First Interstate Bancorp
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
November 5, 1995
First Bank System, Inc.
First Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx
Chairman, President and Chief Executive Officer
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger (the "Merger Agreement") of
even date herewith among First Interstate Bancorp ("Subject Company"), First
Bank System, Inc. ("Parent") and Eleven Acquisition Corp. ("Merger Sub").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Merger Agreement.
In order to induce Parent and Merger Sub to enter into the Merger
Agreement, and in consideration of Parent's undertaking of efforts in
furtherance of the transactions contemplated thereby, Subject Company agrees as
follows:
1. Representations and Warranties. Subject Company hereby represents and
warrants to Parent that Subject Company has all requisite corporate power and
authority to enter into this letter agreement (this "Agreement") and to perform
its obligations set forth herein. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary corporate
action on the part of Subject Company. This Agreement has been duly executed and
delivered by Subject Company.
2. Termination Fee. (a) Unless a Nullifying Event (as such term is defined
below) shall have occurred and be continuing at the time the Merger Agreement is
terminated, in the event that the Merger Agreement is terminated pursuant to
Article VIII thereof (regardless of whether such termination is by Parent or
Subject Company) and prior to or concurrently with such termination a First
Trigger Event (as such term is defined below) shall have occurred, Subject
Company shall pay to Parent a cash fee of $25 million. Such fee shall be payable
in immediately available funds on or before the second business day following
such termination of the Merger Agreement.
(b) In addition, unless a Nullifying Event shall have occurred and be
continuing at the time the Merger Agreement is terminated, in the event that (i)
the Merger Agreement shall have been terminated pursuant to Article VIII
thereof, (ii) prior to or concurrently with such termination
(..continued)
a First Trigger Event shall have occurred, and (iii) prior to, concurrently with
or within 18 months after such termination an Acquisition Event (as such term is
defined below) shall have occurred, Subject Company shall pay to Parent an
additional cash fee of (i) $100 million, less (ii) any amount paid by Subject
Company pursuant to Paragraph 2(a) hereof. Such fee shall be payable in
immediately available funds on or before the second business day following the
occurrence of such Acquisition Event.
(c) As used herein, a "First Trigger Event" shall mean the occurrence of
any of the following events:
(i) Subject Company's Board of Directors shall have failed to approve
or recommend the Merger Agreement or the Merger, or shall have withdrawn or
modified in a manner adverse to Parent its approval or recommendation of
the Merger Agreement or the Merger, or shall have resolved or publicly
announced an intention to do either of the foregoing;
(ii) Subject Company or any Significant Subsidiary (as such term is
defined below), or the Board of Directors of Subject Company or a
Significant Subsidiary, shall have recommended that the stockholders of
Subject Company approve any Acquisition Proposal (as such term is defined
below) or shall have entered into an agreement with respect to, authorized,
approved, proposed or publicly announced its intention to enter into, any
Acquisition Proposal;
(iii) the Merger Agreement shall not have been approved at a meeting
of Subject Company stockholders which has been held for that purpose prior
to termination of the Merger Agreement in accordance with its terms, if
prior thereto it shall have been publicly announced that any person (other
than Parent or any of its Subsidiaries) shall have made, or disclosed an
intention to make, an Acquisition Proposal;
(iv) any person (together with its affiliates and associates) or group
(as such terms are used for purposes of Section 13(d) of the Exchange Act)
(other than Parent and its Subsidiaries) shall have acquired beneficial
ownership (as such term is used for purposes of Section 13(d) of the
Exchange Act) or the right to acquire beneficial ownership of 50% or more
of the then outstanding shares of the stock then entitled to vote generally
in the election of directors of Subject Company or a Significant
Subsidiary; or
(v) following the making of an Acquisition Proposal, Subject Company
shall have breached any covenant or agreement contained in the Merger
Agreement such that Parent would be entitled to terminate the Merger
Agreement under Section 8.1(d) thereof (without regard to any grace period
provided for therein) unless such breach is promptly cured without
jeopardizing consummation of the Merger pursuant to the terms of the Merger
Agreement.
(d) As used herein, "Acquisition Event" shall mean the consummation of any
event described in the definition of "Acquisition Proposal," except that the
percentage reference contained in clause (C) of such definition shall be 50%
instead of 20%.
(e) As used herein, "Acquisition Proposal" shall mean any (i) publicly
announced proposal, (ii) regulatory application or notice (whether in draft or
final form), (iii) agreement or understanding, (iv) disclosure of an intention
to make a proposal, or (v) amendment to any of the
(..continued)
foregoing, made or filed on or after the date hereof, in each case with respect
to any of the following transactions with a counterparty other than Parent or
any of its Subsidiaries: (A) a merger or consolidation, or any similar
transaction, involving Subject Company or any Significant Subsidiary (other than
mergers, consolidations or similar transactions involving solely Subject Company
and/or one or more wholly owned Subsidiaries of Subject Company and other than a
merger or consolidation as to which the common shareholders of Subject Company
immediately prior thereto in the aggregate own at least 70% of the common stock
of the publicly held surviving or successor corporation (or any publicly held
ultimate parent company thereof) immediately following consummation thereof);
(B) a purchase, lease or other acquisition of all or substantially all of the
assets or deposits of Subject Company or any Significant Subsidiary; or (C) a
purchase or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 20% or more of the voting
power of Subject Company or any Significant Subsidiary. Notwithstanding the
foregoing, Subject Company confirms that the proposal made by Xxxxx Fargo &
Company ("Xxxxx") prior to the date hereof to enter into a business combination
with Subject Company shall also constitute an Acquisition Proposal which has
been publicly announced; provided, however, that solely for purposes of
Paragraph 2(c)(iii) hereof, such proposal shall not constitute a publicly
announced Acquisition Proposal if Xxxxx shall have publicly announced the
withdrawal of such proposal prior to the time Subject Company mails to its
stockholders a proxy statement in connection with the stockholder meeting called
to approve and adopt the Merger Agreement. Nothing contained in the proviso to
the immediately preceding sentence shall imply that any proposal made by Xxxxx
after the date hereof does not constitute an Acquisition Proposal for purposes
of Paragraph 2(c)(iii) hereof.
(f) As used herein, "Nullifying Event" shall mean any of the
following events occurring and continuing at a time when Subject Company is not
in material breach of any of its covenants or agreements contained in the Merger
Agreement: (i) Parent shall be in breach of any of its covenants or agreements
contained in the Merger Agreement such that Subject Company shall be entitled to
terminate the Merger Agreement pursuant to Section 8.1(d) thereof (without
regard to any grace period provided for therein), (ii) the stockholders of
Parent shall have voted and failed to approve the Parent Vote Matters at a
meeting of such stockholders which has been held for that purpose or at any
adjournment or postponement thereof (unless the Merger Agreement shall not have
been approved at a meeting of Subject Company stockholders which was held on or
prior to such date for the purpose of voting with respect to the Merger
Agreement) or (iii) the Board of Directors of Parent shall have failed to
approve or recommend the Parent Vote Matters or shall have withdrawn, modified
or changed in any manner adverse to Subject Company its approval or
recommendation of the Parent Vote Matters or shall have resolved or publicly
announced its intention to do any of the foregoing.
(g) As used herein, "Significant Subsidiary" shall mean a
"significant subsidiary," as defined in Rule 1-02 of Regulation S-X promulgated
by the Securities and Exchange Commission, of Subject Company.
3. To the extent that Subject Company is prohibited by applicable law
or regulation, or by administrative actions or policy of a Federal or state
financial institution supervisory agency having jurisdiction over it, from
making the payments required to be paid by Subject Company herein in full, it
shall immediately so notify Parent and thereafter deliver or cause to be
delivered, from time to time, to Parent, the portion of the payments required to
be paid by it herein that it is no longer prohibited from paying, within five
business days after the date on which the Subject Company is no longer so
prohibited; provided, however, that if Subject Company at any time is prohibited
by applicable law or regulation, or by administrative actions or policy of a
Federal or state financial institution supervisory agency having jurisdiction
over it, from making
(..continued)
the payments required hereunder in full, it shall (i) use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to make such payments, (ii)
within five days of the submission or receipt of any documents relating to any
such regulatory and legal approvals, provide Parent with copies of the same, and
(iii) keep Parent advised of both the status of any such request for regulatory
and legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same.
4. Except where federal law specifically applies, this Agreement
shall be construed and interpreted according to the laws of the State of
Delaware without regard to conflicts of laws principles thereof.
5. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6. Nothing contained herein shall be deemed to authorize Subject
Company or Parent to breach any provision of the Merger Agreement.
* * *
(..continued)
Please confirm your agreement with the understandings set forth herein
by signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
FIRST INTERSTATE BANCORP
By /s/ Xxxxxxx X. X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. X. Xxxxx
Title: Chairman and Chief Executive Officer
Accepted and agreed to as of
the date first above written:
FIRST BANK SYSTEM, INC.
By /s/ Xxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
