First Interstate Bancorp
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
November 5, 1995
First Bank System, Inc.
First Bank Place
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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 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
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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
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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
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 ▇▇▇▇▇ Fargo & Company ("▇▇▇▇▇") 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 ▇▇▇▇▇ 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 ▇▇▇▇▇
after the date hereof does not constitute an Acquisition Proposal for purposes
of Paragraph 2(c)(iii) hereof.
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(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 the payments required hereunder in full, it
shall (i) use its reason-
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able 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.
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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/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
Accepted and agreed to as of the date first above written:
FIRST BANK SYSTEM, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
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