-----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, NYJotKymN5/kh9kpxfjwIYUui4yJFaOk7iESXYeYYxaQjMAnuhcsPkDM2vrXFVSh 8aWsDnHtKPzu5WqN9iMa+Q== 0000950172-95-000457.txt : 19951201 0000950172-95-000457.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950172-95-000457 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19951129 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRST INTERSTATE BANCORP /DE/ CENTRAL INDEX KEY: 0000105982 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 951418530 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-39787 FILM NUMBER: 95597520 BUSINESS ADDRESS: STREET 1: 633 W FIFTH ST-T8-19 STREET 2: PO BOX 54068 CITY: LOS ANGELES STATE: CA ZIP: 90054 BUSINESS PHONE: 2136143001 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN BANCORPORATION DATE OF NAME CHANGE: 19911124 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FIRST INTERSTATE BANCORP /DE/ CENTRAL INDEX KEY: 0000105982 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 951418530 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 633 W FIFTH ST-T8-19 STREET 2: PO BOX 54068 CITY: LOS ANGELES STATE: CA ZIP: 90054 BUSINESS PHONE: 2136143001 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN BANCORPORATION DATE OF NAME CHANGE: 19911124 SC 14D9/A 1 SCHEDULE 14D9 - AMENDMENT NO. 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 FIRST INTERSTATE BANCORP (Name of Subject Company) FIRST INTERSTATE BANCORP (Name of Person Filing Statement) COMMON STOCK, PAR VALUE $2.00 PER SHARE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (Title of Class of Securities) 320548100 (CUSIP Number of Class of Securities) WILLIAM J. BOGAARD, ESQ. EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL FIRST INTERSTATE BANCORP 633 WEST FIFTH STREET LOS ANGELES, CA 90071 (213) 614-3001 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT) COPY TO: FRED B. WHITE III, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM 919 THIRD AVENUE NEW YORK, NEW YORK 10022 (212) 735-3000 First Interstate Bancorp ("First Interstate") hereby amends and supplements its statement on Schedule 14D-9 initially filed with the Securities and Exchange Commission on November 20, 1995, as amended by Amendment No. 1 thereto (the "Schedule 14D-9"). Unless otherwise indicated herein, each capitalized term used but not defined herein shall have the meaning assigned to such term in the Schedule 14D-9. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. The information set forth in the "Litigation" subsection of Item (8) of the Schedule 14D-9 is hereby amended and supplemented by the following information: On November 22, 1995, the Los Angeles Superior Court granted the defendants' Motion to Stay filed in Mesko v. Bryson, et al., (Case No. BC137379). The Court stayed the action pending the final resolution of the consolidated class action proceeding in the Delaware Chancery Court entitled In re First Interstate Bancorp Shareholder Litig., Del. Ch., Consol. C.A. No. 14623 (the "Delaware Consolidated Action"). The plaintiff in Mesko may move to amend or dissolve this stay if any of the three following events occurs: (1) the Delaware Consolidated Action does not proceed on behalf of a class consisting of all public shareholders of First Interstate (the "Class"); (2) the Class is not certified in the Delaware Consolidated Action; or (3) if counsel for the plaintiff in Mesko files an action in the Delaware Chancery Court similar to the action filed in California and that action is consolidated with the Delaware Consolidated Action, such counsel is not then given the opportunity to be actively included in the Delaware Consolidated Action. Counsel for the plaintiff in Mesko agreed on the record that the stay also should apply to the following cases in which such counsel represents the plaintiffs: Eaves v. Bryson, et al., (Case No. BC137380); Grill v. Bryson, et al., (Case No. BC137508); Mondschein v. Bryson, et al., (Case No. BC137509); Kaplan v. Bryson, et al., (Case No. BC138639); Kaplan v. Bryson, et al., (Case No. BC138409); Thornhill v. Bryson, et al., (Case No. BC139252). The parties are currently drafting an attorney order for the Court's approval. Two actions have been filed in the United States District Court for the Central District of California. The two actions are entitled: Kaplin v. Bryson, et al. (Civ. No. 95-7954 RG) and Bradley v. Siart, et al. (Civ. No. 95-8047 AAH). The Kaplin action names the Board of Directors of First Interstate, a former First Interstate director, First Bank System, Inc. ("FBS") and FBS' Chairman and Chief Executive Officer as defendants. The action alleges breach of fiduciary duty, abuse of control and unjust enrichment. The plaintiff further alleges that FBS and its Chairman and Chief Executive Officer aided and abetted the other defendants in breaching their fiduciary duties. The plaintiff seeks declaratory relief as well as preliminary and permanent injunctive relief enjoining defendants from (1) enforcing defensive measures designed to prevent an auction, bidding or tender offer for First Interstate; and (2) proceeding with the Merger with FBS until the value of that transaction can be shown to compare favorably with the takeover premium available following an auction. In addition, plaintiff seeks monetary damages of an unspecified amount together with prejudgment interest and attorneys' and experts' fees. The Bradley action names the Board of Directors of First Interstate, FBS and Donaldson, Lufkin & Jenrette ("DLJ") as defendants. This complaint alleges that First Interstate's directors breached their fiduciary duty by entering into the Merger Agreement with FBS and allegedly preventing third parties, including Wells Fargo & Company ("Wells"), from acquiring all of First Interstate's common stock at a price in excess of the current market price. Plaintiff further alleges that FBS and DLJ aided and abetted the other defendants in breaching their fiduciary duties. In addition, this complaint alleges violations of sections 14(e) and 14(a) of the Securities Exchange Act of 1934, as amended, abuse of control, unfair business practices, unjust enrichment and constructive fraud. The plaintiff seeks injunctive relief as well as monetary damages of an unspecified amount, including punitive damages, together with prejudgment interest and attorneys' fees. The defendants intend to defend both actions vigorously. On November 27, 1995, an additional purported class action was filed in the Los Angeles Superior Court against the Board of Directors of First Interstate and FBS. The action, entitled Bradley v. Siart, et al. (Case No. BC139665), alleges that First Interstate's directors breached their fiduciary duty by entering into the Merger Agreement with FBS and allegedly preventing third parties (including Wells) from acquiring all of First Interstate's common stock at a price in excess of the current market price. Plaintiff further alleges that FBS aided and abetted the other defendants in breaching their fiduciary duties. In addition, this complaint alleges abuse of control, unfair business practices, unjust enrichment and constructive fraud. Plaintiff seeks injunctive relief as well as monetary damages of an unspecified amount, including punitive damages, together with prejudgment interest and attorneys' fees. The defendants intend to defend this action vigorously. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. The following Exhibits are filed herewith: Exhibit 39: Derivative Complaint in Kaplin v. Bryson, et al. (U.S. District Court, Central District of California). Exhibit 40: Complaint in Bradley v. Siart, et al. (California Superior Court). Exhibit 41: Complaint in Bradley v. Siart, et al. (U.S. District Court, Central District of California). Exhibit 42: Complaint in Thornhill v. Bryson, et al. (California Superior Court). SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. FIRST INTERSTATE BANCORP By: /s/ William J. Bogaard --------------------------- William J. Bogaard Executive Vice President and General Counsel Dated: November 29, 1995 EX-99 2 EXHIBIT 39 - KAPLIN DERIVATIVE COMPLAINT MILBERG WEISS BERSHAD HYNES & LERACH WILLIAM S. LERACH (68581) SALLIE A. BLACKMAN (141830) ERIN C. WARD (147063) 600 West Broadway, Suits 1800 San Diego, CA 92101 Telephone: 619/231-1058 - and - JEFF S. WESTERMAN (94559) 355 S. Grand Avenue, Suite 4170 Los Angeles, CA 90071 Telephone: 213/617-9007 WEISS & YOURMAN JOSEPH H. WEISS 319 Fifth Avenue New York, NY 10016 Telephone: 212/532-4171 PRONGAY & MIKOLAJCZYK - and - KEVIN M. PRONGAY (87010) KEVIN J. YOURMAN (147159) EUGENE MIKOLAJCZYK (106929) 10940 Wilshire Blvd. 881 Alma Real Drive 24th Floor Suite 211 Los Angeles, CA 90024 Pacific Palisades, CA 90272 Telephone: 310/208-2800 Telephone: 310/573-3600 Attorneys for Plaintiff UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA HOWARD KAPLIN, Derivatively on ) No. Behalf of FIRST INTERSTATE BANCORP, ) INC., ) (Derivative Action) Plaintiff, ) vs. ) ) JOHN E. BRYSON, DON C. FRISBEE, ) VERIFIED DERIVATIVE STEVEN B. SAMPLE, EDWARD M. CARSON, ) COMPLAINT FOR BREACH GEORGE M. KELLER, FORREST N. ) OF FIDUCIARY DUTY, SHUMWAY, JEWEL PLUMMER COBB, ) ABUSE OF CONTROL, W.F. KIESCHNICK, WILLIAM B. SIART, ) UNJUST ENRICHMENT, AND RALPH P. DAVIDSON, THOMAS L. LEE, ) RICHARD J. STEGEMEIER, MYRON DuBAIN, ) EQUITABLE RELIEF AND WILLIAM F. MILLER, DANIEL M. TELLEP, ) DAMAGES MAX MESSMER, FIRST BANK SYSTEM, INC. ) and JOHN F. GRUNDHOFER, ) Defendants. ) - and - ) ) FIRST INTERSTATE BANCORP, INC., a ) Delaware corporation ) ) Plaintiff Demands A Nominal Defendant. ) Trial By Jury Plaintiff, as and for his complaint, alleges as follows upon information and belief except as to paragraph 9, which is alleged upon knowledge. Plaintiff's information and belief is based upon, inter alia, the investigation made by plaintiff by and through his counsel. INTRODUCTION AND OVERVIEW 1. This is a stockholder derivative action seeking equitable relief and compensatory damages as a result of a "sweetheart" merger transaction, brought on behalf of First Interstate Bancorp ("First Interstate" or the "Company"), against First Interstate's top officers and the members of the Board of Directors of First Interstate and First Interstate's merger partner, First Bank System, Inc. ("First Bank") and its Chairman/CEO, seeking to remedy violations of state law arising out of these defendants' actions and conduct undertaken to entrench First interstate management in derogation of their duties to the Company. First Interstate's Board of Directors has pursued a course of conduct through misuse and self-serving allocation and waste of the Company's assets and resources intended to and having the effect of making it extremely difficult for any outside party to successfully acquire First Interstate, even at prices well in excess of First Interstate stock's historical price range. This course of conduct has been undertaken by the defendants to secure and retain their lucrative positions of power, prestige and profit with respect to First Interstate and to enhance and aggrandize their own interests at the expense of First Interstate. 2. On October 18, 1995, Wells Fargo, a highly successful, profitable and well-capitalized bank, made an offer to acquire First Interstate at a price far in excess of First Interstate's then-market price, by exchanging in a tax-free exchange .625 shares of Wells Fargo stock for each share of First Interstate stock, an offer worth $133.50 per share based on the October 17, 1995 closing price of Wells Fargo stock of $213.62 per share. First Interstate's stock jumped from $106 per share to $140 per share upon this announcement, while Wells Fargo's stock increased to $228.65 per share, making the offer worth $142.65 per First Interstate share. The defendants' response was to reject the Wells Fargo bid without fully exploring the extent of the bid and without allowing market forces to set the price through an auction. The defendants rejected Wells Fargo's bid even though Wells Fargo's CEO had let it be known that he was willing to negotiate a higher price and thus to offer a fair and reasonable price for First Interstate stock, well above the levels at which the stock has traded historically. First Interstate's investment adviser even opined that the first proposal was "fair." 3. In recent years, defendants have consistently refused to entertain highly favorable acquisition offers or overtures for First Interstate. Defendants have done this to retain their positions of prestige, power and profit, as they know they will lose those positions in the event First Interstate is acquired. Defendants' interests in holding on to their positions of power, prestige and profit as officers and directors of First Interstate far exceed their interests as shareholders in First Interstate, as they collectively own only about 144,000 of First Interstate's 75.7 million shares -- a minuscule .001% of its outstanding stock. As a result, their personal interests in maintaining their positions diverge from, and are in conflict with, the best interests of First Interstate. 4. The defendants took defensive steps to thwart the Wells Fargo bid, or any higher bid by Wells Fargo or any other suitor by engaging in the merger with First Bank ("First Bank Transaction") even though: (a) they admittedly did not secure First Bank's best offering price; (b) they did not fully investigate or attempt to obtain Wells Fargo's best offer; (c) they accepted and continue to support the First Bank Transaction which was worth less than Wells Fargo's position in negotiations and less than Wells Fargo's subsequent proposal on November 13, 1995; (d) they are relying on defensive tactics such as a lock-up fee and break up options which, in effect impose a $200 million penalty on First Interstate or any other bidder and they are wielding a "poison pill" to discourage other bidders; and (e) First Bank is engaging in large repurchases of its stock to support its stock price, and thus artificially support the "value" of its stock exchange ratio in the First Bank Transaction, to give the appearance that the Transaction is more valuable than it really is, and because, as stated by the head of First Bank, "If your stock tanks the deal's over." 5. This action seeks to prevent the defendants from using their positions to waste the assets of First Interstate and enrich themselves at the expense of the Company. They should be required to allow market forces to set the value of First Interstate and conduct a fair and open auction to set the true price of the Company. They should also be restrained from, and/or held liable for any damages their actions are inflicting upon First Interstate. JURISDICTION AND VENUE 6. This Court has jurisdiction of this action pursuant to 28 U.S.C. SECTION 1332(a)(1). Plaintiff and all defendants are residents and citizens of different states. The amount in controversy between the plaintiff and the defendants exceeds $50,000 exclusive of interest and costs. This is not collusive action to confer jurisdiction on this Court which it would not otherwise have. 7. Venue is proper in this District. Many of the acts and transactions giving rise to the violations of law complained of herein occurred in this District. The company has its principal place of business in Los Angeles and certain of the defendants reside in Los Angeles County. 8. In connection with the acts alleged in this complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including the mails and interstate telephone and wire communications and the facilities of the national securities markets. PARTIES AND ACTORS 9. Plaintiff Howard Kaplin, the owner of shares of First Interstate, is and was at all times relevant hereto a common shareholder of First Interstate since prior to October 1995. Plaintiff is a resident of New York and brings this action derivatively on behalf of and for the benefit of First Interstate, named as a nominal defendant in this action. 10. (a) First Interstate is a corporation with its principal executive offices in Los Angeles, California and which operates principally in California, as well as several other western states. First Interstate is a bank holding company. Although it is incorporated in Delaware it does not do business or maintain offices in that state. (b) At December 31, 1994, First Interstate owned 16 banks (the "Subsidiary Banks") which operated approximately 1,100 banking offices in 13 states, including California. 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. (c) The Subsidiary Banks accept checking, savings and other time deposit accounts and employ these funds principally by making consumer, real estate and commercial loans and investing in securities and other interest-bearing assets. (d) The Company also provides banking-related financial services and products. These include asset-based commercial financing, asset management and investment counseling, bank card operations, mortgage banking, venture capital and investment products. It engages in these activities both through non-bank subsidiaries of the Company and through the Subsidiary Banks and their subsidiaries. (e) The larger Subsidiary Banks provide international banking services on a limited basis through the international departments of their domestic offices. They also maintain correspondent relationships with major banks throughout the world. 11. (a) Defendant John E. Bryson ("Bryson") was a director of First Interstate and Board Chairman and Chief Executive Officer of SCEcorp and Southern California Edison Company at all times relevant hereto. (b) Defendant Don C. Frisbee ("Frisbee") was a First Interstate director and Chairman Emeritus PacifiCorp at all times relevant hereto. (c) Defendant Steven B. Sample ("Sample") was a First Interstate director and President of the University of Southern California at all times relevant hereto. (d) Defendant Edward M. Carson ("Carson") was a member of the Board of First Interstate at all times relevant hereto. (e) Defendant George M. Keller ("Keller") was a director of First Interstate and the retired Chairman and Chief Executive Officer of Chevron Corporation at all times relevant hereto. (f) Defendant Forrest N. Shumway ("Shumway") was a director of First Interstate and former Vice-Chairman of the Board Allied-Signal, Inc. at all times relevant hereto. (g) Defendant Jewel Plummer Cobb ("Cobb") was a director of First Interstate and President Emeritus California State University, Fullerton at all times relevant hereto. (h) Defendant W.F. Kieschnick ("Kieschnick") was a director of First Interstate and retired President and Chief Executive Officer Atlantic Richfield Company at all times relevant hereto. (i) Defendant William B. Siart ("Siart") was President and Chief Executive Officer First Interstate and a director at all times relevant hereto. (j) Defendant Ralph P. Davidson ("Davidson") was a director of First Interstate and former Chairman of The John F. Kennedy Center for the Performing Arts at all times relevant hereto. (k) Defendant Thomas L. Lee ("Lee") was a director of First Interstate and Chairman and Chief Executive Officer The Newhall Land and Farming Company at all times relevant hereto. (l) Defendant Richard J. Stegemeier ("Stegemeier") was a director of First Interstate and Chairman of the Board Unocal Corporation at all times relevant hereto. (m) Defendant Myron DuBain ("DuBain") was a director of First Interstate and retired Chairman and Chief Executive Officer Fireman's Fund Corporation at all times relevant hereto. (n) Defendant William F. Miller ("Miller") was a director of First Interstate and President Emeritus SRI International at all times relevant hereto. (o) Defendant Daniel M. Tellep ("Tellep") was a director of First Interstate and Chairman and Chief Executive Officer Lockheed Corporation at all times relevant hereto. (p) Defendant Max Messmer ("Messmer") was a director of First Interstate at all times relevant hereto. He is a longtime friend of Siart and he was added to the board to assist Siart in defeating any takeover proposals that would not be in Siart's personal interest. (q) Defendant First Bank System, Inc. ("First Bank"), is a Delaware corporation with its principal offices in Minnesota. (r) Defendant John F. Grundhofer, ("Grundhofer") has been the Chairman of the board of directors and Chief Executive Officer of First Bank at all relevant times hereto. 12. Defendants named in paragraph 8(a) through (p) (hereinafter collectively referred to as the "Director Defendants") are each members of First Interstate's Board of Directors. 13. The Director Defendants owed and owe First Interstate fiduciary obligations and were and are required to: (i) use their ability to manage First Interstate in a fair, just and equitable manner; (ii) act in furtherance of the best interests of First Interstate and its shareholders; (iii) act to maximize the value of First Interstate and shareholder value; (iv) govern First Interstate in such a manner as to utilize the resources of the Company in a manner which benefits the Company and its shareholders and not their personal interests or preferences; (v) refrain from abusing their positions of control, power, prestige and profit; and (vi) not favor their own interests at the expense of First Interstate and its shareholders. By reason of their fiduciary relationships, these defendants owed and owe First Interstate the highest obligation of good faith, fair dealing, loyalty and due care. 14. Wells Fargo is a corporation with its principal executive offices in San Francisco, California. Wells Fargo is a huge bank holding Company and one of the most well-managed, profitable and well-capitalized banks in the United States. With more than 600 branch outlets, 1,900 round-the-clock Wells Fargo Express ATMs and a popular 24-hour telephone banking service, Wells Fargo operates one of the largest and busiest consumer banking businesses in the United States. Besides serving as banker to some 3.5 million California households, Wells Fargo provides a full range of banking services to commercial, agribusiness, real estate and small business customers, mainly in California. It is one of the nation's leading managers of personal trust accounts, corporate 401(k) plans and mutual funds, with approximately $57 billion in assets under its management and administration. 15. Each Director Defendant, First Bank and Grundhofer herein is sued individually as a participant and aider and abettor in the wrongful activity, and the liability of each arises from the fact that each has engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein. FACTUAL BACKGROUND OF THE WRONGDOING The Director Defendants Reject Wells Fargo's First Premium Offer Claiming That They Need Six Months To Evaluate Their Options And Determine Their Strategy 16. As pleaded earlier, First Interstate is an interstate banking corporation. First Interstate's stock performed poorly in 1994 through mid-1995, due to First Interstate's lackluster performance and perceptions that it was poorly managed. For instance, First Interstate's stock traded at a high of $85 per share and then fell, falling to a low of $67 per share in December 1994. First Interstate did not reach $85 per share again until mid-1995. After June 1995, First Interstate's stock performed better, reaching over $100 per share in late September 1995, due to an increase in the prices in bank stocks generally and because of rumors that a favorable acquisition offer for First Interstate would be forthcoming as part of the wave of bank acquisitions and mergers now sweeping the United States. However, even with this increase, First Interstate's stock has been a relatively poor performer when compared to other bank stocks. Because in recent years First Interstate has not been viewed to be as well-managed as many other large banks and thus has not performed as well in terms of many of its key ratios and measurements of success as other banks, its stock has not performed well and thus, shareholders in First Interstate have, in recent years, obtained a below-industry trendline or industry average return. The chart below shows the price action of First Interstate stock in 1994-1995: [The hardcopy Complaint filed with the Court contains a Line graph showing the daily common stock price for First Interstate for the period December 31, 1993 through October 17, 1995. Because the document for which this Complaint is an Exhibit has been filed with the Securities and Exchange Commission by electronic transmission, this graph is not contained herein. The following information summarizes the First Interstate daily closing stock price, plotted along the graphs's vertical axis, for the dates indicated on the horizontal axis of the graph: Date Common Stock Price --------- ------------------- December 31, 1993 64 1/8 March 25, 1994 77 7/8 June 17, 1994 75 3/4 September 9, 1994 79 1/4 December 2, 1994 69 3/8 February 24, 1995 81 3/8 May 19, 1995 81 August 11, 1995 87 1/2 October 17, 1995 106] 17. In recent years, certain other large financial institutions have approached First Interstate with favorable acquisition inquiries and offers. Some years ago, Bank of America approached First Interstate about a possible acquisition. Approximately a year ago, Wells Fargo approached First Interstate about a possible acquisition of First Interstate at a premium price. First Interstate's Board and its top management have rejected and frustrated all of these prior acquisition overtures and offers, even though those offers would have resulted in First Interstate shareholders receiving a substantial premium over the then-market price of First Interstate stock. The Director Defendants have done this because they know that in the event First Interstate is acquired by another bank, most or all of the directors of First Interstate will, either in connection with the acquisition or shortly thereafter, be removed from the Board of the surviving bank because their services will not be necessary and they will be mere surplusage and thus such an acquisition would bring an and to their positions of power, prestige and profit as directors of this huge bank. At the same time, top managers at First Interstate have caused these prior acquisition overtures and offers to be rejected and/or frustrated, because they also know that, in the event of an acquisition, they will also lose their lucrative jobs and their positions of power, prestige and profit as officers of a major banking institution. In so acting, these defendants have been aggrandizing their own personal positions and interests over that of First Interstate and its broader shareholder community to whom they owe fiduciary duties to bring about a sale of First Interstate on favorable terms to all the shareholders, even if it results in them losing their lucrative positions. 18. Shortly prior to October 18, 1995, Wells Fargo approached First Interstate and offered to negotiate an acquisition of First Interstate for a price far in excess of First Interstate's current stock price. On October 17, 1995, Paul Hazen ("Hazen"), Wells Fargo's Chief Executive Officer ("CEO"), called Siart and made a proposal for Wells Fargo to acquire First Interstate. Siart rejected the approach and told Hazen that he thought that it was in the best interest of First Interstate to take six months or longer to consider options, including a merger. In truth, Siart and/or First Interstate's Board had determined that they would resist any offer by Wells Fargo to buy the Company. On October 18, 1995, Wells Fargo made an unsolicited acquisition offer for First Interstate offering to exchange .625 shares of its stock for each share of First Interstate stock, a $133.50 per share offer based on the October 17, 1995 closing price of Wells Fargo stock of $213.62 per share. Upon the announcement of this favorable acquisition offer, First Interstate's stock instantly skyrocketed from $106 per share to over $140 per share, reflecting the extremely large premium being offered to First Interstate shareholders in this tax-free exchange, and the increase in Wells Fargo's stock price to $228.65 per share making the offer worth $142.65 per First Interstate share. Wells Fargo's offer to acquire First Interstate is approximately three times First Interstate's book value, which is a high offer compared to recent bank acquisition prices. The acquisition price was also approximately 12.1 times First Interstate's estimated 1995 earnings per share of $11.29 per share, which is also reasonable in light of other recent bank acquisitions, although it is lower than 15 times the estimated next year's earnings paid in other bank acquisitions. 19. Also, prior to Mr. Hazen's call, Siart had stated that he was determined to keep First Interstate independent. The mindset of the Director Defendants was further emphasized by Joseph Pinola, First Interstate's former chairman, who predicted a protracted struggle and stated, "I don't see anything that Wells is offering us that is other than temporary." 20. On or about October 18, 1995, after becoming aware of Wells Fargo's intent to acquire First Interstate, Siart also stated that, "We don't see any advantage to talking to anybody else about a merger." 21. In response to the Wells proposal, Siart also stated that he was "deeply disappointed" by the proposal, despite the fact that First Interstate stock had jumped nearly 30% in response to the proposal. Over the course of the next two and one-half weeks, First Interstate attempted to give Wells Fargo the impression that it might be willing to negotiate a takeover in good faith, while it was in fact pursuing an "anyone but Wells" strategy. The Director Defendants Abandon Their "Six-Month Strategy" To Put First Interstate Up For Sale And Enter Into An Inferior Sweetheart Deal In l9 Days 22. As part of the "anyone but Wells" strategy, the Director Defendants provided other potential bidders for First Interstate with access to First Interstate's books and records to conduct due diligence to encourage a proposal to compete with the Wells bid. This conduct by the Director Defendants served to give other potential bidders an unfair advantage over Wells Fargo which was denied equal access to First Interstate's books and records to refine or enhance its bid. 23. During this time period Wells Fargo indicated both privately to First Interstate and publicly that it had "wiggle room" in its bid and that it was willing to go higher. 24. Immediately following Wells Fargo's bid, on October 18, 1995, the Director Defendants abandoned their plan and strategy, expressed by Siart, of taking six months or longer to consider their options. They knew that Wells Fargo presented a very credible proposal, as confirmed by a fairness opinion of their own adviser, at an extremely high premium over First Interstate's historic market price and that they would have to either accept the proposal, and risk losing their positions, or find an alternative transaction, even if it was inferior, to discourage Wells Fargo from going forward. As a result, the Director Defendants abandoned their express long-term strategy, and instead engaged in defensive tactics and a defensive effort to put the Company up "for sale" to thwart the Wells Fargo proposal, and to implement their "anyone but Wells" strategy, regardless of the cost expense and/or waste of corporate assets that might result from their newly formed defensive strategy. 25. Because of their commitment to implement an "anyone but Wells" strategy, the Director Defendants either directly or by conduct and deference to First Interstate's management, informed the prospective bidders that they would be preferred over Wells Fargo and given preferential treatment in an effort to create an alternative transaction that would discourage or defeat Wells Fargo's bid. It was also determined that the Director Defendants' and/or First Interstate's management would also seek preferential treatment in the course of negotiating any such "alternative" transaction to enable them to keep their jobs to the greatest extent possible and in any event, with a greater certainty than they expected should Wells Fargo succeed with its bid. 26. As a result of this "anyone but Wells" strategy which was made known to the potential bidders, the Director Defendants squandered their negotiating leverage by expressing a willingness to sell First Interstate at a price which would be extremely favorable to a friendly bidder, and which would in turn ensure First Interstate's management and directors preferential treatment in the aftermath of the deal. As part of this effort the Director Defendants, directly or through First Interstate's management, also provided one or more of the prospective bidders with further favorable treatment in the form of their expression of a willingness to engage in various defensive maneuvers to favor a prospective alternative bidder with defensive steps designed to thwart the Wells Fargo proposal such as, the triggering of a "poison pill", a lock-up fee, a break-up option, and/or a no-shop provision. These defensive devices were improperly offered to prospective bidders in a show of favoritism to ensure the prospective bidders that they could offer a less favorable deal than Wells, with the assurance that their deal would be protected in a manner that would not only render Wells present bid less favorable but would also make any future bid by wells Fargo or another suitor more expensive, even if it were to be more favorable in the absence of these defensive tactics. 27. On November 6, 1995, the defendants collectively announced the "merger" between First Interstate and First Bank. As reported by the Associated Press: Investors seemed unenthusiastic about First Interstate's decision. The bank's shares fell 87 1/2 cents to $1.26. 87 1/2 on the New York Stock Exchange. First Bank Systems' shares also sagged, ending $1 lower at $49.87 1/2. 28. In spite of the stated plan to take six months to explore its options, the Director Defendants took exactly 19 days to change direction and enter into the executed defensive merger agreement with First Bank. 29. The First Bank Transaction not only values First Interstate lower than Wells Fargo's opening offer, but up to $500 million, or more lower than Wells Fargo's revised offer of .65 Wells Fargo shares, which was on the table to First Interstate before the First Bank Transaction was signed. To compound the damage, defendants included a $100 million "break up" fee and a $100 million "lock up" option to protect the deal with First Bank. This makes it up to $200 million more expensive for another acquirer to purchase First Interstate and makes First Interstate responsible for paying the funds to First Bank, even though First Bank does not provide any corresponding comparable consideration or value and will not suffer damages in that amount if a higher alternative bid is available or accepted. 30. An article in the November 8, 1995 Los Angeles Times illustrates that the First Interstate and First Bank merger agreement was a fixed, sweetheart deal that confers no benefit on the Company or the shareholders. The article provides: And in an apparent attempt to discourage its hostile suitor, First Interstate warned Wells that First Bank stands ready to match any competing bid, according to a person who was present during a conversation between senior officials of Wells and First Interstate. Los Angeles Times, November 8, 1995. These statements constitute admissions that First Bank not only can, but will, bid higher for First Interstate if it is not given preferential treatment and must respond to an auction. First Interstate's preferential arrangement with First Bank highlights how completely defendants abdicated their fiduciary responsibilities and squandered their bargaining power by failing to conduct an auction to get First Bank to make its best offer before the merger deal was signed. First Bank and Grundhofer in turn extracted the defensive provisions from the Director Defendants to aid their breach of fiduciary and other duties knowing that it would result in a lower value for the Company than would be set by market forces and knowing that it was a breach of the Director Defendants' duties. 31. It is clear from the comments of large First Interstate shareholders, and analysts, that the First Bank Transaction is an inadequate excuse for a defensive play against Wells Fargo. Defendants' only hope to protect the merger was with the $200 million hurdle imposed by the lock-up and break up provisions, along with other defensive tactics and expenditures of corporate resources, which are a waste of corporate assets. 32. The Director Defendants have taken an inferior bid and they are committing corporate resources to implementing the First Bank Transaction, even though major shareholders are seriously questioning and opposing the deal, "The number might be closer to $200 to $300 million" [referring to the $500 million assumption used to value the First Bank transaction] in cost cuts by First Bank, said Orphanos of Warburg, Pincas which owned 412,400 First Interstate shares at mid- year. "That being the case . . . I think Wells is the best." Other investors agreed. "The Wells-Interstate combination makes more sense," said Robert Poll, director of equity investments at Oppenheimer Management Corp., which owns 360,000 First Interstate shares and 525,000 First Bank shares. "I still think Wells can top it," said James Schmidt of John Hancock Funds, which owns 269,000 First Interstate shares. Bloomberg Wire Service, dated November 7, 1995. 33. As stated in a Wall Street Journal article, dated November 7, 1995, which quoted First Interstate's second largest shareholder, which is located here in California: "The best combination is clearly Wells and First Interstate," said an executive at one of First Interstate's largest shareholders, Capital Group, Inc., based in Los Angeles. 34. As reported in a Los Angeles Times article, dated November 7, 1995: "First Interstate is going to get sold -- that's the one thing we learned today," said Scott Edgar of the Sife Trust Fund, a mutual fund that holds about 110,000 First Interstate shares. "We still don't know who's going to be the buyer." * * * Several money managers whose institutions own large First Interstate stocks said Monday that they were holding on to their stock in hopes of a higher bid. 35. The above reactions were the result of the announcement of the First Bank Transaction which, at the time, valued the holdings of First Interstate's public investors at $132.275 -- approximately $7.21 per share or $550 million lower than the implied market valuation of the available proposal by Wells Fargo. 36. Siart, on behalf of the defendants collectively, stated several rationales for the First Bank Transaction, which one analyst summed up as follows: "The stated rationale (by First Interstate) should cause shareholders to be upset," said Thomas Brown, an analyst with Donaldson, Lufkin & Jenrette. He said the deal boils down to "a senior management job preservation act" for First Interstate executives. 37. In the course of interviews given after the announcement of the First Bank Transaction, Siart and Grundhofer admitted that their merger discussions took place after the Wells Fargo proposal to Siart on October 17. Thus, it was an unreasonable defensive move, purely in response to the Wells Fargo proposal, that failed to allow market forces to set the true price of First Interstate. 38. It was an unreasonable response because it did not maximize the value of First Interstate's assets given both First Bank's and Wells Fargo's known willingness to bid higher. Under these circumstances, the only reasonable response was to conduct an auction of First Interstate to obtain maximum value for its assets. It was unreasonable of the Director Defendants to commit the resources of First Interstate to the "anyone but Wells" strategy and to provide First Bank with preferential due diligence, preferential negotiating privileges, the ability to close the transaction at significantly less than either First Bank or Wells Fargo were actually willing to bid, up to $200 million in preferential fees and options at the expense of First Interstate and the additional protection from a competing bid by wielding First Interstate's poison pill against any competing offer. Wells Fargo Makes Yet A Higher Bid And Offers To Go Head-to-Head With First Bank For "Best And Final" Offers -- The Director Defendants Reject This Proposal Worth Hundreds Of Millions Of Dollars More 39. On Monday, November 13, 1995, Wells Fargo announced that it intended to take its offer to acquire First Interstate directly to the shareholders by an exchange offer. Under the offer, Wells Fargo will offer First Interstate shareholders an opportunity to exchange their shares for .67 shares of Wells Fargo, an increase over both the initial .625 exchange proposal on October 17-18 and the later .65 exchange proposal made prior to the execution of the First Bank Transaction. Based upon the closing price of Wells Fargo on November 10, 1995 (the last trading day before the enhanced offer) Wells Fargo valued the proposal at $143.58 per share of First Interstate common stock, giving the transaction a total value of $10.9 billion. 40. However, due to the unreasonable defensive measures and waste and abuse of First Interstate's assets, the Wells Fargo offer, although superior to the First Bank Transaction, is conditioned upon, among other things, the redemption or invalidation of First Interstate's "poison pill." 41. As evidence of Wells Fargo's good faith and the value of its proposal, it expressly stated that it would not seek any break up fees or lock-up options. 42. Additionally, as further evidence that First Interstate is being sold to First Bank at an inadequate price, Wells Fargo offered to engage in a process whereby: Wells Fargo and First Bank System would each be given 10 days to submit its best and final merger proposal, and First Interstate would agree to submit both proposals promptly to its stockholders in a manner fair and acceptable to both bidders so that the stockholders would be able to decide for themselves which proposal is in their best interests. 43. The above proposal by Wells Fargo is a clear indications that if it is treated fairly and equally to First Bank, it is willing to increase its bid yet a third time to its "best and final merger proposal." Given that the Director Defendants and/or First Interstate management acting at their direction, told Wells Fargo executives that First Bank "stands ready to match any competing bid," the Director Defendants have an absolute duty to maximize those bids since First Interstate was clearly "shopped" and put up "for sale" to obtain the First Bank Transaction. 44. On November 20, 1995, the Director Defendants, in a clear breach of their duties and in wrongful continuation of their "anyone but Wells" strategy, formally rejected the Wells Fargo proposal in an attempt to continue to shelter and favor their sweetheart deal with First Bank. The Director Defendants undertook this rejection of the Wells Fargo proposal because either: (a) they do not want to force First Bank to offer a higher price for First Interstate; and/or (b) they are afraid that First Bank would be unable to match a best and final merger proposal by Wells Fargo and their "anyone but Wells" strategy would collapse. 45. Defendants' efforts preserve the First Bank Transaction flies in the face of the values assigned by the marketplace to the present competing proposals. As of the close of the New York Stock Exchange on Monday, November 20, the trading prices of the three companies' stocks reflected an implied value of $140.92 per share for the Wells Fargo proposal (still not "best and final") and $135.85 per share for the First Bank Transaction (still not its "best and final" either if it is truthfully willing to match any bid by Wells Fargo as First Interstate representatives stated). Since there are approximately 75.7 million First Interstate shares outstanding, the $5.07 spread makes the market's implied value of the Wells Fargo bid at least $380 million higher than the First Bank Transaction as of November 20. 46. First Interstate's top officers and the Director Defendants are resisting and are going to continue to resist Wells Fargo so that they can, as they have in the past, retain themselves in their positions of power, prestige and profit. For instance, members of First Interstate's Board of Directors own only a minuscule portion of First Interstate's outstanding common stock. They actually own only 144,000 shares of First Interstate's 75.7 million shares of outstanding common stock, or just .001% of the stock. Thus, whatever interest the defendants have to protect the interests of the Company, as shareholders in First Interstate based on their minuscule holdings of the Company's stock, is far outweighed by their interest in retaining their lucrative positions of power, prestige and profit as directors and/or officers of the Company from which they receive lucrative fees, prestige in the community, large salaries, and other emoluments of office, which they will lose if First Interstate is acquired. 47. The outright rejections of the Wells Fargo offers is a breach of defendants' fiduciary duties to First Interstate, an abuse of control, and provides unjust enrichment to all defendants. 48. Unless defendants are enjoined from closing the First Bank Transaction without conducting an auction of First Interstate, or taking other actions to avoid maximizing shareholder value, the Company will continue to suffer injury. The True Inferior Value Of The First Bank Bid Is Being Masked And Manipulated By First Bank's Repurchases Of Its Shares To Prop Up Their Price 49. The defendants stated value of the First Bank Transaction is also illusory in that First Bank and Grundhofer are taking steps to prop up First Bank's shares through share repurchases by First Bank as its stock price starts to drop. The significance of this slick maneuver cannot be understated and it is known to all defendants, including the Director Defendants, to be a required step to give the First Bank Transaction the appearance of value as close to the Wells Fargo bid as possible -- albeit still lower. Given that the First Bank Transaction is an exchange of First Bank shares for First Interstate shares -- and the exchange ratio determines the value of the deal, Grundhofer stated the significance of maintaining First Bank's share price succinctly as follows: "Grundhofer put it simply, if your stock tanks, the deal's over." 50. To artificially support First Bank's share price and prevent it from "tanking," First Bank and Grundhofer, with the knowledge of the Director Defendants, have engaged in a stock repurchase pattern by buying large blocks of its shares, sometimes as much as one half the daily trading volume, as the price declines to artificially support the price and keep its bid artificially closer to Wells Fargo's bid. Defendants Engaged In A Course of Conduct Designed To Thwart Wells Fargo's Bids At Any Price And Favor First Bank 51. In the course of Wells Fargo's efforts to acquire First Interstate, it also attempted to obtain access to non- public information concerning First Interstate that was made available to other interested bidders, so that Wells Fargo could submit its highest and best offer for an acquisition for First Interstate that would provide the highest value. Throughout the process the Director Defendants consistently denied Wells Fargo complete access. 52. Wells Fargo was forced to develop its proposals without complete assistance from First Interstate, the Director Defendants or First Interstate management in identifying cost savings beyond those which could be identified from public information. As a result, Wells Fargo has been foreclosed from fully evaluating First Interstate to enable it to make the best possible offer. Identification of cost savings is a significant factor in the ability of an acquiring company to value and/or raise its bid. However, neither the Director Defendants nor First Interstate, which they controlled, worked with Wells Fargo to identify these costs savings or synergies which would exist. They also denied Wells Fargo the opportunity to conduct a due diligence review comparable to that provided other interested bidders that would enable Wells Fargo to conduct the analysis itself. 53. The First Bank Transaction and the accompanying efforts and expense to implement it and "sell" it to First Interstate's shareholders, the general public, and regulators is an uncon-scionable misuse and waste of First Interstate's assets. 54. The First Bank Transaction serves no legitimate business purpose toward the maximization of shareholder value. Rather, it unfairly benefits and entrenches First Interstate's directors and management at the expense of the Company. For example, the First Bank Transaction is designed to maximize the ability of the Director Defendants' and First Interstate's executives to keep their jobs and already lucrative salaries and benefits. As a result, the proposed First Bank Transaction results in the waste of, or unfair dealing in the assets of First Interstate by the Director Defendants. 55. The pursuit of the First Bank Transaction without conducting an auction of First Interstate is an unconscionable and grossly inadequate method of best serving the interests of the Company. The terms of the First Bank Transaction are structured to favor the interests of, and to entrench, the Director Defendants and management of First Interstate, to the immediate and substantial detriment of the Company. 56. By way of this course of conduct and First Bank Transaction, the Director Defendants have preferred their own interests over those of First Interstate. 57. By reason of the foregoing acts, practices and course of conduct, the Director Defendants have breached and continue to breach their duties as directors and/or officers of the Company. 58. Each officer or Director Defendant approved of, permitted, and facilitated the First Bank Transaction, by among other things, assisting the First Bank Transaction through the preparation of documents needed to complete the Transaction, attending and participating in meetings concerning this matter and voting in favor of this abusive Transaction, the misuse of First Interstate's resources and waste of its assets, rather than the conduct of an auction, which is wrongful to the Company. THE "INDEPENDENT" OR "SPECIAL" COMMITTEE 59. The Director Defendants, wrongful scheme and the First Bank Transaction also included the appointing of an "Independent" or "Special" Committee of First Interstate directors made up of certain Director Defendants to provide what was claimed to be an "independent review" of the Wells Fargo proposals to First Interstate and the First Bank Transaction. While these Director Defendants approved of the rejection of the Wells Fargo bids and the special treatment to other bidders, and the decision to proceed with the First Bank Transaction, their approval was not that of "independent" directors acting in the best interests of the Company but rather was a continuation of defendants, wrongful acts carrying out the abuse of control, waste and the breach of fiduciary duties complained of herein. 60. Siart controlled the Board and thus also the "Independent" Committee members. None of the Director Defendants appointed to the "Independent" Committee was truly independent, and all have an interest in seeing that the wrongful First Bank Transaction is approved by the Board. THIS TRANSACTION IS PROCEDURALLY AND SUBSTANTIVELY UNFAIR 61. The First Bank Transaction is grossly disproportionately beneficial to the self-serving entrenchment interests of First Interstate's directors and management and unfair to the Company. Thus, the Director Defendants, in order to entrench themselves and aggrandize their positions with First Interstate have used their power, control and domination of First Interstate to engineer the abusive First Bank Transaction in breach of the duties they owe First Interstate. CONCERTED ACTION 62. At all relevant times mentioned herein, each of the defendants pursued a common course of conduct, acted with, pursued a scheme and aided and abetted one another to accomplish the wrongs complained of herein. The defendants breached their duties and aided and abetted the breach of duties by others through their conduct, including, but not limited to, those acts and omissions outlined herein. 63. The common enterprise and common course of conduct involved a plan to benefit the defendants, while failing to protect the interests of First Interstate. 64. Each of the defendants named herein, aided and abetted and rendered substantial assistance in the accomplishment of the breach of duty, abuse of control and waste complained of herein. In taking the action, as particularized herein, to aid and abet and substantially assist the commission of this wrongful conduct, each defendant acted with an awareness of the primary wrongdoing and realized that his/her conduct would substantially assist the accomplishment of the abusive and oppressive conduct at issue herein and was aware of his/her overall contribution to and furtherance of the common enterprise and common course of conduct. The Director Defendants each separately and as a group, reached an agreement with respect to and conspired among themselves to commit the wrongful acts set forth herein as evidenced by the terms of the First Bank Transaction, the First Bank share buybacks and the assurances of roles in the merged company. Defendants' acts of aiding and abetting include, inter alia, the acts each of them are alleged to have committed in furtherance of the common enterprise and common course of conduct complained of above. 65. As members of the Board of Directors of First Interstate, the Director Defendants were themselves directly responsible for authorizing the wrongful conduct. Each of them had knowledge of and actively participated in and approved of the wrongdoings alleged, or abdicated his or her responsibilities with respect to these wrongdoings. All other defendants assisted the Director Defendants in this wrongful conduct. The alleged acts of wrongdoing are subjecting First Interstate to unreasonable lose of value and waste as well as the continuing risk of reduction of First Interstate's true value, as described in detail above. 66. Each of the defendants is liable as a direct participant in, an aider and abettor of, and co-conspirator with respect to, the wrongs complained of herein. The Director Defendants each had the power and influence to cause, and did cause, First Interstate to engage in the conduct complained of herein. ABUSE OF CONTROL 67. At all relevant times the Director Defendants owed First Interstate fiduciary obligations of candor, fidelity, trust, and loyalty, and are and were required to use their utmost ability to control First Interstate in a fair, just and equitable manner, as well as to act in furtherance of the beat interests of First Interstate and not in furtherance of their own personal interests. ADDITIONAL DERIVATIVE ALLEGATIONS 68. Plaintiffs bring this action derivatively pursuant to Federal Rule of Civil Procedure 23.1 in the right of and for the benefit of First Interstate to redress injuries suffered and to be suffered by the Company as a direct result of the violations of law, breaches of fiduciary duty, corporate mismanagement, abuse of control as well as the aiding and abetting thereof, by the defendants. First Interstate is named as a nominal defendant solely in a derivative capacity. This is not a collusive action to confer jurisdiction on this Court which it would not otherwise have. 69. Plaintiffs will adequately and fairly represent the interests of First Interstate. 70. Plaintiff has not made any demand on the present Board of Directors of First Interstate to institute this action since such demand would be a futile and useless act for the following reasons: (a) The Director Defendants engaged in the above wrongful conduct which constituted unreasonable and wasteful defensive measures in response to Wells Fargo's takeover proposal not protected by the business judgment rule and they improperly put First Interstate up "for sale" through preferential treatment of bidders friendly to management, without conducting an auction to obtain the Company's true value. (b) The First Interstate Board of Directors participated in and approved the acts, omissions and wrongs complained of above. The Director Defendants were not disinterested in those transactions and they were dominated and controlled by First Interstate's management. In addition, there is more than a reasonable doubt that they did not exercise proper business judgment on behalf of First Interstate in allowing the First Bank Transaction to proceed; (c) The First Interstate Board of Directors, members have divided loyalties between their own interests and First Interstate and as a result of their conflict of interest and the other circumstances alleged, they did not properly exercise business judgment on behalf of First Interstate in connection with the opportunities and transactions alleged; (d) The acts complained of herein constitute violations of fiduciary duties owed by the Director Defendants and these acts are incapable of ratification; (e) The known principal wrongdoers and beneficiaries of the wrongdoing complained of herein are in a position to, and do, dominate and control First Interstate and its Board of Directors. Thus, the Board could neither exercise independent objective judgment in deciding whether to bring this action nor vigorously prosecute this action; (f) The directors of First Interstate cannot be relied upon to reach a truly independent decision as to whether to commence the demanded action against themselves for the misconduct alleged in this Complaint, in that, inter alia, the Board of Directors is totally dominated by First Interstate's management and directly involved in the misconduct alleged and they have caused the actions complained of. This domination of the Board of Directors by First Interstate's management has impaired the Board's ability to validly exercise its business judgment and rendered it incapable of reaching an independent decision as to whether to accept plaintiff's demand; (g) In order to bring this action for breaching their fiduciary duties, the members of the First Interstate Board of Directors would have been required to sue themselves and their fellow directors who are allies in the top ranks of the Company, and their good friends, with whom they have entangling financial alliances, interests and dependencies, which they would not do. Therefore, the Director Defendants would not be able to vigorously prosecute any such action; (h) The members of the First Interstate Board of Directors, who are each defendants herein, receive payments, benefits, and other emoluments by virtue of their membership on the Board and association with First Interstate. They are thus benefitting from the wrongdoing herein alleged and have engaged in such conduct to preserve their positions of control and the perquisites thereof, and are incapable of exercising independent objective judgment in deciding whether to bring this action. The Board members also have close personal and business ties with each other and are, consequently, interested parties and cannot in good faith exercise independent business judgment to determine whether to bring this action against themselves and one another; (i) The Directors would not sue themselves for the transactions complained of herein, because, inter alia, they would thereby jeopardize their continued receipt of these financial benefits; (j) The composition of First Interstate's Board of Directors is designed to (and does) make them dependent on and deferential to the Chairman of the Board of Directors who controls and dominates the process by which Directors are selected and approved for nomination or renomination to the Board and the process by which officers of the Company are selected; (k) The entire Board of Directors was and is involved in the wrongdoing alleged herein, and all Directors are named as defendants in this action, making it impossible for any of them to exercise independent judgment in deciding whether or not to sue themselves and their fellow Directors for their wrongful conduct; and (l) The members of the Board of Directors are beneficiaries of the wrongful transactions complained of herein. 71. A true copy of this Complaint was delivered to First Interstate prior to its filing with the Court. FIRST CAUSE OF ACTION (Derivative Claim For Intentional Breach Of Fiduciary Duty) 72. Plaintiff repeats and realleges the preceding paragraphs as though set forth fully herein. This cause of action is asserted against all defendants, except nominal defendant First Interstate. 73. Each of the Director Defendants engaged in and/or aided and abetted the aforesaid conduct in intentional breach and/or reckless disregard of the fiduciary duties which he/she or it owed to First Interstate and First Bank and Grundhofer aided and abetted the aforesaid conduct. 74. By reason of the foregoing, First Interstate has been damaged and will continue to sustain significant injuries for which there is no adequate remedy at law and injuries entitling an award of damages. SECOND CAUSE OF ACTION (Derivative Claim For Breach Of Fiduciary Duty) 75. Except to the extent they allege intentional or reckless conduct by any defendant, plaintiff incorporates by reference and realleges the preceding paragraphs as if set forth fully herein. This cause of action is asserted against all defendants, except nominal defendant First Interstate. 76. The Director Defendants engaged in or aided and abetted the aforesaid conduct without exercising the reasonable and ordinary care owed to the Company by directors, officers, managing agents, and/or controlling persons of a corporation. Defendants First Bank and Grundhofer aided and abetted the wrongful conduct. 77. First Interstate has been injured by reason of the defendants, negligent and/or grossly negligent breaches of their fiduciary duties. Plaintiff seeks equitable relief damages and other relief as hereinafter set forth. THIRD CAUSE OF ACTION (Derivative Claim For Abuse Of Control) 78. Plaintiff repeats and realleges the preceding paragraphs as though set forth fully herein. This cause of action is asserted against all defendants, except nominal defendant First Interstate. 79. The Director Defendants' conduct constituted an abuse of their ability to control and influence First Interstate, or, with the assistance of First Bank and Grundhofer the aiding and abetting of such conduct, for which all defendants are legally responsible. 80. By reason of the foregoing, First Interstate has been damaged and has sustained, and will continue to sustain, significant injuries for which it has no adequate remedy at law and injuries entitling an award of damages. FOURTH CAUSE OF ACTION (Derivative Claim for Unjust Enrichment) 81. Plaintiff repeats and realleges each and every allegation contained in the preceding paragraphs. This cause of action is asserted against all defendants, except nominal defendant First Interstate. 82. As a result of the tortious conduct described above, certain Director Defendants and First Bank will be unjustly enriched at the expense of First Interstate. WHEREFORE, plaintiff demands judgment as follows: A. Declaring the proposed First Bank Transaction in whole or in part to be invalid, null, void, unenforceable, unfair, unjust, and inequitable to First Interstate; B. Preliminarily and permanently enjoining defendants from enforcing defensive measures designed to prevent an auction, bidding or tender offer for First Interstate and from further wasting assets or abusing their control or relationships with First Interstate and/or from taking any steps to prevent an acquisition of First Interstate at a premium over the First Bank Transaction; C. Preliminarily and permanently enjoining the defendants from proceeding with the First Bank Transaction unless or until the value of that Transaction can be shown to compare favorably with the takeover premium available following an open and fair auction of First Interstate and/or unless or until the shareholders are given a choice between two or more transactions; D. Setting aside the First Bank Transaction and/or any lockup, break up, no-shop provisions or other abusive or wasteful, defensive measures as null, void and unenforceable; E. Awarding money damages against all defendants, jointly and severally, in favor of First Interstate for all losses and damages suffered as a result of the acts and transactions complained of herein, together with pre-judgment interest from the day of the wrongs to the day of judgment herein, molded in a fashion to ensure defendants do not participate therein or benefit thereby; F. Directing all defendants to account for all damages caused by them and all profits and special benefits and unjust enrichment they obtain as a result of their unlawful conduct and imposing a constructive trust thereon; G. Awarding plaintiff the costs and disbursements of this action, including reasonable attorneys', accountants', and experts' fees; and H. Granting such other and further equitable, injunctive, or other relief as this Court may deem just and proper. JURY DEMAND Plaintiff demands a trial by jury. DATED: November 21, 1995 MILBERG WEISS BERSHAD HYNES & LERACH WILLIAM S. LERACH SALLIE A. BLACKMAN ERIN C. WARD WILLIAM S. LERACH 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058 MILBERG WEISS BERSHAD HYNES & LERACH JEFF S. WESTERMAN 355 South Grand Avenue Suite 4170 Los Angeles, CA 90071 Telephone: 213/617-9007 WEISS & YOURMAN JOSEPH H. WEISS 319 Fifth Avenue New York, NY 10016 Telephone: 212/532-4171 WEISS & YOURMAN KEVIN J. YOURMAN 10940 Wilshire Blvd. 24th Floor Los Angeles, CA 90024 Telephone: 310/208-2800 PRONGAY & MIKOLAJCZYK KEVIN M. PRONGAY EUGENE MIKOLAJCZYK 881 Alma Real Drive Suite 211 Pacific Palisades, CA 90272 Telephone: 310/573-3600 Attorneys for Plaintiff VERIFICATION I, the undersigned, say: I am one of the attorneys for plaintiff in the above- entitled action; I have read the foregoing VERIFIED DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, ABUSE OF CONTROL, UNJUST ENRICHMENT, AND EQUITABLE RELIEF AND DAMAGES and know the contents thereof; and I certify that the same is true of my own knowledge, except as to those matters which are therein stated upon my information or belief, and as to those matters I believe it to be true. I make this declaration because the named plaintiff is absent from the county where I maintain my law office. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this 21st day of November, 1995, at San Diego, California. WILLIAM S. LERACH VERIFICATION I, the undersigned, say: I am one of the attorneys for plaintiff in the above- entitled action; I have read the foregoing VERIFIED DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY, ABUSE OF CONTROL, UNJUST ENRICHMENT, AND EQUITABLE RELIEF AND DAMAGES and know the contents thereof; and I certify that the same is true of my own knowledge, except as to those matters which are therein stated upon my information or belief, and as to those matters I believe it to be true. I make this declaration because the named plaintiff is absent from the county where I maintain my law office. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this 21st day of November, 1995, at San Diego, California. WILLIAM S. LERACH EX-99 3 EXHIBIT 40 - BRADLEY COMPLAINT - CALIFORNIA SUPERIOR COURT MAXWELL M. BLECHER (#026202) HAROLD R. COLLINS, JR. (#037114) BLECHER & COLLINS, P.C. 611 West Sixth Street, 20th Floor Los Angeles, CA 90017 (213) 622-4222 JOSEPH W. COTCHETT (#36324) MARIE SETH WEINER (#112032) COTCHETT & PITRE San Francisco Airport Office Center 840 Malcolm Road, Suite 200 Burlingame, CA 94010 (415) 697-6000 Attorneys for Plaintiff and the Class SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES TIMOTHY W. BRADLEY, Civil No. BC139665 individually and on behalf of all others similarly situated, CLASS ACTION Plaintiffs, CLASS ACTION COMPLAINT FOR: vs. 1. BREACH OF FIDUCIARY DUTY; WILLIAM E.B. SIART; JOHN E. 2. ABUSE OF CONTROL; BRYSON; JEWEL PLUMMER COBB; RALPH P. DAVIDSON; MYRON 3. UNFAIR BUSINESS PRACTICES; DuBAIN; DON C. FRISBEE; GEORGE M. KELLER; THOMAS L. LEE; 4. UNJUST ENRICHMENT; and WILLIAM F. MILLER; WILLIAM S. RANDALL; STEVEN B. SAMPLE; 5. CONSTRUCTIVE FRAUD. FORREST N. SHUMWAY; RICHARD J. STEGEMEIER; DANIEL M. TELLEPL; FIRST BANK SYSTEM, INC.; and DOES 1 through 50, inclusive, Defendants. _____________________________/ Plaintiff Timothy W. Bradley alleges upon information and belief, based upon, inter alia, the investigation made by plaintiff and by and through his attorneys, except as to those allegations which pertain to the named plaintiff and his counsel, as follows: INTRODUCTION 1. This is a class action on behalf of all persons, except defendants, who own shares of the common stock of First Interstate Bancorp ("First Interstate"), a holding company whose principal assets is its wholly-owned subsidiary, First Interstate Bank. The members of the class have been damaged and deprived of opportunities to realize the highest price reasonably available and a fair price for their stock ownership in First Interstate because the defendants have wrongfully prevented and are wrongfully preventing the acquisition of all of the common stock of First Interstate by third parties who are willing and able to acquire such stock at a price in excess of the current market price of First Interstate common stock, including but not limited to Wells Fargo & Company ("Wells Fargo"), headquartered in California; and because defendants are now attempting to and have arranged a merger transaction of First Interstate into First Bank System, headquartered in Minneapolis, pursuant to which the First Interstate shareholders will received less per share than the other available transactions and offers. The officers and directors of First Interstate, to protect and preserve their positions of power, prestige and profits and officers and directors of First Interstate, have acted contrary to their fiduciary obligations to the shareholders of First Interstate, namely plaintiff and the Class. Indeed, the defendants have now obligated First Interstate to pay a "poison pill" break-up fee of $200 million if the merger with First Bank System does not go forward, despite the fact that the First Bank System offer is less than the initial offer by Wells Fargo as well as less than the subsequent pending offer by Wells Fargo. The proposed merger with First Interstate is also structured to allow at least half of the defendants to keep their positions as directors and/or officers, and their positions of power, i.e., although First Interstate will technically be owned by First Bank System, the leadership of First Interstate will continue practically unscathed. The defendants have publicly announced that they are giving preference over the lower First Bank System's offer because they want to save the jobs of people at First Interstate, which includes themselves. In order to persuade the shareholders of First Interstate to support the offer by First Bank System rather than the higher offer by Wells Fargo, so as to obtain and sustain the personal financial and prestigious positions of the defendants, the defendants have engaged in the dissemination of misleading statements to plaintiff and the Class. JURISDICTION AND VENUE 2. The amount in controversy exceeds the jurisdictional minimum of this Court. 3. At all times herein, the headquarters and principal place of business of the individual defendants were and are in Los Angeles, California. The individual defendants are all officers and/or directors of First Interstate Bancorp, which is a Delaware corporation with the principal place of business in Los Angeles, California. THE PARTIES Plaintiff 4. Plaintiff Timothy W. Bradley is a resident of Los Angeles County, California and owns common stock of First Interstate. 5. Plaintiff Timothy W. Bradley brings this action individually and on behalf of a Class consisting of all persons and entities who own the common stock of First Interstate, excluding the individual defendants, the members of their immediate families and any entity controlled by any of the defendants, and excluding defendant First Bank System to the extent that it holds any First Interstate common stock. Defendants 6. Defendant William E.B. Siart, at all relevant times herein, was and is President (since 1990), Chief Executive Officer (since January 1995), a director (since 1990), and Chairman of the Board (since May 1995) of First Interstate. As of March 1995, defendant Siart owned, directly or indirectly, 215,004 shares of First Interstate common stock. During 1994, defendant Siart received cash compensation of $1,846,133 from First Interstate, plus other compensation of $19,638 in addition to lucrative securities options and pension plan benefit. Defendant Siart was also provided with a preferential loan on his residence of approximately $875,000 at an interest rate of 6.34% by First Interstate. There is also an employment agreement between defendant Siart and First Interstate providing, and in case of a change of control of First Interstate, the term of the agreement is automatically extended for two years from the date of the change of control, plus if terminated, defendant Siart is entitled to "liquidated damages" of three times annual base salary and target bonus, plus an amount equivalent to three additional years of participation in the Company's retirement plan, plus $30,000 as alleged cost of health and welfare benefit plan coverage, all payable as a cash lump sum within ten days after termination. 7. Defendant John E. Bryson, at all relevant times herein, was and is a director of First Interstate since 1991. As of March 1995, defendant Bryson owned, directly or indirectly, 7,640 shares of First Interstate common stock. 8. Defendant Jewel Plummer Cobb, et al. relevant times herein, was and is a director of First Interstate since 1985. As of March 1995, defendant Cobb owned, directly or indirectly, 8,290 shares of First Interstate common stock. 9. Defendant Ralph P. Davidson, at all relevant times herein, was and is a director of First Interstate since 1987. As of March 1995, defendant Davidson owned, directly or indirectly, 9,500 shares of First Interstate common stock. 10. Defendant Myron DuBain, at all relevant times herein, was and is a director of First Interstate since 1983. As of March 1995, defendant DuBain owned, directly or indirectly, 36,939 shares of First Interstate common stock. 11. Defendant Don C. Frisbee, at all relevant times herein, was and is a director of First Interstate since 1985. As of March 1995, defendant Frisbee owned, directly or indirectly, 3,872 shares of First Interstate common stock. 12. Defendant George M. Keller, at all relevant times herein, was and is a director of First Interstate since 1974. Defendant Keller is also a director of First Interstate Bank of California. As of March 1995, defendant Keller owned, directly or indirectly, 10,896 shares of First Interstate common stock. 13. Defendant Thomas L. Lee, at all relevant times herein, was and is a director of First Interstate since 1993. Defendant Lee is also a director of First Interstate Bank of California. As of March 1995, defendant Lee owned, directly or indirectly, 6,300 shares of First Interstate common stock. 14. Defendant William F. Miller, at all relevant times herein, was and is a director of First Interstate since 1980. Defendant Miller is also a director of First Interstate Bank of California. As of March 1995, defendant Miller owned, directly or indirectly, 10,310 shares of First Interstate common stock. 15. Defendant William S. Randall, at all relevant times herein, was and is Executive Vice President, Chief Operating Officer, and a director of First Interstate. As of March 1995, defendant Randall owned, directly or indirectly, 115,940 shares of First Interstate common stock. During 1994, defendant Randall received cash compensation of $939,252 from First Interstate, plus other compensation of $14,530 in addition to lucrative securities options and pension plan benefit. There is also an employment agreement between defendant Randall and First Interstate providing, and in case of a change of control of First Interstate, the term of the agreement is automatically extended for two years from the date of the change of control, plus if terminated, defendant Randall is entitled to "liquidated damages" of three times annual base salary and target bonus, plus an amount equivalent to thee additional years of participation in the Company's retirement plan, plus $30,000 as alleged cost of health and welfare benefit plan coverage, all payable as a cash lump sum within ten days after termination. 16. Defendant Steven B. Sample, at all relevant times herein, was and is a director of First Interstate since 1991. As of March 1995, defendant Sample owned, directly or indirectly, 7,000 shares of First Interstate common stock. 17. Defendant Forrest N. Shumway, at all relevant times herein, was and is a director of First Interstate since 1982. As of March 1995, defendant Shumway owned, directly or indirectly, 10,000 shares of First Interstate common stock. 18. Defendant Richard J. Stegemeier, at all relevant times herein, was and is a director of First Interstate since 1989. As of March 1995, defendant Stegemeier owned, directly or indirectly, 7,800 shares of First Interstate common stock. 19. Defendant Daniel M. Tellep, at all relevant times herein, was and is a director of First Interstate since 1991. As of March 1995, defendant Tellep owned, directly or indirectly, 7,500 shares of First Interstate common stock. 20. The defendants named in Paragraphs 6 through 19 above, are hereinafter referred to collectively as the "Officer and Director Defendants". 21. Defendant First Bank System, Inc. ("First Bank System") was and is a Minnesota corporation with its principal place of business in Minneapolis, Minnesota. 22. Plaintiff is ignorant of the true names and capacities of other defendants sued herein as DOES 1 through 50, inclusive, and therefore sues these defendants by such fictitious names. Plaintiff will amend this complaint to allege their true names and capacities when ascertained. Plaintiff is informed and believes and thereon alleges that each such fictitiously named defendant is legally responsible in some manner for the events and conduct referred to, and legally caused injury and damages to plaintiff and the members of the Class as herein alleged. CLASS ACTION ALLEGATIONS 23. This lawsuit is brought on behalf of a Class consisting of all persons and entities who own First Interstate common stock. Excluded from the Class are the individual defendants herein, and their immediate family and any subsidiary, affiliate or controlled person or entity of any such defendants, and excluding defendant First Bank System to the extent that it holds any First Interstate common stock. 24. The members of the Class are so numerous that joinder of all members is impracticable. First Interstate common stock is traded on the New York Stock Exchange, a nationwide, recognized stock exchange, under the symbol "I". While the exact number of the Class members is unknown to plaintiff at this time, as of November 1995, First Interstate had approximately 75.7 million shares of its common stock outstanding; and as of March 9, 1995 had 76,268,424 common shares outstanding. The Class members can be identified from the books and records maintained by the defendants and their agents. 25. Plaintiff's claims are typical of the claims of the members of the Class, including issues of law and facts such as whether: (i) defendants violated California state law, (ii) whether defendants failed to obtain the best and highest price for First Interstate shareholders for their shares, (iii) whether defendants acted contrary to their fiduciary obligations to First Interstate shareholders in order to protect defendants' own personal, financial, and professional interests, and (iv) sustained damages arising out of defendants' wrongful conduct in violation of California state law. 26. Plaintiff will fairly and adequately represent and protect the interests of the members of the Class, and has retained counsel competent and experienced in class actions and complex litigation. 27. A class action is superior to other available methods for the fair and efficient adjudication of this controversy, since joinder of all members is impracticable. Furthermore, as the damages suffered by the individual members of the Class may be relatively small, the expense and burden of individual actions makes it impossible for the Class members to individually redress the wrongs from which they have suffered. There will be no real difficulty in the management of this action as a class action. 28. Common questions of law and fact exist as to all members of the Class, and predominate over any questions affecting solely individual members of the Class. Among the questions of law and fact common to the Class are: A. Whether defendants acted in violation of California law; B. Whether defendants, who were in positions of control of First Interstate, breached their fiduciary obligations to the Class members; C. Whether defendants abused their positions of control of First Interstate; D. Whether defendants concealed, failed to disclose, or misrepresented to the Class members regarding the offers to purchase all or a controlling interest of First Interstate stock in excess of the then market value of First Interstate common stock; E. Whether defendants participated in and pursued a conspiracy, scheme, or common course of conduct as alleged herein; F. Whether the defendants acted wilfully, recklessly or intentionally in committing the wrongful conduct complained of herein; and G. Whether the members of the Class have sustained damages, and the proper measure of damages. DEFENDANTS' WRONGFUL CONDUCT 29. On or about October 18, 1995, Wells Fargo & Company, the holding company of California-based Wells Fargo Bank, offered to purchase all outstanding stock of First Interstate Bancorp, the holding company of California-based First Interstate Bank, in a stock swap of 0.625 share of Wells Fargo common stock for each share of First Interstate common stock, which bid was valued at approximately $10.2 billion. The offering price was in excess of the market price of First Interstate common stock. The offer was considered by First Interstate to be a "hostile takeover" bid, and the Officer and Director Defendant responded to it by an announcement that First Interstate would be exploring "alternatives". 30. On or about October 23, 1995, Wells Fargo announced that it would move forward with seeking approval under the federal antitrust laws to start buying First Interstate stock. 31. Without given due consideration to the offer by Wells Fargo, the Officer and Director Defendants proceeded to solicit "white knight" purchasers of First Interstate, and specifically financial institutions which did business outside of California. The Officer and Director Defendants invited Norwest Bancorp of Minneapolis, Minnesota, and Banc One Corp of Columbus, Ohio to inspect the books of First Interstate and otherwise conduct due diligence with an eye towards a "friendly" counteroffer. The Officer and Director Defendants also engaged in communications with defendant First Bank System of Minneapolis in this regard. 32. On or about November 5, 1995, Wells Fargo publicly announced that it had increased its bid to a stock swap of 0.65 to 1.00, or $136.91 per share of First Interstate. 33. On or about November 6, 1995, First Interstate announced that it had rejected the Wells Fargo offer of approximately $10.9 billion and, instead, proposed a merger with defendant First Bank System of Minneapolis in a stock swap valued at $9.88 billion, or $129.55 per share of First Interstate. First Bank System's offer is slightly above the market price of First Interstate common stock. At the end of November 6, 1995, the market price of Wells Fargo placed its bid at a value of $10.04 billion, or $131.41 per share of First Interstate. 34. As the bid by Wells Fargo envisioned a complete acquisition and integration of First Interstate into Wells Fargo, with Wells Fargo to be the surviving business, the Officer and Director Defendants endeavored to obtain a bid by another financial institution holding company which would leave defendants with their existing positions. Although characterized by the Officer and Director Defendants as an offer to acquire and takeover First Interstate by defendant First Bank System, in reality it is nothing but a merger that would leave both financial institutions relatively intact. 35. The reality of the proposed transaction between First Interstate and defendant First Bank System is that (i) First Bank System is only about one-half the size of First Interstate, (ii) their bank subsidiaries have branches located, predominantly, in different locations, different cities, and different states, (iii) the Board of Directors of the merged company consist one- half of "former" First Interstate directors, including certain of the Officer and Director Defendants herein. 36. Indeed, First Interstate and defendant First Bank System only have potentially overlapping operations in Colorado, Montana and Wyoming, despite the fact that combined operations would exist in 21 states. On the other hand, Wells Fargo only has bank branches in California, while First Interstate has half of its bank branches in California, despite operations over 13 states. 37. The Officer and Director Defendants supported defendant First Bank System's bid as they would be provided with retaining or obtaining personal and financial benefits, whereas they would be subject to possibly losing their positions if the Wells Fargo bid was accepted. For example, under the terms of the proposed transactions with defendant First Bank System, (i) defendant Siart would be the President and Chief Operating Officer of the combined company, (ii) the bank of the combined company would operate under the First Interstate name, (iii) membership on the Board of Directors of the combined company would be even split between present directors of First Interstate and present directors of First Bank System, and (iv) the corporate headquarters would remain in Minneapolis, but all business lines would be run by personnel in Los Angeles, including certain of the Officer and Director Defendants. 38. In order to further protect their positions and financial benefits, the Officer and Director Defendants agreed with defendant First Bank System to a "poison pill" provision. The poison pill, designed to discourage other offers by other interested buyers and designed to make a hostile takeover more difficult, potentially obligates First Interstate to pay a $200 million break-up fee to defendant First Bank System if their merger transaction is not completed. 39. In an attempt to further shore-up to the First Bank System "sweetheart" deal, the Officer and Director Defendants also agreed to a "lock-up" agreement, whereby First Bank System holds and controls certain First Interstate shares in a fiduciary capacity, and agreed to grant stock options to purchase 19.9% of all outstanding shares of First Interstate common stock. 40. According to the New York Times in an article published on November 7, 1995, defendant Siart publicly announced that First Bank System's bid "was superior, despite its lower price, because it offered the best opportunity for growth, whereas the proposal from Wells Fargo focused mainly on cost-cutting." 41. It has been rumored that, prior to the announcement of the transaction with First Bank System (and the poison pill provision), Banc One was interested and willing to pay more than the offering price proposed by defendant First Bank System. 42. In response, on or about November 13, 1995, Wells Fargo announced a new bid valued at $10.6 billion to $10.9 billion, in a proposed stock swap of 0.666 share of Wells Fargo common stock for one share of First Interstate common stock, which bid Wells Fargo intends to pursue through a tender offer directly to First Interstate shareholders. The valid of the First Bank System's bid was valued at this time at approximately $10.4 billion. By the close of the market on November 13, 1995, the Wells Fargo bid was worth $140.19 to $140.32 per First Interstate share, while First Bank System's offer was only worth $137.80 per share. 43. To bolster its superior offer, Wells Fargo also informed the Officer and Director Defendants that it would move forward with all regulatory steps for approval of such a proposed acquisition, that any rejection of the latest bid would lead to Wells Fargo and First Bank System having 10 days to submit their best offer to the First Interstate shareholders, that it would be filing a legal action and seeking shareholder action to depose Wells Fargo's current Board to be replaced by directors who support the Wells Fargo higher offer, and that it was seeking judicial intervention to negate the $200 million poison pill provision. Wells Fargo Chairman, Paul Hazen, in a letter to defendant Siart requested, if its last bid was not accepted, that Wells Fargo and First Bank System submit their "best and final" offers and present them side-by-side on a proxy ballot to the First Interstate shareholders for a vote. Hazen went on to state, "As you know, the economic benefit to our respective stockholders that can be generated from the combination of our two companies is enormous, and far outstrips the benefits of a First Interstate First Bank System combination." 44. Upon the announcement by Wells Fargo, First Bank System's Chairman, John Grundhofer, made a public statement that the proposed merger between defendant First Bank System and First Interstate would proceed to completion (stating, "this deal will close as planned"), and accused Wells Fargo of exaggerating the economic benefits of its new proposal, stating that he was "incredulous". He further questioned Wells Fargo's ability to manage the combined company better than First Bank System, and that Wells Fargo has "no multistate operating experience and a very limited recent acquisition history." 45. Wells Fargo has affirmatively filed with the Federal Reserve for approval of its application to be permitted to purchase and to increase its ownership of First Interstate common stock to beyond 4.9%. That clearance has now been given as of November 20, 1995. 46. On or about November 17, 1995, John Grundhofer, the Chairman of First Bank System, and Richard Zona, its Chief Financial Officer, held a conference with financial analysts, in an attempt to debunk statements by Wells Fargo as to earnings and cost savings projections should Wells Fargo's bid be accepted and First Interstate be merged into Wells Fargo. First Bank System accused Wells Fargo of projecting numbers which "are not credible", that Wells Fargo has "overstated cost savings", and that Wells Fargo has "understated revenue losses". 47. In addition, First Bank System, on or about November 17, 1995, published non-SEC approved, full-page advertisement in California newspapers attacking the Wells Fargo offer, and calling such a transaction between Wells Fargo and First Interstate a "disaster for California", citing the possible loss of jobs. 48. What First Bank System has failed to fully and fairly disclose is the fact of and extent to which its own stock market price, which is the basis of the value of the proposed stock swap bid, has been orchestrated and manipulated by First Bank System to be more buoyant than if the market price reflected the market's response to the competition for Wells Fargo. Indeed, it has been reported by the Wall Street Journal on November 20, 1995, that First Bank System has been actively buying up its own stock since its announcement of its potential transaction with First Interstate. This repurchase activity by First Bank System has propped up the market price of First Bank System's stock, and thus kept a higher value on its stock-swap bid than would otherwise be the case. Indeed, since November 7, 1995, through its brokerage, First Bank System has been an enormous buyer of First Bank System stock, accounting for 47% of the total volume of First Bank System stock for the trading days from November 6, 1995 through November 15, 1995, in purchases totalling approximately 2.4 million to 2.7 million shares. Specifically, First Bank System, through its stockbroker, Donaldson Lufkin & Jenrette, bought more than half of all First Bank System shares traded on four of those trading dates; nearly two-thirds of all shares traded on November 7, 1995 (the day after the announcement); yet, bought zero shares the four trading days prior to the November 6, 1995 announcement. Furthermore, those trades have, circumspectly, been timed so that purchases are made by First Bank System when its stock is declining in price -- thus, keeping the First Bank System stock artificially high. Upon inquiry, First Bank System, through its spokesperson Wendy Raway, publicly declined to say whether First Bank System had been engaging in repurchase of its shares since the announcement of its agreement with First Interstate. 49. On the other hand, Wells Fargo has publicly announced that it had affirmatively refrained from any repurchasing of its own shares during the time of this bidding competition for First Interstate. 50. On November 20, 1995, First Interstate issued a press release, which was publicly disseminated, announcing that the Board of Directors of First Interstate, i.e., the Officer and Director Defendants, had rejected the latest Wells Fargo bid and would be moving forward with consummation of the proposed transaction with defendant First Bank System. In that press release, the Officer and Director Defendants made the false representation to all First Interstate shareholders, including plaintiff and the members of the Class, that the Wells Fargo increased offer was "not in the best interests of First Interstate and its shareholders", while stating that the First Bank System offer was in the best interests of First Interstate and its shareholders. The Officer and Director Defendants further instructed the First Interstate shareholders to reject the Wells Fargo offer and not to tender their shares to Wells Fargo. 51. Defendant Siart, on behalf of all of the Officer and Director Defendants, issued an open letter to the First Interstate shareholders, as follows: Dear First Interstate Shareholder: On November 6, 1995, First Interstate announced that it had entered into a merger agreement with First Bank System, Inc. (FBS) pursuant to which First Interstate would merge with a subsidiary of FBS and each of your shares of First Interstate common stock would be converted into 2.6 shares of FBS common stock. On November 13, 1995, Wells Fargo & Company announced that it intended to commence an unsolicited exchange offer in which holders of First Interstate common stock would have the right to exchange each of their shares for two-thirds of a share of Wells common stock. (The Wells exchange offer has not yet commenced and it may be several weeks or longer before you receive any materials with respect to it.) This announcement followed the First Interstate Board's rejection of Wells' earlier unsolicited proposal to merge with First Interstate in a transaction in which First Interstate's shareholders would receive .625 (or possibly .65) shares of Wells common stock for each First Interstate share. Your Board of Directors believes that the merger with FBS is in the best interests of First Interstate and its shareholders. Accordingly, the Board recommends that you reject the Wells Fargo & Company exchange offer and, when and if such offer is commenced, not tender any of your shares to Wells Fargo. Your Board's consideration of Wells Fargo's revised proposal and the FBS merger follows an extensive process of evaluating the company's strategic alternatives for enhancing shareholder value. This process began several months prior to Wells' initial unsolicited bid and included discussions and evaluations of several potential merger possibilities, including one with Wells Fargo. The record is clear. After Wells made its initial takeover proposal public on October 18, on behalf of your Board I engaged in extensive discussions with Wells Fargo, as well as with other potential merger candidates. A full account of that process is contained in the Schedule 14D-9 filed today by First Interstate with the Securities and Exchange Commission and enclosed with this letter. The First Interstate Board believes that the strategic combination of First Interstate and FBS creates a dynamic, lower risk, multi-state banking alliance that will provide substantial near-term and long-range value to you. Your Board and management believe that this combination offers better value to First Interstate's shareholders than the Wells offer. In reaching its determination to reaffirm the FBS merger and recommend rejection of the Wells offer, the First Interstate Board relied upon a number of factors, including: -- the greater earnings per share and cash flow per share of an FBS combination compared to a Wells Fargo combination; -- the higher dividends per share to be received by First Interstate shareholders as a result of the FBS merger than with a Wells Fargo combination; -- the reduced credit risk resulting from operations in 21 states under the FBS merger as contrasted with the substantially greater exposure to the California market that would result from a merger with Wells; -- the superior market position created by an FBS merger--a top three ranking, in terms of deposit market share, in ten states--as opposed to increasing First Interstate's top three ranking in only one state in a Wells merger; -- the substantial loss of revenue, as compared to Wells' public statements, that would result from Wells' proposed branch closings, other cost saving measures and antitrust divestitures (revenue losses not present in the FBS merger); -- the dependence of the value of the Wells offer on Wells' sustaining its high price-to-earnings ratio relative to other high quality bank stocks, including FBS; -- Wells' use of purchase accounting for the transaction, which creates additional goodwill in excess of $7 billion, which would substantially reduce future earnings and returns on equity; and -- the opinions of First Interstate's independent financial advisors, Goldman Sachs & Co. and Morgan Stanley & Co. Incorporated, that the exchange ratio of the FBS merger is fair to First Interstate shareholders. We understand very well why our highly successful multi-state franchise, with its operating scope and strengths, is attractive to Wells Fargo. Our concern is not with Wells' interests, but the strategic alternative that is best for you. We expect the First Interstate/FBS combined company to achieve 1997 EPS accretion of 23% and a return on equity of 27.5%, with virtually no tangible book value dilution. Because cost reductions would be achieved through bank office and staff cuts and systems integration, they can be accomplished quickly and with minimal impact to our customers and revenue. Under pooling accounting, the combined company will avoid the creation of goodwill and still be able to continue returning excess capital to shareholders through share repurchases. The company will have a reduced risk profile and an expanded foundation for future business growth across our 21-state service territory. It will have an exceptional, low-cost deposit base and be a leader in pioneering alternative delivery systems. And the combined company will be the number one ranked bank in the country in corporate cards, purchasing cards, corporate trust and ATM/POS, in addition to being among the top five banks in merchant card processing and asset management. Your Board and management are convinced that the FBS merger is a winning combination for the long-term benefit of our shareholders. It is unfortunate that a respected institution like Wells Fargo would jeopardize its reputation by ignoring your Board of Directors' carefully considered decision and choosing instead to recklessly pursue its hostile takeover proposal. We will not be deterred or distracted from completing our pending merger with First Bank on your behalf. A more detailed description of the factors considered by your Board of Directors is contained in the Schedule 14D-9. We urge you to read it carefully and in its entirety so that you will be fully informed as to the Board's recommendation. The date of the special meeting of First Interstate's shareholders which will be called to consider the proposed merger with FBS has not yet been set. First Interstate is not soliciting proxies from shareholders with respect to the FBS merger at this time. A Joint Proxy Statement/Prospectus of First Interstate and FBS will be mailed to the Company's shareholders in connection with the special meeting of each company's shareholders which will be called to vote upon the merger. On behalf of the Board of Directors, William E.B. Siart Chairman and Chief Executive Officer 52. Grundhofer of defendant First Bank System quickly followed with a public statement, supporting the decision and statements of the Officer and Director Defendants: "The continued support of the people who serve on the board of First Interstate is gratifying and welcome news. We thank them for sharing our conviction that the union of First Bank System and First Interstate is clearly in the best interests of shareholders, employees and the communities we serve." 53. As to November 20, 1995, the competing offers were valued at approximately $10.4 billion for the First Bank System bid and approximately $10.7 billion for the Wells Fargo bid. FIRST CAUSE OF ACTION Breach of Fiduciary Duty (Direct and Secondary Liability of the Officer and Director Defendants) Secondary Liability of Defendant First Bank System) 54. Plaintiff hereby incorporates by reference paragraphs 1 through 53 above as though fully set forth hereinafter. 55. The Officer and Director Defendants, and each of them, owed to plaintiff and the Class, as First Interstate shareholders, a fiduciary duty of the highest good faith, integrity and fair dealing, and said fiduciary relationship existed at all relevant times herein. 56. The Officer and Director Defendants, and each of them, breached their fiduciary duties to plaintiff and the Class by the acts and omissions set forth above. 57. The Officer and Director Defendants, and each of them, committed the acts and omissions alleged herein with the intent to gain an advantage over plaintiff and the Class and to benefit themselves to the detriment of plaintiff and the Class. 58. The breaches of fiduciary duty by the Officer and Director Defendants, and each of them, caused detriment to plaintiff and the Class, including but not limited to (i) the wrongful dissipation of assets by the Officer and Director Defendants obligating First Interstate to a "poison pill" provision with defendant First Bank System providing a break-up fee of $200 million; (ii) refusing to accept or support the offer which provides the greatest return to the First Interstate shareholders and is in their best interests; (iii) by refusing to accept or support any offer which does not protect the Officer and Director Defendants' own positions of power, prestige and money; and (iv) by not making available, fully and fairly, to the First Interstate shareholders, all of the offers that have been made and the terms thereof so that they can make an informed decision regarding the offers. 59. Defendant First Bank System aided and abetted, encouraged and rendered substantial assistance in accomplishing the breaches of fiduciary duties committed by the Officer and Director Defendants, and each of them. Without the involvement of and agreement by defendant First Bank System to act as a "white knight" merger partner to First Interstate, the Officer and Directors Defendants could not accomplish their wrongful goals, including the retention or obtaining of lucrative positions with the ultimately existing corporation and bank. In return of its granting of preferential, job-saving provisions to the Officer and Director Defendants, and the making of a merger offer (although less than any other offer made to date), defendant First Bank System is to receive ownership of First Interstate at a reduced "price", and defendant First Bank System is pledged to receive $200 million if the deal with First Interstate does not go through. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, defendant First Bank System acted with an awareness of its primary wrongdoing and realized that its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 60. The Officer and Director Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 61. Defendants, and each of them, pursued a conspiracy, common enterprise and common course of conduct to accomplish the wrongs complained of herein. The purpose and effect of the conspiracy, common enterprise and common course of conduct complained of was, inter alia, to allow continuing monetary and non-monetary benefits to defendants, and to allow continuing control of First Interstate operations by the Officer and Director Defendants, to the detriment of plaintiff and the Class. Defendants accomplished their conspiracy, common enterprise and common course of conduct by making misrepresentations and concealing information, as specified herein, and by breaching their fiduciary obligations, and by taking steps and making statements in furtherance of their wrongdoing as specified herein. Each defendant was a direct, necessary and substantial participant in the conspiracy, common enterprise and common course of conduct complained of herein, and was aware of his/its overall contribution to, and furtherance of the conspiracy, common enterprise and common course of conduct. Defendants' acts of conspiracy include, inter alia, all of the acts that each of them are alleged to have committed in furtherance of the wrongful conduct complained of herein, except those relating to the reaching of agreements or understandings sufficient to characterize their conduct as conspiratorial. 62. Other persons and entities not named as defendants herein were also participants in the conspiracy alleged and acted in furtherance of the objectives of the conspiracy as co- conspirators. 63. As a result of the defendants', and each of their, wrongful conduct, plaintiff and the other members of the Class have sustained and will sustain economic losses and other general and specific damages, including but not limited to the amounts which the First Interstate shareholders could have received if the highest offer had been accepted and supported by the defendants, and the amount of the $200 million "poison pill" which potentially will reduce the assets of First Interstate, loss of future income, and lost profits, all in an amount to be determined according to proof. 64. The wrongful acts of defendants, and each of them, were done maliciously, oppressively, and fraudulently, and plaintiff and the other members of the Class are entitled to punitive and exemplary damages in an amount to be ascertained according to proof, which is appropriate to punish or set an example of the defendants, and each of them. WHEREFORE, plaintiff and the Class pray for relief as set forth below. SECOND CAUSE OF ACTION Abuse of Control (Direct and Secondary Liability of the Officer and Director Defendants; Secondary Liability of Defendant First Bank System) 65. Plaintiff hereby incorporates by reference paragraphs l through 53 above as though fully set forth hereinafter. 66. The Officer and Director Defendants, and each of them, dominated and controlled the business and corporate affairs of First Interstate through the corporate positions, relationship with the other defendants, personal stock ownership, and their control over other related entities and shareholders. There exists an imbalance and disparity of knowledge and economic power between the Officer and Director Defendants, and the Plaintiff Class. In doing the acts alleged hereinbefore, the defendants, and each of them, have acted to further their own private financial interests to the detriment of the interests of plaintiff and the Class, in flagrant abuse of their positions of corporate control. 67. The Officer and Director Defendants, and each of them, caused detriment to plaintiff and the Class by their abuses of control, including but not limited to (i) the wrongful dissipation of assets by the defendants obligating First Interstate to a "poison pill" provision with defendant First Bank System providing a break-up fee of $200 million; (ii) not attempting to realize the highest recovery possible for the First Interstate shareholders in a sale or merger of First Interstate; (iii) by refusing to accept or support any offer which does not protect defendants' own positions of power, prestige and money; and (iv) by not making available, fully and fairly, to the First Interstate shareholders, all of the offers that have been made and the terms thereof so that they can make an informed decision regarding the offers. 68. The Director and Officer Defendants, and each of them, knew that the acts of the other defendants constituted a breach of duty and an abuse of control. Nevertheless, each Director and Officer Defendants conspired and acted in concert with the other defendants to accomplish the improper acts and transactions alleged. Defendants' actions were illegal and improper, and are in furtherance of the common design to achieve the unlawful purpose of the conspiracy. Each of the Director and Officer Defendants had knowledge of the conspiracy and its unlawful purpose. 69. Defendant First Bank System aided and abetted, encouraged and rendered substantial assistance in accomplishing the abuses of control committed by the Officer and Director Defendants, and each of them. Without the involvement of and agreement by defendant First Bank System to act as a "white knight" merger partner to First Interstate, the Officer and Directors Defendants could not accomplish their wrongful goals, including the retention or obtaining of lucrative positions with the ultimately existing corporation and bank. In return of its granting of preferential, job-saving provisions to the Officer and Director Defendants, and the making of a merger offer (although less than any other offer made to date), defendant First Bank System is to receive ownership of First Interstate at a reduced "price", and defendant First Bank System is pledged to receive $200 million if the deal with First Interstate does not go through. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, defendant First Bank System acted with an awareness of its primary wrongdoing and realized that its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 70. The Officer and Director Defendants and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 71. Defendants, and each of them, pursued a conspiracy, common enterprise and common course of conduct to accomplish the wrongs complained of herein. The purpose and effect of the conspiracy, common enterprise and common course of conduct complained of was, inter alia, to allow continuing monetary and non-monetary benefits to defendants, and to allow continuing control of First Interstate operations by defendants, to the detriment of plaintiff and the Class. Defendants accomplished their conspiracy, common enterprise and common course of conduct by making misrepresentations and concealing information, as specified herein, and by breaching their fiduciary obligations, and by taking steps and making statements in furtherance of their wrongdoing as specified herein. Each defendant was a direct, necessary and substantial participant in the conspiracy, common enterprise and common course of conduct complained of herein, and was aware of his/its overall contribution to, and furtherance of the conspiracy, common enterprise and common course of conduct. Defendants' acts of conspiracy include, inter alia, all of the acts that each of them are alleged to have committed in furtherance of the wrongful conduct complained of herein, except those relating to the reaching of agreements or understandings sufficient to characterize their conduct as conspiratorial. 72. Other persons and entities not named as defendants herein were also participants in the conspiracy alleged and acted in furtherance of the objectives of the conspiracy as co- conspirators. 73. As a result of the defendants', and each of their, wrongful conduct, plaintiff and the other members of the Class have sustained and will sustain economic losses and other general and specific damages, including but not limited to the amounts which the First Interstate shareholders could have received if the highest offer had been accepted and supported by the defendants, and the amount of the $200 million "poison pill" which potentially will reduce the assets of First Interstate, loss of future income, and lost profits, all in an amount to be determined according to proof. 74. The wrongful acts of the defendants, and each of them, were done maliciously, oppressively, and fraudulently, and plaintiff and the other members of the Class are entitled to punitive and exemplary damages in an amount to be ascertained according to proof, which is appropriate to punish or set an example of the defendants, and each of them. WHEREFORE, plaintiff and the Class pray for relief as set forth below. THIRD CAUSE OF ACTION Unfair Business Practices (Direct and Secondary Liability Against All Defendants) 75. Plaintiff hereby incorporates by reference paragraphs 1 through 53 above as though fully set forth hereinafter. 33. By their wrongful conduct, as set forth above, defendants, and each of them, have engaged in unfair competition including unlawful, unfair or fraudulent business practice, in violation of business and Professions Code section 17200 et seq., and have destroyed or prevented fair and honest competition for the purchase of First Interstate common stock as part of a merger or acquisition of First Interstate. 76. Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his or its primary wrongdoing and realized that his/its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 77. Plaintiff and the Class have standing to bring this cause of action for injunctive relief, pursuant to California Business & Professions Code section 17203. 78. If defendants, and each of them, proceed with a merger between First Interstate and defendant First Bank System at the price offered by First Bank System, it will irreparably harm the First Interstate shareholders, namely plaintiff and the Class, unless appropriate injunctive relief is granted. If defendants, and each of them, proceed with payment of a $200 million break up fee pursuant to the "poison pill" provision of the agreement between First Interstate and defendant First Bank System, it is will irreparably harm the First Interstate shareholders, namely plaintiff and the Class, unless appropriate injunctive relief is granted. WHEREFORE, plaintiff and the Class pray for relief as set forth below. FOURTH CAUSE OF ACTION Uniust Enrichment (Direct Liability Against All Defendants) 79. Plaintiff hereby incorporates by reference paragraphs 1 through 53 above as though fully set forth hereinafter. 80. If defendants, and each of them, proceed with a merger between First Interstate and defendant First Bank System at the price offered by First Bank System, rather than accepting the higher offer(s) by Wells Fargo, or soliciting and attempting to obtain the highest offer possible for the benefit of the First Interstate shareholders, because the Officer and Director Defendants want to keep and obtain personal and financial benefits for themselves instead, this would be an unjust enrichment to the Officer and Director Defendants, and each of them, to the detriment of plaintiff and the Class. 81. If defendant First Bank System obtains payment of a $200 million break up fee pursuant to the "poison pill" provision of the agreement between First Interstate and defendant First Bank System, for which compensation defendant First Bank System is not entitled, has not earned, and is not the result of any benefit to the First Interstate shareholders, this would be an unjust enrichment to defendant First Bank System, to the detriment of plaintiff and the Class. 82. Any unjust enrichment obtained by the defendants, and each of them, should be disgorged, and placed in trust for the financial benefit of plaintiff and the Class. WHEREFORE, plaintiff and the Class pray for relief as set forth below. FIFTH CAUSE OF ACTION Constructive Fraud (Direct and Secondary Liability Against the Officer and Director Defendants) 83. Plaintiff hereby incorporates by reference paragraphs 1 through 53 above as though fully set forth hereinafter. 84. As a result of the tortious conduct of the Officer and Director Defendants, and each of them, as set forth above, and because of the fiduciary relationship between First Interstate shareholders and these defendants, the Officer and Director Defendants are liable to plaintiff and the Class for constructive fraud. 85. The Officer and Director Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 86. As a result of the Officer and Director Defendants', and each of their, wrongful conduct, plaintiff and the Class have suffered and continue to suffer economic losses, and other general and specific damages, all in an amount to be determined according to proof at time of trial. WHEREFORE, plaintiff and the Class pray for relief as follows: 1. Compensatory and general damages according to proof; 2. Special damages according to proof; 3. Prejudgment interest at the maximum legal rate; 4. Punitive and exemplary damages according to proof; 5. For injunctive relief; 6. Costs of the proceedings herein; 7. Reasonable attorneys' fees; and 8. All such other and further relief as the Court deems just. DATED: November 22, 1995 BLECHER & COLLINS, P.C. By:____________________ MAXWELL M. BLECHER COTCHETT & PITRE By:____________________ MARIE SETH WEINER Attorneys for Plaintiff and the Class EX-99 4 EXHIBIT 41 - BRADLEY COMPLAINT - FEDERAL COURT MAXWELL M. BLECHER (#026202), HAROLD R. COLLINS, JR. (#037114) BLECHER & COLLINS, P.C. 611 West Sixth Street, 20th Floor Los Angeles, CA 90017 (213) 622-4222 JOSEPH W. COTCHETT (#36324) MARIE SETH WEINER (#112032) COTCHETT & PITRE San Francisco Airport Office Center 640 Malcolm Road, Suite 200 Burlingame, CA 94010 (415) 697-6000 Attorneys for Plaintiff and the Class UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA TIMOTHY W. BRADLEY, Civil individually and on behalf of all others similarly situated, CLASS ACTION Plaintiffs, CLASS ACTION COMPLAINT FOR: vs. 1. VIOLATION OF SECTION WILLIAM E.B. SIART; JOHN E. 14(e) OF THE SECURITIES BRYSON; JEWEL PLUMMER COBB; RALPH EXCHANGE ACT OF 1934; P. DAVIDSON; MYRON DuBAIN; DON C. FRISBEE; GEORGE M. KELLER; THOMAS 2. VIOLATION OF SECTION L. LEE; WILLIAM P. MILLER, WILLIAM 14(a) OF THE SECURITIES S. RANDALL; STEVEN B. SAMPLE; EXCHANGE ACT OF 1934, AND FORREST N. SHUMWAY; RICHARD J. RULE 14a-9; STEGEMEIER; DANIEL M. TELLEP; FIRST BANK SYSTEM, INC.; 3. BREACH OF FIDUCIARY DUTY; DONALDSON, LUFKIN & JENRETTE, INC., 4. ABUSE OF CONTROL; Defendants. 5. UNFAIR BUSINESS PRACTICES; 6. UNJUST ENRICHMENT; and 7. CONSTRUCTIVE FRAUD. PLAINTIFFS DEMAND A TRIAL BY JURY Plaintiff Timothy W. Bradley alleges upon information and belief, based upon, inter alia, the investigation made by plaintiff and by and through his attorneys, except as to those allegations which pertain to the named plaintiff and his counsel, as follows: INTRODUCTION 1. This is a class action on behalf of all persons, except defendants, who own shares of the common stock of First Interstate Bancorp ("First Interstate"), a holding company whose principal assets in its wholly- owned Subsidiary, First Interstate Bank. The members of the class have been damaged and deprived of opportunities to realize the highest price reasonably available and a fair price for their stock ownership in First Interstate because the defendants have wrongfully prevents and are wrongfully preventing the acquisition of all of the common stock of First Interstate by third parties who are willing and able to acquire such stock at a price in excess of the current market price of First Interstate common stock, including but not limited to Wells Fargo & Company ("Wells Fargo"), headquartered in California; and because defendants are now attempting to and have arranged a merger transaction of First Interstate into First Bank System, headquartered in Minneapolis, pursuant to which the First Interstate shareholders will received less per share than the other available transactions and offers. The officers and directors of First Interstate, to protect and preserve their positions of power, prestige and profits and officers and directors of First Interstate have acted contrary to their fiduciary obligation to the shareholders of First Interstate, namely plaintiff and the Class. Indeed, the defendants have now obligated First Interstate to pay a "poison pill" break-up fee of $200 million if the merger with First Bank System does not go forward, despite the fact that the First Bank System offer is less than the initial offer by Wells Fargo as well as less than the subsequent pending offer by Wells Fargo. The proposed merger with First Interstate is also structured to allow at least half of the defendants to keep their positions as directors and/or officers, and their positions of power, i.e., although First Interstate will technically be owned by First Bank System, the leadership of First Interstate will continue practically unscathed. The defendants have publicly announced that they are giving preference over the lower First Bank System's offer because they want to save the jobs of people at First Interstate, which includes themselves. In order to persuade the shareholders of First Interstate to support the offer by First Bank System rather than the higher offer by Wells Fargo, so as to obtain and sustain the personal financial and prestigious positions of the defendants, the defendants have engaged in the dissemination of misleading statements to plaintiff and the Class. 2. Defendant First Bank System and its stockbroker, defendant Donaldson, Lufkin & Jenrette Inc., have engaged in the market manipulation of First Bank System common stock in order to keep the market price artificially high, so as to keep its proposed stock swap merger with First Interstate at a higher value (and for less First Bank System shares) than would otherwise be the case if the market value of that stock was subject to unrestricted adjustment through disinterested purchasers and sellers on the open market. JURISDICTION AND VENUE 3. This Court has jurisdiction over the subject matter of this action under SECTION27 of the Securities Exchange Act of 1934, 15 U.S.C. SECTION78aa. The claims alleged herein arise principally under SECTION14 of the Securities Exchange Act, 15 U.S.C. SECTION78n and rules promulgated thereunder by the Securities and Exchange Commission. 4. Venue is proper in this District pursuant to SECTION27 of the Securities Exchange Act and 28 U.S.C. SECTION1391(b). Certain acts and transactions giving rise to the violations of the law complained of herein, including the preparation and dissemination to the First Interstate shareholders of false and misleading information, occurred in this District. Further, at all times herein, the headquarters and principal place of business of the individual defendants were and are in Los Angeles, Los Angeles County, California. The individual defendants are all officers and/or directors of First Interstate Bancorp, which is a Delaware corporation with the principal place of business in Los Angeles, California. 5. In connection with the acts, conduct and other wrongs complained of herein, the defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, and United States mails, and/or the facilities of a national securities exchange market. THE PARTIES Plaintiff 6. Plaintiff Timothy W. Bradley is a resident of Los Angeles County, California and owns common stock of First Interstate. 7. Plaintiff Timothy W. Bradley brings this action individually and on behalf of a Class consisting of all persons and entities who own the common stock of First Interstate, excluding the individual defendants, the members of their immediate families and any entity controlled by any of the defendants, and excluding defendants First Bank System and DLJ to the extent that they hold any First Interstate common stock. Defendants 8. Defendant William E.B, Siart, at all relevant times herein, was and is President (Since 1990), Chief Executive Officer (since January 1993), a director (since 1990), and Chairman of the Board (since May 1995) of First Interstate. As of March 1995, defendant Siart owned, directly or indirectly 213,004 shares of First Interstate common stock. During 1994, defendant Siart received cash compensation of $1,846,133 from First Interstate, plus other compensation of $19,638 in addition to lucrative securities options and pension plan benefit. Defendant Siart was also provided with a preferential loan on his residence of approximately $875,000 at an interest rate of 6.34% by First Interstate. There is also an employment agreement between defendant Siart and First Interstate providing, and in case of a change of control of First Interstate, the term of the agreement is automatically extended for two years from the date of the change of control, plus if terminated, defendant Siart is entitled to "liquidated damages" of three times annual bass salary and target bonus, plus an amount equivalent to thee additional years of participation in the Company's retirement plan, plus $30,000 as alleged cost of health and welfare benefit plan coverage, all payable as a cash lump sun within ten days after termination. 9. Defendant John S. Bryson, at all relevant times herein, was and is a director of First Interstate since 1991. As of March 1995, defendant Bryson owned, directly or indirectly, 7,640 shares of First Interstate common stock. 10. Defendant Jewel Plummer Cobb, at all relevant times herein, was and is a director of First Interstate since 1985. As of March 1955, defendant Cobb owned, directly or indirectly, 8,290 shares of First Interstate common stock. 11. Defendant Ralph P. Davidson, at all relevant times herein, was and in a director of First Interstate since 1987. As of March 1995, defendant Davidson owned, directly or indirectly, 9,500 shares of First Interstate common stock. 12. Defendant Myron DuBain, at all relevant times herein, was and is a director of First Interstate since 1983. As of March 1995, defendant DuBain owned, directly or indirectly, 36,939 shares of First Interstate common stock. 13. Defendant Don C. Frisbee, at all relevant times herein, was and is a director of First Interstate since 1985. As of March 1995, defendant Frisbee owned, directly or indirectly, 3,872 shares of First Interstate common stock. 14. Defendant George M. Keller, at all relevant times herein, was and is a director of First Interstate since 1974. Defendant Keller in also a director of First Interstate Bank of California. As of March 1995, defendant Keller owned, directly or indirectly, 10,896 shares of First Interstate common stock. 15. Defendant Thomas L. Lee, at all relevant times herein, was and is a director of First Interstate since 1993. Defendant Lee is also a director of First Interstate Bank of California. As of March 1995, defendant Lee owned, directly or indirectly, 6,300 shares of First Interstate common stock. 16. Defendant William P. Miller, at all relevant times herein, was and in a director of First Interstate since 1990. Defendant Miller is also a director of First Interstate Bank of California, As of March 1995, defendant Miller owned, directly or indirectly, 10,310 shares of First Interstate common stock. 17. Defendant William S. Randall, at all relevant times herein, was and is Executive Vice President, Chief Operating Officer, and a director of First Interstate. As of March 1995, defendant Randall owned, directly or indirectly, 115,940 shares of First Interstate common stock. During 1994, defendant Randall received cash compensation of $939,232 from First Interstate, plus other Compensation of $14,530 in addition to lucrative securities options and pension plan benefit. There is also an employment agreement between defendant Randall and First Interstate providing, and in case of a change of control of First Interstate, the term of the agreement in automatically extended for two years from the data of the change of control, plus it terminated, defendant Randall is entitled to "liquidated damages" of thee times annual bass salary and target bonus, plus an amount equivalent to the additional years of participation in the Company's retirement plan, plus $30,000 an alleged coot of health and welfare benefit plan coverage, all payable as a cash lump sum within ten days after termination. 18. Defendant Steven B. Sample, at all relevant times herein, was and is a director of First Interstate since 1991. As of March 1995, defendant sample owned, directly or indirectly, 7,000 shares of First Interstate common stock. 19. Defendant Forrest N. Shumway, at all relevant times herein, was and is a director of First Interstate since 1982. As of March 1995, defendant Shumway owned, directly or indirectly, 10,000 shares of First Interstate common stock. 20. Defendant Richard J. Stegemeier, at all relevant times herein, was and is a director of First Interstate since 1989. As of March 1995, defendant Stegemeier owned, directly or indirectly 7,000 shares of First Interstate common stock. 21. Defendant Daniel N. Tellep, at all relevant times herein, was and is a director of First Interstate since 1991. As Of March 1995, defendant Tellep owned, directly or indirectly, 7,500 shares of First Interstate common stock, 22. The defendants named in Paragraphs 8 through 21 above, are hereinafter referred to collectively as the "Officer and Director Defendants". 23. Defendant First bank System, Inc. ("First Bank System") was and in a Minnesota corporation with its principal place Of business in Minneapolis, Minnesota. 24. Defendant Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), a Delaware corporation with its corporate headquarters in New Jersey, was and is a registered broker-dealer and financial institution. CLASS ACTION ALLEGATIONS 25. This lawsuit is brought on behalf of a Class consisting of all persons and entities who own First Interstate common stock. Excluded from the Class are the individual defendants herein, and their immediate family and any subsidiary, affiliate or controlled person or entity of any such defendants, and excluding defendants First Bank System and DLJ to the extent that they hold any First Interstate common stock. 26. The members of the Class are so numerous that joinder of all members is impracticable. First Interstate common stock is traded on the New York Stock Exchange, a nationwide, recognized stock exchange, under the symbol "I". While the exact number of the Class members In unknown to plaintiff at this time, as of November 1995, First Interstate had approximately 73.7 million Shares of its common stock outstanding, and as of March 9, 1995 had 76,268,424 common shares outstanding. The class members can be identified from the books and records maintained by the defendants and their agents. 27. Plaintiff's claims are typical of the claims of the members of the Class, including issues of law and facts such as whether: (i) defendants violated federal securities laws, (ii) defendants make material false representations and omissions to First Interstate shareholders regarding the Competing takeover bids by First Bank System and Wells Fargo, (iii) defendants violated California state laws, (iv) defendants failed to obtain the best and highest price for First Interstate shareholders for their shares, (v) whether defendants acted contrary to their fiduciary obligations to First Interstate shareholders in order to protect defendants' own personal, financial, and professional interests, and (vi) sustained damages arising out of defendants' wrongful conduct In violation of federal and state law. 28. Plaintiff will fairly and adequately represent and protect the interests of the members of the Class, and has retained counsel competent and experienced in class actions and complex litigation. 29. A class action is superior to other available methods for the fair and efficient adjudication of this controversy, since joinder of all members is impracticable. Furthermore, as the damages suffered by the individual members of the Class may be relatively small, the expense and burden of individual actions makes it impossible for the Class members to individually redress the wrongs from which they have suffered, There will be no real difficulty in the management of this action as a class action. 30. Common questions of law and fact exist of to all members of the Class, and predominate over any questions affecting solely individual members of the Class. Among the questions of law and fact common to the Class are: A. Whether defendants acted in violation of federal securities law; B. Whether defendants acted in violation of California state law; C. Whether defendants made or participated in the making of false and misleading statements and material omissions in connection with a proxy solicitation or a tender offer takeover; D. Whether defendants, who were in positions of control of First Interstate, breached their fiduciary obligations to the class members; E. Whether defendants abused their positions of control of First Interstate; F. Whether defendants concealed, failed to discloses or misrepresented to the Class members regarding the offers to purchase all or a controlling interest of First Interstate stock in excess of the then market value of First Interstate common stock; G. Whether defendants participated in and pursued a conspiracy, schemes, or common course of conduct as alleged herein; H. Whether the defendants acted wilfully, recklessly or intentionally in committing the wrongful conduct complained of herein; and I. Whether the members of the Class have sustained damages, and the proper measure of damages. DEFENDANTS' WRONGFUL CONDUCT 31. On or about October 18, 1995, Wells Fargo & Company, the holding company of California-based Wells Fargo Bank, offered to purchase all outstanding stock of First Interstate Bancorp, the holding company of California-based First Interstate Bank, in a stock swap of 0.625 share of Wells Fargo common stock for each share of First Interstate common stock, which bid was valued at approximately $10.2 billion. The offering price was in excess of the market price of First Interstate common stock. The offer was considered by First Interstate to be a "hostile takeover" bid, and the Officer and Director Defendant responded to it by an announcement that First Interstate would be exploring "alternatives". 32. On or about October 23, 1995, Wells Fargo announced that it would move forward with seeking approval under the federal antitrust laws to start buying First Interstate stock. 33. Without giving due consideration to the offer by Wells Fargo, the officer and Director Defendants proceeded to solicit "white knight" purchasers of First Interstate, and specifically financial institutions which did business outside of California. The Officer and Director Defendants invited Norwest Bancorp of Minneapolis, Minnesota and Banc One Corp of Columbus, Ohio to inspect the books of First Interstate and otherwise conduct due diligence with an eye towards a "friendly" counteroffer. The Officer and Director Defendants also engaged in communications with defendant first Bank System of Minneapolis in this regard. 34. On or about November 5, 1995, Wells Fargo publicly announced that it had increased its bid to a stock swap of 0.65 to 1.00, or $136.91 per share of First Interstate. 35. On or about November 6 1995, First Interstate announced that it had rejected the Wells Fargo offer of approximately $10.9 billion and, instead, proposed a merger with defendant First Bank System of Minneapolis in a stock swap valued at $9.88 billion, or $129.55 per share of First Interstate. First Bank System's offer is slightly above the market price of First Interstate common stock. At the end of November 6, 1995, the market price of Wells Fargo placed its bid at a value of $10.04 billion, or $131.41 per share of First Interstate. 36. As the bid by Wells Fargo envisioned a complete acquisition and integration of First Interstate into Wells Fargo, with Wells Fargo to be the surviving business, the Officer and Director Defendants endeavored to obtain a bid by another financial institution holding company which would leave defendants with their existing positions. Although characterized by the Officer and Director Defendants as an offer to acquire and takeover First Interstate by defendant First Bank System, in reality it is nothing but a merger that would leave both financial institutions relatively intact. 37. The reality of the proposed transaction between First Interstate and defendant First Bank System is that (i) First Bank System is only about one-half the size of First Interstate, (ii) their bank subsidiaries have branches located, predominantly, in different locations, different cities and different states, (iii), the Board of Directors of the merged company consists one-half of "former" First Interstate directors, including certain of the Officer and Director Defendants herein. 38. Indeed, First Interstate and defendant First Bank System only have potentially overlapping operations in Colorado, Montana and Wyoming, despite the fact that combined operations would exist in 21 states. On the other hand, Wells Fargo only has bank branches in California, while First Interstate has half of its bank branches in California, despite operations over 13 states. 39. The Officer and Director Defendants supported defendant First Bank System's bid as they would be provided with retaining or obtaining personal and financial benefits, whereas they would be subject to possibly losing their positions if the Wells Fargo bid was accepted. For example, under the terms of the proposed transactions with defendant First Bank System, (i) defendant Siart would be the President and Chief Operating Officer of the combined company, (ii) the bank of the combined company would operate under the First Interstate name, (iii) membership on the Board of Directors of the combined company would be even split between present directors of First Interstate and present directors of First Bank System, and (iv) the corporate headquarters would remain in Minneapolis, but all business lines would be run by personnel in Los Angeles, including certain of the Officer and Director Defendants, 40. In order to further protect their positions and financial benefits, the Officer and Director Defendants agreed with defendant First Bank System to a "poison pill" provision. The poison pill, designed to discourage other offers by other interested buyers and designed to make a hostile takeover more difficult, potentially obligates First Interstate to pay a $200 million break-up fee to defendant First Bank System if their merger transaction is not completed. 41. In an attempt to further shore-up the First Bank System "sweetheart" deal, the Officer and Director Defendants also agreed to a "lock-up" agreement, whereby First Bank System holds and controls certain First Interstate shares In a fiduciary capacity, and agreed to grant stock options to purchase 19.9% of all outstanding shares of First Interstate common stock. 42. According to the New York Times in an article published on November 7, 1995, defendant Siart publicly announced that First Bank System's bid "was superior, despite its lower price, because it offered the best opportunity for growth, whereas the proposal from Wells Fargo focused mainly on cost-cutting." 43. It has been rumored that, prior to the announcement of the transaction with First Bank System (and the poison pill provision), Banc One was interested and willing to pay more than the offering price proposed by defendant First Bank System. 44. In response, on or about November 13, 1995, Wells Fargo announced a new bid valued at $10.6 billion to $10.9 billion, in a proposed stock swap of 0.666 share of Wall Fargo common stock for one share of First Interstate common stock, which bid Wells Fargo intends to pursue through a tender offer directly to First Interstate shareholders. The valid of the First Bank System bid was valued at this time at approximately $10.4 billion. By the close of the market on November 23, 1995, the Wells Fargo bid was worth $140.29 to $140.32 per First Interstate share, while First Bank System's offer was only worth $137.80 per share. 45. To bolster its superior offer, Wells Fargo also informed the Officer and Director Defendants that it would move forward with all regulatory steps for approval of such a proposed acquisition, that any rejection of the latent bid would lead to Wells Fargo and First Bank System having 10 days to submit their best offer to the First Interstate shareholders, that it would be filing a legal action and seeking shareholder action to depose Wells Fargo's current Board to be replaced by directors who support the Wells Fargo higher offer, and that it was seeking judicial intervention to negate the $200 million poison pill provision. Wells Fargo Chairman, Paul Hazen, in a letter to defendant Siart requested, if its last bid was not accepted, that Wells Fargo and First Bank System submit their "best and final" offers and present them side-by-side on a proxy ballot to the First Interstate shareholders for a vote. Hazen went on to state "As you know, the economic benefit to our respective stockholders that can be generated from the combination of our two companies is enormous, and far outstrips the benefits of a First Interstate-First Bank System combination." 46. Upon the announcement by Wells Fargo, First Bank System's Chairman, John Grundhofer made a public statement that the proposed merger between defendant First Bank System and First Interstate would proceed to completion (stating, "this deal will close as planned"), and accused Wells Fargo of exaggerating the economic benefits of its new proposal, stating that he was "incredulous." He further questioned Wells Fargo's ability to manage the combined company better than First Bank System, and that Wells Fargo has "no multistate operating experience and a very limited recent acquisition history." 47. Wells Fargo has affirmatively filed with the Federal Reserve for approval of its application to be permitted to purchase and to increase its ownership of First Interstate common stock to beyond 4.9%. That clearance has now been given as of November 20, 1995. 48. On or about November 17, 1995, John Grundhofer, the Chairman of First Bank System, and Richard Zone, its Chief Financial Officer, held a conference with financial analysts, in an attempt to debunk statements by Wells Fargo as to earnings and cost savings projections should Wells Fargo's bid be accepted and First Interstate be merged into Wells Fargo. First Bank System accused Wells Fargo of projecting numbers which "are not credible," that Wells Fargo has "overstated cost savings," and that Wells Fargo has "understated revenue losses." 49. In addition, First Sank System, on or about November 17, 1995, published a non-SEC approved, full-page advertisement in California newspapers attacking the Wells Fargo offer, and calling such a transaction between Wells Fargo and First Interstate a "disaster for California," citing the possible loss of jobs. 50. What First Bank System has failed to fully and fairly disclose is the fact of and extent to which its own stock market advice, which is the basis of the value of the proposed stock swap bid, has been orchestrated and manipulated by defendant First Bank System and defendant DLJ to be more buoyant than if the market price reflected the market's response to the competition for Wells Fargo. Indeed, it has been reported by the Wall Street Journal on November 20, 1995 that defendant First Bank System has been actively buying up its own stock, through defendant DLJ, since its announcement of its potential transaction with First Interstate. This repurchase activity by First Bank System and DLJ has propped up the market price of First Bank System's stock, and thus kept a higher value on its stock-swap bid than would otherwise be the case. Indeed, since November 7, 1995, through defendant DLJ, defendant First Bank System has been an enormous buyer of First Bank System stock, accounting for 47% of the total volume of First Bank System stock for the trading days from November 6, 1995 through November 15, 1995, in purchases totalling approximately 2.4 million to 2.7 million shares. Specifically, First Bank System, through DLJ, bought more than half of all First Bank System shares traded on four of those trading dates; nearly two-thirds of all shares traded on November 7, 1995 (the day after the announcement); yet, bought zero shares the four trading days prior to the November 6, 1993 announcement. Furthermore, those trades have, circumspectly, been timed so that purchases are made by First Bank System through DLJ when its stock is declining in price--thus, keeping the First Bank System stock artificially high. Upon inquiry, First Bank System, through its spokesperson Wendy Raway, publicly declined to say whether First Bank System had been engaging in repurchase of its shares since the announcement of its agreement with First Interstate. 51. On the other hand, Wells Fargo has publicly announced that it had affirmatively retrained from any repurchasing of its own shares during the time of this bidding competition for First Interstate. 52. On November 20, 1995, First Interstate issued a press release, which was publicly disseminated, announcing that the Board of Directors of First Interstate, i.e., the Officer and Director Defendants, had rejected the latest Wells Fargo bid and would be moving forward with consummation of the proposed transaction with defendant First Bank System. In that press release, the Officer and Director Defendants made the false representation to all First Interstate shareholders, including plaintiff and the members of the Class, that the Wells Fargo increased offer was "not In the best interests of First Interstate and its shareholders," while stating that the First Bank System offer was in the best interests of First Interstate and its shareholders. The Officer and Director Defendants further instructed the First Interstate shareholders to reject the Wells Fargo offer and not to tender their shares to Wells Fargo. 53. Defendant Siart, on behalf of all of the Officer and Director Defendants, issued an open letter to the First Interstate shareholders, as follows: Dear First Interstate Shareholder: On November 6, 1995, First Interstate announced that it had entered into a merger agreement with First Bank System, Inc. (FBS) pursuant to which First Interstate would merge with a subsidiary of FBS and each of your shares of First Interstate common stock would be converted into 2.6 shares of FBS common stock. On November 13, 1995, Wells Fargo & Company announced that it intended to commence an unsolicited exchange offer in which holders of First Interstate common stock would have the right to exchange each of their shares for two-thirds of a share of Wells common stock. (The Wells exchange offer has not yet commenced and it may be several weeks or longer before you receive any materials with respect to it.) This announcement followed the First Interstate Board's rejection of Wells' earlier unsolicited proposal to merge with First Interstate in a transaction in which First Interstate's shareholders would receive .625 (or possibly .65) shares of Wells common stock for each First Interstate share. Your Board of Directors believes that the merger with FBS is in the best interests of First Interstate and its shareholders. Accordingly, the Board recommends that you reject the Wells Fargo & Company exchange offer and, when and if such offer is commenced, not tender any of your shares to Wells Fargo. Your Board's consideration of Wells Fargo's revised Proposal and the FBS merger follows an extensive process of evaluating the company's strategic alternatives for enhancing shareholder value. This process began several months prior to Wells' initial unsolicited bid and included discussions and evaluations of several potential merger possibilities, including one with Wells Fargo. The record is clear. After Wells made its initial takeover proposal public on October 18, on behalf of your Board I engaged in extensive discussions with Wells Fargo as well as with other potential merger candidates. A full account of that process is contained in the Schedule 14D-9 filed today by First Interstate with the Securities and Exchange Commission and enclosed with this letter. The First Interstate Board believes that the strategic combination of First Interstate and FBS creates a dynamic, lower risk, multi-state banking alliance that will provide substantial near-term and long-range value to you. Your Board and management believe that this combination offers better value to First Interstate's shareholders than the Wells offer. In reaching its determination to reaffirm the FBS merger and recommend rejection of the Wells offer, the First Interstate Board relied upon a number of factors, including: -- the greater earnings per share and cash flow per share of an FBS combination compared to a Wells Fargo combination; - - the higher dividends per share to be received by First Interstate shareholders as a result of the FBS merger than with a Wells Fargo combination; the reduced credit risk resulting from operations in 21 states under the FBS merger as contrasted with the substantially greater exposure to the California market that would result from a merger with Wells; - - the superior market position created by an FBS merger -- a top three ranking, in terms of deposit market share, in ten states -- as opposed to increasing First Interstate's top three ranking in only one state in a Wells merger; -- the substantial loss of revenue, as compared to Wells' public statements, that would result from Wells' proposed branch closings, other cost saving measures and antitrust divestitures (revenue losses not present in the FBS merger); -- the dependence of the value of the Wells offer on Wells' sustaining its high price-to-earnings ratio relative to other high quality bank stocks, including FBS; -- Wells' use of purchase accounting for the transaction, which creates additional goodwill in excess of $7 billion, which would substantially reduce future earnings and returns on equity; and -- the opinions of First Interstate's independent financial advisors, Goldman Sachs & Co. and Morgan Stanley & Co. Incorporated, that the exchange ratio of the FBS merger is fair to First Interstate shareholders. We understand very well why our highly successful multi-state franchise, with its operating scope and strengths, is attractive to Wells Fargo. Our concern is not with Wells interests but the strategic alternative that is best for you. We expect the First Interstate/FBS combined company to achieve 1997 EPS accretion of 23% and a return on equity of 27.5%, with virtually no tangible book value dilution. Because cost reductions would be achieved through bank office and staff cuts and systems integration, they can be accomplished quickly and with minimal impact to our customers and revenue. Under pooling accounting, the combined company will avoid the creation of goodwill and still be able to continue returning excess capital to shareholders through share repurchases. The company will have a reduced risk profile and an expanded foundation for future business growth across our 21-state service territory. It will have an exceptional, low-cost deposit base and be a leader in pioneering alternative delivery systems. And the combined company will be the number one ranked bank in the country in corporate cards, purchasing cards, corporate trust and ATM/POS, in addition to being among the top five banks in merchant card processing and asset management. Your Board and management are convinced that the FBS merger is a winning combination for the long-term benefit of our shareholders. It is unfortunate that a respected institution like Wells Fargo would jeopardize its reputation by ignoring your Board of Directors' carefully considered decision and choosing instead to recklessly pursue its hostile takeover proposal. We will not be deterred or distracted from completing our pending merger with First Bank on your behalf. A more detailed description of the factors considered by your Board of Directors is contained in the Schedule 14D-9. We urge you to read it carefully and in its entirety so that you will be fully informed as to the Board's recommendation. The date of the special meeting of First Interstate shareholders which will be called to consider the proposed merger with FBS has not yet been set. First Interstate is not soliciting proxies from shareholders with respect to the FBS merger at this time. A Joint Proxy Statement/Prospectus of First Interstate and FBS will be mailed to the Company's shareholders in connection with the special meeting of each company's shareholders which will be called to vote upon the merger. On behalf of the Board of Directors, William E. B. Siart Chairman and Chief Executive Officer 54. The letter to the shareholders set forth in the preceding paragraph incorporates by reference the Schedule 14d-9 filed by the Officer and Director Defendants on or about November 20, 1995. The Schedule 14d-9 also contains similar representations as set forth in the letter to the shareholders. 55. Grundhofer of defendant First Bank System quickly followed with a public statement, supporting the decision and statement of the Officer and Director Defendants: "The continued support of the people who serve on the Board of First Interstate is gratifying and welcome news. We thank them for sharing our conviction that the union of First Bank System and First Interstate is clearly in the best interests of shareholders, employees and the communities we serve." 56. As to November 20, 1995, the competing offers were valued at approximately $10.4 billion for the First Bank System bid and approximately $10.7 billion for the Wells Fargo bid. FIRST CAUSE OF ACTION Violation of Section 14(e) of the Securities Exchange Act (Direct Liability of All Defendants) 57. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above as though fully set forth hereinafter. 58. Defendants, and each of them violated federal securities law, 15 U.S.C. SECTION78n(e), Section 14(e) of the Securities Exchange Act of 1934, in that defendants and each of them, made an untrue statement or a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaged in a fraudulent, deceptive or manipulative act or practice, in connection with the tender offer or request or invitation for lenders, or a solicitation of First Interstate shareholders in opposition to such offer, request, or invitation of Wells Fargo and in favor of such offer, request, or invitation of First Bank System. The false and misleading representations and omissions by defendants include, but are not limited to, the November 20th letter to the shareholders, the Schedule 14d-9, press releases and public statements regarding the tender offers. The fraudulent deceptive or manipulative acts or practices of the defendants include, but are not limited to, the carefully timed purchases of First Bank System stock by defendant First Bank System through its broker defendant DLJ which were intended to and did manipulate and artificially inflate the market price of First Bank System in order to inflate the value of First Bank System's offer and proposed stock swap merger transaction with First Interstate, particularly as compared with the stock swap offer by Wells Fargo. 59. In doing the acts, practices, and omissions complained of herein, defendants, and each of them, acted with an intent to deceive, manipulate or defraud, or were reckless. 60. As a result of the violation of Section 14(e) by the defendants, and each of them, plaintiff and the members of the Class, and each of them, sustained losses and were damages, are also entitled to prejudgment interest at the appropriate legal rate. WHEREFORE, plaintiff and the Class pray for relief as set forth below. SECOND CAUSE OF ACTION Violation of Section 14(e) of the Securities Exchange Act and Rule 14a-9 Promulgated by the SEC (Direct Liability of All Defendants) 61. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above aa though fully set forth hereinafter. 62. Defendants, and each of them, violated federal securities law, 13 U.S.C. SECTION78n(e), Section 14(a) of the Securities Exchange Act of 1934, and Rule 14a-9 promulgated thereunder by the Securities and Exchange Commission, in that defendants, and each of them, solicited or permitted the use of his name to solicit a proxy or consent or authorization in respect to First Interstate common stock, and which solicitation was, at the time and in the light of the circumstances under which it was made, false or misleading, or failed to state a material fact necessary to make he statements therein not false or misleading. The false and misleading representations and omissions by defendants include, but are not limited to, the November 20th letter to the shareholders, the Schedule 14d-9, press releases and public statements regarding the tender offers. 63. Defendants, and each of them, knew, or in the exercise of reasonable discretion and due diligence should have known, that these representations were false and misleading and/or omitted to state material facts necessary in order to make the statement made in light of the circumstances under which they were made not misleading. 64. In doing the acts, practices, and omissions complained of herein, defendants, and each of them, acted with an intent to deceive, manipulate or defraud, or were reckless, or were negligent. 65. As a result of the violation of Section 14(a) and Rule 14a-9 by the defendant and each of them, plaintiff and the members of the Class, and each of them, sustained losses and were damages, are also entitled to prejudgment interest at the appropriate legal rate. WHEREFORE, plaintiff and the Class pray for relief as set forth below. THIRD CAUSE OF ACTION Breach of Fiduciary Duty (Direct and Secondary Liability of the Officer and Director Defendants; Secondary Liability of Defendant First Bank System) 66. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above as though fully set forth hereinafter. 67. The Officer and Director Defendants, and each of them, owed to plaintiff and the Class, as First Interstate shareholders, a fiduciary duty of the highest good faith, integrity and fair dealing, and said fiduciary relationship existed at all relevant times herein. 68. The Officer and Director Defendants, and each of them, breached their fiduciary duties to plaintiff and the Class by the acts and omissions set forth above. 69. The Officer and Director Defendants, and each of them, committed the acts and omissions alleged herein with the intent to gain an advantage over plaintiff and the Class and to benefit themselves to the detriment of plaintiff and the Class. 70. The breaches of fiduciary duty by the officer and Director Defendants, and each of theme caused detriment to plaintiff and the Class, including beat not limited to (i) the wrongful dissipation of assets by the Officer and Director Defendants obligating First Interstate to a "poison pill" provision with defendant First Bank System providing a break-up fee of $200 million; (ii) refusing to accept or support the offer which provides the greatest return to the First Interstate shareholders and is in their best interets; (iii) by refusing to accept or support any offer which does not protect the Officer and Director Defendants' own positions of power, prestige and money; and (iv) by not making available, fully and fairly, to the First Interstate shareholders, all of the offers that have been made and the terms thereof so that they can make an informed decision regarding the offers. 71. Defendant First Bank System aided and abetted, encouraged and rendered substantial assistance in accomplishing the breaches of fiduciary duties committed by the Officer and Director Defendants, and each of them. Without the involvement of and agreement by defendant First Bank System to act as a "white knight" merger partner to First Interstate, the Officer and Directors Defendants could not accomplish their wrongful goals, including the retention or obtaining of lucrative positions with the ultimately existing corporation and bank. In return of its granting of preferential, job- saving provisions to the Officer and Director Defendants, and the making of a merger offer (although less than any other offer made to date), defendant First Bank System is to receive ownership of First Interstate at a reduced "price", and defendant First Bank System is pledged to receive $200 million if the deal with First Interstate does not go through. In taking action, as particularized herein, to aid and abet and substantially assist the commission of those wrongful acts and other wrongdoings complained of, defendant First Bank System acted with an awareness of its primary wrongdoing and realized that its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 72. The Officer and Director Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful Conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 73. Defendants, and each of them, pursued a conspiracy, common enterprise and common course of conduct ta accomplish the wrongs complained of herein. The purpose and effect of the conspiracy, common enterprise and common course of conduct complained of was, inter alia, to allow continuing monetary and non- monetary benefits to defendants, and to allow continuing control of First Interstate operations by the Officer and Director Defendants, to the detriment of plaintiff and the Class. Defendants accomplished their conspiracy, common enterprise and common course of conduct by making misrepresentations and concealing information, as specified herein, and by breaching their fiduciary obligations, and by taxing steps and making statements in furtherance of their wrongdoing as specified herein. Each defendants was a direct, necessary and substantial participant in the conspiracy, common enterprise and common course of conduct complained of herein, and was aware of his/its overall contribution to, and furtherance of the conspiracy, common enterprise and common course of conduct. Defendants' acts of conspiracy include, inter alia, all of the acts that each of them are alleged to have committed in furtherance of the wrongful conduct complained of herein, except those relating to the reaching of agreements or understandings sufficient to characterize their conduct as conspiratorial. 74. Other persons and entities not named as defendants herein were also participants in the conspiracy alleged and acted in furtherance of the objectives of the conspiracy as co-conspirators. 75. As a result of the defendants', and each of their, wrongful conduct, plaintiff and the other members of the Class have sustained and will sustain economic losses and other general and specific damages, including but not limited to the amounts which the First Interstate shareholders could have received if the highest offer had boon accepted and supported by the defendants, and the amount of the $200 million "poison pill" which potentially will reduce the assets of First Interstate, loss of future income, and lost profits, all in an amount to be determined according to proof. 76. The wrongful acts of defendants, and each of them, were done maliciously, oppressively, and fraudulently and plaintiff and the other members of the Class are entitled to punitive and exemplary damages in an amount to be ascertained according to proof, which is appropriate to punish or set an example of the defendants, and each of them. WHEREFORE, plaintiff and the Class pray for relief as set forth below. FOURTH CAUSE OF ACTION Abuse of Control (Direct and Secondary Liability of the Officer and Director Defendants; Secondary Liability of Defendant First Bank System) 77. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above an though fully set forth hereinafter. 78. The Officer and Director Defendants, and each of them, dominated and controlled the business and corporate affairs of First Interstate through the corporate positions, relationship with the other defendants, personal stock ownership, and their control over other related entities and shareholders. There exists an imbalance and disparity of knowledge and economic power between the Officer and Director Defendants, and the Plaintiff class. In doing the acts alleged hereinbefore, the defendants, and each of them, have acted to further their own private financial interests to the detriment of the interests of plaintiff and the Class, in flagrant abase of their positions of corporate control. 79. The Officer and Director Defendants, and each of them, caused detriment to plaintiff and the Class by their abuses of control, including but not limited to (i) the wrongful dissipation of assets by the defendants obligating First Interstate to a "poison pill" provision with defendant First Bank System providing break-up fee of $200 million, (ii) not attempting to realize the highest recovery possible for the First Interstate shareholders in sale or merger of First Interstate; (iii) by refusing to accept or support any offer which does not protect defendants' own positions of power, prestige and money; and (iv) by not making available, fully and fairly, to the First Interstate shareholders, all of the offers that have been made and the terms thereof so that they can make an informed decision regarding the offers. 80. The Director and Officer Defendants, and each of them, knew that the acts of the other defendants constituted a breach of duty and an abuse of control. Nevertheless, each Director and Officer Defendants conspired and acted in concert with the other defendants to accomplish the improper acts and transactions alleged. Defendants' actions were illegal and improper, and are in furtherance of the Common design to achieve the unlawful purpose of the conspiracy. Each of the Director and Officer Defendants had knowledge of the conspiracy and its unlawful purpose. 81. Defendant First Bank System aided and abetted, encouraged and rendered substantial assistance in accomplishing the abuses of control committed by the Officer and Director Defendants, and each of them. Without the involvement of and agreement by defendant First Bank System to act as a "white night" merger partner to First Interstate, the Officer and Directors Defendants could not accomplish their wrongful goals, including the retention or obtaining of lucrative position with the ultimately existing corporation and bank. In return of its granting of preferential, job- saving provisions to the Officer and Director Defendants, and the making of a merger offer (although less than any other offer made to date), defendant First Bank System is to receive ownership of First Interstate at a reduced "price", and defendant First Bank System is pledged to receive $200 million if the deal with First Interstate does not go through. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, defendant First Bank System acted with an awareness of its primary wrongdoing and realized that its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 82. The Officer and Director Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 83. Defendants, and each of them, pursued a conspiracy, common enterprise and common course of conduct to accomplish the wrongs complained of herein. The purpose and effect of the conspiracy, common enterprise and common course of conduct complained of was, inter alia, to allow continuing monetary and non- monetary benefits to defendants, and to allow continuing control of First Interstate operations by defendants, to the detriment of plaintiff and the Class. Defendants accomplished their conspiracy, common enterprise and common course of conduct by making misrepresentations and concealing information, as specified herein, and by breaching their fiduciary obligations, and by taking steps and making statements in furtherance of their wrongdoing an specified herein. Each defendant was a direct, necessary and substantial participant In the conspiracy, common enterprise and common course of conduct complained of herein, and was aware of his/its overall contribution of and furtherance of the conspiracy, common enterprise and common course of conduct. Defendants' acts of conspiracy include, inter alia, all of the acts that each of them are alleged to have committed in furtherance of the wrongful conduct complained of herein, except those relating to the reaching of agreements or understandings sufficient to characterize their conduct as conspiratorial. 84. Other persons and entities not named as defendants herein were also participants in the conspiracy alleged and acted in furtherance of the objective of the conspiracy an co-conspirators. 85. As a result of the defendants', and each of their, wrongful conduct, plaintiff and the other members of the Class have sustained and will sustain economic losses and other general and specific damages, including but not limited to the amounts which the First Interstate shareholders could have received if the highest offer had been accepted and supported by the defendants, and the amount of the $200 million "poison pill" which potentially will reduce the assets of First Interstate, loss of future income, and lost profits, all in an amount to be determined according to proof. 86. The wrongful acts of the defendants, and each of them, were done maliciously, oppressively, and fraudulently, and plaintiff and the other members of the Class are entitled to, punitive and exemplary damages in an amount to be ascertained according to proof, which is appropriate to punish or set an example of the defendants, and each of them. WHEREFORE, plaintiff and the Class pray for relief as set forth below. FIFTH CAUSE OF ACTION Unfair Business Practices (Direct and Secondary Liability of All Defendants) 87. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above as though fully set forth hereinafter. 33. By their wrongful conduct, as set forth above, defendants, and each of them, have engaged in unfair competition including unlawful, unfair or fraudulent business practice, in violation of business and Professions Code section 17200 et seq., and have destroyed or prevented fair and honest competition for the purchase of First Interstate common stock as part of a merger or acquisition of First Interstate. 88. Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his or its primary wrongdoing and realized that his/its conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 89. Plaintiff and the Class have standing to bring this cause of action for injunctive relief, pursuant to California Business & Professions Code Section 17203. 90. If defendants, and each of them, proceed with a merger between First Interstate and defendant First Bank System at the price offered by First Bank System, it will irreparably harm the First Interstate shareholders, namely plaintiff and the Class, unless appropriate Injunctive relief is granted. If defendants, and each of them, proceed with payment of a $200 million break up fee pursuant to the "poison pill" provision of the agreement between First Interstate and defendant First Bank System, it is will irreparably harm the First Interstate shareholders, namely plaintiff and the Class, unless appropriate injunctive relief is granted. WHEREFORE, plaintiff and the Class pray for relief as set forth below. SIXTH CAUSE OF ACTION Unjust Enrichment (Direct Liability of All Defendants, Except Defendant DLJ) 91. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above as though fully set forth hereinafter 92. If defendants, and each of them, proceed with a merger between First Interstate and defendant First Bank System at the price offered by first Bank System, rather than accepting the higher offer(s) by Wells Fargo, or soliciting and attempting to obtain the highest offer possible for the benefit of the First Interstate shareholders, because the Officer and Director Defendants want to keep and obtain personal and financial benefits for themselves instead, this would be an unjust enrichment to the Officer and Director Defendants, and each of theme to the detriment of plaintiff and the Class. 93. If defendant First Bank System obtains payment of a $200 million break up fee pursuant to the, "poison pill" provision of the agreement between First Interstate and defendant First Bank System, for which compensation defendant First Bank System is not entitled, has not earned, and is not the result of any benefit to the First Interstate shareholders, this would be an unjust enrichment to defendant First Bank System, to the detriment of plaintiff and the Class. 94. Any unjust enrichment obtained by the defendants, and each of them, should be disgorged, and placed in trust for the financial benefit of plaintiff and the Class. WHEREFORE, plaintiff and the Class pray for relief as set forth below. SEVENTH CAUSE OF ACTION Constructive Fraud (Direct and Secondary Liability of the Officer and Director Defendants) 95. Plaintiff hereby incorporates by reference paragraphs 1 through 56 above as though fully set forth hereinafter. 96. As a result of the tortious conduct of the officer and Director Defendants, and each of them, as set forth above, and because of the fiduciary relationship between First Interstate shareholders and these defendants, the Officer and Director Defendants are liable to plaintiff and the Class for constructive fraud. 97. The Officer and Director Defendants, and each of them, aided and abetted, encouraged and rendered substantial assistance in accomplishing the wrongful conduct and their wrongful goals and other wrongdoing complained of herein. In taking action, as particularized herein, to aid and abet and substantially assist the commission of these wrongful acts and other wrongdoings complained of, each of the defendants acted with an awareness of his primary wrongdoing and realized that his conduct would substantially assist the accomplishment of the wrongful conduct, wrongful goals, and wrongdoing. 98. As a result of the Officer and Director Defendants', and each of their, wrongful conduct, plaintiff and the Class have suffered and continue to suffer economic losses, and other general and specific damages, all in an amount to be determined according to proof at time of trial. WHEREFORE, plaintiff and the Class pray for relief as follows: 1. Compensatory and general damages according to proof; 2. Special damages according to proof; 3. Prejudgment interest at the maximum legal rate; 4. Punitive and exemplary damages according to proof; 5. For injunctive relief 6. Costs of the proceedings herein; 7. Reasonable attorneys' fees; and 8. All such other and further relief as the Court deems just. DATED: November 24, 1995 BLECHER & COLLINS, P.C. By: ________________________ MAXWELL M. BLECHER COTCHETT & PITRE By: ________________________ MARIE SETH WEINER Attorneys for Plaintiff and the Class JURY DEMAND Plaintiff TIMOTHY W. BRADLEY, individually and on behalf of all others similarly situated, demands a trial by jury. DATED: November 24, 1995 BLECHER & COLLINS, P.C. By: ________________________ MAXWELL M. BLECHER COTCHETT & PITRE By: ________________________ MARIE SETH WEINER Attorneys for Plaintiff and the Class EX-99 5 EXHIBIT 42 - THORNHILL COMPLAINT MILBERG WEISS BERSHAD HYNES & LERACH WILLIAM S. LERACH (68581) SALLIE A. BLACKMAN (141830) 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058 - and - JEFF S. WESTERMAN (94559) 355 South Grand Avenue Suite 4170 Los Angeles, CA 90071 Telephone: 213/617-9007 SULLIVAN, HILL, LEWIN & MARKHAM (71814) 550 West C Street Suite 1500 San Diego, CA 92101-3540 Telephone: 619/233-4100 BLUMENTHAL & OSTROFF NORMAN BLUMENTHAL (068687) 1420 Kettner Blvd., 7th Floor San Diego, CA 92101-2431 Telephone: 619/239-7373 Attorneys for Plaintiff SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES JOSEPH M. THORNHILL, On Behalf ) Case No. BC139252 of Himself and All Others ) Similarly Situated ) ) CLASS ACTION Plaintiff, ) ) vs. ) CLASS ACTION COMPLAINT FOR ) BREACH OF FIDUCIARY DUTY, JOHN E. BRYSON, DON C. ) ABUSE OF CONTROL, UNJUST FRISBEE, STEVEN B. SAMPLE, ) ENRICHMENT, INTERFERENCE EDWARD M. CARSON, GEORGE M. ) WITH PROSPECTIVE ECONOMIC KELLER, FORREST N. SHUMWAY, ) ADVANTAGE AND EQUITABLE JEWEL PLUMMER COBB, W.F. ) RELIEF AND DAMAGES KIESCHNICK, WILLIAM B. SIART, ) RALPH P. DAVIDSON, THOMAS L. ) LEE, RICHARD J. STEGEMEIER, ) Plaintiff Demands A MYRON DuBAIN, WILLIAM F. ) Trial By Jury MILLER, DANIEL M. TELLEP and ) J.J. PINOLA, ) ) ) Defendants. Plaintiff, as and for his complaint, alleges as follows upon information and belief except as to paragraph 4, which is alleged upon knowledge. Plaintiff's information and belief is based upon, inter alia, the investigation made by Plaintiff by and through his counsel. INTRODUCTION AND OVERVIEW 1. This is a shareholder class action seeking equitable relief and compensatory damages on behalf of all shareholders of First Interstate Bancorp ("First Interstate" or the "Company") against First Interstate's top officers and the members of the board of Directors of First Interstate, seeking to remedy violations of state law arising out of these defendants' actions and conduct undertaken to defeat a highly favorable acquisition offer for First Interstate stock by Wells Fargo & Co. ("Wells Fargo"). First Interstate's board of Directors has pursued a course of conduct intended to and having the effect of making it extremely difficult for any outside party to successfully acquire First Interstate, even at prices well in excess of First Interstate stock's historical price range. This course of conduct has been undertaken by the defendants to secure and retain their lucrative positions of power, prestige and profit with respect to First Interstate and to enhance and aggrandize their own interests at the expense of First Interstate's other shareholders. 2. On October 18, 1995, Wells Fargo, a highly successful, profitable and well-capitalized bank, made an offer to acquire First Interstate at a price far in excess of First Interstate'S then-market price, by exchanging in a tax-free exchange .625 shares of Wells Fargo stock for each share of First Interstate stock, an offer worth $133.50 per share based on the October 17, 1995 closing price of Wells Fargo stock of $213.62 per share. First Interstate'S stock jumped from $106 per share to $140 per share upon this announcement, while Wells Fargo's stock increased to $228.65 per share, making the offer worth $142.65 per First Interstate share. However, the defendants are rejecting such offer and have refused to negotiate an acquisition of the Company at any higher price, even though Wells Fargo has told First Interstate's board it is willing to negotiate a higher price and thus to offer a fair and reasonable price for First Interstate stock, well above the levels at which the stock has traded historically. 3. In recent years, defendants have consistently refused to entertain highly favorable acquisition offers or overtures for First Interstate, thus preventing an acquisition of the Company at a favorable price for the shareholders. Defendants have done this to retain their positions of prestige, power and profit, as they know they will lose those positions in the event First Interstate is acquired. Defendants' interests in holding on to their positions of power, prestige and profit as officers and directors of First Interstate far exceeds their interests as shareholders in First Interstate, as they collectively own only about 144,000 of First Interstate'S 75.7 million shares -- a minuscule .001% of its outstanding stock. PARTIES AND ACTORS 4. Plaintiff Joseph M. Thornhill, a resident of California and the owner of 100 shares of First Interstate, is and was at all times relevant hereto a common shareholder of First Interstate. Plaintiff brings this action on behalf of the holders of the common stock of First Interstate for injunctive and other relief in connection with the proposed acquisition of First Interstate by Wells Fargo. 5. (a) First Interstate is a corporation with its principal executive offices in Los Angeles, California and which operates principally in California, as well as several other western states. First Interstate is a bank holding company. (b) At December 31, 1994, it owned 16 banks (the "subsidiary banks") which operated approximately 1,100 banking offices in 13 states, including California. 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. (c) The subsidiary Banks accept checking, savings and other time deposit accounts and employ these funds principally by making consumer, real estate and commercial loans and investing in securities and other interest-bearing assets. (d) The Company also provides banking-related financial services and products. These include asset-based commercial financing, asset management and investment counseling, bank card operations, mortgage banking, venture capital and investment products. It engages in these activities both through non-bank subsidiaries of the Company and through the Subsidiary Banks and their subsidiaries. (e) The larger Subsidiary Banks provide international banking services on a limited basis through the international departments of their domestic offices. They also maintain correspondent relationships with major banks throughout the world. 6. (a) Defendant John E. Bryson ("Bryson") was a director of First Interstate and Board Chairman and Chief Executive Officer of SCEcorp and Southern California Edison Company at all times relevant hereto. (b) Defendant Don C. Frisbee ("Frisbee") was a First Interstate director and Chairman Emeritus PacifiCorp at all times relevant hereto. (c) Defendant Steven B. Sample ("Sample") was a First Interstate director and President University of Southern California at all times relevant hereto. (d) Defendant Edward M. Carson ("Carson") was Chairman of the Board of First Interstate at all times relevant hereto. (e) Defendant George M. Keller ("Keller") was a director of First Interstate and the retired Chairman and Chief Executive Officer of Chevron Corporation at all times relevant hereto. (f) Defendant Forrest N. Shumway ("Shumway") was a director of First Interstate and former Vice-Chairman of the Board Allied-Signal, Inc. at all times relevant hereto. (g) Defendant Jewel Plummer Cobb ("Cobb") was a director of First Interstate and president Emeritus California State University, Fullerton at all times relevant hereto. (h) Defendant W.F. Kieschnick ("Kieschnick") was a director of First Interstate and retired President and Chief Executive Officer Atlantic Richfield Company at all times relevant hereto. (i) Defendant William B. Siart ("Siart") was President and Chief Executive Officer First Interstate and a director at all times relevant hereto. (j) Defendant Ralph P. Davidson ("Davidson") was a director of First Interstate and former Chairman of The John F. Kennedy Center for the Performing Arts at all times relevant hereto. (k) Defendant Thomas L. Lee ("Lee") was a director of First Interstate and Chairman and Chief Executive Officer The Newhall Land and Farming Company at all times relevant hereto. (1) Defendant Richard J. Stegemeier ("Stegemeier") was a director of First Interstate and Chairman of the Board Unocal Corporation at all times relevant hereto. (m) Defendant Myron DuBain ("DuBain") was a director of First Interstate and retired Chairman and Chief Executive Officer Fireman's Fund Corporation at all times relevant hereto. (n) Defendant William F. Miller ("Miller") was a director of First Interstate and President Emeritus SRI International at all times relevant hereto. (o) Defendant Daniel M. Tellep ("Tellep") was a director of First Interstate and Chairman and Chief Executive Officer Lockheed Corporation at all times relevant hereto. (p) Defendant J.J. Pinola ("Pinola") was the retired Chairman and Chief Executive Officer of First Interstate and a director at all times relevant hereto. 7. Defendants (hereinafter collectively referred to as the "Individual Defendants") are each members of First Interstate's Board of DirectorS. 8. The individual Defendants owed and owe First Interstate's public shareholders fiduciary obligations and were and are required to: (i) use their ability to manage First Interstate in a fair, just and equitable manner; (ii) act in furtherance of the best interests of First Interstate and its shareholders; (iii) act to maximize shareholder value; (iv) govern First Interstate in such a manner as to heed the expressed views of its public shareholders; (v) refrain from abusing their positions of control, power, prestige and profit; and (vi) not favor their own interests at the expense of First Interstate and its shareholders. By reason of their fiduciary relationships, these defendants owed and owe plaintiff and other members of the Class the highest obligation of good faith, fair dealing, loyalty and due care. 9. Wells Fargo is a corporation with its principal executive offices in San Francisco, California. Wells Fargo is a huge bank holding company and one of the most well-managed, profitable and well-capitalized banks in the United States. With more than 600 branch outlets, 1,900 round-the-clock Wells Fargo Express ATMs and a popular 24-hour telephone banking service, Wells Fargo operates one of the largest and busiest consumer banking businesses in the United States. Besides serving as banker to some 3.5 million California households, Wells Fargo provides a full range of banking services to commercial, agribusiness, real estate and small business customers, mainly in California. It is one of the nation's leading managers of personal trust accounts, corporate 401(k) plans and mutual funds, with approximately $57 billion in assets under its management and administration. 10. Each defendant herein is sued individually as a conspirator and aider and abettor, as well as in his capacity as a director of the Company, and the liability of each arises from the fact that he has engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein. CLASS ACTION ALLEGATIONS 11. Plaintiff brings this lawsuit on behalf of himself and all other common shareholders of First Interstate (except defendants herein and any person, firm, trust, corporation or other entity related to, controlled by or affiliated with any of the defendants and any of their successors in interest (the "Class") 12. This action is properly maintainable as a class action for the following reasons: (a) The Class is so numerous that joinder of all Class members is impracticable. As of January 31, 1995, First Interstate had over 75 million shares of common stock outstanding owned by over 20,000 shareholders. Members of the Class are scattered throughout the United States and are so numerous as to make it impracticable to bring them all before this Court. 13. There are questions of law and fact which are common to members of the Class and which predominate over any questions affecting only individual members. The common questions include, inter alia, the following: (a) Whether the Individual Defendants have breached their fiduciary duties owed by them to plaintiff and the other members of the Class; (b) Whether the Individual Defendants have failed, in violation of their fiduciary duties, to hold a fair auction of the Company or its assets or to sell the Company on the favorable terms; (c) Whether the Individual Defendants have failed, in violation of their fiduciary duties, to provide for a sale of First Interstate; (d) Whether Plaintiff and the other members of the Class will be irreparably damaged if the Wells Fargo acquisition iss not completed; (e) Whether the Individual Defendants have breached or aided and abetted the breach of the fiduciary and other common law duties owed by them to Plaintiff and other members of the Class; and (f) Whether Plaintiff and other members of the Class are being and will continue to be injured by the wrongful conduct alleged herein and, if so, what is the proper remedy and/or measure of damages. 14. The claims of Plaintiff are typical of the claims of other members of the Class and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. 15. Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation of this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. 16. Plaintiff anticipates that there will not be any difficulty in the management of this litigation as a class action. 17. For the reasons stated herein, a class action is superior to any other method available for the fair and efficient adjudication of this controversy since it would be impractical and undesirable for each of the members of the Class who has suffered or will suffer damages to bring separate actions in various parts of the country. Classwide remedies will assure uniform standards of conduct for the Individual Defendants and avoid the risk of inconsistent judgments. SUBSTANTIVE ALLEGATIONS 18. As pleaded earlier, First Interstate is an interstate banking corporation. First Interstate's stock performed poorly in 1994 through mid-1995, due to First Interstate'S lackluster performance and perceptions that it was poorly managed. For instance, First Interstate's stock traded at a high of $85 per share and then fell, falling to a low of $67 per share in December 1994. First Interstate did not reach $85 per share again until mid-1995. After June 1995, First Interstate's stock performed better, reaching over $100 per share in late September 1995, due to an increase in the prices in bank stocks generally and because of rumors that a favorable acquisition offer for First Interstate would be forthcoming as part of the wave of bank acquisitions and mergers now sweeping the United States. However, even with this increase, First Interstate's stock has been a relatively poor performer when compared to other bank stocks. Because in recent years First Interstate has not been viewed to be as well-managed as many other large banks and thus has not performed as well in terms of many of its key ratios and measurements of success as other banks, its stock has not performed well and thus, shareholders in First Interstate have, in recent years, obtained a below industry trendline or industry average return. The chart below shows the price action of First Interstate stock in 1994-1995: [The hardcopy Complaint filed with the Court contains a line graph showing the daily common stock price for First Interstate for the period December 31, 1993 through October 17, 1995. Because the document for which this Complaint is an Exhibit has been filed with the Securities and Exchange Commission by electronic transmission, this graph is not contained herein. The following information summarizes the First Interstate daily closing stock price, plotted along the graph's vertical axis, for the dates indicated on the horizontal axis of the graph: Date Common Stock Price December 31, 1993 64 1/8 March 25, 1994 77 7/8 June 17, 1994 75 3/4 September 9, 1994 79 1/4 December 2, 1994 69 3/8 February 24, 1995 81 3/8 May 19, 1995 81 August 11, 1995 87 1/2 October 17, 1995 106] 19. In recent years, certain other large financial institutions have approached First Interstate with favorable acquisition inquiries and offers. Some years ago, Bank of America approached First Interstate about a possible acquisition. Approximately a year ago, Wells Fargo approached First Interstate about a possible acquisition of First Interstate at a premium price. First Interstate's Board and its top management have rejected and frustrated all of these prior acquisition overtures and offers, even though those offers would have resulted in First Interstate shareholders receiving a substantial premium over the then-market price of First Interstate stock. Defendants have done this because they know that in the event First Interstate is acquired by another bank, most or all of the directors of First Interstate will, either in connection with the acquisition or shortly thereafter, be removed from the Board of the surviving bank because their services will not be necessary and they will be mere surplusage and thus such an acquisition would bring an end to their positions of power, prestige and profit as directors of this huge bank. At the same time, top managers at First Interstate have caused these prior acquisition overtures and offers to be rejected and/or frustrated, because they also know that, in the event of an acquisition, they will also lose their lucrative jobs and their prestigious positions of power, prestige and profit as officers of a major banking institution. In so acting, these defendants have been aggrandizing their own personal positions and interests over that of First Interstate and its broader shareholder community to whom they owe fiduciary duties to bring about a sale of First Interstate on favorable terms to all the shareholders, even if it results in them losing their lucrative positions. 20. Shortly prior to October 18, 1995, Wells Fargo approached First Interstate and offered to negotiate an acquisition of First Interstate for a price far in excess of First Interstate's current stock price. First Interstate's Chairman refused this offer and told Wells Fargo that First Interstate's Board would not negotiate to sell the bank and would resist any offer by Wells Fargo to buy the bank. On October 18, 1995, Wells Fargo made an unsolicited acquisition offer for First Interstate offering to exchange .625 shares of its stock for each share of First Interstate stock, a $133.50 per share offer based on the October 17, 1995 closing price of Wells Fargo stock of $213.62 per share. Upon the announcement of this favorable acquisition offer, First Interstate's stock instantly skyrocketed from $106 per share to over $140 per share, reflecting the extremely large premium being offered to First Interstate shareholders in this tax-free exchange, and the increase in Wells Fargo's stock price to $228 per share making the offer worth $142 per First Interstate share. Wells Fargo's offer to acquire First Interstate is approximately three times First Interstate's book value, which is a high offer compared to recent bank acquisition prices. The acquisition price is also approximately 12.1 times First Interstate's estimated 1995 earnings per share of $11.29 per share, which is also reasonable in light of other recent bank acquisitions, although it is lower than 15 times the estimated next year's earnings paid in other bank acquisitions. 21. Wells Fargo has privately indicated to First Interstate's officers and directors that they are willing and will increase the price of their offer to acquire First Interstate if First Interstate's Board will cooperate in bringing about a consensual acquisition. However, First Interstate'S top officers and its Board are resisting and are going to continue to resist this acquisition offer so that they can, as they have in the past, retain themselves in their positions of power, prestige and profit. For instance, members of First Interstate's Board of Directors own only a minuscule portion of First Interstate's outstanding common stock. They actually own only 144,000 shares of First Interstate's 75.7 million shares of outstanding common stock, or just .001% of the stock. Thus, whatever interest the defendants have as shareholders in First Interstate based on their minuscule holdings of the Company's stock is far outweighed by their interest in retaining their lucrative positions of power, prestige and profit as directors and/or officers of the Company from which they receive lucrative fees, prestige in the community, large salaries, and other emoluments of office, which they will lose if First Interstate is acquired. 22. The rejection of the Wells Fargo offer is a breach of defendants' fiduciary duties, an abuse of control, provides unjust enrichment to all defendants, is an unfair business practice and has been perpetrated through tortious interference with the class members' prospective economic interests and opportunities and through material misrepresentations and the failure by defendants to disclose material information to the members of the Class. 23. Unless defendants are enjoined form refusing to negotiate a sale of First Interstate, plaintiff and the members of the Class will continue to suffer injury. Plaintiff and the members of the Class have no adequate remedy at law. FIRST CAUSE OF ACTION BREACH OF FIDUCIARY DUTIES 24. Plaintiff incorporates by reference 1-23 above. 25. The Individual Defendants engaged in the aforesaid conduct in intentional breach and/or reckless disregard of their fiduciary duties to plaintiff and the members of the Class. 26. Defendants, at the time they rejected Wells Fargo's offer, knew that the market price of First Interstate stock reflected both the intrinsic value of First Interstate and a premium which resulted from market expectations that Wells Fargo's efforts to acquire control of First Interstate would produce greater returns for investors. 27. As a proximate result, the plaintiff and other members of the Class have been substantially injured and request compensatory damages. SECOND CAUSE OF ACTION NEGLIGENT BREACH OF FIDUCIARY DUTIES 28. Plaintiff incorporates by reference 1-23 above. 29. The Individual Defendants engaged in the aforesaid conduct without exercising the reasonable and ordinary care which directors and officers owe to their shareholders, and thereby breached their fiduciary duties to plaintiff and other members of the Class. 30. Defendants, at the time they rejected Wells Fargo's offer, knew or should have known, that the market price of First Interstate stock at the time reflected both the intrinsic value of First Interstate and a premium which resulted from market expectations that Wells Fargo's efforts to acquire control of First Interstate would produce greater returns for investors. 31. As a proximate result, the plaintiff and other members of the Class have been substantially injured and request compensatory damages. 32. Defendants did the things alleged herein without exercising the reasonable and ordinary care owed by corporate directors and officers. THIRD CAUSE OF ACTION ABUSE OF CONTROL 33. Plaintiff incorporates by reference 1-23 above. 34. The Individual Defendants owed duties as controlling persons and/or as controlling or dominant directors to plaintiff and the other members of the Class not to use their positions of control of First Interstate for their own personal interests and contrary to the interests of First Interstate's remaining shareholders. 35. The foregoing conduct by the director defendants amounted to an abuse of their abilities to control First Interstate in violation of their obligations to plaintiff and the other members of the Class. 36. As a proximate result, plaintiff and the other members of the Class have been damaged and will continue to be damaged unless defendants are enjoined, and defendants are each jointly and severally liable to plaintiff and the other members of the Class for all loss and damage they have suffered resulting from the matters set forth herein. FOURTH CAUSE OF ACTION UNJUST ENRICHMENT 37. Plaintiff incorporates by reference 1-23 above. 38. As a proximate result of the tortious conduct described above, all of the defendants have been and will be unjustly enriched at the expense of the members of the Class. The director defendants will retain control of First Interstate and their positions of power, prestige and profit. Defendants have obtained these unjust benefits at the expense of the members of the Class by rejecting the Wells Fargo offer and refusing to negotiate a beneficial sale of First Interstate. FIFTH CAUSE OF ACTION TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE 39. Plaintiff incorporates by reference 1-23 above. 40. By reason, inter alia, of Wells Fargo's announced offer to purchase First Interstate stock at $133+ a share, plaintiff and the members of the Class had an expectancy that they could tender their shares and realize at least the $133+ per share offer. Moreover, all class members had the expectancy of sharing in any premium that results from acquisition attempts. 41. Defendants knew of these prospective advantages presented to plaintiff and the members of the Class and defendants intended to interfere and did interfere with those advantages when they rejected the Wells Fargo offer. 42. Plaintiff and the members of the Class were prevented from obtaining the foregoing advantages as a result of the conduct of all defendants described above. 43. The defendants, and each of them, did the things alleged in this Complaint with the intent to injure plaintiff and the members of the Class. WHEREFORE, plaintiff and members of the Class demand judgment against defendants as follows: 1. Declaring that this action is properly maintainable as a class action and certifying plaintiff as the representative of the Class; 2. Declaring that the defendants have breached and are breaching their fiduciary and other duties to plaintiff and other members of the Class; 3. Preliminarily and permanently enjoining the defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from taking steps to prevent or frustrate the sale to Wells Fargo or refusing to proceed with negotiations with Wells Fargo to increase the offered price; 4. Awarding compensatory damages against defendants individually and severally in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law, arising from the proposed transaction; 5. Awarding plaintiff his costs and disbursements and reasonable allowances of fees for plaintiff's counsel and experts and reimbursement of expenses; and 6. Granting plaintiff and the Class such other and further relief as the Court may deem just and proper. JURY DEMAND Plaintiff demands a trial by jury. DATED: November 16, 1995 MILBERG WEISS BERSHAD HYNES & LERACH WILLIAM S. LERACH ________________________________ WILLIAM S. LERACH 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058 - and - JEFF S. WESTERMAN 355 South Grand Avenue Suite 4170 Los Angeles, CA 90071 Telephone: 213/617-9007 SULLIVAN, HILL, LEWIN & MARKHAM DAVID MARKHAM 550 West C Street Suite 1500 San Diego, CA 92101-3540 Telephone: 619/233-4100 BLUMENTHAL & OSTROFF NORMAN BLUMENTHAL 1420 Kettner Blvd., 7th Floor San Diego, CA 92101-2431 Telephone: 619/239-7373 Attorneys for Plaintiff -----END PRIVACY-ENHANCED MESSAGE-----