IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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HAROLD SACHS and KEN FELDER, :
: Civil Action No.
Plaintiffs, :
: CLASS ACTION
-against- : COMPLAINT
:
FIRST INTERSTATE BANCORP, JOHN E. :
BRYSON, JEWEL PLUMMER COBB, RALPH P. :
DAVIDSON, MYRON DU BAIN, DON C. :
FRISBEE, GEORGE M. KELLER, THOMAS L. :
LEE, WILLIAM F. RANDALL, STEVEN B. :
SAMPLE, FORREST N. SHUMWAY, WILLIAM :
E. B. SIART, RICHARD J. STEGEMEIER and :
DANIEL M. TELLEP, :
:
Defendants. :
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Plaintiffs, by their attorneys, allege upon information and belief
(said information and belief being based, in part, upon the investigation
conducted by and through their), except with respect to their ownership of
First Interstate Bancorp ("First Interstate" or the "Company") common stock,
which is alleged upon his personal knowledge as follows:
THE PARTIES
1. Each plaintiff is the owner of shares of defendant First
Interstate.
2. Defendant First Interstate is a corporation organized and
existing under the laws of the State of Delaware. First Interstate maintains
its principal offices at 633 West Fifth Street, Los Angeles, California. First
Interstate is a bank holding company.
3. Defendant William E. B. Siart ("Siart") is a director and the
Chairman of the Board of First Interstate.
4. The remaining individual defendants John E. Bryson, Jewel
Plummer Cobb, Ralph P. Davidson, Myron Du Bain, Don C. Frisbee, George M.
Keller, Thomas L. Lee, William F. Randall, Steven B. Sample, Forrest N.
Shumway, Richard J. Stegemeier and Daniel M. Tellep are directors of First
Interstate.
5. The foregoing individual defendants (collectively referred to
herein as the "Director Defendants") are in a fiduciary relationship with
plaintiffs and the public stockholders of First Interstate, and owe plaintiffs
and the First Interstate public stockholders the highest obligations of good
faith, fair dealing, due care, loyalty and full and candid disclosure.
CLASS ACTION ALLEGATIONS
6. Plaintiffs bring this action on their own behalf and as a class
action on behalf of all shareholders of defendant First Interstate (except
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants) or their successors in
interest, who have been or will be adversely affected by the conduct of
defendants alleged herein.
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7. This action is properly maintainable as a class action for the
following reasons:
(a) the class of shareholders for whose benefit this action
is brought is so numerous that joinder of all Class members is impracticable.
As of July 31, 1995, there were almost 76 million shares of First Interstate
common stock outstanding, owned by nearly 25,000 shareholders of record
scattered throughout the United States.
(b) there are questions of law and fact which are common to
members of the class including, inter alia, the following:
(i) whether the Director Defendants have breached
their fiduciary duties owed by them to plaintiffs and members of the class
and/or have aided and abetted in such breach, by virtue of their participation
and/or acquiescence and by their other conduct complained of herein;
(ii) whether the Director Defendants have wrongfully
failed and refused to fully consider a purchase of First Interstate and/or any
and all of its various assets or divisions at the best price obtainable and to
take all steps to maximize shareholder value;
(iii) whether plaintiffs and the other members of the
Class will be irreparably damaged by defendants' failure to explore all
reasonable alternatives to maximize shareholder value; and
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(iv) whether defendants have breached or aided and
abetted the breaches of the fiduciary and other common law duties owed by them
to plaintiffs and the other members of the Class.
8. Plaintiffs are committed to prosecuting this action and have
retained competent counsel experienced in litigation of this nature. The
claims of plaintiffs are typical of the claims of the other members of the
Class and plaintiffs have the same interest as the other members of the Class.
Accordingly, plaintiffs are adequate representatives of the Class and will
fairly and adequately protect the interests of the Class.
9. Plaintiffs anticipate that there will not be any difficulty in
the management of this litigation.
10. The prosecution of separate actions by individual members of
the Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their
interests.
11. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
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SUBSTANTIVE ALLEGATIONS
12. On October 18, 1995, Well Fargo & Co. ("Wells Fargo")
announced a hostile offer to buy First Interstate for 0.625 Wells Fargo shares
per First Interstate share, equal to approximately $10.90 billion or $140.75
per First Interstate share based on Wells Fargo's current market price of $229
per share. The market price of First Interstate stock immediately prior to the
offer was only $105 per share, and it had traded as low as $85 3/8 as recently
as August 4, 1995.
13. First Interstate had already rejected an offer from Wells
Fargo during 1994 and it has given no indication that it intends to take all
steps possible to maximize shareholder value. In fact, defendant Siart
responded to the offer by stating, "I am deeply disappointed that Wells Fargo
would take this uninvited action." First Interstate failed to commit to
consummate any alternatives which would result in the maximization of
stockholder value.
14. Defendants' conduct amounts to a breach of the fiduciary
duties owed to plaintiffs and the Class in that plaintiffs and the Class are
being deprived of their right to share in the valuable assets and businesses
of First Interstate and to receive the maximum possible value for their
shares.
15. Under the circumstances, the Director Defendants are obligated
to explore all alternatives to maximize shareholder value. The Director
Defendants will be in breach of their fiduciary duties owed to First
Interstate's public shareholders if they fail to fully explore
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and negotiate with respect to the Wells Fargo offer and to explore any other
bona fide offers by potential acquirors for the purchase of the Company.
16. The Wells Fargo proposal represents an opportunity to effect a
change in control of First Interstate, its business and affairs. In a change
of control transaction, the Director Defendants necessarily and inherently
suffer from a conflict of interest between their own personal desires to
retain their offices in First Interstate, with the emoluments and prestige
which accompany those offices, and their fiduciary obligation to maximize
shareholder value in a change of control transaction. Because of such conflict
of interest, it is unlikely that defendants will be able to represent the
interests of First Interstate's public stockholders with the impartiality that
their fiduciary duties require, nor will they be able to ensure that their
conflicts of interest will be resolved in the best interests of First
Interstate's public stockholders.
17. Plaintiffs and the Class will suffer irreparable damage unless
defendants are enjoined from breaching their fiduciary duties to maximize
shareholder value.
18. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs demand judgement as follows:
A. Declaring this to be a proper class action;
B. Ordering defendants to carry out their fiduciary duties to
plaintiffs and the other members of the Class by announcing their intention
to:
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(i) undertake an appropriate evaluation of alternatives
designed to maximize value for First Interstate's public stockholders;
(ii) adequately ensure that no conflicts of interests exist
between defendants' own interests and their fiduciary obligation to the public
stockholders or, if such conflicts exist, to ensure that all of the conflicts
would be resolved in the best interests of First Interstate's public
stockholders; and
(iii) act independently, by, among other things, appointing
a disinterested committee so that the interests of First Interstate's public
stockholders would be protected, or alternatively, appointing a shareholder
committee to review all bona fide offers.
C. Directing that defendants pay to plaintiffs and the Class all
damages caused to them and account for all profits and any special benefits
obtained as a result of their unlawful conduct;
D. Awarding to plaintiffs the costs and disbursements of this
action, including a reasonable allowance for the fees and expenses of
plaintiff's attorneys and expert; and
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E. Granting such other and further relief as may be just and
proper in the premises.
Dated: October 19, 1996
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: _________________________________________
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
ABBEY & ELLIS
212 East 39th Street
New York, New York 10016
Telephone: (212) 889-3700
Faruqui & Faruqui, LLP
415 Madison Avenue
New York, New York 10017
Telephone: (212)
Robert C. Susser, P.C.
6 East 43rd Street, Ste 1900
New York, New York 10017
Telephone: (212) 808-0298
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