent permitted by the DGCL. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
EXHIBIT NO. DESCRIPTION ------- ----------- 3.1 Restated Certificate of Incorporation of the Registrant dated March 3, 1987 (filed as Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993).* 3.2 Bylaws of the Registrant, as amended April 18, 1995 (filed as Exhibit 3(ii) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993).* 3.3 Certificate of the Voting Powers, Designation, Preferences and Relative Participating, Optional or Other Special Rights, and the Qualifications, Limitations or Restrictions Thereof, Which Have Not Been Set Forth in the Certificate of Incorporation or in Any Amendment Thereto, of the Adjustable Rate Cumulative Preferred Stock, Series B (filed as Exhibit 3(c) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993).* 3.4 Certificate of the Voting Powers, Designation, Preferences and Relative Participating, Optional or Other Special Rights, and the Qualifications, Limitations or Restrictions Thereof, Which Have Not Been Set Forth in the Certificate of Incorporation or in Any Amendment Thereto, of the 9% Preferred Stock, Series C (filed as Exhibit 3 to the Registrant's Current Report on Form 8-K dated October 24, 1991).* 3.5 Certificate of the Voting Powers, Designation, Preferences and Relative Participating, Optional or Other Special Rights, and the Qualifications, Limitations or Restrictions Thereof, Which Have Not Been Set Forth in the Certificate of Incorporation or in Any Amendment Thereto, of the 8 7/8% Preferred Stock, Series D (filed as Exhibit 3 to the Registrant's Current Report on Form 8-K dated March 5, 1992).*
II-1
EXHIBIT NO. DESCRIPTION ------- ----------- 5.1 Opinion of Sullivan & Cromwell.** 8.1 Tax opinion of Sullivan & Cromwell.** 21.1 Subsidiaries of the Registrant (filed as Exhibits 21 and 22 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994).* 23.1 Consent of KPMG Peat Marwick LLP. 23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1).** 23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1).** 24.1 Powers of Attorney (See page II-4). 99.1 Form of Letter of Transmittal.** 99.2 Form of Letter of Transmittal Supplement.** 99.3 Form of Notice of Guaranteed Delivery.** 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.** 99.5 Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.** 99.6 Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.** 99.7 Summary Advertisement.**
- -------- * Incorporated by reference. ** To be filed by amendment. ITEM 22. UNDERTAKINGS The Undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the II-2 registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. The undersigned registrant hereby undertakes to supply by means of a post- effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and County of San Francisco, State of California on November 27, 1995. WELLS FARGO & COMPANY By /s/ Rodney L. Jacobs ----------------------------------------- Rodney L. Jacobs Vice Chairman and Chief Financial Officer Each person whose signature appears below appoints Paul Hazen, William F. Zuendt, and Rodney L. Jacobs and each of them, any of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents, 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 any and all amendments (including post-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully 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 or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Paul Hazen Chairman of the Board, Chief November 27, 1995 ______________________________________ Executive Officer and Director Paul Hazen (Principal Executive Officer) /s/ Rodney L. Jacobs Vice Chairman and Chief November 27, 1995 ______________________________________ Financial Officer (Principal Rodney L. Jacobs Financial Officer) /s/ Frank A. Moeslein Executive Vice President and November 27, 1995 ______________________________________ Controller (Principal Frank A. Moeslein Accounting Officer) /s/ H. Jesse Arnelle ______________________________________ Director November 27, 1995 H. Jesse Arnelle /s/ William R. Breuner ______________________________________ Director November 27, 1995 William R. Breuner /s/ William S. Davila ______________________________________ Director November 27, 1995 William S. Davila
II-4
SIGNATURE TITLE DATE --------- ----- ---- /s/ Rayburn S. Dezember ______________________________________ Director November 27, 1995 Rayburn S. Dezember /s/ Robert K. Jaedicke ______________________________________ Director November 27, 1995 Robert K. Jaedicke /s/ Ellen M. Newman ______________________________________ Director November 27, 1995 Ellen M. Newman /s/ Philip J. Quigley ______________________________________ Director November 27, 1995 Philip J. Quigley /s/ Carl E. Reichardt ______________________________________ Director November 27, 1995 Carl E. Reichardt /s/ Donald B. Rice ______________________________________ Director November 27, 1995 Donald B. Rice /s/ Susan G. Swenson ______________________________________ Director November 27, 1995 Susan G. Swenson /s/ Chang-Lin Tien ______________________________________ Director November 27, 1995 Chang-Lin Tien /s/ John A. Young ______________________________________ Director November 27, 1995 John A. Young /s/ William F. Zuendt ______________________________________ Director November 27, 1995 William F. Zuendt
II-5 EXHIBIT INDEX
EXHIBIT PAGE NO. DESCRIPTION NO. ------- ----------- ---- 5.1 Opinion of Sullivan & Cromwell.** 8.1 Tax opinion of Sullivan & Cromwell.** 21.1 Subsidiaries of the Registrant (filed as Exhibits 21 and 22 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994).* 23.1 Consent of KPMG Peat Marwick LLP. 23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1).** 23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1).** 24.1 Powers of Attorney (See page II-4). 99.1 Form of Letter of Transmittal.** 99.2 Form of Letter of Transmittal Supplement.** 99.3 Form of Notice of Guaranteed Delivery.** 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.** 99.5 Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.** 99.6 Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.** 99.7 Summary Advertisement.**
- -------- * Incorporated by reference. ** To be filed by amendment. EXHIBIT 23.1 CONSENT OF KPMG PEAT MARWICK LLP The Board of Directors Wells Fargo & Company: We consent to the incorporation by reference in the Registration Statement on Form S-4 (No. 33- ) of Wells Fargo & Company of our report dated January 17, 1995, incorporated by reference in the Annual Report on Form 10-K of Wells Fargo & Company for the year ended December 31, 1994 and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG Peat Marwick LLP San Francisco, CA November 27, 1995 -----END PRIVACY-ENHANCED MESSAGE-----