exv4w10



 


EXHIBIT 4.10











AMENDED AND RESTATED DECLARATION

OF TRUST



by and among



U. S. BANK NATIONAL ASSOCIATION,

as Institutional Trustee,



FIRST INTERSTATE BANCSYSTEM, INC.,

as Sponsor,



and



THOMAS W. SCOTT, LYLE R. KNIGHT and

TERRILL R. MOORE,

as Administrators,



Dated as of March 26, 2003
















 






 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	ARTICLE I INTERPRETATION AND DEFINITIONS
	 	 	1	 
	 	 	
Section 1.1.
	 	Definitions
	 	 	1	 
	ARTICLE II ORGANIZATION
	 	 	7	 
	 	 	
Section 2.1.
	 	Name
	 	 	7	 
	 	 	
Section 2.2.
	 	Office
	 	 	7	 
	 	 	
Section 2.3.
	 	Purpose
	 	 	8	 
	 	 	
Section 2.4.
	 	Authority
	 	 	8	 
	 	 	
Section 2.5.
	 	Title to Property of the Trust
	 	 	8	 
	 	 	
Section 2.6.
	 	Powers and Duties of the Institutional Trustee and the Administrators
	 	 	8	 
	 	 	
Section 2.7.
	 	Prohibition of Actions by the Trust and the Institutional Trustee
	 	 	11	 
	 	 	
Section 2.8.
	 	Powers and Duties of the Institutional Trustee
	 	 	12	 
	 	 	
Section 2.9.
	 	Certain Duties and Responsibilities of the Institutional Trustee and
Administrators
	 	 	13	 
	 	 	
Section 2.10.
	 	Certain Rights of Institutional Trustee
	 	 	14	 
	 	 	
Section 2.11.
	 	Execution of Documents
	 	 	16	 
	 	 	
Section 2.12.
	 	Not Responsible for Recitals or Issuance of Securities
	 	 	16	 
	 	 	
Section 2.13.
	 	Duration of Trust
	 	 	16	 
	 	 	
Section 2.14.
	 	Mergers
	 	 	16	 
	ARTICLE III SPONSOR
	 	 	17	 
	 	 	
Section 3.1.
	 	Sponsor’s Purchase of Common Securities
	 	 	17	 
	 	 	
Section 3.2.
	 	Responsibilities of the Sponsor
	 	 	17	 
	 	 	
Section 3.3.
	 	Expenses
	 	 	17	 
	 	 	
Section 3.4.
	 	Right to Proceed
	 	 	18	 
	ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS
	 	 	18	 
	 	 	
Section 4.1.
	 	Institutional Trustee; Eligibility
	 	 	18	 
	 	 	
Section 4.2.
	 	Administrators
	 	 	19	 
	 	 	
Section 4.3.
	 	Appointment, Removal and Resignation of Institutional
Trustee and Administrators
	 	 	19	 
	 	 	
Section 4.4.
	 	Institutional Trustee Vacancies
	 	 	20	 
	 	 	
Section 4.5.
	 	Effect of Vacancies
	 	 	20	 
	 	 	
Section 4.6.
	 	Meetings of the Institutional Trustee and the Administrators
	 	 	20	 
	 	 	
Section 4.7.
	 	Delegation of Power
	 	 	21	 
	 	 	
Section 4.8.
	 	Conversion, Consolidation or Succession to Business
	 	 	21	 
	ARTICLE V DISTRIBUTIONS
	 	 	21	 
	 	 	
Section 5.1.
	 	Distributions
	 	 	21	 
	ARTICLE VI ISSUANCE OF SECURITIES
	 	 	21	 
	 	 	
Section 6.1.
	 	General Provisions Regarding Securities
	 	 	21	 
	 	 	
Section 6.2.
	 	Paying Agent, Transfer Agent and Registrar
	 	 	22	 
	 	 	
Section 6.3.
	 	Form and Dating
	 	 	22	 
	 	 	
Section 6.4.
	 	Book-Entry Capital Securities
	 	 	23	 
	 	 	
Section 6.5.
	 	Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	24	 
	 	 	
Section 6.6.
	 	Temporary Securities
	 	 	24	 



i






 




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
Section 6.7.
	 	Cancellation
	 	 	25	 
	 	 	
Section 6.8.
	 	CUSIP Numbers
	 	 	25	 
	 	 	
Section 6.9.
	 	Rights of Holders; Waivers of Past Defaults
	 	 	25	 
	ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST
	 	 	26	 
	 	 	
Section 7.1.
	 	Dissolution and Termination of Trust
	 	 	26	 
	ARTICLE VIII TRANSFER OF INTERESTS
	 	 	27	 
	 	 	
Section 8.1.
	 	General
	 	 	27	 
	 	 	
Section 8.2.
	 	Transfer Procedures and Restrictions
	 	 	28	 
	 	 	
Section 8.3.
	 	Deemed Security Holders
	 	 	30	 
	ARTICLE
IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS
	 	 	30	 
	 	 	
Section 9.1.
	 	Liability
	 	 	30	 
	 	 	
Section 9.2.
	 	Exculpation
	 	 	31	 
	 	 	
Section 9.3.
	 	Fiduciary Duty
	 	 	31	 
	 	 	
Section 9.4.
	 	Indemnification
	 	 	31	 
	 	 	
Section 9.5.
	 	Outside Businesses
	 	 	33	 
	 	 	
Section 9.6.
	 	Compensation; Fee
	 	 	33	 
	ARTICLE X ACCOUNTING
	 	 	34	 
	 	 	
Section 10.1.
	 	Fiscal Year
	 	 	34	 
	 	 	
Section 10.2.
	 	Certain Accounting Matters
	 	 	34	 
	 	 	
Section 10.3.
	 	Banking
	 	 	34	 
	 	 	
Section 10.4.
	 	Withholding
	 	 	34	 
	ARTICLE XI AMENDMENTS
AND MEETINGS
	 	 	35	 
	 	 	
Section 11.1.
	 	Amendments
	 	 	35	 
	 	 	
Section 11.2.
	 	Meetings of the Holders of Securities; Action by Written Consent
	 	 	36	 
	ARTICLE XII REPRESENTATIONS
OF INSTITUTIONAL TRUSTEE
	 	 	37	 
	 	 	
Section 12.1.
	 	Representations and Warranties of Institutional Trustee
	 	 	37	 
	ARTICLE XIII MISCELLANEOUS
	 	 	37	 
	 	 	
Section 13.1.
	 	Notices
	 	 	37	 
	 	 	
Section 13.2.
	 	Governing Law
	 	 	38	 
	 	 	
Section 13.3.
	 	Intention of the Parties
	 	 	39	 
	 	 	
Section 13.4.
	 	Headings
	 	 	39	 
	 	 	
Section 13.5.
	 	Successors and Assigns
	 	 	39	 
	 	 	
Section 13.6.
	 	Partial Enforceability
	 	 	39	 
	 	 	
Section 13.7.
	 	Counterparts
	 	 	39	 




	 	 	 
	Annex I	 	
Terms of Securities
	Exhibit A-1	 	
Form of Capital Security Certificate
	Exhibit A-2	 	
Form of Common Security Certificate
	Exhibit B	 	
Specimen of Initial Debenture
	Exhibit C	 	
Placement Agreement




ii










 



AMENDED AND RESTATED



DECLARATION OF TRUST



OF



FIRST INTERSTATE STATUTORY TRUST I



March 26, 2003



     AMENDED AND RESTATED DECLARATION OF TRUST (“Declaration”) dated and
effective as of March 26, 2003, by the Institutional Trustee (as defined
herein), the Administrators (as defined herein), the Sponsor (as defined
herein) and by the holders, from time to time, of undivided beneficial
interests in the Trust (as defined herein) to be issued pursuant to this
Declaration;


     WHEREAS, the Institutional Trustee, the Administrators and the Sponsor
established First Interstate Statutory Trust I (the “Trust”), a statutory trust
under the Statutory Trust Act (as defined herein) pursuant to a Declaration of
Trust dated as of March 11, 2003 (the “Original Declaration”), and a
Certificate of Trust filed with the Secretary of State of the State of
Connecticut on March 11, 2003, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain debentures of the
Debenture Issuer (as defined herein);


     WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and


     WHEREAS, the Institutional Trustee, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration;


     NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a statutory trust under the Statutory Trust Act and that this
Declaration constitutes the governing instrument of such statutory trust, the
Institutional Trustee declares that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration. The
parties hereto hereby agree as follows:


ARTICLE I



INTERPRETATION AND DEFINITIONS



     Section 1.1. Definitions. Unless the context otherwise requires:


     (a)  Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;


     (b)  a term defined anywhere in this Declaration has the same meaning
throughout;


     (c)  all references to “the Declaration” or “this Declaration” are to this
Declaration as modified, supplemented or amended from time to time;


     (d)  all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits
to this Declaration unless otherwise specified; and


     (e)  a reference to the singular includes the plural and vice versa.


     “Additional Interest” has the meaning set forth in the Indenture.


1






 


     “Administrative Action” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Administrators” means each of Thomas W. Scott, Lyle R. Knight and Terrill
R. Moore, solely in such Person’s capacity as Administrator of the Trust
created and continued hereunder and not in such Person’s individual capacity,
or such Administrator’s successor in interest in such capacity, or any
successor appointed as herein provided.


     “Affiliate” has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.


     “Applicable Depositary Procedures” means, with respect to any transfer or
transaction involving a Book-Entry Capital Security, the rules and procedures
of the Depositary for such Book-Entry Capital Security, in each case to the
extent applicable to such transaction and as in effect from time to time.


     “Authorized Officer” of a Person means any Person that is authorized to
bind such Person.


     “Bankruptcy Event” means, with respect to any Person:


     (a)       a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part
of its property, or ordering the winding-up or liquidation of its affairs and
such decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or


     (b)        such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.


     “Book-Entry Capital Securities” means a Capital Security, the ownership
and transfer of which shall be made through book entries by a Depositary.


     “Business Day” means any day other than Saturday, Sunday or any other day
on which banking institutions in New York City or Hartford, Connecticut are
permitted or required by any applicable law to close.


     “Capital Securities” has the meaning set forth in paragraph 1(a) of Annex
I.


     “Capital Security Certificate” means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibit A-1.


     “Capital Treatment Event” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Certificate” means any certificate evidencing Securities.


     “Closing Date” has the meaning set forth in the Placement Agreement.


     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.


     “Common Securities” has the meaning set forth in paragraph 1(b) of Annex
I.


     “Common Security Certificate” means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.


2






 


     “Company Indemnified Person” means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator;
or (d) any officer, employee or agent of the Trust or its Affiliates.


     “Comparable Treasury Issue” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Comparable Treasury Price” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Corporate Trust Office” means the office of the Institutional Trustee at
which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103.


     “Coupon Rate” has the meaning set forth in paragraph 2(a) of Annex I.


     “Covered Person” means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) any of the Trust’s Affiliates; and (b) any Holder of Securities.


     “Creditor” has the meaning set forth in Section 3.3.


     “Debenture Issuer” means First Interstate BancSystem, Inc., a Montana
corporation, in its capacity as issuer of the Debentures under the Indenture.


     “Debenture Trustee” means U. S. Bank National Association, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.


     “Debentures” means the Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2033 to be issued by the Debenture Issuer under the
Indenture.


     “Defaulted Interest” has the meaning set forth in the Indenture.


     “Definitive Capital Securities Certificates” means Capital Securities
issued in certificated, fully registered form that are not Global Capital
Securities.


     “Depositary” means an organization registered as a clearing agency under
the Exchange Act that is designated as Depositary by the Administrators or any
successor thereto. DTC will be the initial Depositary.


     “Depositary Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.


     “Determination Date” has the meaning set forth in paragraph 4(a) of Annex
I.


     “Direct Action” has the meaning set forth in Section 2.8(d).


     “Distribution” means a distribution payable to Holders of Securities in
accordance with Section 5.1.


     “Distribution Payment Date” has the meaning set forth in paragraph 2(b) of
Annex I.


     “Distribution Period” means the period beginning on (and including) the
date of original issuance and ending on (but excluding) June 26, 2003 and each
successive period beginning on (and including) June 26, 2003, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date.


3






 


     “Distribution Rate” means, for the period beginning on (and including) the
date of original issuance and ending on (but excluding) March 26, 2008, the
rate per annum of 4.41063%, and for the period beginning on (and including)
March 26, 2008 and thereafter, the Coupon Rate.


     “DTC” means The Depositary Trust Company or any successor thereto.


     “Event of Default” means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):


     (a)       the occurrence of an Indenture Event of Default; or


     (b)       default by the Trust in the payment of any Redemption Price or Special
Redemption Price of any Security when it becomes due and payable; or


     (c)       default in the performance, or breach, in any material respect, of any
covenant or warranty of the Institutional Trustee in this Declaration (other
than those specified in clause (a) or (b) above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail to the Institutional Trustee and to the Sponsor by
the Holders of at least 25% in aggregate liquidation amount of the outstanding
Capital Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or


     (d)       the occurrence of a Bankruptcy Event with respect to the Institutional
Trustee if a successor Institutional Trustee has not been appointed within 90
days thereof.


     “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.


     “Extension Period” has the meaning set forth in paragraph 2(b) of Annex I.


     “Federal Reserve” has the meaning set forth in paragraph 3 of Annex I.


     “Fiduciary Indemnified Person” shall mean the Institutional Trustee, any
Affiliate of the Institutional Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee.


     “Fiscal Year” has the meaning set forth in Section 10.1.


     “Fixed Rate Period Remaining Life” has the meaning set forth in paragraph
4(a) of Annex I.


     “Global Capital Security” means a Capital Securities Certificate
evidencing ownership of Book-Entry Capital Securities.


     “Guarantee” means the guarantee agreement to be dated as of the Closing
Date, of the Sponsor in respect of the Capital Securities.


     “Holder” means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.


     “Indemnified Person” means a Company Indemnified Person or a Fiduciary
Indemnified Person.


     “Indenture” means the Indenture dated as of the Closing Date, between the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and any supplemental indenture may be amended, supplemented
or otherwise modified from time to time.


4






 


     “Indenture Event of Default” means an “Event of Default” as defined in the
Indenture.


     “Institutional Trustee” means the Trustee meeting the eligibility
requirements set forth in Section 4.1.


     “Interest” means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.


     “Investment Company” means an investment company as defined in the
Investment Company Act.


     “Investment Company Act” means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.


     “Investment Company Event” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Liquidation” has the meaning set forth in paragraph 3 of Annex I.


     “Liquidation Distribution” has the meaning set forth in paragraph 3 of
Annex I.


     “Majority in liquidation amount of the Securities” means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.


     “Maturity Date” has the meaning set forth in paragraph 4(a) of Annex I.


     “Officers’ Certificates” means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers’ Certificate
delivered with respect to compliance with a condition or covenant providing for
it in this Declaration shall include:


     (a)       a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;


     (b)       a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;


     (c)       a statement that each such officer has made such examination or
investigation as, in such officer’s opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and


     (d)       a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.


     “OTS” has the meaning set forth in paragraph 3 of Annex I.


     “Owner” means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Depositary or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner
as reflected in the records of the Depositary Participant.


     “Paying Agent” has the meaning specified in Section 6.2.


5






 


     “Person” means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.


     “Placement Agreement” means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.


     “Primary Treasury Dealer” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Property Account” has the meaning set forth in Section 2.8(c).


     “Pro Rata” has the meaning set forth in paragraph 8 of Annex I.


     “QIB” means a “qualified institutional buyer” as defined in Rule 144A
under the Securities Act.


     “Quorum” means a majority of the Administrators or, if there are only two
Administrators, both of them.


     “Quotation Agent” has the meaning set forth in paragraph 4(a) of Annex I.


     “Redemption Date” has the meaning set forth in paragraph 4(a) of Annex I.


     “Redemption/Distribution Notice” has the meaning set forth in paragraph
4(e) of Annex I.


     “Redemption Price” has the meaning set forth in paragraph 4(a) of Annex I.


     “Registrar” has the meaning set forth in Section 6.2.


     “Reference Treasury Dealer” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Reference Treasury Dealer Quotations” has the meaning set forth in
paragraph 4(a) of Annex I.


     “Responsible Officer” means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer’s
knowledge of and familiarity with the particular subject.


     “Restricted Securities Legend” has the meaning set forth in Section
8.2(b).


     “Rule 3a-5” means Rule 3a-5 under the Investment Company Act.


     “Rule 3a-7” means Rule 3a-7 under the Investment Company Act.


     “Securities” means the Common Securities and the Capital Securities.


     “Securities Act” means the Securities Act of 1933, as amended from time to
time, or any successor legislation.


     “Special Event” has the meaning set forth in paragraph 4(a) of Annex I.


     “Special Redemption Date” has the meaning set forth in paragraph 4(a) of
Annex I.


     “Special Redemption Price” has the meaning set forth in paragraph 4(a) of
Annex I.


6






 


     “Sponsor” means First Interstate BancSystem, Inc., a Montana corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.


     “Statutory Trust Act” means Chapter 615 of Title 34 of the Connecticut
General Statutes, Sections 500, et seq. as may be amended from time to time.


     “Successor Entity” has the meaning set forth in Section 2.14(b).


     “Successor Institutional Trustee” has the meaning set forth in Section
4.3(a).


     “Successor Securities” has the meaning set forth in Section 2.14(b).


     “Super Majority” has the meaning set forth in paragraph 5(b) of Annex I.


     “Tax Event” has the meaning set forth in paragraph 4(a) of Annex I.


     “10% in liquidation amount of the Securities” means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
10% or more of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.


     “3-Month LIBOR” has the meaning set forth in paragraph 4(a) of Annex I.


     “Transfer Agent” has the meaning set forth in Section 6.2.


     “Treasury Rate” has the meaning set forth in paragraph 4(a) of Annex I.


     “Treasury Regulations” means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).


     “Trust Property” means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Property Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.


     “U.S. Person” means a United States Person as defined in Section
7701(a)(30) of the Code.


ARTICLE II



ORGANIZATION



     Section 2.1. Name. The Trust is named “First Interstate Statutory Trust
I,” as such name may be modified from time to time by the Administrators
following written notice to the Holders of the Securities. The Trust’s
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrators.


     Section 2.2. Office. The address of the principal office of the Trust is
c/o U. S. Bank National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103. On at least 10 Business Days written notice to
the Holders of the Securities, the Administrators may designate another
principal office, which shall be in a state of the United States or in the
District of Columbia.


7






 


     Section 2.3. Purpose. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from
such sale to acquire the Debentures, (c) to facilitate direct investment in the
assets of the Trust through issuance of the Common Securities and the Capital
Securities and (d) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.


     Section 2.4. Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Institutional Trustee acting
on behalf of the Trust, no Person shall be required to inquire into the
authority of the Institutional Trustee to bind the Trust. Persons dealing with
the Trust are entitled to rely conclusively on the power and authority of the
Institutional Trustee as set forth in this Declaration. The Administrators
shall have only those ministerial duties set forth herein with respect to
accomplishing the purposes of the Trust and are not intended to be trustees or
fiduciaries with respect to the Trust or the Holders. The Institutional
Trustee shall have the right, but shall not be obligated except as provided in
Section 2.6, to perform those duties assigned to the Administrators.


     Section 2.5. Title to Property of the Trust. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any
part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.


     Section 2.6. Powers and Duties of the Institutional Trustee and the
Administrators.


     (a)       The Institutional Trustee and the Administrators shall conduct the
affairs of the Trust in accordance with the terms of this Declaration. Subject
to the limitations set forth in paragraph (b) of this Section, and in
accordance with the following provisions (i) and (ii), the Institutional
Trustee and the Administrators shall have the authority to enter into all
transactions and agreements determined by the Institutional Trustee to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Institutional Trustee or the Administrators, as the case may be, under
this Declaration, and to perform all acts in furtherance thereof, including
without limitation, the following:



		
	 	     (i)     Each Administrator shall have the power and authority to act on
behalf of the Trust with respect to the following matters:




		
	 	     (A) the issuance and sale of the Securities;
	 
	 	     (B) to cause the Trust to enter into, and to execute and
deliver on behalf of the Trust, such agreements as may be necessary
or desirable in connection with the purposes and function of the
Trust, including agreements with the Paying Agent;
	 
	 	     (C) ensuring compliance with the Securities Act, applicable
state securities or blue sky laws;
	 
	 	     (D) the sending of notices (other than notices of default), and
other information regarding the Securities and the Debentures to the
Holders in accordance with this Declaration;
	 
	 	     (E) the consent to the appointment of a Paying Agent, Transfer
Agent and Registrar in accordance with this Declaration, which
consent shall not be unreasonably withheld or delayed;
	 
	 	     (F) execution and delivery of the Securities in accordance with
this Declaration;



8






 





		
	 	     (G) execution and delivery of closing certificates pursuant to
the Placement Agreement and the application for a taxpayer
identification number;
	 
	 	     (H) unless otherwise determined by the Holders of a Majority in
liquidation amount of the Securities or as otherwise required by the
Statutory Trust Act, to execute on behalf of the Trust (either
acting alone or together with any or all of the Administrators) any
documents that the Administrators have the power to execute pursuant
to this Declaration;
	 
	 	     (I) the taking of any action incidental to the foregoing as the
Institutional Trustee may from time to time determine is necessary
or advisable to give effect to the terms of this Declaration for the
benefit of the Holders (without consideration of the effect of any
such action on any particular Holder);
	 
	 	     (J) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established,
including Distributions, voting rights, redemptions and exchanges,
and to issue relevant notices to the Holders of Capital Securities
and Holders of Common Securities as to such actions and applicable
record dates; and
	 
	 	     (K) to duly prepare and file all applicable tax returns and tax
information reports that are required to be filed with respect to
the Trust on behalf of the Trust.




		
	 	     (ii)     As among the Institutional Trustee and the Administrators, the
Institutional Trustee shall have the power, duty and authority to act on
behalf of the Trust with respect to the following matters:




		
	 	     (A) the establishment of the Property Account;
	 
	 	     (B) the receipt of the Debentures;
	 
	 	     (C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Property Account;
	 
	 	     (D) the distribution through the Paying Agent of amounts owed
to the Holders in respect of the Securities;
	 
	 	     (E) the exercise of all of the rights, powers and privileges of
a holder of the Debentures;
	 
	 	     (F) the sending of notices of default and other information
regarding the Securities and the Debentures to the Holders in
accordance with this Declaration;
	 
	 	     (G) the distribution of the Trust Property in accordance with
the terms of this Declaration;
	 
	 	     (H) to the extent provided in this Declaration, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Connecticut;
	 
	 	     (I) after any Event of Default (provided that such Event of
Default is not by or with respect to the Institutional Trustee) the
taking of any action incidental to the foregoing as the
Institutional Trustee may from time to time determine is necessary
or advisable to give effect to the terms of this Declaration and
protect and conserve the Trust Property for the benefit of the
Holders (without consideration of the effect of any such action on
any particular Holder); and
	 
	 	     (J) to take all action that may be necessary for the
preservation and the continuation of the Trust’s valid existence,
rights, franchises and privileges as a statutory trust under the
laws of the State of Connecticut and of each other jurisdiction in
which such existence is necessary to protect the limited liability of the Holders of the Capital Securities
or to enable the Trust to effect the purposes for which the Trust
was created.



9






 







		
	 	     (iii)     The Institutional Trustee shall have the power and authority to
act on behalf of the Trust with respect to any of the duties, liabilities,
powers or the authority of the Administrators set forth in Section
2.6(a)(i)(D), (E) and (F) herein but shall not have a duty to do any such
act unless specifically requested to do so in writing by the Sponsor, and
shall then be fully protected in acting pursuant to such written request;
and in the event of a conflict between the action of the Administrators
and the action of the Institutional Trustee, the action of the
Institutional Trustee shall prevail.



     (b)       So long as this Declaration remains in effect, the Trust (or the
Institutional Trustee or Administrators acting on behalf of the Trust) shall
not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the
Institutional Trustee nor the Administrators may cause the Trust to (i) acquire
any investments or engage in any activities not authorized by this Declaration,
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to
Holders, except as expressly provided herein, (iii) take any action that would
reasonably be expected (x) to cause the Trust to fail or cease to qualify as a
“grantor trust” for United States federal income tax purposes or (y) to require
the trust to register as an Investment Company under the Investment Company
Act, (iv) incur any indebtedness for borrowed money or issue any other debt or
(v) take or consent to any action that would result in the placement of a lien
on any of the Trust Property. The Institutional Trustee shall, at the sole
cost and expense of the Trust, defend all claims and demands of all Persons at
any time claiming any lien on any of the Trust Property adverse to the interest
of the Trust or the Holders in their capacity as Holders.


     (c)       In connection with the issuance and sale of the Capital Securities,
the Sponsor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):



		
	 	     (i)     the taking of any action necessary to obtain an exemption from
the Securities Act;
	 
	 	     (ii)     the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice
to the Administrators of actions they must take on behalf of the Trust,
and the preparation for execution and filing of any documents to be
executed and filed by the Trust or on behalf of the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws
of any such States in connection with the sale of the Capital Securities;
	 
	 	     (iii)     the negotiation of the terms of, and the execution and delivery
of, the Placement Agreement providing for the sale of the Capital
Securities; and
	 
	 	     (iv)     the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.



     (d)       Notwithstanding anything herein to the contrary, the Administrators
and the Holders of a Majority in liquidation amount of the Common Securities
are authorized and directed to conduct the affairs of the Trust and to operate
the Trust so that the Trust will not (i) be deemed to be an Investment Company
required to be registered under the Investment Company Act, and (ii) fail to be
classified as a “grantor trust” for United States federal income tax purposes.
The Administrators and the Holders of a Majority in liquidation amount of the
Common Securities shall not take any action inconsistent with the treatment of
the Debentures as indebtedness of the Debenture Issuer for United States
federal income tax purposes. In this connection, the Administrators and the
Holders of a Majority in liquidation amount of the Common Securities are
authorized to take any action, not inconsistent with applicable laws, the
Certificate of Trust or this Declaration, as amended from time to time, that

10






 




each of the Administrators and the Holders of a Majority in liquidation
amount of the Common Securities determines in their discretion to be necessary
or desirable for such purposes.


     (e)       All expenses incurred by the Administrators or the Institutional
Trustee pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and
the Institutional Trustee and the Administrators shall have no obligations with
respect to such expenses.


     (f)       The assets of the Trust shall consist of the Trust Property.


     (g)       Legal title to all Trust Property shall be vested at all times in the
Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee and the Administrators for the
benefit of the Trust in accordance with this Declaration.


     (h)       If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and
in every such case the Sponsor, the Institutional Trustee and the Holders
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Institutional Trustee and the Holders shall continue as
though no such proceeding had been instituted.


     Section 2.7. Prohibition of Actions by the Trust and the Institutional
Trustee.


     (a)       The Trust shall not, and the Institutional Trustee shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:



		
	 	     (i)     invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the
Securities pursuant to the terms of this Declaration and of the
Securities;
	 
	 	     (ii)     acquire any assets other than as expressly provided herein;
	 
	 	     (iii)     possess Trust Property for other than a Trust purpose;
	 
	 	     (iv)     make any loans or incur any indebtedness other than loans
represented by the Debentures;




		
	 	     (v)     possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever other
than as expressly provided herein;




		
	 	     (vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities;




		
	 	     (vii)     carry on any “trade or business” as that phrase is used in the
Code; or




		
	 	     (viii)     other than as provided in this Declaration (including Annex
I), (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B)
waive any past default that is waivable under the Indenture, (C) exercise
any right to rescind or annul any declaration that the principal of all
the Debentures shall be due and payable, or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have received a written
opinion of counsel to the effect that such modification will not cause the
Trust to cease to be classified as a “grantor trust” for United States
federal income tax purposes.



11






 




     Section 2.8. Powers and Duties of the Institutional Trustee.


     (a)       The legal title to the Debentures shall be owned by and held of record
in the name of the Institutional Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.3. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.


     (b)       The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators.


     (c)       The Institutional Trustee shall:



		
	 	     (i)     establish and maintain a segregated non-interest bearing trust
account (the “Property Account”) in the name of and under the exclusive
control of the Institutional Trustee, and maintained in the Institutional
Trustee’s trust department, on behalf of the Holders of the Securities
and, upon the receipt of payments of funds made in respect of the
Debentures held by the Institutional Trustee, deposit such funds into the
Property Account and make payments, or cause the Paying Agent to make
payments, to the Holders of the Capital Securities and Holders of the
Common Securities from the Property Account in accordance with Section
5.1. Funds in the Property Account shall be held uninvested until
disbursed in accordance with this Declaration;




		
	 	     (ii)     engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and




		
	 	     (iii)     upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the
occurrence of certain circumstances pursuant to the terms of the
Securities.



     (d)       The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust which arises out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee’s duties and obligations under this Declaration; provided, however,
that if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder
of the Capital Securities may directly institute a proceeding for enforcement
of payment to such Holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder (a “Direct Action”) on or after the
respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Holders of the Common Securities will be
subrogated to the rights of such Holder of the Capital Securities to the extent
of any payment made by the Debenture Issuer to such Holder of the Capital
Securities in such Direct Action; provided, however, that no Holder of the
Common Securities may exercise such right of subrogation so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.


     (e)       The Institutional Trustee shall continue to serve as a Trustee until
either:



		
	 	     (i)     the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of the Securities pursuant to the
terms of the Securities and this Declaration; or




		
	 	     (ii)     a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 4.3.



12






 


     (f)       The Institutional Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a Holder of the Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities,
enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to this Declaration (including Annex I) and the terms of the
Securities.


     The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 2.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust
set out in Section 2.3.


     Section 2.9. Certain Duties and Responsibilities of the Institutional
Trustee and Administrators.


     (a)       The Institutional Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.9), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.


     (b)       The duties and responsibilities of the Institutional Trustee and the
Administrators shall be as provided by this Declaration. Notwithstanding the
foregoing, no provision of this Declaration shall require the Institutional
Trustee or Administrators to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers if it shall have reasonable
grounds to believe that repayment of such funds or adequate protection against
such risk of liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Declaration relating to the
conduct or affecting the liability of or affording protection to the
Institutional Trustee or Administrators shall be subject to the provisions of
this Article. Nothing in this Declaration shall be construed to relieve an
Administrator or the Institutional Trustee from liability for its own negligent
act, its own negligent failure to act, or its own willful misconduct. To the
extent that, at law or in equity, the Institutional Trustee or an Administrator
has duties and liabilities relating to the Trust or to the Holders, the
Institutional Trustee or such Administrator shall not be liable to the Trust or
to any Holder for the Institutional Trustee’s or such Administrator’s good
faith reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of the
Administrators or the Institutional Trustee otherwise existing at law or in
equity, are agreed by the Sponsor and the Holders to replace such other duties
and liabilities of the Administrators or the Institutional Trustee.


     (c)       All payments made by the Institutional Trustee or a Paying Agent in
respect of the Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Institutional Trustee
or a Paying Agent to make payments in accordance with the terms hereof. Each
Holder, by its acceptance of a Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available
for distribution to it as herein provided and that the Institutional Trustee
and the Administrators are not personally liable to it for any amount
distributable in respect of any Security or for any other liability in respect
of any Security. This Section 2.9(c) does not limit the liability of the
Institutional Trustee expressly set forth elsewhere in this Declaration.


     (d)       The Institutional Trustee shall not be liable for its own acts or
omissions hereunder except as a result of its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:



		
	 	     (i)     the Institutional Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;



13






 





		
	 	     (ii)     the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Capital Securities or the Common Securities, as
applicable, relating to the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee, or
exercising any trust or power conferred upon the Institutional Trustee
under this Declaration;




		
	 	     (iii)     the Institutional Trustee’s sole duty with respect to the
custody, safekeeping and physical preservation of the Debentures and the
Property Account shall be to deal with such property in a similar manner
as the Institutional Trustee deals with similar property for its fiduciary
accounts generally, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration;




		
	 	     (iv)     the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor; and money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the Property
Account maintained by the Institutional Trustee pursuant to Section
2.8(c)(i) and except to the extent otherwise required by law; and




		
	 	     (v)     the Institutional Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Sponsor with their respective
duties under this Declaration, nor shall the Institutional Trustee be
liable for any default or misconduct of the Administrators or the Sponsor.



     Section 2.10. Certain Rights of Institutional Trustee. Subject to the
provisions of Section 2.9:


     (a)       the Institutional Trustee may conclusively rely and shall fully be
protected in acting or refraining from acting in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;


     (b)       if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of
the application of any provision of this Declaration, then, except as to any
matter as to which the Holders of Capital Securities are entitled to vote under
the terms of this Declaration, the Institutional Trustee may deliver a notice
to the Sponsor requesting the Sponsor’s written instructions as to the course
of action to be taken and the Institutional Trustee shall take such action, or
refrain from taking such action, as the Institutional Trustee shall be
instructed in writing, in which event the Institutional Trustee shall have no
liability except for its own negligence or willful misconduct;


     (c)       any direction or act of the Sponsor or the Administrators contemplated
by this Declaration shall be sufficiently evidenced by an Officers’
Certificate;


     (d)       whenever in the administration of this Declaration, the Institutional
Trustee shall deem it desirable that a matter be proved or established before
undertaking, suffering or omitting any action hereunder, the Institutional
Trustee (unless other evidence is herein specifically prescribed) may request
and conclusively rely upon an Officers’ Certificate as to factual matters
which, upon receipt of such request, shall be promptly delivered by the Sponsor
or the Administrators;


     (e)       the Institutional Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;


     (f)       the Institutional Trustee may consult with counsel of its selection
(which counsel may be counsel to the Sponsor or any of its Affiliates) and the
advice of such counsel shall be full and complete authorization and

14






 




protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon and in accordance with such
advice; the Institutional Trustee shall have the right at any time to seek
instructions concerning the administration of this Declaration from any court
of competent jurisdiction;


     (g)       the Institutional Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the request or
direction of any of the Holders pursuant to this Declaration, unless such
Holders shall have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; provided,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an
Event of Default (that has not been cured or waived pursuant to Section 6.7),
to exercise such of the rights and powers vested in it by this Declaration, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs;


     (h)       the Institutional Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the
Institutional Trustee may make such further inquiry or investigation into such
facts or matters as it may see fit;


     (i)       the Institutional Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Institutional Trustee shall not be responsible for
any misconduct or negligence on the part of or for the supervision of, any such
agent or attorney appointed with due care by it hereunder;


     (j)       whenever in the administration of this Declaration the Institutional
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the
Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;


     (k)       except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;


     (l)       when the Institutional Trustee incurs expenses or renders services in
connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;


     (m)       the Institutional Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder, the Sponsor or the Debenture
Trustee;


     (n)       any action taken by the Institutional Trustee or its agents hereunder
shall bind the Trust and the Holders of the Securities, and the signature of
the Institutional Trustee or its agents alone shall be sufficient and effective
to perform any such action and no third party shall be required to inquire as
to the authority of the Institutional Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which shall
be conclusively evidenced by the Institutional Trustee’s or its agent’s taking
such action; and


     (o)       no provision of this Declaration shall be deemed to impose any duty or
obligation on the Institutional Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any

15






 




jurisdiction in which it shall be illegal, or in which the Institutional
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.


     Section 2.11. Execution of Documents. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute on behalf of the
Trust any documents that the Institutional Trustee or the Administrators, as
the case may be, have the power and authority to execute pursuant to Section
2.6.


     Section 2.12. Not Responsible for Recitals or Issuance of Securities. The
recitals contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Institutional Trustee does not assume any
responsibility for their correctness. The Institutional Trustee makes no
representations as to the value or condition of the property of the Trust or
any part thereof. The Institutional Trustee makes no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.


     Section 2.13. Duration of Trust. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.


     Section 2.14. Mergers.


     (a)       The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 2.14(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of
Annex I.


     (b)       The Trust may, with the consent of the Institutional Trustee and
without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided that:



		
	 	     (i)     if the Trust is not the surviving entity, such successor entity
(the “Successor Entity”) either:




		
	 	     (A) expressly assumes all of the obligations of the Trust under
the Securities; or




		
	 	     (B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the “Successor
Securities”) so that the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
Liquidation, redemption and otherwise;




		
	 	     (ii)     the Sponsor expressly appoints a trustee of the Successor Entity
that possesses substantially the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;




		
	 	     (iii)     such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the Holders
of the Securities (including any Successor Securities) in any material
respect;




		
	 	     (iv)     the Institutional Trustee receives written confirmation from
Moody’s Investor Services, Inc. and any other nationally recognized
statistical rating organization that rates securities issued by the
initial purchaser of the Capital Securities that it will not reduce or
withdraw the rating of any such securities because of such merger,
conversion, consolidation, amalgamation or replacement;




		
	 	     (v)     such Successor Entity has a purpose substantially identical to
that of the Trust;



16






 





		
	 	     (vi)     prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:




		
	 	     (A) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities)
in any material respect;




		
	 	     (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
	 
	 	     (C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a “grantor trust” for United States federal income tax
purposes;




		
	 	     (vii)     the Sponsor guarantees the obligations of such Successor Entity
under the Successor Securities at least to the extent provided by the
Guarantee;




		
	 	     (viii)     the Sponsor owns 100% of the common securities of any
Successor Entity; and




		
	 	     (ix)     prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officers’
Certificate of the Administrators and an opinion of counsel, each to the
effect that all conditions precedent under this Section 2.14(b) to such
transaction have been satisfied.



     (c)       Notwithstanding Section 2.14(b), the Trust shall not, except with the
consent of Holders of 100% in aggregate liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.


ARTICLE III



SPONSOR



     Section 3.1. Sponsor’s Purchase of Common Securities. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the
Trust in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.


     Section 3.2. Responsibilities of the Sponsor. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in, or direct the Administrators to engage
in, the following activities:


     (a)       to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Capital Securities and to do any and
all such acts, other than actions which must be taken by the Trust, and advise
the Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;
and


     (b)       to negotiate the terms of and/or execute on behalf of the Trust, the
Placement Agreement and other related agreements providing for the sale of the
Capital Securities.


     Section 3.3. Expenses. In connection with the offering, sale and issuance
of the Debentures to the Trust and in connection with the sale of the
Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer,
shall:

17






 




     (a)       pay all reasonable costs and expenses owing to the Debenture Trustee
pursuant to Section 6.6 of the Indenture;


     (b)       be responsible for and shall pay all debts and obligations (other than
with respect to the Securities) and all costs and expenses of the Trust, the
offering, sale and issuance of the Securities (including fees to the placement
agents in connection therewith), the costs and expenses (including reasonable
counsel fees and expenses) of the Institutional Trustee and the Administrators,
the costs and expenses relating to the operation of the Trust, including,
without limitation, costs and expenses of accountants, attorneys, statistical
or bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, Paying Agents, Registrars, Transfer Agents, duplicating,
travel and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets and the enforcement by the Institutional Trustee of
the rights of the Holders (for purposes of clarification, this Section 3.3(b)
does not contemplate the payment by the Sponsor of acceptance or annual
administration fees owing to the Institutional Trustee pursuant to the services
to be provided by the Institutional Trustee under this Declaration or the fees
and expenses of the Institutional Trustee’s counsel in connection with the
closing of the transactions contemplated by this Declaration); and


     (c)       pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.


     The Sponsor’s obligations under this Section 3.3 shall be for the benefit
of, and shall be enforceable by, any Person to whom such debts, obligations,
costs, expenses and taxes are owed (a “Creditor”) whether or not such Creditor
has received notice hereof. Any such Creditor may enforce the Sponsor’s
obligations under this Section 3.3 directly against the Sponsor and the Sponsor
irrevocably waives any right or remedy to require that any such Creditor take
any action against the Trust or any other Person before proceeding against the
Sponsor. The Sponsor agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of this
Section 3.3.


     Section 3.4. Right to Proceed. The Sponsor acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.


ARTICLE IV



INSTITUTIONAL TRUSTEE AND ADMINISTRATORS



     Section 4.1. Institutional Trustee; Eligibility.


     (a)       There shall at all times be one Institutional Trustee which shall:



		
	 	     (i)     not be an Affiliate of the Sponsor;
	 
	 	     (ii)     not offer or provide credit or credit enhancement to the Trust;
and
	 
	 	     (iii)     be a banking corporation or trust company organized and doing
business under the laws of the United States of America or any state
thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of
at least 50 million U.S. dollars ($50,000,000.00), and subject to
supervision or examination by Federal, state, or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 4.1(a)(iii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.



     (b)     If at any time the Institutional Trustee shall cease to be eligible to
so act under Section 4.1(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 4.3(a).


18






 


     (c)       If the Institutional Trustee has or shall acquire any “conflicting
interest” within the meaning of Section 310(b) of the Trust Indenture Act of
1939, as amended, the Institutional Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
this Declaration.


     (d)       The initial Institutional Trustee shall be U. S. Bank National
Association.


     Section 4.2. Administrators. Each Administrator shall be a U.S. Person,
21 years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be Thomas W. Scott, Lyle R. Knight and Terrill R. Moore.
There shall at all times be at least one Administrator. Except where a
requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power of
the Administrators may be exercised by, or with the consent of, any one such
Administrator.


     Section 4.3. Appointment, Removal and Resignation of Institutional Trustee
and Administrators.


     (a)       Notwithstanding anything to the contrary in this Declaration, no
resignation or removal of the Institutional Trustee and no appointment of a
Successor Institutional Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Institutional Trustee in
accordance with the applicable requirements of this Section 4.3.


     Subject to the immediately preceding paragraph, the Institutional Trustee
may resign at any time by giving written notice thereof to the Holders of the
Securities and by appointing a Successor Institutional Trustee. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements, its expenses and charges to serve as the successor
Institutional Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expense and charges (the “Successor
Institutional Trustee”). If the instrument of acceptance by the Successor
Institutional Trustee required by this Section 4.3 shall not have been
delivered to the Institutional Trustee within 60 days after the giving of such
notice of resignation or delivery of the instrument of removal, the
Institutional Trustee may petition, at the expense of the Trust, any Federal,
state or District of Columbia court of competent jurisdiction for the
appointment of a Successor Institutional Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Institutional Trustee. The Institutional Trustee shall have no
liability for the selection of such successor pursuant to this Section 4.3.


     The Institutional Trustee may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Institutional Trustee (in its individual capacity and on behalf of the Trust)
if an Event of Default shall have occurred and be continuing. If the
Institutional Trustee shall be so removed, the Holders of Capital Securities,
by act of the Holders of a Majority in liquidation amount of the Capital
Securities then outstanding delivered to the Institutional Trustee, shall
promptly appoint a Successor Institutional Trustee, and such Successor
Institutional Trustee shall comply with the applicable requirements of this
Section 4.3. If no Successor Institutional Trustee shall have been so
appointed by the Holders of a Majority in liquidation amount of the Capital
Securities and accepted appointment in the manner required by this Section 4.3,
within 30 days after delivery of an instrument of removal, any Holder who has
been a Holder of the Securities for at least 6 months may, on behalf of himself
and all others similarly situated, petition any Federal, state or District of
Columbia court of competent jurisdiction for the appointment of the Successor
Institutional Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Institutional
Trustee.


     The Institutional Trustee shall give notice of its resignation and removal
and each appointment of a Successor Institutional Trustee to all Holders in the
manner provided in Section 13.1(d) and shall give notice to the Sponsor. Each
notice shall include the name of the Successor Institutional Trustee and the
address of its Corporate Trust Office.


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     (b)       In case of the appointment hereunder of a Successor Institutional
Trustee, the retiring Institutional Trustee and the Successor Institutional
Trustee shall execute and deliver an amendment hereto wherein the Successor
Institutional Trustee shall accept such appointment and which (i) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, the Successor Institutional Trustee all the rights, powers,
trusts and duties of the retiring Institutional Trustee with respect to the
Securities and the Trust and (ii) shall add to or change any of the provisions
of this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Institutional Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Institutional Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Institutional Trustee
shall become effective to the extent provided therein and each Successor
Institutional Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Institutional Trustee; but, on request of the Trust or any Successor
Institutional Trustee such retiring Institutional Trustee shall duly assign,
transfer and deliver to such Successor Institutional Trustee all Trust
Property, all proceeds thereof and money held by such retiring Institutional
Trustee hereunder with respect to the Securities and the Trust.


     (c)       No Institutional Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee.


     (d)       The Holders of the Capital Securities will have no right to vote to
appoint, remove or replace the Administrators, which voting rights are vested
exclusively in the Holder of the Common Securities.


     Section 4.4. Institutional Trustee Vacancies. If the Institutional
Trustee ceases to hold office for any reason a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Institutional
Trustee shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a trustee appointed in accordance with Section
4.3.


     Section 4.5. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of the Institutional Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration.


     Section 4.6. Meetings of the Institutional Trustee and the Administrators.
Meetings of the Administrators shall be held from time to time upon the call
of an Administrator. Regular meetings of the Administrators may be held in
person in the United States or by telephone, at a place (if applicable) and
time fixed by resolution of the Administrators. Notice of any in-person
meetings of the Institutional Trustee with the Administrators or meetings of
the Administrators shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the
Institutional Trustee with the Administrators or meetings of the Administrators
or any committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of the Institutional Trustee or an
Administrator, as the case may be, at a meeting shall constitute a waiver of
notice of such meeting except where the Institutional Trustee or an
Administrator, as the case may be, attends a meeting for the express purpose of
objecting to the transaction of any activity on the grounds that the meeting
has not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Institutional Trustee or the Administrators, as
the case may be, may be taken at a meeting by vote of the Institutional Trustee
or a majority vote of the Administrators present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Institutional Trustee or the Administrators. Meetings of the Institutional
Trustee and the Administrators together shall be held from time to time upon
the call of the Institutional Trustee or an Administrator.


20






 


     Section 4.7. Delegation of Power.


     (a)       Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 that is a U.S.
Person his or her power for the purpose of executing any documents contemplated
in Section 2.6; and


     (b)       the Administrators shall have power to delegate from time to time to
such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.


     Section 4.8. Conversion, Consolidation or Succession to Business. Any
Person into which the Institutional Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Institutional Trustee shall be a
party, or any Person succeeding to all or substantially all the corporate trust
business of the Institutional Trustee shall be the successor of the
Institutional Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.


ARTICLE V



DISTRIBUTIONS



     Section 5.1. Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder’s Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the
Institutional Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a “Distribution”) of such amounts to
Holders.


ARTICLE VI



ISSUANCE OF SECURITIES



     Section 6.1. General Provisions Regarding Securities.


     (a)       The Administrators shall, on behalf of the Trust, issue one series of
capital securities substantially in the form of Exhibit A-1 representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I and one series of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I. The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital Securities and the
Common Securities. The Capital Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where
an Event of Default has occurred and is continuing, the rights of Holders of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.


     (b)       The Certificates shall be signed on behalf of the Trust by one or more
Administrators. Such signature shall be the facsimile or manual signature of
any Administrator. In case any Administrator of the Trust who shall have
signed any of the Securities shall cease to be such Administrator before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator, and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of
such Security, shall be an Administrator of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by
the facsimile or manual signature of an Authorized Officer

21






 




of the Institutional Trustee. Such signature shall be conclusive evidence
that the Capital Security has been authenticated under this Declaration. Upon
written order of the Trust signed by one Administrator, the Institutional
Trustee shall authenticate the Capital Securities for original issue. The
Institutional Trustee may appoint an authenticating agent that is a U.S. Person
acceptable to the Trust to authenticate the Capital Securities. A Common
Security need not be so authenticated.


     (c)       The Capital Securities issued to QIBs shall be, except as provided in
Section 6.4, Book-Entry Capital Securities issued in the form of one or more
Global Capital Securities registered in the name of the Depositary or its
nominee and deposited with the Depositary or a custodian for the Depositary for
credit by the Depositary to the respective accounts of the Depositary
Participants thereof (or such other accounts as they may direct). The Capital
Securities issued to a Person other than a QIB shall be issued in the form of a
Definitive Capital Securities Certificate.


     (d)       The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.


     (e)       Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and,
except as provided in Section 9.1(b) with respect to the Common Securities,
non-assessable.


     (f)       Every Person, by virtue of having become a Holder in accordance with
the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration and the
Guarantee.


     Section 6.2. Paying Agent, Transfer Agent and Registrar. The Trust shall
maintain in Hartford, Connecticut, an office or agency where the Capital
Securities may be presented for payment (“Paying Agent”), and an office or
agency where Securities may be presented for registration of transfer or
exchange (the “Transfer Agent”). The Trust shall keep or cause to be kept at
such office or agency a register for the purpose of registering Securities,
transfers and exchanges of Securities, such register to be held by a registrar
(the “Registrar”). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co-Transfer Agents in such
other locations as it shall determine. The term “Paying Agent” includes any
additional paying agent, the term “Registrar” includes any additional registrar
or co-Registrar and the term “Transfer Agent” includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.


     Section 6.3. Form and Dating. The Capital Securities and the
Institutional Trustee’s certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or
other marks of identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the Trust is subject
if any, or usage (provided that any such notation, legend or endorsement is in
a form acceptable to the Sponsor). The Trust at the direction of the Sponsor
shall furnish any such legend not contained in Exhibit A-1 to the Institutional
Trustee in writing. Each Capital Security shall be dated on or before the date
of its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the
Institutional Trustee, the Administrators and the Sponsor, by their execution
and delivery of this Declaration, expressly agree to such terms and provisions
and to be bound

22






 




thereby. Capital Securities will be issued only in blocks having a stated
liquidation amount of not less than $100,000.00 and any multiple of $1,000.00
in excess thereof.


     The Capital Securities are being offered and sold by the Trust pursuant to
the Placement Agreement in definitive, registered form without coupons and with
the Restricted Securities Legend.


     Section 6.4. Book-Entry Capital Securities.


     (a)       A Global Capital Security may be exchanged, in whole or in part, for
Definitive Capital Securities Certificates registered in the names of Owners
only if such exchange complies with Article VIII and (i) the Depositary advises
the Administrators and the Institutional Trustee in writing that the Depositary
is no longer willing or able to properly discharge its responsibilities with
respect to the Global Capital Security, and no qualified successor is appointed
by the Administrators within ninety (90) days of receipt of such notice, (ii)
the Depositary ceases to be a clearing agency registered under the Exchange Act
and the Administrators fail to appoint a qualified successor within ninety (90)
days of obtaining knowledge of such event, (iii) the Administrators at their
option advise the Institutional Trustee in writing that the Trust elects to
terminate the book-entry system through the Depositary, or (iv) an Indenture
Event of Default has occurred and is continuing. Upon the occurrence of any
event specified in clause (i), (ii), (iii) or (iv) above, the Administrators
shall notify the Depositary and instruct the Depositary to notify all Owners of
Book-Entry Capital Securities and the Institutional Trustee of the occurrence
of such event and of the availability of Definitive Capital Securities
Certificates to Owners of the Capital Securities requesting the same. Upon the
issuance of Definitive Capital Securities Certificates, the Administrators and
the Institutional Trustee shall recognize the Holders of the Definitive Capital
Securities Certificates as Holders. Notwithstanding the foregoing, if an Owner
of a beneficial interest in a Global Capital Security wishes at any time to
transfer an interest in such Global Capital Security to a Person other than a
QIB, such transfer shall be effected, subject to the Applicable Depository
Procedures, in accordance with the provisions of this Section 6.4 and Article
VIII, and the transferee shall receive a Definitive Capital Securities
Certificate in connection with such transfer. A holder of a Definitive Capital
Securities Certificate that is a QIB may upon request, and in accordance with
the provisions of this Section 6.4 and Article VIII, exchange such Definitive
Capital Securities Certificate for a beneficial interest in a Global Capital
Security.


     (b)       If any Global Capital Security is to be exchanged for Definitive
Capital Securities Certificates or canceled in part, or if any Definitive
Capital Securities Certificate is to be exchanged in whole or in part for any
Global Capital Security, then either (i) such Global Capital Security shall be
so surrendered for exchange or cancellation as provided in this Section 6.4 and
Article VIII or (ii) the aggregate liquidation amount represented by such
Global Capital Security shall be reduced, subject to Section 6.3, or increased
by an amount equal to the liquidation amount represented by that portion of the
Global Capital Security to be so exchanged or canceled, or equal to the
liquidation amount represented by such Definitive Capital Securities
Certificates to be so exchanged for any Global Capital Security, as the case
may be, by means of an appropriate adjustment made on the records of the
Securities Registrar, whereupon the Institutional Trustee, in accordance with
the Applicable Depositary Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender to the Administrators or the Registrar of any Global
Capital Security or Securities by the Depositary, accompanied by registration
instructions, the Administrators, or any one of them, shall execute the
Definitive Capital Securities Certificates in accordance with the instructions
of the Depositary. None of the Registrar, Administrators, or the Institutional
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.


     (c)       Every Definitive Capital Securities Certificate executed and delivered
upon registration or transfer of, or in exchange for or in lieu of, a Global
Capital Security or any portion thereof shall be executed and delivered in the
form of, and shall be, a Global Capital Security, unless such Definitive
Capital Securities Certificate is registered in the name of a Person other than
the Depositary for such Global Capital Security or a nominee thereof.


     (d)       The Depositary or its nominee, as registered owner of a Global Capital
Security, shall be the Holder of such Global Capital Security for all purposes
under this Declaration and the Global Capital Security, and Owners

23






 




with respect to a Global Capital Security shall hold such interests
pursuant to the Applicable Depositary Procedures. The Registrar, the
Administrators and the Institutional Trustee shall be entitled to deal with the
Depositary for all purposes of this Declaration relating to the Global Capital
Securities (including the payment of the liquidation amount of and
Distributions on the Book-Entry Capital Securities represented thereby and the
giving of instructions or directions by Owners of Book-Entry Capital Securities
represented thereby and the giving of notices) as the sole Holder of the
Book-Entry Capital Securities represented thereby and shall have no obligations
to the Owners thereof. None of the Administrators, the Institutional Trustee
nor the Registrar shall have any liability in respect of any transfers effected
by the Depositary.


     (e)       The rights of the Owners of the Book-Entry Capital Securities shall be
exercised only through the Depositary and shall be limited to those established
by law, the Applicable Depositary Procedures and agreements between such Owners
and the Depositary and/or the Depositary Participants; provided, however,
solely for the purpose of determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided for in this
Declaration, to the extent that Capital Securities are represented by a Global
Capital Security, the Administrators and the Institutional Trustee may
conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Institutional Trustee by the
Depositary setting forth the Owners’ votes or assigning the right to vote on
any matter to any other Persons either in whole or in part. To the extent that
Capital Securities are represented by a Global Capital Security, the initial
Depositary will make book-entry transfers among the Depositary Participants and
receive and transmit payments on the Capital Securities that are represented by
a Global Capital Security to such Depositary Participants, and none of the
Sponsor, the Administrators or the Institutional Trustee shall have any
responsibility or obligation with respect thereto.


     (f)       To the extent that a notice or other communication to the Holders is
required under this Declaration, for so long as Capital Securities are
represented by a Global Capital Security, the Administrator and the
Institutional Trustee shall give all such notices and communications to the
Depositary, and shall have no obligations to the Owners.


     Section 6.5. Mutilated, Destroyed, Lost or Stolen Certificates.


     If:


     (a)       any mutilated Certificates should be surrendered to the Registrar, or
if the Registrar shall receive evidence to its satisfaction of the destruction,
loss or theft of any Certificate; and


     (b)       there shall be delivered to the Registrar, the Administrators and the
Institutional Trustee such security or indemnity as may be required by them to
keep each of them harmless;


then, in the absence of notice that such Certificate shall have been acquired
by a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under
this Section 6.4, the Registrar or the Administrators may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in
the relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.


     Section 6.6. Temporary Securities. Until definitive Securities are ready
for delivery, the Administrators may prepare and, in the case of the Capital
Securities, the Institutional Trustee shall authenticate, temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Administrators consider appropriate
for temporary Securities. Without unreasonable delay, the Administrators shall
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate, definitive Securities in exchange for temporary Securities.


24






 



     Section 6.7. Cancellation. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee
shall promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been
delivered to the Institutional Trustee for cancellation.


     Section 6.8. CUSIP Numbers. The Trust in issuing the Securities may use
“CUSIP” numbers (if then generally in use), and, if so, the Institutional
Trustee shall use CUSIP numbers in notice of redemption as a convenience to
Holders, provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption and that
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Trust shall
promptly notify the Institutional Trustee in writing of any change in the CUSIP
numbers.


     Section 6.9. Rights of Holders; Waivers of Past Defaults.


     (a)       The legal title to the Trust Property is vested exclusively in the
Institutional Trustee (in its capacity as such) in accordance with Section 2.5,
and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division
of property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights.


     (b)       For so long as any Capital Securities remain outstanding, if upon an
Indenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding shall have the right to make such declaration by a notice in
writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.


     At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof,
fails to annul any such declaration and waive such default, the Holders of a
Majority in liquidation amount of the Capital Securities, by written notice to
the Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind
and annul such declaration and its consequences if:



		
	 	     (i)     the Debenture Issuer has paid or deposited with the Debenture
Trustee a sum sufficient to pay




		
	 	              (A) all overdue installments of interest on all of the
Debentures,
	 
	 	             (B) any accrued Additional Interest on all of the Debentures,
	 
	 	             (C) the principal of (and premium, if any, on) any Debentures
that have become due otherwise than by such declaration of
acceleration and interest and Additional Interest thereon at the
rate borne by the Debentures, and
	 
	 	             (D) all sums paid or advanced by the Debenture Trustee under
the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the
Institutional Trustee, their agents and counsel; and



25






 





		
	 	     (ii)     all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.7 of the Indenture.



     The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except
a default or Indenture Event of Default in the payment of principal or interest
on the Debentures (unless such default or Indenture Event of Default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default under the Indenture or an Indenture Event of
Default in respect of a covenant or provision that under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Debenture. No such rescission shall affect any subsequent default or impair
any right consequent thereon.


     Upon receipt by the Institutional Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities, a record date shall be established for determining
Holders of outstanding Capital Securities entitled to join in such notice,
which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
join in such notice, whether or not such Holders remain Holders after such
record date; provided, that unless such declaration of acceleration, or
rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the
day that is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice that has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 6.9.


     (c)       Except as otherwise provided in paragraphs (a) and (b) of this Section
6.9, the Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default or Event of Default and its consequences. Upon such waiver,
any such default or Event of Default shall cease to exist, and any default or
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.


ARTICLE VII



DISSOLUTION AND TERMINATION OF TRUST



     Section 7.1. Dissolution and Termination of Trust.


     (a)       The Trust shall dissolve on the first to occur of:



		
	 	     (i)     unless earlier dissolved, on March 26, 2038, the expiration of
the term of the Trust;




		
	 	     (ii)     upon a Bankruptcy Event with respect to the Sponsor, the Trust
or the Debenture Issuer;




		
	 	     (iii)     upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor (other than in connection with a
merger, consolidation or similar transaction not prohibited by the
Indenture, this Declaration or the Guarantee, as the case may be) or upon
the revocation of the charter of the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof;



26






 





		
	 	     (iv)     upon the distribution of the Debentures to the Holders of the
Securities, upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Annex I
hereto;




		
	 	     (v)     upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;




		
	 	     (vi)     when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities; or




		
	 	     (vii)     before the issuance of any Securities, with the consent of the
Institutional Trustee and the Sponsor.



     (b)       As soon as is practicable after the occurrence of an event referred to
in Section 7.1(a), and after satisfaction of liabilities to creditors of the
Trust as required by applicable law, including of the Statutory Trust Act, and
subject to the terms set forth in Annex I, the Institutional Trustee shall
terminate the Trust by filing a certificate of cancellation with the Secretary
of State of the State of Connecticut.


     (c)       The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.


ARTICLE VIII



TRANSFER OF INTERESTS



     Section 8.1. General.


     (a)       Subject to Section 8.1(c), where Capital Securities are presented to
the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Capital Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfer and exchanges, the Trust shall issue and the
Institutional Trustee shall authenticate Capital Securities at the Registrar’s
request.


     (b)       Upon issuance of the Common Securities, the Sponsor shall acquire and
retain beneficial and record ownership of the Common Securities and for so long
as the Securities remain outstanding, the Sponsor shall maintain 100% ownership
of the Common Securities; provided, however, that any permitted successor of
the Sponsor, in its capacity as Debenture Issuer, under the Indenture that is a
U.S. Person may succeed to the Sponsor’s ownership of the Common Securities.


     (c)       Capital Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by applicable
law, any transfer or purported transfer of any Security not made in accordance
with this Declaration shall be null and void and will be deemed to be of no
legal effect whatsoever and any such transferee shall be deemed not to be the
holder of such Capital Securities for any purpose, including but not limited to
the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.


     (d)       The Registrar shall provide for the registration of Securities and of
transfers of Securities, which will be effected without charge but only upon
payment (with such indemnity as the Registrar may require) in respect of any
tax or other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Securities, the Registrar shall
cause one or more new Securities of the same tenor to be issued in the name of
the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder’s attorney duly authorized in writing. Each Security surrendered
for registration of transfer shall be



27










 



canceled by the Institutional Trustee pursuant to Section 6.7. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.


     (e)     The Trust shall not be required (i) to issue, register the transfer
of, or exchange any Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.


     Section 8.2. Transfer Procedures and Restrictions.


     (a)     The Capital Securities shall bear the Restricted Securities Legend,
which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel satisfactory to
the Trustee, as may be reasonably required by the Trust, that neither the
legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof comply with the provisions of the Securities Act.
Upon provision of such satisfactory evidence, the Institutional Trustee, at
the written direction of the Trust, shall authenticate and deliver Capital
Securities that do not bear the legend.


     (b)     Except as permitted by Section 8.2(a), each Capital Security shall
bear a legend (the “Restricted Securities Legend”) in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:



		
	 	     [If the Capital Security is to be Global Capital Security- THIS
CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS
CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER
OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.




		
	 	     UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO FIRST INTERSTATE STATUTORY TRUST I OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.]




		
	 	     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE



28






 





		
	 	ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER
OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE
TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE SPONSOR’S AND THE TRUST’S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE
TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.




		
	 	     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS
NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER
OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT
IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3)
OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE,
A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY
EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.



29






 





		
	 	     THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER.




		
	 	     THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.



     (c)     To permit registrations of transfers and exchanges, the Trust shall
execute and the Institutional Trustee shall authenticate Capital Securities at
the Registrar’s request.


     (d)     Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Registrar or the
Sponsor may require) in respect of any tax or other governmental charge that
may be imposed in relation to it.


     (e)     All Capital Securities issued upon any registration of transfer or
exchange pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration as
the Capital Securities surrendered upon such registration of transfer or
exchange.


     Section 8.3. Deemed Security Holders. The Trust, the Administrators, the
Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar
may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of
the Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Institutional
Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have
actual or other notice thereof.


ARTICLE IX



LIMITATION OF LIABILITY OF

HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS



     Section 9.1. Liability.


     (a)     Except as expressly set forth in this Declaration, the Guarantee and
the terms of the Securities, the Sponsor shall not be:



		
	 	     (i)     personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; or




		
	 	     (ii)     required to pay to the Trust or to any Holder of the Securities
any deficit upon dissolution of the Trust or otherwise.



     (b)     The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust’s assets.


     (c)     Pursuant to the Statutory Trust Act, the Holders of the Capital
Securities shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Connecticut.


30






 


     Section 9.2. Exculpation.


     (a)     No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person’s negligence or willful
misconduct with respect to such acts or omissions.


     (b)     An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person’s
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.


     Section 9.3. Fiduciary Duty.


     (a)     To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity,
are agreed by the parties hereto to replace such other duties and liabilities
of the Indemnified Person.


     (b)     Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:



		
	 	     (i)     in its “discretion” or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or




		
	 	     (ii)     in its “good faith” or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.



     Section 9.4. Indemnification.


     (a)     The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Trust) arising out of or in connection with the acceptance or
administration of this Declaration by reason of the fact that he is or was an
Indemnified Person against expenses (including reasonable attorneys’ fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Indemnified
Person did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.


31






 


     (b)     The Sponsor shall indemnify, to the full extent permitted by law, any
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor arising out of or in connection with
the acceptance or administration of this Declaration by reason of the fact that
he is or was an Indemnified Person against expenses (including reasonable
attorneys’ fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust; provided, however, that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.


     (c)     To the extent that an Indemnified Person shall be successful on the
merits or otherwise (including dismissal of an action without prejudice or the
settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this
Section 9.4, or in defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses (including
attorneys’ fees and expenses) actually and reasonably incurred by him in
connection therewith.


     (d)     Any indemnification of an Administrator under paragraphs (a) and (b)
of this Section 9.4 (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(a) and (b). Such determination shall be made (i) by the Administrators by a
majority vote of a Quorum consisting of such Administrators who were not
parties to such action, suit or proceeding, (ii) if such a Quorum is not
obtainable, or, even if obtainable, if a Quorum of disinterested Administrators
so directs, by independent legal counsel in a written opinion, or (iii) by the
Common Security Holder of the Trust.


     (e)     To the fullest extent permitted by law, expenses (including reasonable
attorneys’ fees and expenses) incurred by an Indemnified Person in defending a
civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (a) and (b) of this Section 9.4 shall be paid by the
Sponsor in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Indemnified Person to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrators by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a
Quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Administrators so directs, by independent legal counsel in a written opinion or
(iii) by the Common Security Holder of the Trust, that, based upon the facts
known to the Administrators, counsel or the Common Security Holder at the time
such determination is made, such Indemnified Person acted in bad faith or in a
manner that such Indemnified Person did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Administrators, independent legal counsel or the Common Security Holder
reasonably determine that such Indemnified Person deliberately breached his
duty to the Trust or its Common or Capital Security Holders.


     (f)     The Institutional Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its own choosing in
any action, suit or any other proceeding for which it is indemnified under
paragraphs (a) and (b) of this Section 9.4, without affecting its right to
indemnification hereunder or waiving any rights afforded to it under this
Declaration or applicable law.


     (g)     The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his


32






 




 official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 9.4 shall be deemed
to be provided by a contract between the Sponsor and each Indemnified Person
who serves in such capacity at any time while this Section 9.4 is in effect.
Any repeal or modification of this Section 9.4 shall not affect any rights or
obligations then existing.


     (h)     The Sponsor or the Trust may purchase and maintain insurance on behalf
of any Person who is or was an Indemnified Person against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Sponsor would have the power to
indemnify him against such liability under the provisions of this Section 9.4.


     (i)     For purposes of this Section 9.4, references to “the Trust” shall
include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of
such constituent entity as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the provisions of this
Section 9.4 with respect to the resulting or surviving entity as he would have
with respect to such constituent entity if its separate existence had
continued.


     (j)     The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, (i) continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person; and (ii) survive the termination or expiration
of this Declaration or the earlier removal or resignation of an Indemnified
Person.


     Section 9.5. Outside Businesses. Any Covered Person, the Sponsor and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. None of any Covered Person,
the Sponsor or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust, could be taken
by the Trust, and any Covered Person, the Sponsor and the Institutional Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person and the Institutional Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Sponsor or its Affiliates.


     Section 9.6. Compensation; Fee. The Sponsor agrees:


     (a)     to pay to the Institutional Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and


     (b)     except as otherwise expressly provided herein, to reimburse the
Institutional Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Institutional Trustee in accordance with
any provision of this Declaration (including the reasonable compensation and
the expenses and disbursements of their respective agents and counsel), except
any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct.


     The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
the Institutional Trustee.


33






 


     No Institutional Trustee may claim any lien or charge on any property of
the Trust as a result of any amount due pursuant to this Section 9.6.


ARTICLE X



ACCOUNTING



     Section 10.1. Fiscal Year. The fiscal year (“Fiscal Year”) of the Trust
shall be the calendar year, or such other year as is required by the Code.


     Section 10.2. Certain Accounting Matters.


     (a)     At all times during the existence of the Trust, the Administrators
shall keep, or cause to be kept at the principal office of the Trust in the
United States, as defined for purposes of Treasury Regulations section
301.7701-7, full books of account, records and supporting documents, which
shall reflect in reasonable detail each transaction of the Trust. The books of
account shall be maintained, at the Sponsor’s expense, in accordance with
generally accepted accounting principles, consistently applied. The books of
account and the records of the Trust shall be examined by and reported upon
(either separately or as part of the Sponsor’s regularly prepared consolidated
financial report) as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.


     (b)     The Administrators shall cause to be duly prepared and delivered to
each of the Holders of Securities Form 1099 or such other annual United States
federal income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Administrators shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.


     (c)     The Administrators, at the Sponsor’s expense, shall cause to be duly
prepared at the principal office of the Sponsor in the United States, as
‘United States’ is defined in Section 7701(a)(9) of the Code (or at the
principal office of the Trust if the Sponsor has no such principal office in
the United States), and filed an annual United States federal income tax return
on a Form 1041 or such other form required by United States federal income tax
law, and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.


     Section 10.3. Banking. The Trust shall maintain in the United States, as
defined for purposes of Treasury Regulations section 301.7701-7, one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.


     Section 10.4. Withholding. The Institutional Trustee or any Paying Agent
and the Administrators shall comply with all withholding requirements under
United States federal, state and local law. The Institutional Trustee or any
Paying Agent shall request, and each Holder shall provide to the Institutional
Trustee or any Paying Agent, such forms or certificates as are necessary to
establish an exemption from withholding with respect to the Holder, and any
representations and forms as shall reasonably be requested by the Institutional
Trustee or any Paying Agent to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrators shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a Distribution in the
amount of the withholding to the Holder. In the event of any claimed

34






 




overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Institutional Trustee or any
Paying Agent may reduce subsequent Distributions by the amount of such
withholding.


ARTICLE XI



AMENDMENTS AND MEETINGS



     Section 11.1. Amendments.


     (a)     Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may only be amended by a written
instrument approved and executed by the Institutional Trustee.


     (b)     Notwithstanding any other provision of this Article XI, an amendment
may be made, and any such purported amendment shall be valid and effective only
if:



		
	 	     (i)     the Institutional Trustee shall have first received




		
	 	     (A)     an Officers’ Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and




		
	 	     (B)     an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and




		
	 	     (ii)     the result of such amendment would not be to




		
	 	     (A)     cause the Trust to cease to be classified for purposes of
United States federal income taxation as a grantor trust; or




		
	 	     (B)     cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.



     (c)     Except as provided in Section 11.1(d), (e) or (h), no amendment shall
be made, and any such purported amendment shall be void and ineffective, unless
the Holders of a Majority in liquidation amount of the Capital Securities shall
have consented to such amendment.


     (d)     In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Securities as of a specified date or
change any conversion or exchange provisions or (ii) restrict the right of a
Holder to institute suit for the enforcement of any such payment on or after
such date.


     (e)     Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.


     (f)     Article III shall not be amended without the consent of the Holders of
a Majority in liquidation amount of the Common Securities.


     (g)     The rights of the Holders of the Capital Securities under Article IV
to appoint and remove the Institutional Trustee shall not be amended without
the consent of the Holders of a Majority in liquidation amount of the Capital
Securities.


35






 


      (h)     This Declaration may be amended by the Institutional Trustee and the
Holders of a Majority in liquidation amount of the Common Securities without
the consent of the Holders of the Capital Securities to:



		
	 	     (i)     cure any ambiguity;




		
	 	     (ii)     correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration;




		
	 	     (iii)     add to the covenants, restrictions or obligations of the
Sponsor; or




		
	 	     (iv)     modify, eliminate or add to any provision of this Declaration to
such extent as may be necessary to ensure that the Trust will be
classified for United States federal income tax purposes at all times as a
grantor trust and will not be required to register as an Investment
Company (including without limitation to conform to any change in Rule
3a-5, Rule 3a-7 or any other applicable rule under the Investment Company
Act or written change in interpretation or application thereof by any
legislative body, court, government agency or regulatory authority) which
amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders of Securities;



       provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any
material respect the powers, preferences or special rights of Holders of
Capital Securities.


     Section 11.2. Meetings of the Holders of Securities; Action by Written
Consent.


     (a)     Meetings of the Holders of any class of Securities may be called at
any time by the Administrators (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration or the terms of the
Securities. The Administrators shall call a meeting of the Holders of such
class if directed to do so by the Holders of at least 10% in liquidation amount
of such class of Securities. Such direction shall be given by delivering to
the Administrators one or more calls in a writing stating that the signing
Holders of the Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of the
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of the Securities exercising the right to call a meeting and only
those Securities represented by such Certificates shall be counted for purposes
of determining whether the required percentage set forth in the second sentence
of this paragraph has been met.


     (b)     Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:



		
	 	     (i)     notice of any such meeting shall be given to all the Holders of
the Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of the Securities is permitted or required under
this Declaration, such vote, consent or approval may be given at a meeting
of the Holders of the Securities. Any action that may be taken at a
meeting of the Holders of the Securities may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the
Holders of the Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of the Securities
having a right to vote thereon were present and voting. Prompt notice of
the taking of action without a meeting shall be given to the Holders of
the Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the
Holders of the Securities for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by the
Administrators;




		
	 	     (ii)     each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof



36






 





		
	 	unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of the Securities executing it.
Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation
Law of the State of Connecticut relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Connecticut corporation
and the Holders of the Securities were stockholders of a Connecticut
corporation; each meeting of the Holders of the Securities shall be
conducted by the Administrators or by such other Person that the
Administrators may designate; and




		
	 	     (iii)     unless the Statutory Trust Act, this Declaration, or the terms
of the Securities otherwise provides, the Administrators, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of the
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of
any such right to vote; provided, however, that each meeting shall be
conducted in the United States (as that term is defined in Treasury
Regulations section 301.7701-7).



ARTICLE XII



REPRESENTATIONS OF INSTITUTIONAL TRUSTEE



     Section 12.1. Representations and Warranties of Institutional Trustee.
The initial Institutional Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee’s acceptance of its appointment as
Institutional Trustee, that:


     (a)     the Institutional Trustee is a national banking association with trust
powers, duly organized and validly existing under the laws of the United States
of America with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration;


     (b)     the execution, delivery and performance by the Institutional Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a
legal, valid and binding obligation of the Institutional Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors’ rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);


     (c)     the execution, delivery and performance of this Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and


     (d)     no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.


ARTICLE XIII



MISCELLANEOUS



     Section 13.1. Notices. All notices provided for in this Declaration shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:


     (a)     if given to the Trust, in care of the Administrators at the Trust’s
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):

37






 





		
	 	First Interstate Statutory Trust I

c/o First Interstate BancSystem, Inc.

First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101

Attention: Gary Brown

Fax: 406-255-5288



     (b)     if given to the Institutional Trustee, at the Institutional Trustee’s
mailing address set forth below (or such other address as the Institutional
Trustee may give notice of to the Holders of the Securities):



		
	 	U. S. Bank National Association

225 Asylum Street, Goodwin Square

Hartford, Connecticut 06103

Attention: Vice President, Corporate Trust Services Division

Telecopy: 860-244-1889




		With a copy to:






		
	 	U. S. Bank National Association

1 Federal Street - 3rd Floor

Boston, Massachusetts 02110

Attention: Paul D. Allen, Corporate Trust Services Division

Telecopy: 617-603-6665



     (c)     if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):



		
	 	First Interstate BancSystem, Inc.

First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101

Attention: Gary Brown

Fax: 406-255-5288



     (d)     if given to any other Holder, at the address set forth on the books
and records of the Trust.


     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.


     Section 13.2. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Connecticut and all rights and remedies shall be governed
by such laws without regard to the principles of conflict of laws of the State
of Connecticut or any other jurisdiction that would call for the application of
the law of any jurisdiction other than the State of Connecticut; provided,
however, that there shall not be applicable to the Trust, the Institutional
Trustee or this Declaration any provision of the laws (statutory or common) of
the State of Connecticut pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (a) the filing with any court or
governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (b) affirmative requirements to post bonds for trustees, officers,
agents or employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of
real or personal property, (d) fees or other sums payable to trustees,
officers, agents or employees of a trust, (e) the allocation of receipts and
expenditures to income or principal, or (f) restrictions or limitations on the
permissible nature, amount or


38






 




concentration of trust investments or requirements relating to the
titling, storage or other manner of holding or investing trust assets.


     Section 13.3. Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income
tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.


     Section 13.4. Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.


     Section 13.5. Successors and Assigns. Whenever in this Declaration any of
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Institutional Trustee shall bind and inure
to the benefit of their respective successors and assigns, whether or not so
expressed.


     Section 13.6. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.


     Section 13.7. Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Institutional Trustee and
Administrators to any of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have
the same force and effect as though all of the signers had signed a single
signature page.


Signatures appear on the following page



39






 





     IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.



	 	 	 	 	 
	 	U. S. BANK NATIONAL ASSOCIATION,

as Institutional Trustee
	 	 	 	 	 
	 	By: 	
/s/ PAUL D. ALLEN	 	 
	 	

	 	 
	 	 	
Name: Paul D. Allen

Title: Vice President	 	 
	 	 	 	 	 
	 	
FIRST INTERSTATE BANCSYSTEM, INC., as Sponsor
	 	 	 	 	 
	 	By: 	
/s/ TERRILL R. MOORE	 	 
	 	

	 	 
	 	 	
Name:

Title:	 	 
	 	 	 	 	 
	 	
FIRST INTERSTATE STATUTORY TRUST I
	 	 	 	 	 
	 	By: 	
/s/ TERRILL R. MOORE	 	 
	 	

	 	 
	 	 	
Administrator	 	 
	 	 	 	 	 
	 	By: 	
/s/ THOMAS W. SCOTT	 	 
	 	

	 	 
	 	 	
Administrator	 	 
	 	 	 	 	 
	 	By: 	
/s/ LYLE R. KNIGHT	 	 
	 	

	 	 
	 	 	
Administrator	 	 



40






 



ANNEX I



TERMS OF SECURITIES



               Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust,
dated as of March 26, 2003 (as amended from time to time, the “Declaration”),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Capital Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration):



     1.     Designation and Number.


               (a)     40,000 Floating Rate Capital Securities of First Interstate Statutory
Trust I (the “Trust”), with an aggregate stated liquidation amount with respect
to the assets of the Trust of forty million dollars ($40,000,000.00) and a
stated liquidation amount with respect to the assets of the Trust of $1,000.00
per Capital Security, are hereby designated for the purposes of identification
only as the “Capital Securities”. The Capital Security Certificates evidencing
the Capital Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.



               (b)     1,238,000 Floating Rate Common Securities of the Trust (the “Common
Securities”) will be evidenced by Common Security Certificates substantially in
the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.



     2.     Distributions.


               (a)     Distributions will be payable on each Security for the period
beginning on (and including) the date of original issuance and ending on (but
excluding) June 26, 2003 at a rate per annum of 4.41063% and shall bear
interest for each successive period beginning on (and including) June 26, 2003,
and each succeeding Distribution Payment Date, and ending on (but excluding)
the next succeeding Distribution Payment Date (each, a “Distribution Period”)
at a rate per annum equal to the 3-Month LIBOR, determined as described below,
plus 3.15% (the “Coupon Rate”); provided, however, that prior to March 26,
2008, the Coupon Rate shall not exceed 11.75%, applied to the stated
liquidation amount thereof, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
will bear interest thereon compounded quarterly at the applicable Distribution
Rate (to the extent permitted by law). Distributions, as used herein, include
cash distributions and any such compounded distributions unless otherwise
noted. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. In the event that any
date on which a Distribution is payable on the Securities is not a Business
Day, then payment of the Distribution payable on such date shall be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable. The amount of the
Distribution payable (i) for any Distribution Period commencing on or after the
date of original issuance but before March 26, 2008 will be computed on the
basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution
Period commencing on March 26, 2008 and each succeeding Distribution Period
will be calculated by applying the Distribution Rate to the stated liquidation
amount outstanding at the commencement of the Distribution Period and
multiplying each such amount by the actual number of days in the Distribution
Period concerned divided by 360. All percentages resulting from any
calculations

I-1






 




on the Capital Securities will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655), and all dollar amounts used in or resulting from
such calculation will be rounded to the nearest cent (with one-half cent being
rounded upward)).



               (b)     Distributions on the Securities will be cumulative, will accrue from
the date of original issuance, and will be payable, subject to extension of
distribution payment periods as described herein, quarterly in arrears on March
26, June 26, September 26 and December 26 of each year, commencing on June 26,
2003 (each a “Distribution Payment Date”) when, as and if available for
payment. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures, so long as no Indenture Event of
Default has occurred and is continuing, by deferring the payment of interest on
the Debentures for up to 20 consecutive quarterly periods (each an “Extension
Period”) at any time and from time to time, subject to the conditions described
below, during which Extension Period no interest shall be due and payable.
During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest will accrue at an annual rate
equal to the Distribution Rate in effect for each such Extension Period,
compounded quarterly from the date such interest would have been payable were
it not for the Extension Period, to the extent permitted by law (such interest
referred to herein as “Additional Interest”). No Extension Period may end on a
date other than a Distribution Payment Date. At the end of any such Extension
Period, the Debenture Issuer shall pay all interest then accrued and unpaid on
the Debentures (together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date and provided
further, however, that during any such Extension Period, the Debenture Issuer
and its Affiliates shall not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Debenture Issuer’s or its Affiliates’ capital stock (other than
payments of dividends or distributions to the Debenture Issuer) or make any
guarantee payments with respect to the foregoing, or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Debenture Issuer or any Affiliate that rank pari
passu in all respects with or junior in interest to the Debentures (other than,
with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Debenture Issuer in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer (or securities convertible into or exercisable
for such capital stock) as consideration in an acquisition transaction entered
into prior to the applicable Extension Period, (b) as a result of any exchange
or conversion of any class or series of the Debenture Issuer’s capital stock
(or any capital stock of a subsidiary of the Debenture Issuer) for any class or
series of the Debenture Issuer’s capital stock or of any class or series of the
Debenture Issuer’s indebtedness for any class or series of the Debenture
Issuer’s capital stock, (c) the purchase of fractional interests in shares of
the Debenture Issuer’s capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholders’ rights
plan, or the issuance of rights, stock or other property under any
stockholders’ rights plan, or the redemption or repurchase of rights pursuant
thereto, (e) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive
quarterly periods, or extend beyond the Maturity Date. Upon the termination of
any Extension Period and upon the payment of all accrued and unpaid interest
and Additional Interest, the Debenture Issuer may commence a new Extension
Period, subject to the foregoing requirements. No interest or Additional



I-2






 





Interest shall be due and payable during an Extension Period, except at
the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall
be deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.


               (c)     Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant record
dates. The relevant record dates shall be 15 days before the relevant
Distribution Payment Date. Distributions payable on any Securities that are
not punctually paid on any Distribution Payment Date, as a result of the
Debenture Issuer having failed to make a payment under the Debentures, as the
case may be, when due (taking into account any Extension Period), will cease to
be payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable
to the Person in whose name such Securities are registered on the special
record date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such payment date.



               (d)     In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.



     3.     Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a “Liquidation”) other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out
of the assets of the Trust available for distribution to Holders of the
Securities, after satisfaction of liabilities to creditors of the Trust (to the
extent not satisfied by the Debenture Issuer), distributions equal to the
aggregate of the stated liquidation amount of $1,000.00 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the “Liquidation Distribution”), unless in connection with such
Liquidation, the Debentures in an aggregate stated principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Distribution Rate of, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on, and having the
same record date as, such Securities, after paying or making reasonable
provision to pay all claims and obligations of the Trust in accordance with the
Statutory Trust Act, shall be distributed on a Pro Rata basis to the Holders of
the Securities in exchange for such Securities.


     The Sponsor, as the Holder of all of the Common Securities, has the right
at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event), subject to the receipt by the Debenture Issuer
of prior approval from the Board of Governors of the Federal Reserve System and
any successor federal agency that is primarily responsible for regulating the
activities of the Sponsor (the “Federal Reserve”), if the Sponsor is a bank
holding company, or from the Office of Thrift Supervision and any successor
federal agency that is primarily responsible for regulating the activities of
Sponsor, (the


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“OTS”) if the Sponsor is a savings and loan holding company, in either
case if then required under applicable capital guidelines or policies of the
Federal Reserve or OTS, as applicable, and, after satisfaction of liabilities
to creditors of the Trust, cause the Debentures to be distributed to the
Holders of the Securities on a Pro Rata basis in accordance with the aggregate
stated liquidation amount thereof.


     If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be
liquidated by the Institutional Trustee as expeditiously as it determines to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust, to the Holders of the Securities, the Debentures on a Pro Rata basis to
the extent not satisfied by the Debenture Issuer, unless such distribution is
determined by the Institutional Trustee not to be practical, in which event
such Holders will be entitled to receive out of the assets of the Trust
available for distribution to the Holders, after satisfaction of liabilities of
creditors of the Trust to the extent not satisfied by the Debenture Issuer, an
amount equal to the Liquidation Distribution. An early Liquidation of the
Trust pursuant to clause (iv) of Section 7.1(a) of the Declaration shall occur
if the Institutional Trustee determines that such Liquidation is possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.


     If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
the Trust on such Capital Securities shall be paid to the Holders of the Trust
Securities on a Pro Rata basis, except that if an Event of Default has occurred
and is continuing, the Capital Securities shall have a preference over the
Common Securities with regard to such distributions.


     After the date for any distribution of the Debentures upon dissolution of
the Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder’s Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or
principal shall be made to Holders of Securities in respect of any payments due
and payable under the Debentures; provided, however that such failure to pay
shall not be deemed to be an Event of Default and shall not entitle the Holder
to the benefits of the Guarantee), and (iv) all rights of Holders of Securities
under the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.


     4.     Redemption and Distribution.


               (a)     The Debentures will mature on March 26, 2033. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, at any Distribution
Payment Date on or after March 26, 2008, at the Redemption Price. In addition,
the Debentures may be redeemed by the Debenture Issuer at the Special
Redemption Price, in whole but not in part, at any Distribution Payment Date,
upon the occurrence and continuation of a Special Event within 120 days
following the occurrence of such Special Event at the Special Redemption Price,
upon not less than 30 nor more than 60 days’ notice to holders of such
Debentures so long as such Special Event is continuing. In each case, the right
of the Debenture Issuer to redeem the Debentures is subject to the Debenture
Issuer having received prior approval from the Federal Reserve (if the
Debenture Issuer is a bank holding company) or prior approval from the OTS (if
the Debenture Issuer is a savings and loan holding company), in each case if
then required under applicable capital guidelines or policies of the applicable
federal agency. The Sponsor

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shall appoint a Quotation Agent, which initially shall be U. S. Bank
National Association, for the purpose of performing the services contemplated
in or by reference in, the definition of Special Redemption Price. Any error
in the calculation of the Special Redemption Price by the Quotation Agent or
the Debenture Trustee may be corrected at any time by notice delivered to the
Sponsor and the holders of the Capital Securities. Subject to the corrective
rights set forth above, all certificates, communications, opinions,
determinations, calculations, quotations and decisions given, expressed, made
or obtained for the purposes of the provisions relating to the payment and
calculation of the Special Redemption Price on the Debentures or the Capital
Securities by the Debenture Trustee, the Quotation Agent or the Institutional
Trustee, as the case may be, shall (in the absence of willful default, bad
faith or manifest error) be final, conclusive and binding on the holders of the
Debentures and the Capital Securities, the Trust and the Sponsor, and no
liability shall attach (except as provided above) to the Debenture Trustee, the
Quotation Agent or the Institutional Trustee in connection with the exercise or
non-exercise by any of them of their respective powers, duties and discretion.


     “3-Month LIBOR” means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture Trustee in the
following order of priority:



		
	 	     (1)     the rate (expressed as a percentage per annum) for U.S. dollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date (as
defined below). “Telerate Page 3750” means the display designated as
“Page 3750” on the Dow Jones Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as
may be nominated by the British Bankers’ Association as the information
vendor for the purpose of displaying London interbank offered rates for
U.S. dollar deposits;




		
	 	     (2)     if such rate cannot be identified on the related Determination
Date, the Debenture Trustee will request the principal London offices of
four leading banks in the London interbank market to provide such banks’
offered quotations (expressed as percentages per annum) to prime banks in
the London interbank market for U.S. dollar deposits having a three-month
maturity as of 11:00 a.m. (London time) on such Determination Date. If
at least two quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations;




		
	 	     (3)     if fewer than two such quotations are provided as requested in
clause (2) above, the Debenture Trustee will request four major New York
City banks to provide such banks’ offered quotations (expressed as
percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If at
least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and




		
	 	     (4)     if fewer than two such quotations are provided as requested in
clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR determined with
respect to the Distribution Period immediately preceding such current
Distribution Period.




      
If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.

     The Coupon Rate for any Distribution Period will at no time be higher than
the maximum rate then permitted by New York law as the same may be modified by
United States law.


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     “Capital Treatment Event” means the receipt by the Debenture Issuer and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws, rules or regulations of the
United States or any political subdivision thereof or therein, or as the result
of any official or administrative pronouncement or action or decision
interpreting or applying such laws, rules or regulations, which amendment or
change is effective or which pronouncement, action or decision is announced on
or after the date of original issuance of the Debentures, there is more than an
insubstantial risk that the Sponsor will not, within 90 days of the date of
such opinion, be entitled to treat an amount equal to the aggregate liquidation
amount of the Capital Securities as “Tier 1 Capital” (or its then equivalent)
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Sponsor (or if the Sponsor is not a bank
holding company, such guidelines applied to the Sponsor as if the Sponsor were
subject to such guidelines); provided, however, that the inability of the
Sponsor to treat all or any portion of the liquidation amount of the Capital
Securities as Tier l Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Sponsor having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the Federal Reserve or OTS, as applicable,
may now or hereafter accord Tier 1 Capital treatment in excess of the amount
which may now or hereafter qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines; provided further, however, that the
distribution of Debentures in connection with the Liquidation of the Trust
shall not in and of itself constitute a Capital Treatment Event unless such
Liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event.


     “Comparable Treasury Issue” means with respect to any Special Redemption
Date the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Fixed Rate Period Remaining Life that would
be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the Fixed Rate Period Remaining Life. If no United
States Treasury security has a maturity which is within a period from 3 months
before to 3 months after March 26, 2008, the two most closely corresponding
United States Treasury securities as selected by the Quotation Agent shall be
used as the Comparable Treasury Issue, and the Treasury Rate shall be
interpolated and extrapolated on a straight-line basis, rounding to the nearest
month using such securities.


     “Comparable Treasury Price” means (a) the average of 5 Reference Treasury
Dealer Quotations for such Special Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (b) if the Quotation
Agent obtains fewer than 5 such Reference Treasury Dealer Quotations, the
average of all such Quotations.


     “Determination Date” means the date that is two London Banking Days (i.e.,
a business day in which dealings in deposits in U.S. dollars are transacted in
the London interbank market) preceding the particular Distribution Period for
which a Coupon Rate is being determined.


     “Fixed Rate Period Remaining Life” means, with respect to any Debenture,
the period from the Special Redemption Date for such Debenture to March 26,
2008.


     “Investment Company Event” means the receipt by the Debenture Issuer and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Trust is or, within 90 days of the date of such opinion, will be considered
an Investment Company that is required to be registered under the Investment


I-6






 




Company Act which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Debentures.


     “Maturity Date” means March 26, 2033.


     “Primary Treasury Dealer” shall mean either a primary United States
Government securities dealer or an entity of nationally recognized standing in
matters pertaining to the quotation of treasury securities that is reasonably
acceptable to the Sponsor and the Institutional Trustee.


     “Quotation Agent” means U. S. Bank National Association, or its designee,
and its successors; provided, however, that if the foregoing shall cease to be
a Primary Treasury Dealer, the Sponsor shall substitute therefor another
Primary Treasury Dealer.


     “Redemption Date” shall mean the date fixed for the redemption of Capital
Securities, which shall be any March 26, June 26, September 26 or December 26
commencing March 26, 2008.


     “Redemption Price” means 100% of the principal amount of the Debentures
being redeemed, plus accrued and unpaid Interest on such Debentures to the
Redemption Date.


     “Reference Treasury Dealer” means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Debenture Issuer.


     “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day
preceding such Redemption Date.


     “Special Event” means a Tax Event, an Investment Company Event or a
Capital Treatment Event.


     “Special Redemption Date” means a date on which a Special Event redemption
occurs, which shall be any March 26, June 26, September 26 or December 26.


     “Special Redemption Price” means (a) if the Special Event is before March
26, 2008, the greater of (i) 107.5% of the principal amount of the Debentures,
plus accrued and unpaid Interest on the Debentures to the occurrence of the
Special Event, or (ii) as determined by the Quotation Agent, the sum of (A) the
present value of the principal amount of the Debentures and the present value
of Interest payable on the Debentures during the Fixed Rate Period Remaining
Life of the Debentures, each discounted to the date on which such Special Event
occurs on a quarterly basis (assuming a 360-day year consisting of twelve
30-day months at the Treasury Rate), plus (B) accrued and unpaid Interest on
the Debentures to such Special Redemption Date, or (b) if the Special Event is
on or after March 26, 2008, 100% of the principal amount of the Debentures
being redeemed, plus accrued and unpaid Interest on such Debentures to the
Special Redemption Date.


     “Tax Event” means the receipt by the Debenture Issuer and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement including any notice or announcement of intent to adopt such
procedures or regulations) (an “Administrative Action”) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued


I-7






 




to or in connection with a proceeding involving the Debenture Issuer or
the Trust and whether or not subject to review or appeal, which amendment,
clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original
issuance of the Debentures, there is more than an insubstantial risk that: (i)
the Trust is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Debentures; (ii) interest payable by the Debenture Issuer on the Debentures
is not, or within 90 days of the date of such opinion, will not be, deductible
by the Debenture Issuer, in whole or in part, for United States federal income
tax purposes; or (iii) the Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.


     “Treasury Rate” means (i) the yield, under the heading which represents
the average for the week immediately prior to the date of calculation,
appearing in the most recently published statistical release designated H.15
(519) or any successor publication which is published weekly by the Federal
Reserve and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption “Treasury Constant
Maturities,” for the maturity corresponding to the Fixed Rate Period Remaining
Life (if no maturity is within three months before or after the Fixed Rate
Period Remaining Life, yields for the two published maturities most closely
corresponding to the Fixed Rate Period Remaining Life shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date. The Treasury Rate shall be calculated by the
Quotation Agent on the third Business Day preceding the Special Redemption
Date.


               (b)     Upon the repayment in full at maturity or redemption in whole or in
part of the Debentures (other than following the distribution of the Debentures
to the Holders of the Securities), the proceeds from such repayment or payment
shall concurrently be applied to redeem Pro Rata at the applicable Redemption
Price or Special Redemption Price, as applicable, Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed; provided, however, that holders of such
Securities shall be given not less than 30 nor more than 60 days’ notice of
such redemption (other than at the scheduled maturity of the Debentures).



               (c)     If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro Rata and
the Capital Securities to be redeemed will be redeemed Pro Rata from each
Holder of Capital Securities.



               (d)     The Trust may not redeem fewer than all the outstanding Capital
Securities unless all accrued and unpaid Distributions have been paid on all
Capital Securities for all quarterly Distribution periods terminating on or
before the date of redemption.



               (e)     Redemption or Distribution Procedures.




		
	 	               (i)     Notice of any redemption of, or notice of distribution of the
Debentures in exchange for, the Securities (a “Redemption/Distribution
Notice”) will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days
before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this
paragraph 4(e)(i), a Redemption/Distribution Notice shall be deemed to be
given



I-8






 





		
	 	on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of such Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of such Securities at the
address of each such Holder appearing on the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing
thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.




		
	 	               (ii)     If the Securities are to be redeemed and the Trust gives a
Redemption/ Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this paragraph 4 (which notice will
be irrevocable), then, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Institutional Trustee will, with respect
to Book-Entry Capital Securities, irrevocably deposit with the Depositary
for such Book-Entry Capital Securities, to the extent available therefor,
funds sufficient to pay the relevant Redemption Price or Special
Redemption Price and will give such Depositary irrevocable instructions
and authority to pay such Redemption Price or Special Redemption Price,
as applicable, to the Owners of the Capital Securities and with respect
to Capital Securities that are not Book-Entry Capital Securities, the
Institutional Trustee will pay, to the extent available therefor, the
relevant Redemption Price or Special Redemption Price, as applicable, to
the Holders of such Securities by check mailed to the address of each
such Holder appearing on the books and records of the Trust on the
Redemption Date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required then immediately prior to the close
of business on the date of such deposit Distributions will cease to
accrue on the Securities so called for redemption and all rights of
Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the applicable
Redemption Price or Special Redemption Price specified in paragraph 4(a),
but without interest on such Redemption Price or Special Redemption
Price. If any date fixed for redemption of Securities is not a Business
Day, then payment of any such Redemption Price or Special Redemption
Price payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date fixed for redemption. If payment of the Redemption Price or
Special Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Trust or by the Debenture
Issuer as guarantor pursuant to the Guarantee, Distributions on such
Securities will continue to accrue at the Distribution Rate from the
original Redemption Date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price or Special Redemption Price.
In the event of any redemption of the Capital Securities issued by the
Trust in part, the Trust shall not be required to (i) issue, register the
transfer of or exchange any Security during a period beginning at the
opening of business 15 days before any selection for redemption of the
Capital Securities and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been
given to all Holders of the Capital Securities to be so redeemed or (ii)
register the transfer of or exchange any Capital Securities so selected
for redemption, in whole or in part, except for the unredeemed portion of
any Capital Securities being redeemed in part.




		
	 	               (iii)     Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust to (A) in respect of the Capital
Securities, the Holders thereof and (B) in respect of the Common
Securities, the Holder thereof.




		
	 	               (iv)     Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), and provided that the
acquiror is not the Holder



I-9






 





		
	 	of the Common Securities or the obligor under the Indenture, the
Sponsor or any of its subsidiaries may at any time and from time to time
purchase outstanding Capital Securities by tender, in the open market or
by private agreement.



     5.     Voting
Rights - Capital Securities.


               (a)     Except as provided under paragraphs 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights. The Administrators are required to call a meeting of the
Holders of the Capital Securities if directed to do so by Holders of at least
10% in liquidation amount of the Capital Securities.



               (b)     Subject to the requirements of obtaining a tax opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence
of this paragraph, the Holders of a Majority in liquidation amount of the
Capital Securities, voting separately as a class, have the right to direct the
time, method, and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under the Declaration, including the right to direct
the Institutional Trustee, as holder of the Debentures, to (i) exercise the
remedies available under the Indenture as the holder of the Debentures, (ii)
waive any past default that is waivable under the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
aggregate principal amount of Debentures (a “Super Majority”) affected thereby,
the Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. If
the Institutional Trustee fails to enforce its rights under the Debentures
after the Holders of a Majority in liquidation amount of such Capital
Securities have so directed the Institutional Trustee, to the fullest extent
permitted by law, a Holder of the Capital Securities may institute a legal
proceeding directly against the Debenture Issuer to enforce the Institutional
Trustee’s rights under the Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on the date the interest
or principal is payable (or in the case of redemption, the Redemption Date or
the Special Redemption Date, as applicable), then a Holder of record of the
Capital Securities may directly institute a proceeding for enforcement of
payment, on or after the respective due dates specified in the Debentures, to
such Holder directly of the principal of or interest on the Debentures having
an aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder. The Institutional Trustee shall notify all
Holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Debentures unless (x) such default
has been cured prior to the giving of such notice or (y) the Institutional
Trustee determines in good faith that the withholding of such notice is in the
interest of the Holders of such Capital Securities, except where the default
relates to the payment of principal of or interest on any of the Debentures.
Such notice shall state that such Indenture Event of Default also constitutes
an Event of Default hereunder. Except with respect to directing the time,
method and place of conducting a proceeding for a remedy, the Institutional
Trustee shall not take any of the actions described in clauses (i), (ii) or
(iii) above unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a gr
antor trust for United States federal income tax
purposes.



     In the event the consent of the Institutional Trustee, as the holder of
the Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the


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Institutional Trustee shall request the direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of a Super-Majority, the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities outstanding which the
relevant Super-Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the Holders of the Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.


     A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Event of Default hereunder. Any required approval or direction of
Holders of the Capital Securities may be given at a separate meeting of Holders
of the Capital Securities convened for such purpose, at a meeting of all of the
Holders of the Securities in the Trust or pursuant to written consent. The
Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the
date by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents. No vote or consent of the
Holders of the Capital Securities will be required for the Trust to redeem and
cancel Capital Securities or to distribute the Debentures in accordance with
the Declaration and the terms of the Securities.


     Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not entitle the Holder thereof to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Capital Securities were
not outstanding.


     In no event will Holders of the Capital Securities have the right to vote
to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee.


     6.     Voting
Rights - Common Securities.


               (a)     Except as provided under paragraphs 6(b), 6(c) and 7 and as otherwise
required by law and the Declaration, the Common Securities will have no voting
rights.



               (b)     The Holders of the Common Securities are entitled, in accordance with
Article IV of the Declaration, to vote to appoint, remove or replace any
Administrators.



               (c)     Subject to Section 6.9 of the Declaration and only after each Event of
Default (if any) with respect to the Capital Securities has been cured, waived,
or otherwise eliminated and subject to the requirements of the second to last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures,

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(ii)  waiving any past default and its consequences that is waivable under
the Indenture, or (iii) exercising any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided,
however, that, where a consent or action under the Indenture would require a
Super Majority, the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding. Notwithstanding this paragraph 6(c), the Institutional Trustee
shall not revoke any action previously authorized or approved by a vote or
consent of the Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee or the Debenture Trustee as set
forth above, the Institutional Trustee shall not take any action described in
(i), (ii) or (iii) above, unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee fails to enforce
its rights under the Declaration to the fullest extent permitted by law, any
Holder of the Common Securities may institute a legal proceeding directly
against any Person to enforce the Institutional Trustee’s rights under the
Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.


     Any approval or direction of Holders of the Common Securities may be given
at a separate meeting of Holders of the Common Securities convened for such
purpose, at a meeting of all of the Holders of the Securities in the Trust or
pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.


     No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.


     7.     Amendments to Declaration and Indenture.


               (a)     In addition to any requirements under Section 11.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Institutional
Trustee, Sponsor or Administrators otherwise propose to effect, (i) any action
that would adversely affect the powers, preferences or special rights of the
Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the Liquidation of the Trust, other than as described in Section 7.1 of
the Declaration, then the Holders of outstanding Securities, voting together as
a single class, will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities,
affected thereby; provided, however, if any amendment or proposal referred to
in clause (i) above would adversely affect only the Capital Securities or only
the Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Securities.



               (b)     In the event the consent of the Institutional Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect

I-12






 





to such amendment, modification, or termination as directed by a Majority
in liquidation amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of
the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.


               (c)     Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause the
Trust to be classified for purposes of United States federal income taxation as
other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee or (iii) cause the Trust to be deemed an
Investment Company which is required to be registered under the Investment
Company Act.



               (d)     Notwithstanding any provision of the Declaration, the right of any
Holder of the Capital Securities to receive payment of distributions and other
payments upon redemption or otherwise, on or after their respective due dates,
or to institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of the Capital Securities shall be entitled to such relief as can
be given either at law or equity.



     8.     Pro Rata. A reference in these terms of the Securities to any payment,
distribution or treatment as being “Pro Rata” shall mean pro rata to each
Holder of the Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities then outstanding unless, in relation to a payment, an
Event of Default has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of
the Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.


     9.     Ranking. The Capital Securities rank pari passu with and payment
thereon shall be made Pro Rata with the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price (or Special Redemption Price) of, any
Common Security, and no other payment on account of redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions on all outstanding Capital
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price (or Special Redemption Price) the
full amount of such Redemption Price (or Special Redemption Price) on all
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds immediately available to the Institutional
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or the Redemption Price (or Special Redemption Price) of, the
Capital Securities then due and payable.


     10.     Acceptance of Guarantee and Indenture. Each Holder of the Capital
Securities and the Common Securities, by the acceptance of such Securities,
agrees to the provisions of the Guarantee, including the subordination
provisions therein and to the provisions of the Indenture.


     11.     No Preemptive Rights. The Holders of the Securities shall have no
preemptive or similar rights to subscribe for any additional securities.


I-13






 


     12.     Miscellaneous. These terms constitute a part of the Declaration. The
Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to a Holder without charge on written request to the Sponsor at its
principal place of business.


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EXHIBIT A-1



FORM OF CAPITAL SECURITY CERTIFICATE



[FORM OF FACE OF SECURITY]



     [If the Capital Security is to be Global Capital Security- THIS CAPITAL
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
(“DTC”) OR A NOMINEE OF DTC. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER
OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.


     UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC TO FIRST INTERSTATE STATUTORY TRUST I OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]


     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR’S
AND THE TRUST’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL,


A-1-1






 




CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM
THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.


     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY
REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN
ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.


     THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.


     THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.


     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED
BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.


A-1-2






 


Certificate Number P-1                                                                                           [CAPITAL] Capital Securities



March 26, 2003



Certificate Evidencing Floating Rate Capital Securities



of



First Interstate Statutory Trust I



(liquidation amount $1,000.00 per Capital Security)



     First Interstate Statutory Trust I, a statutory trust created under the
laws of the State of Connecticut (the “Trust”), hereby certifies that
[PURCHASER] is the registered owner of capital securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
(liquidation amount $1,000.00 per capital security) (the “Capital Securities”).
Subject to the Declaration (as defined below), the Capital Securities are
transferable on the books and records of the Trust in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The Capital Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of March 26, 2003, among Thomas W. Scott, Lyle R. Knight
and Terrill R. Moore, as Administrators, U. S. Bank National Association, as
Institutional Trustee, First Interstate BancSystem, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of
the Trust, including the designation of the terms of the Capital Securities as
set forth in Annex I to such amended and restated declaration as the same may
be amended from time to time (the “Declaration”). Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and
the Indenture to the Holder without charge upon written request to the Sponsor
at its principal place of business.


     Upon receipt of this Security, the Holder is bound by the Declaration and
is entitled to the benefits thereunder.


     By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.


     This Capital Security is governed by, and construed in accordance with,
the laws of the State of Connecticut, without regard to principles of conflict
of laws.


Signatures appear on following page




A-1-3










 



     IN WITNESS WHEREOF, the Trust has duly executed this certificate.



	 	 	 	 	 	 
	 	 	FIRST INTERSTATE STATUTORY TRUST I
	 	 	 
	 	 	By:	
 
	 	 	 	
    

	 	 	 	
Name:
	 	 	 	
Title:  Administrator




CERTIFICATE OF AUTHENTICATION



     This is one of the Capital Securities referred to in the within-mentioned
Declaration.



	 	 	 	 
	 	 	
U. S. BANK NATIONAL ASSOCIATION,

as the Institutional Trustee
	 	 	 	 
	 	 	
By:	
 
	 	 	
 	
 

	 	 	
 	
Authorized Officer




A-1-4






 





[FORM OF REVERSE OF CAPITAL SECURITY]



     Distributions payable on each Capital Security will be payable at an
annual rate equal to 4.41063% beginning on (and including) the date of original
issuance and ending on (but excluding) June 26, 2003 and at an annual rate for
each successive period beginning on (and including) June 26, 2003, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a “Distribution Period”), equal to
3-Month LIBOR, determined as described below, plus 3.15% (the “Coupon Rate”);
provided, however, that prior to March 26, 2008, the Coupon Rate shall not
exceed 11.75%, applied to the stated liquidation amount of $1,000.00 per
Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
will bear interest thereon compounded quarterly at the Distribution Rate (to
the extent permitted by applicable law). The term “Distributions” as used
herein includes cash distributions and any such compounded distributions unless
otherwise noted. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Institutional Trustee and to
the extent the Institutional Trustee has funds available therefor. As used
herein, “Determination Date” means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period. In the event that any date on which a
Distribution is payable on this Capital Security is not a Business Day, then a
payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date the payment was originally payable. The amount of the
Distribution payable (i) for any Distribution Period commencing on or after the
date of original issuance but before March 26, 2008 will be computed on the
basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution
Period commencing on March 26, 2008 and each succeeding Distribution Period
will be calculated by applying the Distribution Rate to the stated liquidation
amount outstanding at the commencement of the Distribution Period and
multiplying each such amount by the actual number of days in the Distribution
Period concerned divided by 360.


     “3-Month LIBOR” as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (“Telerate Page 3750” means the display designated
as “Page 3750” on the Dow Jones Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying London interbank offered rates for U.S. dollar deposits);
(ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading
banks in the London interbank market to provide such banks’ offered quotations
(expressed as percentages per annum) to prime banks in the London interbank
market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m.
(London time) on such Determination Date. If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii)
if fewer than two such quotations are provided as requested in clause (ii)
above, the Debenture Trustee will request four major New York City banks to
provide such banks’ offered quotations (expressed as percentages per annum) to
leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time)
on such Determination Date. If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; and (iv) if fewer
than two such quotations are provided as requested in clause (iii) above,
3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period. If
the rate for U.S. dollar deposits having a three-month maturity that initially
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected

A-1-5






 




rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.


     The Coupon Rate for any Distribution Period will at no time be higher than
the maximum rate then permitted by New York law as the same may be modified by
United States law.


     All percentages resulting from any calculations on the Capital Securities
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and
all dollar amounts used in or resulting from such calculation will be rounded
to the nearest cent (with one-half cent being rounded upward)).


     Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 26, June 26, September 26 and
December 26 of each year, commencing on June 26, 2003. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an “Extension Period”) at any time and from time to
time on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Distribution
Rate in effect for each such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as
“Additional Interest”). No Extension Period may end on a date other than a
Distribution Payment Date. At the end of any such Extension Period, the
Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that
no Extension Period may extend beyond the Maturity Date. Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive
quarterly periods, or extend beyond the Maturity Date. Upon the termination of
any Extension Period and upon the payment of all accrued and unpaid interest
and Additional Interest, the Debenture Issuer may commence a new Extension
Period, subject to the foregoing requirements. No interest or Additional
Interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due
and payable during such Extension Period shall bear Additional Interest.
During any Extension Period, Distributions on the Capital Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.


     The Capital Securities shall be redeemable as provided in the Declaration.


A-1-6






 



ASSIGNMENT



     FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:




	 	 
	

	 
	(Insert assignee’s
social security or tax identification number)  	 
	 	

	 
	

	 
	

	 
	(Insert address and zip code of assignee) and irrevocably appoints
	 
	





     agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.



	 	 
	Date:	 
	 	

	 




	 	 
	Signature:	 
	 	

	 



               (Sign exactly as your name appears on the other side of this Capital
Security Certificate)



     Signature Guarantee:1







	1 Signature must be guaranteed by an “eligible guarantor institution” that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.


A-1-7






 






EXHIBIT A-2



FORM OF COMMON SECURITY CERTIFICATE



     THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.


     THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION 8.1
OF THE DECLARATION.



	 	 	 
	Certificate Number C-1	 	
[COMMON] Common Securities



March 26, 2003



Certificate Evidencing Floating Rate Common Securities



of



First Interstate Statutory Trust I



     First Interstate Statutory Trust I, a statutory trust created under the
laws of the State of Connecticut (the “Trust”), hereby certifies that First
Interstate BancSystem, Inc. (the “Holder”) is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the “Common Securities”). The Common Securities
represented hereby are issued pursuant to, and the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of March 26,
2003, among Thomas W. Scott, Lyle R. Knight and Terrill R. Moore, as
Administrators, U. S. Bank National Association, as Institutional Trustee,
First Interstate BancSystem, Inc., as Sponsor, and the holders from time to
time of undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to
such amended and restated declaration, as the same may be amended from time to
time (the “Declaration”). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge upon written request to the Sponsor at its principal
place of business.


     As set forth in the Declaration, when an Event of Default has occurred and
is continuing, the rights of Holders of Common Securities to payment in respect
of Distributions and payments upon Liquidation, redemption or otherwise are
subordinated to the rights of payment of Holders of the Capital Securities.


     Upon receipt of this Certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.


     By acceptance of this Certificate, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Common Securities as evidence of undivided beneficial ownership in the
Debentures.


     This Common Security is governed by, and construed in accordance with, the
laws of the State of Connecticut, without regard to principles of conflict of
laws.


A-2-1






 




     IN
WITNESS WHEREOF, the Trust has duly executed this certificate.
	 	 	 	 	 	 
	 	 	FIRST INTERSTATE STATUTORY TRUST I
	 	 	 
	 	 	By:	
 
	 	 	 	
    

	 	 	 	
Name:
	 	 	 	
Title:  Administrator





A-2-2






 



[FORM OF REVERSE OF COMMON SECURITY]



     Distributions payable on each Common Security will be payable at an annual
rate equal to 4.41063% beginning on (and including) the date of original
issuance and ending on (but excluding) June 26, 2003 and at an annual rate for
each successive period beginning on (and including) June 26, 2003, and each
succeeding Distribution Payment Date, and ending on (but excluding) the next
succeeding Distribution Payment Date (each a “Distribution Period”), equal to
3-Month LIBOR, determined as described below, plus 3.15% (the “Coupon Rate”);
provided, however, that prior to March 26, 2008, the Coupon Rate shall not
exceed 11.75%, applied to the stated liquidation amount of $1,000.00 per Common
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term “Distributions” as used herein includes cash
distributions and any such compounded distributions unless otherwise noted. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. As used herein,
“Determination Date” means the date that is two London Banking Days (i.e., a
business day in which dealings in deposits in U.S. dollars are transacted in
the London interbank market) preceding the commencement of the relevant
Distribution Period. In the event that any date on which a Distribution is
payable on this Common Security is not a Business Day, then a payment of the
Distribution payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable. The amount of the Distribution payable (i) for
any Distribution Period commencing on or after the date of original issuance
but before March 26, 2008 will be computed on the basis of a 360-day year of
twelve 30-day months, and (ii) for the Distribution Period commencing on March
26, 2008 and each succeeding Distribution Period will be calculated by applying
the Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.


     “3-Month LIBOR” as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (“Telerate Page 3750” means the display designated
as “Page 3750” on the Dow Jones Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying London interbank offered rates for U.S. dollar deposits);
(ii) if such rate cannot be identified on the related Determination Date, the
Debenture Trustee will request the principal London offices of four leading
banks in the London interbank market to provide such banks’ offered quotations
(expressed as percentages per annum) to prime banks in the London interbank
market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m.
(London time) on such Determination Date. If at least two quotations are
provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii)
if fewer than two such quotations are provided as requested in clause (ii)
above, the Debenture Trustee will request four major New York City banks to
provide such banks’ offered quotations (expressed as percentages per annum) to
leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time)
on such Determination Date. If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; and (iv) if fewer
than two such quotations are provided as requested in clause (iii) above,
3-Month LIBOR will be a 3-Month LIBOR determined with respect to the
Distribution Period immediately preceding such current Distribution Period. If
the rate for U.S. dollar deposits having a three-month maturity that initially
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date is superseded on the Telerate Page 3750 by a corrected

A-2-3






 




rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.


     The Coupon Rate for any Distribution Period will at no time be higher than
the maximum rate then permitted by New York law as the same may be modified by
United States law.


     All percentages resulting from any calculations on the Common Securities
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and
all dollar amounts used in or resulting from such calculation will be rounded
to the nearest cent (with one-half cent being rounded upward)).


     Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 26, June 26, September 26 and
December 26 of each year, commencing on June 26, 2003. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an “Extension Period”) at any time and from time to
time on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on
such accrued interest will accrue at an annual rate equal to the Distribution
Rate in effect for each such Extension Period, compounded quarterly from the
date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as
“Additional Interest”). No Extension Period may end on a date other than a
Distribution Payment Date. At the end of any such Extension Period, the
Debenture Issuer shall pay all interest then accrued and unpaid on the
Debentures (together with Additional Interest thereon); provided, however, that
no Extension Period may extend beyond the Maturity Date. Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive
quarterly periods, or extend beyond the Maturity Date. Upon the termination of
any Extension Period and upon the payment of all accrued and unpaid interest
and Additional Interest, the Debenture Issuer may commence a new Extension
Period, subject to the foregoing requirements. No interest or Additional
Interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due
and payable during such Extension Period shall bear Additional Interest.
During any Extension Period, Distributions on the Common Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust’s funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.


     The Common Securities shall be redeemable as provided in the Declaration.


A-2-4






 



ASSIGNMENT



     FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:




	 	 	 
	
	 
	 	 
	(Insert assignee’s social security or tax identification number)	
	 
	 	 
	
	 
	 	 
	
	 
	 	 
	(Insert address and zip code of assignee) and irrevocably appoints	 
	 	 
	
	 





	 	 	 	 	 	 
	

	 agent
	
to transfer this Common Security Certificate on
the books of the Trust. The agent may substitute another to
act for him or her.	 
	 	 	 	 	 
	Date:	 
	

	 
	 	 	 	 
	
Signature:	 
	

	 
	 	 	 	 	 
	
(Sign exactly as your name appears on the other side of this
Common Security Certificate)	 
	 	 	 	 	 
	
Signature:	 
	

	 
	 	 	 	 	 
	
(Sign exactly as your name appears on the other side of this
Common Security Certificate)	 



     Signature Guarantee2







	2Signature must be guaranteed by an “eligible guarantor institution” that is a
bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the
Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.


A-2-5






 






EXHIBIT B



SPECIMEN OF INITIAL DEBENTURE



B-1






 





FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE



     THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.


     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.


     THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY
REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN
ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE
OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE


 






 


IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN,
OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


     THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF
$1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.


     THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.


     IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED
BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.


Floating Rate Junior Subordinated Deferrable Interest Debenture



of



First Interstate BancSystem, Inc.



March 26, 2003



     First Interstate BancSystem, Inc., a Montana corporation (the “Company”
which term includes any successor Person under the Indenture hereinafter
referred to), for value received promises to pay to U. S. Bank National
Association, not in its individual capacity but solely as Institutional Trustee
for First Interstate Statutory Trust I (the “Holder”) or registered assigns,
the principal sum of forty-one million two hundred thirty-eight thousand
dollars ($41,238,000.00) on March 26, 2033, and to pay interest on said
principal sum from March 26, 2003, or from the most recent interest payment
date (each such date, an “Interest Payment Date”) to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 26, June 26, September 26 and December 26 of each year
commencing June 26, 2003, at an annual rate equal to 4.41063% beginning on (and
including) the date of original issuance and ending on (but excluding) June 26,
2003 and at an annual rate for each successive period beginning on (and
including) June 26, 2003, and each succeeding Interest Payment Date, and ending
on (but excluding) the next succeeding Interest Payment Date (each a
“Distribution Period”), equal to 3-Month LIBOR, determined as described below,
plus 3.15% (the “Coupon Rate”); provided, however, that prior to March 26,
2008, the Coupon Rate shall not exceed 11.75%, applied to the principal amount
hereof, until the principal hereof is paid or duly provided for or made
available for payment, and
on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest (including Additional Interest) at the Interest Rate in
effect for each applicable period, compounded quarterly, from the dates such
amounts are due until they are paid or made available for payment. The amount
of interest payable for any period will be computed on the basis of the actual
number of days in the Distribution Period concerned divided by 360. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such


2






 


Business Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date the payment was originally payable. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on the regular record date for such
interest installment, which shall be fifteen days prior to the day on which the
relevant Interest Payment Date occurs. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such regular record date and may be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is registered at the
close of business on a special record date.


     “3-Month LIBOR” as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Trustee in
the following order of priority: (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (“Telerate Page 3750” means the display designated as “Page 3750” on the
Dow Jones Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will
request the principal London offices of four leading banks in the London
interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two
such quotations are provided as requested in clause (ii) above, the Trustee
will request four major New York City banks to provide such banks’ offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination
Date. If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a
3-Month LIBOR determined with respect to the Distribution Period immediately
preceding such current Distribution Period. If the rate for U.S. dollar
deposits having a three-month maturity that initially appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the related Determination Date is
superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London
time) on such Determination Date, then the corrected rate as so substituted on
the applicable page will be the applicable 3-Month LIBOR for such Determination
Date. As used herein, “Determination Date” means the date that is two London
Banking Days (i.e., a business day in which dealings in deposits in U.S.
dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period.


     The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be
modified by United States law.


     All percentages resulting from any calculations on the Debentures will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all
dollar amounts used in or resulting from such calculation will be rounded to
the nearest cent (with one-half cent being rounded upward)).


     The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the
Company) maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public

3






 




and private debts; provided, however, that payment of interest may be
made by check mailed to the registered holder at such address as shall appear
in the Debenture Register if a request for a wire transfer by such holder has
not been received by the Company or by wire transfer to an account
appropriately designated by the holder hereof. Notwithstanding the foregoing,
so long as the holder of this Debenture is the Institutional Trustee, the
payment of the principal of and interest on this Debenture will be made in
immediately available funds at such place and to such account as may be
designated by the Trustee.


     So long as no Event of Default has occurred and is continuing, the Company
shall have the right, from time to time, and without causing an Event of
Default, to defer payments of interest on the Debentures by extending the
interest payment period on the Debentures at any time and from time to time
during the term of the Debentures, for up to 20 consecutive quarterly periods
(each such extended interest payment period, an “Extension Period”), during
which Extension Period no interest (including Additional Interest) shall be due
and payable (except any Additional Sums that may be due and payable). No
Extension Period may end on a date other than an Interest Payment Date. During
an Extension Period, interest will continue to accrue on the Debentures, and
interest on such accrued interest will accrue at an annual rate equal to the
Interest Rate in effect for such Extension Period, compounded quarterly from
the date such interest would have been payable were it not for the Extension
Period, to the extent permitted by law (such interest referred to herein as
“Additional Interest”). At the end of any such Extension Period the Company
shall pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no Extension Period may
extend beyond the Maturity Date; provided further, however, that during any
such Extension Period, the Company shall not and shall not permit any Affiliate
to engage in any of the activities or transactions described on the reverse
side hereof and in the Indenture. Prior to the termination of any Extension
Period, the Company may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof
shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the
payment of all accrued and unpaid interest and Additional Interest, the Company
may commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. The Company must give the Trustee notice of its election
to begin or extend an Extension Period at least 5 Business Days prior to the
regular record date (as such term is used in Section 2.8 of the Indenture)
immediately preceding the Interest Payment Date with respect to which interest
on the Debentures would have been payable except for the election to begin or
extend such Extension Period.


     The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her attorney-
in-fact for any and all such purposes. Each holder hereof, by his or her
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.


     This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by or on behalf
of the Trustee.


4






 


     The provisions of this Debenture are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.


Signatures appear on the following page



5






 





     IN WITNESS WHEREOF, the Company has duly executed this certificate.




	 	 	 	 	 	 
	 	 	FIRST INTERSTATE BANCSYSTEM, INC.
	 	 	 
	 	 	By	
 
	 	 	 	
    

	 	 	 	
Name:
	 	 	 	
Title:




CERTIFICATE OF AUTHENTICATION



     This is one of the Debentures referred to in the within-mentioned
Indenture.



	 	 	 	 
	 	 	
U. S. Bank National Association, as Trustee
	 	 	 	 
	 	 	
By:	
 
	 	 	
 	
 

	 	 	
 	
Authorized Officer





6






 



REVERSE OF DEBENTURE



     This Debenture is one of the floating rate junior subordinated deferrable
interest debentures of the Company, all issued or to be issued under and
pursuant to the Indenture dated as of March 26, 2003 (the “Indenture”), duly
executed and delivered between the Company and the Trustee, to which Indenture
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures. The Debentures are limited in
aggregate principal amount as specified in the Indenture.


     Upon the occurrence and continuation of a Special Event prior to March 26,
2008, the Company shall have the right to redeem the Debentures in whole, but
not in part, at any Interest Payment Date, within 120 days following the
occurrence of such Special Event, at the Special Redemption Price.


     In addition, the Company shall have the right to redeem the Debentures, in
whole or in part, but in all cases in a principal amount with integral
multiples of $1,000.00, on any Interest Payment Date on or after March 26,
2008, at the Redemption Price.


     Prior to 10:00 a.m. New York City time on the Redemption Date or Special
Redemption Date, as applicable, the Company will deposit with the Trustee or
with one or more paying agents an amount of money sufficient to redeem on the
Redemption Date or the Special Redemption Date, as applicable, all the
Debentures so called for redemption at the appropriate Redemption Price or
Special Redemption Price.


     If all, or less than all, the Debentures are to be redeemed, the Company
will give the Trustee notice not less than 45 nor more than 60 days,
respectively, prior to the Redemption Date or Special Redemption Date, as
applicable, as to the aggregate principal amount of Debentures to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Debentures or portions thereof (in integral
multiples of $1,000.00) to be redeemed.


     Notwithstanding the foregoing, any redemption of Debentures by the Company

shall be subject to the receipt of any and all required regulatory approvals.


     In case an Event of Default shall have occurred and be continuing, upon
demand of the Trustee, the principal of all of the Debentures shall become due
and payable in the manner, with the effect and subject to the conditions
provided in the Indenture.


     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debentures at the time outstanding, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debentures; provided, however, that no such supplemental indenture shall
without the consent of the holders of each Debenture then outstanding and
affected thereby (i) change the fixed maturity of any Debenture, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Debentures, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the
option of the holder, or (ii) reduce the aforesaid percentage of Debentures the
holders of which are required to consent to any such supplemental indenture.


     The Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Debentures at the time
outstanding on behalf of the holders of all of the Debentures to waive (or
modify any previously granted waiver of) any past default or Event of Default,
and its consequences, except a default (a) in the payment of principal of,
premium, if any, or interest on any of the Debentures, (b) in respect of
covenants or provisions hereof or of the Indenture which cannot be modified or
amended without the consent of the holder of each Debenture affected, or (c) in
respect of the covenants contained in Section 3.9 of the Indenture; provided,
however, that if the Debentures are held by the Trust or a trustee of such
trust, such waiver or modification to such waiver shall not be effective until
the holders of a majority in Liquidation Amount of Trust Securities of the
Trust shall have consented to such waiver or modification to such waiver,
provided, further, that if the consent of the holder of each outstanding
Debenture is required, such waiver shall not be effective until each holder of
the Trust Securities of the Trust shall have consented to such waiver. Upon
any such waiver, the default covered thereby shall be deemed to be cured for
all purposes of the Indenture and the Company, the Trustee and the holders of
the Debentures shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Whenever any default or Event of Default hereunder shall have been waived as
permitted by the Indenture, said default or Event of Default shall for all
purposes of the Debentures and the Indenture be deemed to have been cured and
to be not continuing.


     No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and
place and at the rate and in the money herein prescribed.


     The Company has agreed that if Debentures are initially issued to the
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held
by such Trust) and (i) there shall have occurred and be continuing an Event of
Default, (ii) the Company shall be in default with respect to its payment of
any obligations under the Capital Securities Guarantee, or (iii) the Company
shall have given notice of its election to defer payments of interest on the
Debentures by extending the interest payment period as provided herein and such
Extension Period, or any extension thereof, shall be continuing, then the
Company shall not, and shall not allow any Affiliate of the Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company’s capital
stock or its Affiliates’ capital stock (other than payments of dividends or
distributions to the Company) or make any guarantee payments with respect
to the foregoing or (y) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company or any Affiliate that rank pari passu in all respects with

7






 




or junior in interest to the Debentures (other than, with respect to clauses (x) and (y)
above, (1) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of
capital stock of the Company (or securities convertible into or exercisable for
such capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, if any, (2) as a result of any
exchange or conversion of any class or series of the Company’s capital stock
(or any capital stock of a subsidiary of the Company) for any class or series
of the Company’s capital stock or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock, (3) the
purchase of fractional interests in shares of the Company’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (4) any declaration of a dividend in
connection with any stockholders’ rights plan, or the issuance of rights, stock
or other property under any stockholders’ rights plan, or the redemption or
repurchase of rights pursuant thereto, (5) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock and any cash payments in lieu of fractional shares issued
in connection therewith, or (6) payments under the Capital Securities
Guarantee).


     The Debentures are issuable only in registered, certificated form without
coupons and in minimum denominations of $100,000.00 and any multiple of
$1,000.00 in excess thereof. As provided in the Indenture and subject to the
transfer restrictions and limitations as may be contained herein and therein
from time to time, this Debenture is transferable by the holder hereof on the
Debenture Register of the Company. Upon due presentment for registration of
transfer of any Debenture at the Principal Office of the Trustee or at any
office or agency of the Company maintained for such purpose as provided in
Section 3.2 of the Indenture, the Company shall execute, the Company or the
Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. All
Debentures presented for registration of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating
Agent) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to, the Company and the Trustee or
the Authenticating Agent duly executed by the holder or his attorney duly
authorized in writing. No service charge shall be made for any exchange or
registration of transfer of Debentures, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith.


     Prior to due presentment for registration of transfer of any Debenture,
the Company, the Trustee, any Authenticating Agent, any paying agent, any
transfer agent and any Debenture registrar may deem the Person in whose name
such Debenture shall be registered upon the Debenture Register to be, and may
treat him as, the absolute owner of such Debenture (whether or not such
Debenture shall be overdue) for the purpose of receiving payment of or on
account of the principal of, premium, if any, and interest on such Debenture
and for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
Debenture registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.


     No recourse for the payment of the principal of or premium, if any, or
interest on any Debenture, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or in any supplemental indenture, or
in any such Debenture, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, officer or director, as such, past, present or future, of the Company
or of any successor Person of the Company, either directly or through the
Company or any successor Person of the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise, it being expressly understood that all such liability
is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of the Indenture and the issue of the
Debentures.


     Capitalized terms used and not defined in this Debenture shall have the
meanings assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.


     THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.


8






 


EXHIBIT C


PLACEMENT AGREEMENTS


C-1







 



FIRST INTERSTATE BANCSYSTEM, INC.



17,640 Capital Securities



Floating Rate Capital Securities

(Liquidation Amount $1,000.00 per Capital Security)



PLACEMENT AGREEMENT



March 17, 2003


FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117



Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019


Ladies and Gentlemen:


     First Interstate BancSystem, Inc., a Montana corporation (the “Company”),
and its financing subsidiary, First Interstate Statutory Trust I, a Connecticut
statutory trust (the “Trust,” and hereinafter together with the Company, the
“Offerors”), hereby confirm their agreement (this “Agreement”) with you as
placement agents (the “Placement Agents”), as follows:


Section 1.      Issuance and Sale of Securities.


     1.1.     Introduction. The Offerors propose to issue and sell at the Closing
(as defined in Section 2.3.1 hereof) 17,640 of the Trust’s Floating Rate
Capital Securities, with a liquidation amount of $1,000.00 per capital security
(the “Capital Securities”), to Preferred Term Securities IX, Ltd., a company
with limited liability established under the laws of the Cayman Islands (the
“Purchaser”) pursuant to the terms of a Subscription Agreement entered into, or
to be entered into on or prior to the Closing Date (as defined in Section
2.3.1 hereof), between the Offerors and the Purchaser (the “Subscription
Agreement”), the form of which is attached hereto as Exhibit A and incorporated
herein by this reference.


     1.2.      Operative Agreements. The Capital Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the “Guarantee”) pursuant and subject to the Guarantee Agreement (the
“Guarantee Agreement”), to be dated as of the Closing Date and executed and delivered
by the Company and U. S. Bank National Association (“U. S. Bank”), as trustee
(the “Guarantee Trustee”), for the benefit from time to time of the holders of
the Capital Securities. The entire proceeds from the sales by the Trust to the
Purchaser and to two other purchasers pursuant to additional


 






 


subscription agreements to be dated as of the Closing Date of the Capital Securities shall
be combined with the entire proceeds from the sale by the Trust to the Company
of its common securities in the amount of $1,238,000.00 (the “Common
Securities”), and shall be used by the Trust to purchase $41,238,000.00 in
principal amount of the Floating Rate Junior Subordinated Deferrable Interest
Debentures (the “Debentures”) of the Company. The Capital Securities and the
Common Securities for the Trust shall be issued pursuant to an Amended and
Restated Declaration of Trust among U. S. Bank, as institutional trustee (the
“Institutional Trustee”), the Administrators named therein, and the Company, to
be dated as of the Closing Date and in substantially the form heretofore
delivered to the Placement Agents (the “Trust Agreement”). The Debentures
shall be issued pursuant to an Indenture (the “Indenture”), to be dated as of
the Closing Date, between the Company and U. S. Bank, as indenture trustee (the
“Indenture Trustee”). The documents identified in this Section 1.2 and in
Section 1.1 are referred to herein as the “Operative Documents.”


     1.3.      Rights of Purchaser. The Capital Securities shall be offered and
sold by the Trust directly to the Purchaser without registration of any of the
Capital Securities, the Debentures or the Guarantee under the Securities Act of
1933, as amended (the “Securities Act”), or any other applicable securities
laws in reliance upon exemptions from the registration requirements of the
Securities Act and other applicable securities laws. The Offerors agree that
this Agreement shall be incorporated by reference into the Subscription
Agreement and the Purchaser shall be entitled to each of the benefits of the
Placement Agents and the Purchaser under this Agreement and shall be entitled
to enforce obligations of the Offerors under this Agreement as fully as if the
Purchaser were a party to this Agreement. The Offerors and the Placement
Agents have entered into this Agreement to set forth their understanding as to
their relationship and their respective rights, duties and obligations.


     1.4.     Legends. Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act, the Capital Securities and Debentures certificates shall each contain a
legend as required pursuant to any of the Operative Documents.


Section 2.     Purchase of Capital Securities.


     2.1.      Exclusive Rights; Purchase Price. From the date hereof until the
Closing Date (which date may be extended by mutual agreement of the Offerors
and the Placement Agents), the Offerors hereby grant to the Placement Agents
the exclusive right to arrange for the sale of the Capital Securities to the
Purchaser at a purchase price of $1,000.00 per Capital Security.


     2.2.      Subscription Agreement. The Offerors hereby agree to evidence their
acceptance of the subscription by countersigning a copy of the Subscription
Agreement and returning the same to the Placement Agents.


     2.3.      Closing and Delivery of Payment.


          2.3.1.      Closing; Closing Date. The sale and purchase of the Capital
Securities by the Offerors to the Purchaser shall take place at a closing (the
“Closing”) at the offices of Lewis, Rice & Fingersh, L.C., at 10:00 a.m. (St.
Louis time) on March 26, 2003, or such other business day as may be agreed upon
by the Offerors and the Placement Agents (the “Closing Date”); provided,
however, that in no event shall the Closing Date occur later than March 28,
2003 unless consented to by the Purchaser. Payment by the Purchaser shall be
payable in the manner set forth in the Subscription Agreement and shall be made
prior to or on the Closing Date.

2






 





          2.3.2.      Delivery. The certificate for the Capital Securities shall be in
definitive form, registered in the name of the Purchaser and in the aggregate
amount of the Capital Securities purchased by the Purchaser.



          2.3.3.      Transfer Agent. The Offerors shall deposit the certificate
representing the Capital Securities with the Institutional Trustee or other
appropriate party prior to the Closing Date.



     2.4.      Placement Agents’ Fees and Expenses.


          2.4.1.      Placement Agents’ Compensation. Because the proceeds from the sale
of the Capital Securities shall be used to purchase the Debentures from the
Company, the Company shall pay an aggregate of $404,200.00. Of this amount,
$202,100.00 shall be payable to FTN Financial Capital Markets and $202,100.00
shall be payable to Keefe, Bruyette & Woods, Inc. Such amount shall be
delivered to the Trustee or such other person designated by the Placement
Agents on the Closing Date and shall be allocated between and paid to the
respective Placement Agents as directed by the Placement Agents.



          2.4.2.     Costs and Expenses. Whether or not this Agreement is terminated or
the sale of the Capital Securities is consummated, the Company hereby covenants
and agrees that it shall pay or cause to be paid (directly or by reimbursement)
all reasonable costs and expenses incident to the performance of the
obligations of the Offerors under this Agreement, including all fees, expenses
and disbursements of counsel and accountants for the Offerors; all reasonable
expenses incurred by the Offerors incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture, and the Guarantee; and all
other reasonable costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement.



     2.5.      Failure to Close. If any of the conditions to the Closing specified
in this Agreement shall not have been fulfilled to the satisfaction of the
Placement Agents or if the Closing shall not have occurred on or before 10:00
a.m. (St. Louis time) on March 31, 2003, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved
of all further obligations under this Agreement without thereby waiving any
rights it may have by reason of such nonfulfillment or failure; provided,
however, that the obligations of the parties under Sections 2.4.2, 7.5 and 9 shall not be so relieved
and shall continue in full force and effect.



Section 3.      Closing Conditions. The obligations of the Purchaser and the
Placement Agents on the Closing Date shall be subject to the accuracy, at and
as of the Closing Date, of the representations and warranties of the Offerors
contained in this Agreement, to the accuracy, at and as of the Closing Date, of
the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations
under this Agreement, to compliance, at and as of the Closing Date, by the
Offerors with their respective agreements herein contained, and to the
following further conditions:


     3.1.     Opinions of Counsel. On the Closing Date, the Placement Agents shall
have received the following favorable opinions, each dated as of the Closing
Date: (a) from Christian, Samson, Jones & Chisholm, PLLC, counsel for the
Offerors and addressed to the Purchaser and the Placement Agents in
substantially the form set forth on Exhibit B-1 attached hereto and
incorporated herein by this reference, (b) from Bingham McCutchen LLP, special
Connecticut counsel to the Offerors and addressed to the Purchaser, the
Placement Agents and the Offerors, in substantially the form set forth on
Exhibit B-2 attached hereto and incorporated herein by this reference and (c)
from Lewis, Rice & Fingersh, L.C., special tax counsel to the Offerors, and
addressed to the Placement Agents and the Offerors, in substantially the form
set forth on Exhibit B-3 attached hereto and incorporated herein by this
reference,


3






 


subject to the receipt by Lewis, Rice & Fingersh, L.C. of a
representation letter from the Company in the form set forth in Exhibit B-3
completed in a manner reasonably satisfactory to Lewis, Rice & Fingersh, L.C.
(collectively, the “Offerors’ Counsel Opinions”). In rendering the Offerors’
Counsel Opinions, counsel to the Offerors may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees
of the Offerors (copies of which shall be delivered to the Placement Agents and
the Purchaser) and by government officials, and upon such other documents as
counsel to the Offerors may, in their reasonable opinion, deem appropriate as a
basis for the Offerors’ Counsel Opinions. Counsel to the Offerors may specify
the jurisdictions in which they are admitted to practice and that they are not
admitted to practice in any other jurisdiction and are not experts in the law
of any other jurisdiction. If the Offerors’ counsel is not admitted to
practice in the State of New York, the opinion of Offerors’ counsel may assume,
for purposes of the opinion, that the laws of the State of New York are
substantively identical, in all respects material to the opinion, to the
internal laws of the state in which such counsel is admitted to practice. Such
Offerors’ Counsel Opinions shall not state that they are to be governed or
qualified by, or that they are otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).


     3.2.      Officer’s Certificate. At the Closing Date, the Purchaser and the
Placement Agents shall have received certificates from the Chief Executive
Officer of the Company, dated as of the Closing Date, stating that (i) the
representations and warranties of the Offerors set forth in Section 5 hereof
are true and correct as of the Closing Date and that the Offerors have complied
with all agreements and satisfied all conditions on their part to be performed
or satisfied at or prior to the Closing Date, (ii) since the date of this
Agreement the Offerors have not incurred any liability or obligation, direct or
contingent, or entered into any material transactions, other than in the
ordinary course of business, which is material to the Offerors, and (iii)
covering such other matters as the Placement Agents may reasonably request.


     3.3.      Administrator’s Certificate.
At the Closing Date, the Purchaser and the Placement Agents shall have
received a certificate of one or more Administrators of the Trust, dated as of
the Closing Date, stating that the representations and warranties of the Trust
set forth in Section 5 are true and correct as of the Closing Date and that the
Trust has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date.


     3.4.     Purchase Permitted by Applicable Laws; Legal Investment. The
purchase of and payment for the Capital Securities as described in this
Agreement and pursuant to the Subscription Agreement shall (a) not be
prohibited by any applicable law or governmental regulation, (b) not subject
the Purchaser or the Placement Agents to any penalty or, in the reasonable
judgment of the Purchaser and the Placement Agents, other onerous conditions
under or pursuant to any applicable law or governmental regulation, and (c) be
permitted by the laws and regulations of the jurisdictions to which the
Purchaser and the Placement Agents are subject.


     3.5.      Consents and Permits. The Company and the Trust shall have received
all consents, permits and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company or the Trust is a party or
to which either is subject, in connection with the transactions contemplated by
this Agreement.


     3.6.     Sale of Purchaser Securities. The Purchaser shall have sold
securities issued by the Purchaser in an amount such that the net proceeds of
such sale shall be (i) available on the Closing Date and (ii) in an amount
sufficient to purchase the Capital Securities and all other capital or similar
securities contemplated in agreements similar to this Agreement and the
Subscription Agreement.


4






 


     3.7.      Information. Prior to or on the Closing Date, the Offerors shall
have furnished to the Placement Agents such further information, certificates,
opinions and documents addressed to the Purchaser and the Placement Agents,
which the Placement Agents may reasonably request, including, without
limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the
Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.


     If any condition specified in this Section 3 shall not have been fulfilled
when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors
at any time at or prior to the Closing Date. Notice of such termination shall
be given to the Offerors in writing or by telephone or facsimile confirmed in
writing.


Section 4.     Conditions to the Offerors’ Obligations. The obligations of
the Offerors to sell the Capital Securities to the Purchaser and consummate the
transactions contemplated by this Agreement shall be subject to the accuracy,
at and as of the Closing Date, of the representations and warranties of the Placement Agents
contained in this Agreement and to the following further conditions:


     4.1.     Executed Agreement. The Offerors shall have received from the
Placement Agents an executed copy of this Agreement.


     4.2.     Fulfillment of Other Obligations. The Placement Agents shall have
fulfilled all of their other obligations and duties required to be fulfilled
under this Agreement and under that certain Placement Agreement, dated as of
March 24, 2003, by and among the Offerors and the Placement Agents (the “Second
Placement Agreement”) prior to or at the Closing and the transactions
contemplated by both this Agreement and the Second Placement Agreement shall
close substantially simultaneously.


Section 5.      Representations and Warranties of the Offerors. Except as set
forth on the Disclosure Schedule (as defined in Section 11.1) attached hereto,
if any, the Offerors jointly and severally represent and warrant to the
Placement Agents and the Purchaser as of the date hereof and as of the Closing
Date as follows:


     5.1. Securities Law Matters.


          (a)      Neither the Company nor the Trust, nor any of their “Affiliates” (as
defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation
D”)), nor any person acting on any of their behalf has, directly or indirectly,
made offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration under the Securities
Act of any of the Capital Securities, the Guarantee or the Debentures
(collectively, the “Securities”) or any other securities to be issued, or which
may be issued, by the Purchaser.



          (b)      Neither the Company nor the Trust, nor any of their Affiliates, nor
any person acting on its or their behalf has (i) other than the Placement
Agents, offered for sale or solicited offers to purchase the Securities, (ii)
engaged or will engage, in any “directed selling efforts” within the meaning of
Regulation S under the Securities Act (“Regulation S”) with respect to the
Securities, or (iii) engaged in any form of offering, general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of any of the Securities.



5






 





          (c)      The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.



          (d)      Neither the Company nor the Trust is or, after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in this Agreement, will be an “investment company” or an
entity “controlled” by an “investment company,” in each case within the meaning
of Section 3(a) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”) without regard to Section 3(c) of the Investment
Company Act.



          (e)     Neither the Company nor the Trust has paid or agreed to pay to any
person or entity (other than the Placement Agents) any compensation for
soliciting another to purchase any of the Securities.



     5.2. Organization, Standing and Qualification of the Trust. The Trust has
been duly created and is validly existing in good standing as a statutory trust
under the Connecticut Statutory Trust Act (the “Statutory Trust Act”) with the
power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under
the Operative Documents. The Trust is duly qualified to transact business as a
foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in
good standing would not have a material adverse effect on the Trust. The Trust
is not a party to or otherwise bound by any agreement other than the Operative
Documents. The Trust is and will, under current law, be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation.


     5.3. Trust Agreement. The Trust Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company and the Administrators of the Trust, and, assuming due
authorization, execution and delivery by the Institutional Trustee, will be a
valid and binding obligation of the Company and such Administrators,
enforceable against them in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation and other laws relating to or affecting creditors’ rights
generally, and (b) general principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) (“Bankruptcy and
Equity”). Each of the Administrators of the Trust is an employee or a director
of the Company or of a financial institution subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.


     5.4. Guarantee Agreement and the Indenture. Each of the Guarantee and the
Indenture has been duly authorized by the Company and, on the Closing Date will
have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.


     5.5. Capital Securities and Common Securities. The Capital Securities and
the Common Securities have been duly authorized by the Trust Agreement and,
when issued and delivered against payment therefor on the Closing Date to the
Purchaser, in the case of the Capital Securities, and to the Company, in the
case of the Common Securities, will be validly issued and represent undivided
beneficial interests in the assets of the Trust. None of the Capital Securities
or the Common Securities is subject to preemptive or other similar rights. On
the Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.


6






 


     5.6. Debentures. The Debentures have been duly authorized by the Company and, at the
Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the Indenture, and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor by the Trust, will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture enforceable against the
Company in accordance with their terms, subject to Bankruptcy and Equity.


     5.7. Power and Authority. This Agreement has been duly authorized,
executed and delivered by the Company and the Trust and constitutes the valid
and binding obligation of the Company and the Trust, enforceable against the
Company and the Trust in accordance with its terms, subject to Bankruptcy and
Equity.


     5.8. No Defaults. The Trust is not in violation of the Trust Agreement
or, to the knowledge of the Administrators, any provision of the Statutory
Trust Act. The execution, delivery and performance by the Company or the Trust
of this Agreement or the Operative Documents to which it is a party, and the
consummation of the transactions contemplated herein or therein and the use of
the proceeds therefrom, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any property or assets of the Trust, the Company or any
of the Company’s Subsidiaries (as defined in Section 5.11 hereof) pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of any of them is subject, except for a conflict, breach,
default, lien, charge or encumbrance which could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect nor will
such action result in any violation of the Trust Agreement or the Statutory
Trust Act or require the consent, approval, authorization or order of any court
or governmental agency or body. As used herein, the term “Material Adverse
Effect” means any one or more effects that individually or in the aggregate are
material and adverse to the Offeror’s ability to consummate the transactions
contemplated herein or in the Operative Documents or any one or more effects
that individually or in the aggregate are material and adverse to the condition
(financial or otherwise), earnings, affairs, business, prospects or results of
operations of the Company and its Subsidiaries taken as whole, whether or not
occurring in the ordinary course of business.


     5.9. Organization, Standing and Qualification of the Company. The Company
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of Montana, with all requisite corporate power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.


     5.10. Subsidiaries of the Company. Each of the Company’s significant
subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the “Significant Subsidiaries”)) is listed in Exhibit C attached hereto
and incorporated herein by this reference. Each Significant Subsidiary has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction in which it is chartered or organized, with all requisite
power and authority to own its properties and conduct the business it transacts
and proposes to transact, and is duly qualified to transact business and is in
good standing as a foreign entity in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of any such Significant Subsidiary to
be so qualified would not, singly or in the aggregate, have a Material Adverse
Effect. All of the issued and outstanding shares of capital stock of the
Significant Subsidiaries (a) have been duly authorized and are validly issued,
(b) are


7






 


fully paid and nonassessable, and (c) are wholly owned, directly or
indirectly, by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction upon voting or transfer, preemptive
rights, claim, equity or other defect.


     5.11.      Permits. The Company and each of its subsidiaries (as defined in
Section 1-02(x) of Regulation S-X to the Securities Act) (the “Subsidiaries”)
have all requisite power and authority, and all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, to own or lease their respective
properties and to conduct their respective businesses as now being conducted,
except such authorizations, approvals, orders, licenses, certificates and
permits which, if not obtained and maintained, would not, singly or in the
aggregate, have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorizations, approvals, orders,
licenses, certificates or permits which, singly or in the aggregate, if the
failure to be so licensed or approved is the subject of an unfavorable
decision, ruling or finding, would, singly or in the aggregate, have a Material
Adverse Effect; and the Company and its Subsidiaries are in compliance with all
applicable laws, rules, regulations and orders and consents, the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.


     5.12.      Conflicts, Authorizations and Approvals. Neither the Company nor
any of its Subsidiaries is in violation of its respective articles or
certificate of incorporation, charter or by-laws or similar organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
either the Company or any of its Subsidiaries is a party, or by which it or any
of them may be bound or to which any of the property or assets of the Company
or any of its Subsidiaries is subject, the effect of which violation or default
in performance or observance would have, singly or in the aggregate, a Material
Adverse Effect.


     5.13.      Holding Company Registration and Deposit Insurance. The Company is
duly registered (i) as a bank holding company or financial holding company
under the Bank Holding Company Act of 1956, as amended, and the regulations of
the Board of Governors of the Federal Reserve System or (ii) as a savings and
loan holding company under the Home Owners’ Loan Act of 1933, as amended, and
the regulations of the Office of Thrift Supervision, and the deposit accounts
of the Company’s Subsidiary depository institutions are insured by the Federal
Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by law
and the rules and regulations of the FDIC, and no proceedings for the
termination of such insurance are pending or threatened.


     5.14.     Financial Statements.


          (a)      The consolidated balance sheets of the Company and all of its
Subsidiaries as of December 31, 2001 and related consolidated income statements
and statements of changes in shareholders’ equity for the year ended December 31, 2001 together with
the notes thereto, copies of each of which have been provided to the Placement
Agents (together, the “Financial Statements”), have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be disclosed therein) and fairly present in all material
respects the financial position and the results of operations and changes in
shareholders’ equity of the Company and all of its Subsidiaries as of the dates
and for the periods indicated. The books and records of the Company and all of
its Subsidiaries have been, and are being, maintained in all material respects
in accordance with generally accepted accounting principles and any other
applicable legal and accounting requirements and reflect only actual
transactions.



8






 





          (b)      The information in the Company’s report on form FR Y-9C dated December
31, 2002 (the “FR Y-9C”) previously provided to the Placement Agents fairly
presents in all material respects the financial position of the Company and all
of its Subsidiaries as of such date.



          (c)     Since the respective dates of the Financial Statements and the FR
Y-9C, there has been no material adverse change or development with respect to
the financial condition or earnings of the Company and all of its Subsidiaries,
taken as a whole.



          (d)      The accountants of the Company who certified the Financial Statements
are independent public accountants of the Company and its Subsidiaries within
the meaning of the Securities Act and the rules and regulations thereunder.



     5.15.     Regulatory Enforcement Matters. Neither the Company nor any of its
Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been since January 1, 2000, a recipient of
any supervisory letter from, or since January 1, 2000, has adopted any board
resolutions at the request of, any Regulatory Agency (as defined below) that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies, their ability or authority to pay dividends or make distributions to
their shareholders or make payments of principal or interest on their debt
obligations, their management or their business (each, a “Regulatory
Agreement”), nor has the Company or any of its Subsidiaries been advised since
January 1, 2000, by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. There is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any of its
Subsidiaries. As used herein, the term “Regulatory Agency” means any federal
or state agency charged with the supervision or regulation of depository
institutions, bank, financial or savings and loan holding companies, or engaged
in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries.


     5.16.     No Material Change. Since December 31, 2002, there has been no material adverse change or
development with respect to the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company or its
Subsidiaries on a consolidated basis, whether or not arising in the ordinary
course of business.


     5.17.      No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
Subsidiaries since the date of the most recent balance sheet included in the
Financial Statements.


     5.18.      Litigation. No charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Offerors, threatened, against or affecting
the Company or its Subsidiaries or any of their respective properties before or
by any courts or any regulatory, administrative or governmental official,


9






 


commission, board, agency or other authority or body, or any arbitrator,
wherein an unfavorable decision, ruling or finding could have, singly or in the
aggregate, a Material Adverse Effect.


     5.19.      Deferral of Interest Payments on Debentures. The Company has no
present intention to exercise its option to defer payments of interest on the
Debentures as provided in the Indenture. The Company believes that the
likelihood that it would exercise its right to defer payments of interest on
the Debentures as provided in the Indenture at any time during which the
Debentures are outstanding is remote because of the restrictions that would be
imposed on the Company’s ability to declare or pay dividends or distributions
on, or to redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company’s capital stock and on the Company’s ability to make any
payments of principal, interest or premium on, or repay, repurchase or redeem,
any of its debt securities that rank pari passu in all respects with, or junior
in interest to, the Debentures.


Section 6.      Representations and Warranties of the Placement Agents. Each
Placement Agent represents and warrants to the Offerors as to itself (but not
as to the other Placement Agent) as follows:


     6.1.      Organization, Standing and Qualification.


          (a)      FTN Financial Capital Markets is a division of First Tennessee Bank,
N.A., a national banking association duly organized, validly existing and in
good standing under the laws of the United States, with full power and
authority to own, lease and operate its properties and conduct its business as
currently being conducted. FTN Financial Capital Markets is duly qualified to
transact business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases property or conducts its business
so as to require such qualification and in which the failure to so qualify
would, individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.



          (b)     Keefe, Bruyette & Woods, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with
full power and authority to own, lease and operate its properties and conduct
its business as currently being conducted. Keefe, Bruyette & Woods, Inc. is
duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.



     6.2.      Power and Authority. The Placement Agent has all requisite power and
authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject
to Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.


     6.3.      General Solicitation. In the case of the offer and sale of the
Capital Securities, no form of general solicitation or general advertising was
used by the Placement Agent or its representatives including, but not limited
to, advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. Neither the Placement Agent nor its
representatives have engaged or will engage in any “directed selling efforts”
within the meaning of Regulation S with respect to the Capital Securities.


10






 


     6.4.     Purchaser. The Placement Agent has made such reasonable inquiry as
is necessary to determine that the Purchaser is acquiring the Capital
Securities for its own account, that the Purchaser does not intend to
distribute the Capital Securities in contravention of the Securities Act or any
other applicable securities laws, and that the Purchaser is not a “U.S. person”
as that term is defined under Rule 902 of the Securities Act.


     6.5.     Qualified Purchasers. The Placement Agent has not offered or sold
and will not arrange for the offer or sale of the Capital Securities except (i)
in an offshore transaction complying with Rule 903 of Regulation S, or (ii) to
those the Placement Agent reasonably believes are “accredited investors” (as
defined in Rule 501 of Regulation D), or (iii) in any other manner that does
not require registration of the Capital Securities under the Securities Act.
In connection with each such sale, the Placement Agent has taken or will take
reasonable steps to ensure that the Purchaser is aware that (a) such sale is
being made in reliance on an exemption under the Securities Act and (b) future
transfers of the Capital Securities will not be made except in compliance with
applicable securities laws.


     6.6.     Offering Circulars. Neither the Placement Agent nor its
representatives will include any non-public information about the Company, the
Trust or any of their affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Capital Securities without the prior written consent of the Trust
and the Company.


Section 7.     Covenants of the Offerors. The Offerors covenant and agree
with the Placement Agents and the Purchaser as follows:


     7.1.      Compliance with Representations and Warranties. During the period
from the date of this Agreement to the Closing Date, the Offerors shall use
their best efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.


     7.2.      Sale and Registration of Securities. The Offerors and their
Affiliates shall not nor shall any of them permit any person acting on their
behalf (other than the Placement Agents), to directly or indirectly (i) sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as defined in the Securities Act) that would or could be
integrated with the sale of the Capital Securities in a manner that would
require the registration under the Securities Act of the Securities or (ii)
make offers or sales of any such Security, or solicit offers to buy any such
Security, under circumstances that would require the registration of any of
such Securities under the Securities Act.


     7.3.      Use of Proceeds. The Trust shall use the proceeds from the sale of
the Capital Securities to purchase the Debentures from the Company.


     7.4.      Investment Company. The Offerors shall not engage, or permit any
Subsidiary to engage, in any activity which would cause it or any Subsidiary to
be an “investment company” under the provisions of the Investment Company Act.


     7.5.     Reimbursement of Expenses. If the sale of the Capital Securities
provided for herein is not consummated (i) because any condition set forth in
Section 3 hereof is not satisfied, or (ii) because of any refusal, inability or
failure on the part of the Company or the Trust to perform any agreement herein
or comply with any provision hereof other than by reason of a breach by the
Placement Agents, the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket expenses (including reasonable
fees and disbursements of counsel) in an amount not to exceed $50,000.00 that
shall have been incurred by them in connection with the proposed purchase and
sale of



11










 



the Capital Securities. Notwithstanding the foregoing, the Company
shall have no obligation to reimburse the Placement Agents for their
out-of-pocket expenses if the sale of the Capital Securities fails to occur
because the condition
set forth in Section 3.6 is not satisfied or because either of the
Placement Agents fails to fulfill a condition set forth in Section 4.


     7.6. Directed Selling Efforts, Solicitation and Advertising. In
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to, (i) engage in any
“directed selling efforts” within the meaning of Regulation S, or (ii) engage
in any form of general solicitation or general advertising (as defined in
Regulation D).


     7.7. Compliance with Rule 144A(d)(4) under the Securities Act. So long as
any of the Securities are outstanding and are “restricted securities” within
the meaning of Rule 144(a)(3) under the Securities Act, the Offerors will,
during any period in which they are not subject to and in compliance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or the Offerors are not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2(b) under the
Exchange Act, provide to each holder of such restricted securities and to each
prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser in
connection with any proposed transfer, any information required to be provided
by Rule 144A(d)(4) under the Securities Act, if applicable. This covenant is
intended to be for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such restricted securities.
The information provided by the Offerors pursuant to this Section 7.7 will not,
at the date thereof, contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.


     7.8.      Quarterly Reports. Within 50 days of the end of each calendar year
quarter and within 100 days of the end of each calendar year during which the
Debentures are issued and outstanding, the Offerors shall submit to The Bank of
New York a completed quarterly report in the form attached hereto as Exhibit D.
The Offerors acknowledge and agree that The Bank of New York and its
successors and assigns is a third party beneficiary of this Section 7.8


Section 8.      Covenants of the Placement Agents. The Placement Agents
covenant and agree with the Offerors that, during the period from the date of
this Agreement to the Closing Date, the Placement Agents shall use their best
efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 6 to be true as of Closing
Date, after giving effect to the transactions contemplated by this Agreement,
as if made on and as of the Closing Date. The Placement Agents further
covenant and agree not to engage in hedging transactions with respect to the
Capital Securities unless such transactions are conducted in compliance with
the Securities Act.


Section 9.      Indemnification.


     9.1. Indemnification Obligation. The Offerors shall jointly and severally
indemnify and hold harmless the Placement Agents and the Purchaser and each of
their respective agents, employees, officers and directors and each person that
controls either of the Placement Agents or the Purchaser within the meaning of
Section 15 of the
Securities Act or Section 20 of the Exchange Act, and agents, employees,
officers and directors or any such controlling person of either of the
Placement Agents or the Purchaser (each such person or entity, an “Indemnified
Party”) from and against any and all losses, claims, damages, judgments,
liabilities or expenses, joint or several, to which such Indemnified Party may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, or at


12






 


common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Offerors), insofar as such losses, claims, damages, judgments,
liabilities or expenses (or actions in respect thereof) arise out of, or are
based upon, or relate to, in whole or in part, (a) any untrue statement or
alleged untrue statement of a material fact contained in any information
(whether written or oral) or documents executed in favor of, furnished or made
available to the Placement Agents or the Purchaser by the Offerors, or (b) any
omission or alleged omission to state in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Indemnified Party for any legal and other expenses as
such expenses are reasonably incurred by such Indemnified Party in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, judgments, liability, expense or action described in this
Section 9.1. In addition to their other obligations under this Section 9, the
Offerors hereby agree that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of, or
based upon, or related to the matters described above in this Section 9.1, they
shall reimburse each Indemnified Party on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, each
Indemnified Party shall promptly return such amounts to the Offerors together
with interest, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) announced from time
to time by First Tennessee Bank, N.A. (the “Prime Rate”). Any such interim
reimbursement payments which are not made to an Indemnified Party within 30
days of a request for reimbursement shall bear interest at the Prime Rate from
the date of such request.


     9.2.      Conduct of Indemnification Proceedings. Promptly after receipt by an
Indemnified Party under this Section 9 of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Offerors under this Section 9, notify the Offerors in writing
of the commencement thereof; but, subject to Section 9.4, the omission to so
notify the Offerors shall not relieve them from any liability pursuant to
Section 9.1 which the Offerors may have to any Indemnified Party unless and to
the extent that the Offerors did not otherwise learn of such action and such
failure by the Indemnified Party results in the forfeiture by the Offerors of
substantial rights and defenses. In case any such action is brought against
any Indemnified Party and such Indemnified Party seeks or intends to seek
indemnity from the Offerors, the Offerors shall be entitled to participate in,
and, to the extent that they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
if the defendants in any such action include both the Indemnified Party and the
Offerors and the Indemnified Party shall have reasonably concluded that there
may be a conflict between the positions of the Offerors and the Indemnified
Party in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Offerors, the Indemnified Party
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
Indemnified Party. Upon receipt of notice from the Offerors to such
Indemnified Party of their election to so assume the defense of such action and
approval by the Indemnified Party of counsel, the Offerors shall
not be liable to such Indemnified Party under this Section 9 for any legal
or other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof unless (i) the Indemnified Party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso in the preceding sentence (it being understood, however, that
the Offerors shall not be liable for the expenses of more than one separate
counsel representing the Indemnified Parties who are parties to such action),
or (ii) the Offerors shall not


13






 


have employed counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action, in each of which cases the
fees and expenses of counsel of such Indemnified Party shall be at the expense
of the Offerors.


     9.3.      Contribution. If the indemnification provided for in this Section 9
is required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an Indemnified Party under Section 9.1
in respect of any losses, claims, damages, liabilities or expenses referred to
herein or therein, then the Offerors shall contribute to the amount paid or
payable by such Indemnified Party as a result of any losses, claims, damages,
judgments, liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on
the one hand, and the Indemnified Party, on the other hand, from the offering
of such Capital Securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Offerors, on the one hand, and the Placement
Agents, on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein or other breaches
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Offerors, on the one hand, and the
Placement Agents, on the other hand, shall be deemed to be in the same
proportion, in the case of the Offerors, as the total price paid to the
Offerors for the Capital Securities sold by the Offerors to the Purchaser (net
of the compensation paid to the Placement Agents hereunder, but before
deducting expenses), and in the case of the Placement Agents, as the
compensation received by them, bears to the total of such amounts paid to the
Offerors and received by the Placement Agents as compensation. The relative
fault of the Offerors and the Placement Agents shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission of a material
fact or the inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Offerors or the Placement Agents and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The provisions set forth in
Section 9.2 with respect to notice of commencement of any action shall apply if
a claim for contribution is made under this Section 9.3; provided, however,
that no additional notice shall be required with respect to any action for
which notice has been given under Section 9.2 for purposes of indemnification.
The Offerors and the Placement Agents agree that it would not be just and
equitable if contribution pursuant to this Section 9.3 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in this Section 9.3. The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages, judgments, liabilities or expenses referred to in this Section 9.3
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. In no
event shall the liability of the Placement Agents hereunder be greater in
amount than the dollar amount of the compensation (net of payment of all
expenses) received by the Placement Agents upon the sale of the Capital
Securities giving rise to such obligation. No person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.


     9.4.      Additional Remedies. The indemnity and contribution agreements
contained in this Section 9 are in addition to any liability that the Offerors
may otherwise have to any Indemnified Party.


     9.5. Additional Indemnification. The Company shall indemnify and hold
harmless the Trust against all loss, liability, claim, damage and expense
whatsoever, as due from the Trust under Sections 9.1 through 9.4 hereof.


14






 



Section 10.      Rights and Responsibilities of Placement Agents.


     10.1.      Reliance. In performing their duties under this Agreement, the
Placement Agents shall be entitled to rely upon any notice, signature or
writing which they shall in good faith believe to be genuine and to be signed
or presented by a proper party or parties. The Placement Agents may rely upon
any opinions or certificates or other documents delivered by the Offerors or
their counsel or designees to either the Placement Agents or the Purchaser.


     10.2.      Rights of Placement Agents. In connection with the performance of
their duties under this Agreement, the Placement Agents shall not be liable for
any error of judgment or any action taken or omitted to be taken unless the
Placement Agents were grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds
or otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of their duties hereunder. The
Placement Agents shall be under no obligation to exercise any of the rights or
powers vested in them by this Agreement.


Section 11.      Miscellaneous.


     11.1.      Disclosure Schedule. The term “Disclosure Schedule,” as used
herein, means the schedule, if any, attached to this Agreement that sets forth
items the disclosure of which is necessary or appropriate as an exception to
one or more representations or warranties contained in Section 5 hereof;
provided, that any item set forth in the Disclosure Schedule as an exception to
a representation or warranty shall be deemed an admission by the Offerors that
such item represents an exception, fact, event or circumstance that is
reasonably likely to result in a Material Adverse Effect. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 5. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.


     11.2.      Legal Expenses. At Closing, the Placement Agents shall provide a
credit for the Offerors’ transaction-related legal expenses in the amount of
$10,000.00.


     11.3.      Notices. Prior to the Closing, and thereafter with respect to
matters pertaining to this Agreement only, all notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or overnight air courier guaranteeing next
day delivery:


15






 



	 	 	 
	if to the Placement Agents, to:
	 	 	
FTN Financial Capital Markets
	 	 	
845 Crossover Lane, Suite 150
	 	 	
Memphis, Tennessee 38117
	 	 	
Telecopier: 901-435-4706
	 	 	
Telephone: 800-456-5460
	 	 	
Attention: James D. Wingett
	 	 	 
	 	 	
and

	 	 	 
	 	 	
Keefe, Bruyette & Woods, Inc.
	 	 	
787 7th Avenue
	 	 	
4th Floor
	 	 	
New York, New York 10019
	 	 	
Telecopier: 212-403-2000
	 	 	
Telephone: 212-403-1004
	 	 	
Attention: Mitchell Kleinman, General Counsel
	 	 	 
	with a copy to:
	 	 	 
	 	 	
Lewis, Rice & Fingersh, L.C.
	 	 	
500 North Broadway, Suite 2000
	 	 	
St. Louis, Missouri 63102
	 	 	
Telecopier: 314-241-6056
	 	 	
Telephone: 314-444-7600
	 	 	
Attention: Thomas C. Erb, Esq.
	 	 	 
	 	 	
and
 
	 	 	 
	 	 	
Sidley Austin Brown & Wood LLP
	 	 	
787 7th Avenue
	 	 	
New York, New York 10019
	 	 	
Telecopier: 212-839-5599
	 	 	
Telephone: 212-839-5300
	 	 	
Attention: Renwick Martin, Esq.




	 	 	 
	if to the Offerors, to:
	 	 	 
	 	 	
First Interstate BancSystem, Inc.
	 	 	
401 North 31st Street, 13th Floor
	 	 	
Billings, Montana 59101
	 	 	
Telecopier: 406-255-5288
	 	 	
Telephone: 406-255-5371
	 	 	
Attention: Gary Brown
	 	 	 



16






 



	 	 	 
	 	 	
with a copy to:
	 	 	 
	 	 	
David R. Chisholm, Esq.
	 	 	
Christian, Samson, Jones & Chisholm, PLLC
	 	 	
310 West Spruce
	 	 	
Missoula, Montana 59807
	 	 	
Telecopier: 406-721-7776
	 	 	
Telephone: 406-721-7772
	 	 	
Attention: David R. Chisholm, Esq.



     All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
business days after being deposited in the mail, postage prepaid, if mailed,
(iii) when answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after
the Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The
Placement Agents, the Company, and their respective counsel, may change their
respective notice addresses from time to time by written notice to all of the
foregoing persons.


     11.4.      Parties in Interest, Successors and Assigns. Except as expressly
set forth herein, this Agreement is made solely for the benefit of the
Placement Agents, the Purchaser and the Offerors and any person controlling the
Placement Agents, the Purchaser or the Offerors and their respective successors
and assigns; and no other person shall acquire or have any right under or by
virtue of this Agreement. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.


     11.5.     Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.


     11.6.      Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.


     11.7.      Governing Law.THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE STATE
OF NEW YORK.


     11.8.     Entire Agreement. This Agreement, together with the Operative
Documents and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, together with the Operative Documents and
the other documents delivered in connection with the transaction contemplated
by this Agreement, supersedes all prior agreements and understandings between
the parties with respect to such subject matter.


     11.9.     Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the


17






 


remaining provisions hereof shall not be in any way impaired or affected,
it being intended that all of the Placement Agents’ and the Purchaser’s rights
and privileges shall be enforceable to the fullest extent permitted by law.


     11.10.     Survival. The Placement Agents and the Offerors, respectively,
agree that the representations, warranties and agreements made by each of them
in this Agreement and in any certificate or other instrument delivered pursuant
hereto shall remain in full force and effect and shall survive the delivery of,
and payment for, the Capital Securities.


Signatures appear on the following page






18






 



     If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.



	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	FIRST INTERSTATE BANCSYSTEM, INC.
	 	 	 	 	 
	 	 	
By:

	/s/ TERRILL R. MOORE



	 	 	
Name:

	 	Terrill R. Moore


	 	 	
Title:	 	Chief Financial Officer

	 	 	 	 	 
	 	 	
FIRST INTERSTATE STATUTORY TRUST I
	 	 	 	 	 
	 	 	
By:

	/s/ TERRILL R. MOORE



	 	 	
Name:

	 	Terrill R. Moore


	 	 	
Title:
	 	Administrator



CONFIRMED AND ACCEPTED,

as of the date first set forth above




	 	 	 	 	 
	FTN FINANCIAL CAPITAL MARKETS,

a division of First Tennessee Bank, N.A.,

as a Placement Agent
	 	 	 	 	 
	By:
	
/s/ JAMES D. WINGETT


	 	 
	Name:
   James D. Wingett

	 	 	 
	Title:
   Senior Vice President

	 	 	 
	 	 	 	 	 
	KEEFE, BRUYETTE & WOODS, INC.

a New York corporation, as a Placement Agent
	 	 	 	 	 
	By: 
	
/s/ PETER J. WIRTH


	 	 
	Name:
   Peter J. Wirth

	 	 	 
	Title:
   Managing Director

	 	 	 



19






 



EXHIBIT A



FORM OF SUBSCRIPTION AGREEMENT



FIRST INTERSTATE STATUTORY TRUST I

FIRST INTERSTATE BANCSYSTEM, INC.



SUBSCRIPTION AGREEMENT



March 26, 2003



     THIS SUBSCRIPTION AGREEMENT (this “Agreement”) made among First Interstate
Statutory Trust I (the “Trust”), a statutory trust created under the
Connecticut Statutory Trust Act (Chapter 615 of Title 34 of the Connecticut
General Statutes, Section 500, et seq.), First Interstate BancSystem, Inc., a
Montana corporation, with its principal offices located at 401 North 31st
Street, 13th Floor, Billings, Montana 59101 (the “Company” and, collectively
with the Trust, the “Offerors”), and Preferred Term Securities IX, Ltd. (the
“Purchaser”).


RECITALS:



     A.     The Trust desires to issue 40,000 of its Floating Rate Capital
Securities (the “Capital Securities”), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the “Offering”), to be issued pursuant to an Amended and Restated
Declaration of Trust (the “Declaration”) by and among the Company, U. S. Bank
National Association (“U. S. Bank”), the administrators named therein, and the
holders (as defined therein), which Capital Securities are to be guaranteed by
the Company with respect to distributions and payments upon liquidation,
redemption and otherwise pursuant to the terms of a Guarantee Agreement between
the Company and U. S. Bank, as trustee (the “Guarantee”); and


     B.     The proceeds from the sale of the Capital Securities will be combined
with the proceeds from the sale by the Trust to the Company of its common
securities, and will be used by the Trust to purchase an equivalent amount of
Floating Rate Junior Subordinated Deferrable Interest Debentures of the Company
(the “Debentures”) to be issued by the Company pursuant to an indenture to be
executed by the Company and U. S. Bank, as trustee (the “Indenture”); and


     C.     In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:


ARTICLE I



PURCHASE AND SALE OF CAPITAL SECURITIES



     1.1.     Upon the execution of this Agreement, the Purchaser hereby agrees to
purchase from the Trust 17,640 Capital Securities at a price equal to $1,000.00
per Capital Security (the “Purchase Price”) and the Trust agrees to sell such
Capital Securities to the Purchaser for said Purchase Price. The rights and
preferences of the Capital Securities are set forth in the Declaration. The
Purchase Price is payable in immediately available funds on March 26, 2003, or
such other business day as may be designated by the Purchaser, but in no event
later than March 28, 2003 (the “Closing Date”). The Offerors shall provide the
Purchaser wire transfer instructions no later than 1 day following the date
hereof.


     1.2.     The certificate for the Capital Securities shall be delivered by the
Trust on the Closing Date to the Purchaser or its designee.


A-1






 


     1.3.     The Placement Agreement, dated March 17, 2003 (the “Placement
Agreement”), among the Offerors and the Placement Agents identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the Offering. The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce
the obligations of the Offerors under such Placement Agreement as fully as if
the Purchaser were a party to such Placement Agreement.


ARTICLE II



REPRESENTATIONS AND WARRANTIES OF PURCHASER



     2.1.     The Purchaser understands and acknowledges that neither the Capital
Securities, the Debentures nor the Guarantee have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not
be offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any
other applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.


     2.2.     The Purchaser represents, warrants and certifies that (i) it is not a
“U.S. person” as such term is defined in Rule 902 under the Securities Act,
(ii) it is not acquiring the Capital Securities for the account or benefit of
any such U.S. person, (iii) the offer and sale of Capital Securities to the
Purchaser constitutes an “offshore transaction” under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard
to the Capital Securities unless such transactions are conducted in compliance
with the Securities Act and the Purchaser agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.


     2.3.     The Purchaser represents and warrants that it is purchasing the
Capital Securities for its own account, for investment, and not with a view to,
or for offer or sale in connection with, any distribution thereof in violation
of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within
its control and subject to its ability to resell such Capital Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable Securities law.


     2.4.     The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations
and warranties specified herein, and to consummate the transactions
contemplated herein and it has full right and power to subscribe for Capital
Securities and perform its obligations pursuant to this Agreement.


     2.5.     The Purchaser, a Cayman Islands Company whose business includes
issuance of certain notes and acquiring the Capital Securities and other
similar securities, represents and warrants that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of purchasing the Capital Securities, has had the
opportunity to ask questions of, and receive answers and request additional
information from, the Offerors and is aware that it may be required to bear the
economic risk of an investment in the Capital Securities.


     2.6.     The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification
or decree of, any governmental body, agency or court having jurisdiction over
the Purchaser, other than those that have been made or obtained, is necessary
or


A-2






 


required for the performance by the Purchaser of its obligations under
this Agreement or to consummate the transactions contemplated herein.


     2.7.     The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.


     2.8.     The Purchaser represents and warrants that (i) the Purchaser is not
in violation or default of any term of its Memorandum of Association or
Articles of Association, of any provision of any mortgage, indenture, contract,
agreement, instrument or contract to which it is a party or by which it is
bound or of any judgment, decree, order, writ or, to its knowledge, any
statute, rule or regulation applicable to the Purchaser which would prevent the
Purchaser from performing any material obligation set forth in this Agreement;
and (ii) the execution, delivery and performance of and compliance with this
Agreement, and the consummation of the transactions contemplated herein, will
not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term, or the suspension, revocation, impairment, forfeiture or
non-renewal of any permit, license, authorization or approval applicable to the
Purchaser, its business or operations or any of its assets or properties which
would prevent the Purchaser from performing any material obligations set forth
in this Agreement.


     2.9.     The Purchaser represents and warrants that the Purchaser is an
exempted company with limited liability duly incorporated, validly existing and
in good standing under the laws of the jurisdiction where it is organized, with
full power and authority to perform its obligations under this Agreement.


     2.10.     The Purchaser understands and acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.


     2.11.     The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.


ARTICLE III



MISCELLANEOUS



     3.1.     Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:



	 	 	 	 	 
	 	 	
To the Offerors:
	 	First Interstate BancSystem, Inc.
	 	 	 	 	401 North 31st Street, 13th Floor
	 	 	 	 	Billings, Montana 59101
	 	 	 	 	Attention: Gary Brown
	 	 	 	 	Fax: Gary Brown
	 	 	 	 	 
	 	 	
To the Purchaser:
	 	Preferred Term Securities IX, Ltd.
	 	 	 	 	c/o Maples Finance Limited
	 	 	 	 	P.O. Box 1093 GT
	 	 	 	 	Queensgate House
	 	 	 	 	South Church Street



A-3






 





	 	 	 	 	 
	 	 	 	 	George Town, Grand Cayman

Cayman Islands

Attention: The Directors

Fax: 345-945-7100



               Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.


     3.2.     This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.


     3.3.     Upon the execution and delivery of this Agreement by the Purchaser,
this Agreement shall become a binding obligation of the Purchaser with respect
to the purchase of Capital Securities as herein provided.


     3.4.     NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY
OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.


     3.5.     The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this
Agreement.


     3.6.     This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.


     3.7.     In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors’ and the Purchaser’s rights and
privileges shall be enforceable to the fullest extent permitted by law.


Signatures appear on the following page




A-4






 





          IN WITNESS WHEREOF, I have set my hand the day and year first written above.




	 	 	 
	PREFERRED TERM SECURITIES IX, LTD
	 	 	 
	By:	 	 
	 	

	Print Name:	 
	 	


	Title:	 	 
	 	


	 	
 



     IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day
and year first written above.



	 	 	 	 	 
	 	 	
FIRST INTERSTATE BANCSYSTEM, INC
	 	 	 	 	 
	 	 	By:	 	 
	 	 	
	 
	 	 	 	 	 
	 	 	
Name:	 
	 	 	


	 	 	 	 	 
	 	 	
Title:	 
	 	 	


	 	 	
FIRST INTERSTATE STATUTORY TRUST I
	 	 	 	 	 
	 	 	By:	 
	 	 	

	 	 	 	 	 
	 	 	
Name:	 
	 	 	


	 	 	 	 	 
	 	 	
Title: Administrator




A-5






 



EXHIBIT B-1



FORM OF COMPANY COUNSEL OPINION



March 26, 2003




	 	 	 
	Preferred Term Securities IX, Ltd.	 	
FTN Financial Capital Markets
	c/o Maples Finance Limited	 	
845 Crossover Lane, Suite 150
	P. O. Box 1093 GT	 	
Memphis, Tennessee 38117
	Queensgate House	 	 
	South Church Street	 	
Keefe, Bruyette & Woods, Inc.
	George Town, Grand Cayman	 	
787 7th Avenue
	Cayman Islands	 	
4th Floor
	 	 	
New York, New York 10019



Ladies and Gentlemen:



     We have acted as counsel to First Interstate BancSystem, Inc. (the
“Company”), a Montana corporation in connection with a certain Placement
Agreement, dated March 17, 2003, (the “Placement Agreement”), between the
Company and First Interstate Statutory Trust I (the “Trust”), on one hand, and
FTN Financial Capital Markets and Keefe, Bruyette & Woods, Inc. (the “Placement
Agents”), on the other hand. Pursuant to the Placement Agreement, and subject
to the terms and conditions stated therein, the Trust will issue and sell to
Preferred Term Securities IX, Ltd. (the “Purchaser”), $17,640,000.00 aggregate
principal amount of Floating Rate Capital Securities (liquidation amount
$1,000.00 per capital security) (the “Capital Securities”).


     Capitalized terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.


     The law covered by the opinions expressed herein is limited to the law of
the United States of America and of the State of Montana.


     We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company’s Articles of Incorporation, as amended, and its By-Laws, as amended;
and (b) such corporate documents, records, information and certificates of the
Company and its Subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in
connection with the above-referenced transaction, of officers and other
representatives of the Company and its Subsidiaries and the Trust.


     As used herein, the phrase “to our knowledge” or “to the best of our
knowledge” or other similar phrase means the actual knowledge of the attorneys
who have had active involvement in the transactions described above or who have
prepared or signed this opinion letter, or who otherwise have devoted
substantial attention to legal matters for the Company.


     Based upon and subject to the foregoing and the further qualifications set
forth below, we are of the opinion as of the date hereof that:


B-1-1






 


     1.     The Company is validly existing and in good standing under the laws of
the State of Montana and is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended [or as a savings and loan holding
company under the Home Owners’ Loan Act of 1933, as amended]. Each of the
Significant Subsidiaries is validly existing and in good standing under the
laws of its jurisdiction of organization. Each of the Company and the
Significant Subsidiaries has full corporate power and authority to own or lease
its properties and to conduct its business as such business is currently
conducted in all material respects. To the best of our knowledge, all
outstanding shares of capital stock of the Significant Subsidiaries have been
duly authorized and validly issued, and are fully paid and nonassessable except
to the extent such shares may be deemed assessable under 12 U.S.C. Section
1831o or 12 U.S.C. Section 55, and are owned of record and beneficially,
directly or indirectly, by the Company.


     2.          The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The
issuance, sale and delivery of the Debentures by the Company and the issuance,
sale and delivery of the Trust Securities by the Trust do not give rise to any
preemptive or other rights to subscribe for or to purchase any shares of
capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either Company or the Subsidiaries is a party or by which
the Company or the Significant Subsidiaries may be bound.


     3.          The Company has all requisite corporate power to enter into and perform
its obligations under the Placement Agreement and the Subscription Agreement,
and the Placement Agreement and the Subscription Agreement have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy or other laws affecting creditors’
rights generally, and except as the indemnification and contribution provisions
thereof may be limited under applicable laws and certain remedies may not be
available in the case of a non-material breach.


     4.     Each of the Indenture, the Trust Agreement and the Guarantee Agreement
has been duly authorized, executed and delivered by the Company, and is a valid
and legally binding obligation of the Company enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity.


     5.     The Debentures have been duly authorized, executed and delivered by the
Company, are entitled to the benefits of the Indenture and are legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights
and remedies of creditors generally and of general principles of equity.


     6.          To the best of our knowledge, neither the Company, the Trust, nor any
other Subsidiaries of the Company is in breach or violation of, or default
under, with or without notice or lapse of time or both, its Articles of
Incorporation or Charter, By-Laws or other governing documents (including
without limitation, the Trust Agreement). The execution, delivery and
performance of the Placement Agreement and the Operative Documents and the
consummation of the transactions contemplated by the Placement Agreement and
the Operative Documents do not and will not (i) result in the creation or
imposition of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company or its Subsidiaries, or (ii) conflict
with, constitute a material breach or violation of, or constitute a material


B-1-2






 


default under, with or without notice or lapse of time or both, any of the
terms, provisions or conditions of (A) the Articles of Incorporation or
Charter, By-Laws or other governing documents of the Company or its
Subsidiaries, or (B) to the best of our knowledge, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license or any other agreement or instrument to which the Company or
its Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or (C) any order, decree, judgment, franchise, license,
permit, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, known to us having
jurisdiction over the Company or its Subsidiaries or any of their respective
properties which, in the case of each of (i) or (ii) above, is material to the
Company and its Subsidiaries on a consolidated basis.


     7.          Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required
under the laws of the State of Montana in connection with the transactions
contemplated by the Placement Agreement and the Operative Documents in
connection with the offer and sale of the Capital Securities as contemplated by
the Placement Agreement and the Operative Documents.


     8.          To the best of our knowledge (i) no action, suit or proceeding at law
or in equity is pending or threatened to which the Offerors or their
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Offerors or their Subsidiaries
or any of their properties, before or by any court or governmental official,
commission, board or other administrative agency, authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding could reasonably
be expected to have a material adverse effect on the consummation of the
transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Offerors and their Subsidiaries on a
consolidated basis.


     9.     Assuming the truth and accuracy of the representations and warranties
of the Placement Agents in the Placement Agreement and the Purchaser in the
Subscription Agreement, it is not necessary in connection with the offering,
sale and delivery of the Capital Securities, the Debentures and the Guarantee
Agreement (or the Guarantee) to register the same under the Securities Act of
1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.


     10.     Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in the Placement Agreement will be, an “investment
company” or an entity “controlled” by an “investment company,” in each case
within the meaning of the Investment Company Act of 1940, as amended, without
regard to Section 3(c) of such Act.


     The opinion expressed in the first two sentences of numbered paragraph 1
of this Opinion Letter is based solely upon certain certificates and
confirmations issued by the applicable governmental officer or authority with
respect to each of the Company and the Significant Subsidiaries.


     With respect to the foregoing opinions, since no member of this firm is
actively engaged in the practice of law in the States of Connecticut or New
York, we do not express any opinions as to the laws of such states and have (i)
relied, with your approval, upon the opinion of Bingham McCutchen LLP with
respect to matters of Connecticut law and (ii) assumed, with your approval and
without rendering any opinion to such effect, that the laws of the State of New
York, in all respects material to this opinion, are substantively identical to
the laws of the State of Montana, without regard to conflict of law provisions.


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     This opinion is rendered to you solely pursuant to Section 3.1(a) of the
Placement Agreement. As such, it may be relied upon by you only and may not be
used or relied upon by any other person for any purpose whatsoever without our
prior written consent.




Very truly yours,



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EXHIBIT B-2



FORM OF CONNECTICUT COUNSEL OPINION



TO THE PARTIES LISTED

ON SCHEDULE I HERETO



Ladies and Gentlemen:



     We have acted as special counsel in the State of Connecticut (the “State”)
for First Interstate Statutory Trust I (the “Trust”), a Connecticut statutory
trust formed pursuant to the Amended and Restated Declaration of Trust (the
“Trust Agreement”) dated as of the date hereof, among First Interstate
BancSystem, Inc., a Montana corporation (the “Sponsor”), U. S. Bank National
Association, a national banking association (“U. S. Bank”), in its capacity as
Institutional Trustee (the “Institutional Trustee”), and Thomas W. Scott, Lyle
R. Knight and Terrill R. Moore, each, an individual, (each, an “Administrator”)
in connection with the issuance by the Trust to the Holders (as defined in the
Trust Agreement) of its capital securities (the “Capital Securities”) pursuant
to the Placement Agreement dated as of March 17, 2003 (the “Placement
Agreement”), the issuance by the Trust to the Sponsor of its Common Securities,
pursuant to the Trust Agreement and the acquisition by the Trust from the
Sponsor of Debentures, issued pursuant to the Indenture dated as of the date
hereof (the “Indenture”).


     The Institutional Trustee has requested that we deliver this opinion to
you in accordance with Section 3.1(b) of the Placement Agreement. Capitalized
terms not otherwise defined herein shall have the meanings specified in, or
defined by reference in or set forth in the Operative Documents (as defined
below).


     Our representation of the Trust has been as special counsel for the
limited purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied, with your permission, entirely upon (i)
the representations and warranties of the parties set forth in the Operative
Documents and (ii) certificates delivered to us by the management of U. S.
Bank, and have assumed, with your permission, without independent inquiry, the
accuracy of those representations, warranties and certificates.


     We have examined the following documents to which the Trust is a party,
each of which is dated the date hereof, unless otherwise noted:



	 	 	 	 	 
	 	 	
(i)
	 	the Trust Agreement;
	 	 	 	 	 
	 	 	
(ii)
	 	the Placement Agreements;
	 	 	 	 	 
	 	 	
(iii)
	 	the Subscription Agreements;
	 	 	 	 	 
	 	 	
(iv)
	 	the Certificate of Common Securities;
	 	 	 	 	 
	 	 	
(v)
	 	the Certificates of Capital Securities;
	 	 	 	 	 
	 	 	
(vi)
	 	the Guarantee Agreement;
	 	 	 	 	 
	 	 	
(vii)
	 	the Certificate of Trust filed with the Secretary of State of the State of
Connecticut dated March 11, 2003; and
	 	 	 	 	 



B-2-1






 



	 	 	 	 	 
	 	 	
(viii)
	 	a Certificate of Legal Existence for the Trust
obtained from the Secretary of State of the State of
Connecticut dated March 11, 2003 (the “Certificate of
Legal Existence”).



     The documents referenced in subparagraphs (i) through (vii) above are
hereinafter referred to collectively as the “Operative Documents.”


     We have also examined originals, or copies, certified or otherwise
identified to our satisfaction, of such other corporate and public records and
agreements, instruments, certificates and other documents as we have deemed
necessary or appropriate for the purposes of rendering this opinion. For
purposes of our opinion rendered in paragraph 1 below, with respect to the
legal existence of the Trust, our opinion relies entirely upon and is limited
by the Certificate of Legal Existence, which is attached hereto as Exhibit A.


     We have assumed, with your permission, the genuineness of all signatures
(other than those on behalf of U. S. Bank, the Guarantee Trustee, Indenture
Trustee, Institutional Trustee and the Trust), the conformity of the originals
of all documents reviewed by us as copies, the authenticity and completeness of
all original documents reviewed by us in original or copy form and the legal
competence of each individual executing any document (other than those
individuals executing documents on behalf of U. S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee and the Trust).


     When an opinion set forth below is given to the best of our knowledge, or
to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly and substantively in the
specific transactions to which this opinion relates and without any special or
additional investigation undertaken for the purposes of this opinion except as
indicated herein.


     For the purposes of this opinion we have made such examination of law as
we have deemed necessary. The opinions expressed below are limited solely to
the internal substantive laws of the State (as applied by courts located in the
State without regard to choice of law) and we express no opinion as to the laws
of any other jurisdiction. To the extent to which this opinion deals with
matters governed by or relating to the laws of any other state or jurisdiction,
we have assumed, with your permission, that the Operative Documents are
governed by the internal substantive laws of the State.


     We express no opinion as to (i) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to the obligations of any
applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Trust Agreement with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein
as to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents. No opinion is expressed herein as to the application or effect of
federal securities laws or as to the securities or so-called “Blue Sky” laws of
Connecticut or of any other state or other jurisdiction.


     Our opinion, with your permission, is further subject to the following
exceptions, qualifications and assumptions:



		
	 	     (a)     We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than U. S. Bank, the
Guarantee Trustee, Indenture Trustee, Institutional Trustee and the
Trust, as applicable, at all times relevant thereto, is validly existing
and in good standing under the laws of the jurisdiction in which it is
organized, and is qualified to do business and in good standing under the
laws of each jurisdiction where such qualification is



B-2-2






 







		
	 	required generally or necessary in order for such party to enforce
its rights under such Operative Documents, (ii) each party to the
Operative Documents, at all times relevant thereto, had and has the full
power, authority and legal right under its certificate of incorporation,
partnership agreement, by-laws, and other governing organizational
documents, and the applicable corporate, partnership, or other enterprise
legislation and other applicable laws, as the case may be (other than U.
S. Bank, the Guarantee Trustee, Indenture Trustee, Institutional Trustee
or the Trust) to execute, deliver and to perform its obligations under,
the Operative Documents, and (iii) each party to the Operative Documents
other than U. S. Bank, the Guarantee Trustee, Indenture Trustee,
Institutional Trustee or the Trust has duly executed and delivered each
of such agreements and instruments to which it is a party and that the
execution and delivery of such agreements and instruments and the
transactions contemplated thereby have been duly authorized by proper
corporate or other organizational proceedings as to each such party.
	 
	 	     (b)     We have assumed without any independent investigation (i) that
the Institutional Trustee, the Sponsor and the Administrators have
received the agreed to and stated consideration for the incurrence of the
obligations applicable to it under the Trust Agreement and each of the
other Operative Documents, (ii) that each of the Operative Documents
(other than the Trust Agreement) is a valid, binding and enforceable
obligation of each party thereto other than the Trust, U. S. Bank and the
Institutional Trustee, as applicable; and, for the purposes of this
opinion letter, we herein also assume that each of the Operative
Documents (other than the Trust Agreement) constitutes a valid, binding
and enforceable obligation of U. S. Bank, the Guarantee Trustee and the
Indenture Trustee, as applicable under Connecticut and federal law (as to
which such matters we are delivering to you a separate opinion letter on
this date, which is subject to the assumptions, qualifications and
limitations set forth therein).
	 
	 	     (c)     The enforcement of any obligations of U. S. Bank, the Sponsor
and the Administrators, as applicable, under the Trust Agreement and the
obligations of the Trust under the other Operative Documents may be
limited by the receivership, conservatorship and supervisory powers of
depository institution regulatory agencies generally, as well as by
bankruptcy, insolvency, reorganization, moratorium, marshaling or other
laws and rules of law affecting the enforcement generally of creditors’
rights and remedies (including such as may deny giving effect to waivers
of debtors’ or guarantors’ rights); and we express no opinion as to the
status under any fraudulent conveyance laws or fraudulent transfer laws
of any of the obligations of U. S. Bank, the Sponsor, the Administrators
or the Trust under any of the Operative Documents.
	 
	 	     (d)     We express no opinion as to the enforceability of any particular
provision of the Trust Agreement or the other Operative Documents
relating to remedies after default.
	 
	 	     (e)     We express no opinion as the availability of any specific or
equitable relief of any kind.
	 
	 	     (f)     The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
	 
	 	     (g)     We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by
operation of law, (iii) waivers of any applicable defenses, setoffs,
recoupments, or counterclaims, (iv) waivers or variations of provisions
which are not capable of waiver or variation under Sections 1-102(3),
9-501(3) or



B-2-3






 







		
	 	other provisions of the Uniform Commercial Code (“UCC”) of the
State, (v) the grant of powers of attorney to any person or entity, or
(vi) exculpation or exoneration clauses, indemnity clauses, and clauses
relating to releases or waivers of unmatured claims or rights.
	 
	 	     (h)     We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter,
and we assume no responsibility to inform you of additional or changed
facts, or changes in law, of which we may become aware.
	 
	 	     (i)     We express no opinion as to any requirement that any party to
the Operative Documents (or any other persons or entities purportedly
entitled to the benefits thereof) qualify or register to do business in
any jurisdiction in order to be able to enforce its rights thereunder or
obtain the benefits thereof.



     Based upon the foregoing and subject to the limitations and qualifications
set forth herein, we are of the opinion that:


     1.     The Trust has been duly formed and is validly existing as a statutory
trust under the Connecticut Statutory Trust Act, Chapter 615 of Title 34 of the
Connecticut General Statutes, Section 500, et seq. (the “Act”).


     2.     The Trust Agreement constitutes a valid and binding obligation of U. S.
Bank and the Institutional Trustee enforceable against U. S. Bank and the
Institutional Trustee in accordance with the terms thereof.


     3.     The Trust Agreement constitutes a valid and binding obligation of the
Sponsor and the Administrators, enforceable against the Sponsor and the
Administrators in accordance with its terms.


     4.     The Trust has the requisite trust power and authority to (a) execute
and deliver, and to perform its obligations under, the Operative Documents, and
(b) perform its obligations under such Operative Documents.


     5.     Each of the Operative Documents to which the Trust is a party
constitutes a valid and binding obligation of the Trust, enforceable against
the Trust in accordance with the terms thereof.


     6.     The Capital Securities have been duly authorized by the Trust under the
Trust Agreement, and the Capital Securities, when duly executed and delivered
to the Holders in accordance with the Trust Agreement, the Placement Agreement
and the Subscription Agreement, will be validly issued, fully paid and
nonassessable and will evidence undivided beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust Agreement.


     7.     The Common Securities have been duly authorized by the Trust Agreement,
and the Common Securities, when duly executed and delivered to the Company in
accordance with the Trust Agreement, the Placement Agreements and the
Subscription Agreements and delivered and paid for in accordance therewith,
will be validly issued, fully paid and nonassessable (subject to Section 9.1(b)
of the Trust Agreement which provides that the Holders of Common Securities are
liable for debts and obligations of the Trust to the extent such debts and
obligations are not satisfied out of the Trust’s assets) and will evidence
undivided beneficial interests in the assets of the Trust and will be entitled
to the benefits of the Trust Agreement.


     8.     Neither the execution, delivery or performance by the Trust of the
Operative Documents, the consummation by the Trust of the transactions
contemplated thereby, nor compliance by the Trust


B-2-4






 


with any of the terms and provisions thereof, (a) violates the Trust
Agreement, or, to the best of our knowledge, contravenes or will contravene any
provision of, or constitutes a default under, or results in any breach of, or
results in the creation of any lien (other than as permitted under the
Operative Documents) upon property of the Trust under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan or
credit agreement, license or other agreement or instrument, in each case known
to us, to which it is a party or by which it is bound or (b) violates any
applicable Connecticut law governing the Trust, or, to the best of our
knowledge, any judgment or order of any court or other tribunal, in each case
known to us, applicable to or binding on it.


     9.        No consent, approval, order or authorization of, giving of notice to,
or registration with, or taking of any other action in respect of, any
Connecticut governmental authority regulating the Trust is required for the
execution, delivery, validity or performance of, or the carrying out by, the
Trust of any of the transactions contemplated by the Operative Documents, other
than any such consent, approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken.


     10.     The Holders, as the beneficial holders of the Capital Securities, will
be entitled to the same limitation of personal liability extended to
shareholders of domestic corporations organized under the laws of the State.


     11.     Under the Trust Agreement, the issuance of the Capital Securities is
not subject to preemptive rights.


     12.     Assuming that the Trust will not be taxable as a corporation for
federal income tax purposes, but rather will be classified for such purposes as
a grantor trust, the Trust will not be subject to any tax, fee or other
government charge under the laws of the State of Connecticut or any political
subdivision thereof.


     This opinion is rendered solely for the benefit of those institutions
listed on Schedule I hereto and their successors and assigns in connection with
the transactions contemplated by the Operative Documents and may not be used or
relied upon by any other person or for any other purpose.



	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	
BINGHAM MCCUTCHEN LLP



B-2-5






 



SCHEDULE I



U. S. Bank National Association



FTN Financial Capital Markets


Keefe, Bruyette & Woods, Inc.


Preferred Term Securities IX, Ltd.


Preferred Term Securities IX, Inc.


Lewis, Rice & Fingersh, L.C.


First Interstate BancSystem, Inc.


Christian, Samson, Jones & Chisholm, PLLC





B-2-6






 





EXHIBIT A TO EXHIBIT B-2



CERTIFICATE OF LEGAL EXISTENCE



Included as Exhibit 4.8 to Registrant’s Form 10-Q for the quarter ended June 30, 2003.





B-2-7






 





EXHIBIT B-3



FORM OF TAX COUNSEL OPINION



First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101



First Interstate Statutory Trust I

c/o First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101


FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117


Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019


Ladies and Gentlemen:


     We have acted as special tax counsel to First Interstate BancSystem, Inc.
and to First Interstate Statutory Trust I in connection with the proposed
issuance of (i) Floating Rate Capital Securities, liquidation amount $1,000.00
per Capital Security (the “Capital Securities”) of First Interstate Statutory
Trust I, a statutory business trust created under the laws of Connecticut (the
“Trust”), pursuant to the terms of the Amended and Restated Declaration of
Trust dated as of the date hereof by First Interstate BancSystem, Inc., a
Montana corporation (the “Company”), U. S. Bank National Association, as
institutional trustee, and Thomas W. Scott, Lyle R. Knight and Terrill R.
Moore, as Administrators (the “Trust Agreement”), (ii) Junior Subordinated
Deferrable Interest Debentures (the “Corresponding Debentures”) of the Company
issued pursuant to the terms of an Indenture dated as of the date hereof from
the Company to U. S. Bank National Association, as trustee (the “Indenture”),
which Debentures are to be sold by the Company to the Trust, and (iii) the
Guarantee Agreement of the Company with respect to the Capital Securities dated
as of the date hereof (the “Guarantee”) between the Company and U. S. Bank
National Association, as guarantee trustee. The Capital Securities and the
Corresponding Debentures are to be issued as contemplated by the Offering
Circular (the “Offering Circular”) dated March 17, 2003 prepared by Preferred
Term Securities IX, Ltd., an entity formed under the Companies Law of the
Cayman Islands, and Preferred Term Securities IX, Inc., a Delaware corporation.


     We have examined originals or copies, certified or otherwise identified to
our satisfaction, of documents, corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion including (i)
the Offering Circular, (ii) the Indenture, (iii) the form of the Corresponding
Debentures attached as an exhibit to the Indenture, (iv) the Trust Agreement,
(v) the Guarantee, and (vi) the form of Capital Securities Certificate attached
as an exhibit to the Trust Agreement (collectively the “Documents”).
Furthermore, we have relied upon certain representations made by the Company
and upon the opinion of Bingham McCutchen LLP as to certain matters of
Connecticut law. In such examination, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or


B-3-1






 


photostatic copies, the authenticity of the originals of such latter
documents, the genuineness of all signatures and the correctness of all
representations made therein. We have further assumed that there are no
agreements or understandings contemplated therein other than those contained in
the Documents.


     Based upon the foregoing, and assuming (i) that the final Documents will
be substantially identical to the forms examined, (ii) full compliance with all
the terms of the final Documents, and (iii) the accuracy of representations
made by the Company and delivered to us, we are of the opinion that:



	 	(a)	 	The Corresponding Debentures will be classified as
indebtedness of the Company for U.S. federal income tax purposes.
	 
	 	(b)	 	The Trust will be characterized as a grantor trust and not as
an association taxable as a corporation for U.S. federal income tax
purposes.



     The opinions expressed above are based on existing provisions of the
Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury
regulations, published interpretations by the Internal Revenue Service of the
Code and such Treasury regulations, and existing court decisions, any of which
could be changed at any time. Any such changes may or may not be retroactively
applied, and may result in federal income tax consequences that differ from
those reflected in the opinions set forth above. We note that there is no
authority directly on point dealing with securities such as the Capital
Securities or with transactions of the type described herein, and that the
authorities on which this opinion is based are subject to various
interpretations. Further, you should be aware that opinions of counsel have no
official status and are not binding on the Internal Revenue Service or the
courts. Accordingly, we can provide no assurance that the interpretation of
the federal income tax laws set forth in our opinions will prevail if
challenged by the IRS in an administrative or judicial proceeding.


     We have also assumed that each transaction contemplated herein will be
carried out strictly in accordance with the Documents. Any variance in the
facts may result in Federal income tax consequences that differ from those
reflected in the opinions set forth above.


     Additionally, we undertake no obligation to update this opinion in the
event there is either a change in the legal authorities, in the facts
(including the taking of any action by any party to any of the transactions
described in the Documents relating to such transactions) or in the Documents
on which this opinion is based, or an inaccuracy in any of the representations
upon which we have relied in rendering this opinion.


     We express no opinion with respect to any matter not specifically
addressed by the foregoing opinions, including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and
discussed above including, without limitation, the effect on the matters
covered by this opinion of the laws of any other jurisdiction.


     This letter is delivered for the benefit of the specified addressees and
may not be relied upon by any other person. No portion of this letter may be
quoted or otherwise referred to in any document or delivered to any other
person or entity without the express written consent of Lewis, Rice & Fingersh,
L.C. This opinion letter is rendered as of the date set forth above.



	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	
LEWIS, RICE & FINGERSH, L.C.



B-3-2






 



Lewis, Rice & Fingersh, L.C.

500 N. Broadway, Suite 2000

St. Louis, Missouri 63102

Attention: Lawrence H. Weltman, Esq.




	 	 	 
	Re:	 	
Representations Concerning the Issuance of Floating Rate
Junior Subordinated Deferrable Interest Debentures (the
“Debentures”) to First Interstate Statutory Trust I (the “Trust”)
and Sale of Trust Securities (the “Trust Securities”) of the Trust



Ladies and Gentlemen:



     In accordance with your request, First Interstate BancSystem, Inc. (the
“Company”) hereby makes the following representations in connection with the
preparation of your opinion letter as to the United States federal income tax
consequences of the issuance by the Company of the Debentures to the Trust and
the sale of the Trust Securities.


     Company hereby represents that:


     1.          The sole assets of the Trust will be the Debentures, any interest paid
on the Debentures to the extent not distributed, proceeds of the Debentures, or
any of the foregoing.


     2.          The Company intends to use the net proceeds from the sale of the
Debentures for general corporate purposes.


     3.          The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Debentures, and (iii)
engaging only in activities necessary or incidental thereto.


     4.          The Trust was formed to facilitate direct investment in the assets of
the Trust, and the existence of multiple classes of ownership is incidental to
that purpose. There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.


     5.          The Company intends to create a debtor-creditor relationship between
the Company, as debtor, and the Trust, as a creditor, upon the issuance and
sale of the Debentures to the Trust by the Company. The Company will (i) record
and at all times continue to reflect the Debentures as indebtedness on its
separate books and records for financial accounting purposes, and (ii) treat
the Debentures as indebtedness for all United States tax purposes.


     6.          During each year, the Trust’s income will consist solely of payments
made by the Company with respect to the Debentures. Such payments will not be
derived from the active conduct of a financial business by the Trust. Both the
Company’s obligation to make such payments and the measurement of the amounts
payable by the Company are defined by the terms of the Debentures. Neither the
Company’s obligation to make such payments nor the measurement of the amounts
payable by the Company is dependent on income or profits of Company or any
affiliate of the Company.


     7.          The Company expects that it will be able to make, and will make, timely
payment of amounts identified by the Debentures as principal and interest in
accordance with the terms of the Debentures with available capital or
accumulated earnings.


B-3-3






 



     8.            The Company presently has no intention to defer interest payments on
the Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company) or make any payment of principal of or interest or premium, if
any, on or repay, repurchase, or redeem any debt securities of the Company or
any affiliate of the Company that rank pari passu in all respects with or
junior in interest to the Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered into in
connection with the issuance of the Debentures.


     9.            Immediately after the issuance of the Debentures, the debt-to-equity
ratio of the Company (as determined for financial accounting purposes, but
excluding deposit liabilities from the Company’s debt) will be within standard
depository institution industry norms and, in any event, will be no higher than
four to one (4 : 1).


     10.         To the best of our knowledge, the Company is currently in compliance
with all federal, state, and local capital requirements, except to the extent
that failure to comply with any such requirements would not have a material
adverse effect on the Company and its affiliates.


     11.         The Company will not issue any class of common stock or preferred
stock senior to the Debentures during their term.


     12.         The Internal Revenue Service has not challenged the interest deduction
on any class of the Company’s subordinated debt in the last ten (10) years on
the basis that such debt constitutes equity for federal income tax purposes.


     The above representations are accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless
you are otherwise notified by us in writing. The undersigned understands that
you will rely on the foregoing in connection with rendering certain legal
opinions, and possesses the authority to make the representations set forth in
this letter on behalf of the Company.



	 	 	 	 	 	 	 
	 	 	 	Very truly yours,	 	 
	 	 	 	 	 	 	 
	 	 	 	FIRST INTERSTATE BANCSYSTEM, INC.	 	 
	 	 	 	 	 	 	 
	Date: March 24, 2003	 	
By:	 	 	 	 
	 	 	 	

	 	 
	 	 	 	Title:	 	 
	 	 	 	 	
	 	 



B-3-4






 



EXHIBIT C



SIGNIFICANT SUBSIDIARIES



First Interstate Bank



FIB Capital Trust


i_Tech Corporation




C-1






 




EXHIBIT D



FORM OF QUARTERLY REPORT



Preferred Term Securities IX, Ltd.

c/o The Bank of New York

Collateralized Debt Obligation Group

101 Barclay Street, 8E

New York, New York 10286

Attention: Franco B. Talavera

CDO Relationship Manager


	 	 	 	 
	BANK HOLDING COMPANY

As of [March 31, June 30, September 30 or December 31], 20     	 
	 	 	 	 
	Tier 1 to Risk Weighted Assets	 	
	
%
	 	 	 	 
	Ratio of Double Leverage	 	
	
%
	 	 	 	 
	Non-Performing Assets to Loans and OREO	 	
	
%
	 	 	 	 
	Ratio of Reserves to Non-Performing Loans	 	
	
%
	 	 	 	 
	Ratio of Net Charge-Offs to Loans	 	
	
%
	 	 	 	 
	Return on Average Assets (annualized)**	 	
	
%
	 	 	 	 
	Net Interest Margin (annualized)**	 	
	
%
	 	 	 	 
	Efficiency Ratio	 	
	
%
	 	 	 	 
	Ratio of Loans to Assets	 	
	
%
	 	 	 	 
	Ratio of Loans to Deposits	 	
	
%
	 	 	 	 
	Total
Assets	$	
 	 

	 	 	 	 
	Year to Date Income	$	
	
 






*A table describing the quarterly report calculation procedures is
provided on page D-2



** To annualize Return on Average Assets and Net Interest Margin do the following:


1st Quarter-multiply income statement item by 4, then divide by balance sheet item(s)


2nd Quarter-multiply income statement item by 2, then divide by balance sheet item(s)


3rd Quarter-divide income statement item by 3, then multiply by 4, then divide by balance sheet item(s)


4th Quarter-should already be an annual number


NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS


D-1






 





Financial Definitions




	 	 	 	 	 
	 	 	Corresponding FRY-9C or LP Line Items	 	 
	Report Item	 	 with Line Item corresponding Schedules	 	Description of Calculation
	
	 	
	 	

	“Tier 1 Capital” to

Risk Weighted

Assets	 	
BHCK7206
Schedule HC-R
	 	Tier 1 Risk Ratio: Core Capital

(Tier 1)/ Risk-Adjusted Assets
	 	 	 	 	 
	Ratio of Double

Leverage	 	
(BHCP0365)/(BHCP3210)
Schedule PC in the LP
	 	Total equity
investments in subsidiaries divided by the total equity capital. This
field is calculated at the parent company
level. “Subsidiaries” include bank, bank holding company, and nonbank
subsidiaries.
	 	 	 	 	 
	Non-Performing

Assets to Loans and

OREO	 	
(BHCK5525-BHCK3506+BHCK5526-BHCK3507+
BHCK2744)/(BHCK2122+BHCK274
4)
Schedules HC-C, HC-M & HC-N
	 	Total Nonperforming
Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual &
Repossessed Assets)/Total Loans + Foreclosed Real Estate
	 	 	 	 	 
	Ratio of Reserves

to Non-Performing

Loans	 	
(BHCK3123+BHCK3128)/(BHCK5525-BH

CK3506+BHCK5526-BHCK3507)

Schedules HC & HC-N
	 	Total Loan Loss and
Allocated Transfer Risk Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured)
	 	 	 	 	 
	Ratio of Net

Charge-Offs to

Loans	 	
(BHCK4635-BHCK4605)/(BHCK3516)
Schedules HI-B & HC-K
	 	Net charge offs for
the period as a percentage of average loans.
	 	 	 	 	 
	Return on Assets	 	
(BHCK4340/BHCK3368)
Schedules HI & HC-K
	 	Net Income as a percentage of Assets.
	 	 	 	 	 
	Net Interest Margin	 	
(BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985)
Schedules HI Memorandum and HC-K
	 	(Net Interest Income
Fully Taxable Equivalent, if available / Average Earning Assets)
	 	 	 	 	 
	Efficiency Ratio	 	
(BHCK4093)/(BHCK4519+BHCK4079)

Schedule HI
	 	(Noninterest Expense)/ (Net

Interest Income Fully Taxable

Equivalent, if available, plus

Noninterest Income)
	 	 	 	 	 
	Ratio of Loans to

Assets	 	
(BHCKB528+BHCK5369)/BHCK2170)

Schedule HC
	 	Total Loans &
Leases (Net of Unearned Income & Gross of Reserve)/Total Assets
	 	 	 	 	 
	Ratio of Loans to

Deposits	 	
(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)
Schedule HC
	 	Total Loans &
Leases (Net of Unearned Income & Gross of Reserve)/Total Deposits (Includes
Domestic and Foreign Deposits)
	 	 	 	 	 
	Total Assets	 	
(BHCK2170)

Schedule HC
	 	The sum of total
assets. Includes cash and balances due from depository institutions;
securities; federal funds sold and securities purchased under
agreements to resell; loans and lease financing receivables; trading
assets; premises and fixed assets; other real estate owned;
investments in unconsolidated subsidiaries and associated companies;
customer’s liability on acceptances outstanding; intangible assets; and
other assets.
	 	 	 	 	 
	Net Income	 	
(BHCK4300)

Schedule HI
	 	The sum of income
(loss) before extraordinary items and other adjustments and
extraordinary items; and other adjustments, net of income taxes.




D-2









 



FIRST INTERSTATE BANCSYSTEM, INC.



22,360 Capital Securities



Floating Rate Capital Securities

(Liquidation Amount $1,000.00 per Capital Security)



PLACEMENT AGREEMENT



March 24, 2003


FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117



Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019


Ladies and Gentlemen:


     First Interstate BancSystem, Inc., a Montana corporation (the “Company”),
and its financing subsidiary, First Interstate Statutory Trust I, a Connecticut
statutory trust (the “Trust,” and hereinafter together with the Company, the
“Offerors”), hereby confirm their agreement (this “Agreement”) with you as
placement agents (the “Placement Agents”), as follows:


Section 1. Issuance and Sale of Securities.



     1.1.      Introduction. The Offerors propose to issue
and sell at the Closing (as
defined in Section 2.3.1 hereof) 22,360 of the Trust’s Floating Rate Capital
Securities, with a liquidation amount of $1,000.00 per capital security (the
“Capital Securities”), to Zions First National Bank and First Tennessee Bank
National Association (the “Purchasers”) pursuant to the terms of Subscription
Agreements entered into, or to be entered into on or prior to the Closing Date
(as defined in Section 2.3.1 hereof), between the Offerors and the Purchasers
(the “Subscription Agreements”), the form of which is attached hereto as
Exhibit A and incorporated herein by this reference.


     1.2.      Operative Agreements. The Capital
Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the “Guarantee”) pursuant and subject to the Guarantee Agreement (the
“Guarantee Agreement”), to be dated as of the Closing Date and executed and
delivered by the Company and U. S. Bank National Association (“U. S. Bank”), as
trustee (the “Guarantee Trustee”), for the benefit from time to time of the
holders of the Capital Securities. The entire proceeds from the sales by the
Trust to the Purchasers and to a third purchaser pursuant to an additional
subscription agreement to be dated as of the Closing Date of the Capital
Securities shall be combined with the entire proceeds from the sale by the
Trust to the Company of its common securities in the amount of


 






 


$1,238,000.00 (the “Common Securities”), and shall be used by the Trust to purchase
$41,238,000.00 in principal amount of the Floating Rate Junior Subordinated
Deferrable Interest Debentures (the “Debentures”) of the Company. The Capital
Securities and the Common Securities for the Trust shall be issued pursuant to
an Amended and Restated Declaration of Trust among U. S. Bank, as institutional
trustee (the “Institutional Trustee”), the Administrators named therein, and
the Company, to be dated as of the Closing Date and in substantially the form
heretofore delivered to the Placement Agents (the “Trust Agreement”). The
Debentures shall be issued pursuant to an Indenture (the “Indenture”), to be
dated as of the Closing Date, between the Company and U. S. Bank, as indenture
trustee (the “Indenture Trustee”). The documents identified in this Section
1.2 and in Section 1.1 are referred to herein as the “Operative Documents.”


     1.3.      Rights of Purchasers. The Capital Securities
shall be offered and sold by
the Trust directly to the Purchasers without registration of any of the Capital
Securities, the Debentures or the Guarantee under the Securities Act of 1933,
as amended (the “Securities Act”), or any other applicable securities laws in
reliance upon exemptions from the registration requirements of the Securities
Act and other applicable securities laws. The Offerors agree that this
Agreement shall be incorporated by reference into the Subscription Agreement
and the Purchasers shall be entitled to each of the benefits of the Placement
Agents and the Purchasers under this Agreement and shall be entitled to enforce
obligations of the Offerors under this Agreement as fully as if the Purchasers
were a party to this Agreement. The Offerors and the Placement Agents have
entered into this Agreement to set forth their understanding as to their
relationship and their respective rights, duties and obligations.


     1.4.      Legends. Upon original issuance thereof,
and until such time as the same
is no longer required under the applicable requirements of the Securities Act,
the Capital Securities and Debentures certificates shall each contain a legend
as required pursuant to any of the Operative Documents.


Section 2. Purchase of Capital Securities.



     2.1.      Exclusive Rights; Purchase Price. From the
date hereof until the Closing
Date (which date may be extended by mutual agreement of the Offerors and the
Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive right to arrange for the sale of the Capital Securities to the
Purchasers at a purchase price of $1,000.00 per Capital Security.


     2.2.      Subscription Agreements. The Offerors
hereby agree to evidence their
acceptance of the subscription by countersigning a copy of the Subscription
Agreements and returning the same to the Placement Agents.


     2.3.      Closing and Delivery of Payment.


               2.3.1. Closing; Closing
Date. The sale and purchase of the Capital Securities
by the Offerors to the Purchasers shall take place at a closing (the “Closing”)
at the offices of Lewis, Rice & Fingersh, L.C., at 10:00 a.m. (St. Louis time)
on March 26, 2003, or such other business day as may be agreed upon by the
Offerors and the Placement Agents (the “Closing Date”); provided, however, that
in no event shall the Closing Date occur later than March 31, 2003 unless
consented to by the Purchasers. Payment by the Purchasers shall be payable in
the manner set forth in the Subscription Agreement and shall be made prior to
or on the Closing Date.



               2.3.2. Delivery. Not
less than two full business days prior to the Closing
Date, a global Capital Security certificate in definitive form shall be made
available by or on behalf of the Offerors to the Placement Agents and the
Institutional Trustee for inspecting, checking and delivery to the Depository
Trust Company (“DTC”) or its custodian.



2






 





     2.4.     Placement Agents’ Fees and
Expenses.


               2.4.1. Placement
Agents’ Compensation. Because the proceeds from the sale of
the Capital Securities shall be used to purchase the Debentures from the
Company, the Company shall pay an aggregate of $30.00 for each $1,000.00 of
principal amount of Debentures sold to the Trust (excluding the Debentures
related to the Common Securities purchased by the Company). Of this amount,
$15.00 for each $1,000.00 of principal amount of Debentures shall be payable to
FTN Financial Capital Markets and $15.00 for each $1,000.00 of principal amount
of Debentures shall be payable to Keefe, Bruyette & Woods, Inc. Such amount
shall be delivered to the Trustee or such other person designated by the
Placement Agents on the Closing Date and shall be allocated between and paid to
the respective Placement Agents as directed by the Placement Agents.



               2.4.2. Costs and Expenses.
Whether or not this Agreement is terminated or the
sale of the Capital Securities is consummated, the Company hereby covenants and
agrees that it shall pay or cause to be paid (directly or by reimbursement) all
reasonable costs and expenses incident to the performance of the obligations of
the Offerors under this Agreement, including all fees, expenses and
disbursements of counsel and accountants for the Offerors; all reasonable
expenses incurred by the Offerors incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture, and the Guarantee; and all
other reasonable costs and expenses incident to the performance of the
obligations of the Company hereunder and under the Trust Agreement.



     2.5.      Failure to Close. If any of the conditions to
the Closing specified in
this Agreement shall not have been fulfilled to the satisfaction of the
Placement Agents or if the Closing shall not have occurred on or before 10:00
a.m. (St. Louis time) on March 31, 2003, then each party hereto,
notwithstanding anything to the contrary in this Agreement, shall be relieved
of all further obligations under this Agreement without thereby waiving any
rights it may have by reason of such nonfulfillment or failure; provided,
however, that the obligations of the parties under Sections 2.4.2, 7.5 and 9
shall not be so relieved and shall continue in full force and effect.


Section 3. Closing Conditions. The obligations of the Purchasers and the
Placement Agents on the Closing Date shall be subject to the accuracy, at and
as of the Closing Date, of the representations and warranties of the Offerors
contained in this Agreement, to the accuracy, at and as of the Closing Date, of
the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations
under this Agreement, to compliance, at and as of the Closing Date, by the
Offerors with their respective agreements herein contained, and to the
following further conditions:


     3.1.     Opinions of Counsel. On the Closing Date,
the Placement Agents shall have
received the following favorable opinions, each dated as of the Closing Date:
(a) from Christian, Samson, Jones & Chisholm, PLLC, counsel for the Offerors
and addressed to the Purchasers and the Placement Agents in substantially the
form set forth on Exhibit B-1 attached hereto and incorporated herein by this
reference, (b) from Bingham McCutchen LLP, special Connecticut counsel to the
Offerors and addressed to the Purchasers, the Placement Agents and the
Offerors, in substantially the form set forth on Exhibit B-2 attached hereto
and incorporated herein by this reference and (c) from Lewis, Rice & Fingersh,
L.C., special tax counsel to the Offerors, and addressed to the Placement
Agents and the Offerors, in substantially the form set forth on Exhibit B-3
attached hereto and incorporated herein by this reference, subject to the
receipt by Lewis, Rice & Fingersh, L.C. of a representation letter from the
Company in the form set forth in Exhibit B-3 completed in a manner reasonably
satisfactory to Lewis, Rice & Fingersh, L.C. (collectively, the “Offerors’
Counsel Opinions”). In rendering the Offerors’ Counsel Opinions, counsel to
the Offerors may rely as to factual matters upon certificates or other
documents furnished by officers, directors and trustees of the Offerors (copies
of which shall be delivered to the Placement Agents and the Purchasers) and by
government officials, and upon such other documents as counsel to the


3






 


Offerors may, in their reasonable opinion, deem appropriate as a basis for the Offerors’
Counsel Opinions. Counsel to the Offerors may specify the jurisdictions in
which they are admitted to practice and that they are not admitted to practice
in any other jurisdiction and are not experts in the law of any other
jurisdiction. If the Offerors’ counsel is not admitted to practice in the
State of New York, the opinion of Offerors’ counsel may assume, for purposes of
the opinion, that the laws of the State of New York are substantively
identical, in all respects material to the opinion, to the internal laws of the
state in which such counsel is admitted to practice. Such Offerors’ Counsel
Opinions shall not state that they are to be governed or qualified by, or that
they are otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).


     3.2.      Officer’s Certificate. At the Closing
Date, the Purchasers and the
Placement Agents shall have received certificates from the Chief Executive
Officer of the Company, dated as of the Closing Date, stating that (i) the
representations and warranties of the Offerors set forth in Section 5 hereof
are true and correct as of the Closing Date and that the Offerors have complied
with all agreements and satisfied all conditions on their part to be performed
or satisfied at or prior to the Closing Date, (ii) since the date of this
Agreement the Offerors have not incurred any liability or obligation, direct or
contingent, or entered into any material transactions, other than in the
ordinary course of business, which is material to the Offerors, and (iii)
covering such other matters as the Placement Agents may reasonably request.


     3.3.      Administrator’s Certificate. At the
Closing Date, the Purchasers and the
Placement Agents shall have received a certificate of one or more
Administrators of the Trust, dated as of the Closing Date, stating that the
representations and warranties of the Trust set forth in Section 5 are true and
correct as of the Closing Date and that the Trust has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date.


     3.4.      Purchase Permitted by Applicable Laws; Legal
Investment. The purchase of
and payment for the Capital Securities as described in this Agreement and
pursuant to the Subscription Agreement shall (a) not be prohibited by any
applicable law or governmental regulation, (b) not subject the Purchasers or
the Placement Agents to any penalty or, in the reasonable judgment of the
Purchasers and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by the laws and
regulations of the jurisdictions to which the Purchasers and the Placement
Agents are subject.


     3.5.      Consents and Permits. The Company and
the Trust shall have received all
consents, permits and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company or the Trust is a party or
to which either is subject, in connection with the transactions contemplated by
this Agreement.


     3.6.      Information. Prior to or on the Closing Date,
the Offerors shall have
furnished to the Placement Agents such further information, certificates,
opinions and documents addressed to the Purchasers and the Placement Agents,
which the Placement Agents may reasonably request, including, without
limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the
Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.


     If any condition specified in this Section 3 shall not have been fulfilled
when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors
at any time at or prior to the Closing


4






 


Date. Notice of such termination shall be given to the Offerors in writing or
by telephone or facsimile confirmed in writing.


Section 4. Conditions to the Offerors’ Obligations. The obligations of the
Offerors to sell the Capital Securities to the Purchasers and consummate the
transactions contemplated by this Agreement shall be subject to the accuracy,
at and as of the Closing Date, of the representations and warranties of the
Placement Agents contained in this Agreement and to the following further
conditions:


     4.1.      Executed Agreement. The Offerors shall
have received from the Placement
Agents an executed copy of this Agreement.


     4.2.      Fulfillment of Other Obligations. The
Placement Agents shall have
fulfilled all of their other obligations and duties required to be fulfilled
under this Agreement and under that certain Placement Agreement, dated as of
March 17, 2003, by and among the Offerors and the Placement Agents (the “Second
Placement Agreement”) prior to or at the Closing and the transactions
contemplated by both this Agreement and the Second Placement Agreement shall
close substantially simultaneously.


Section 5. Representations and Warranties of the Offerors. Except as set forth
on the Disclosure Schedule (as defined in Section 11.1) attached hereto, if
any, the Offerors jointly and severally represent and warrant to the Placement
Agents and the Purchasers as of the date hereof and as of the Closing Date as
follows:


     5.1.      Securities Law Matters.


               (a) Neither the
Company nor the Trust, nor any of their “Affiliates” (as
defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation
D”)), nor any person acting on any of their behalf has, directly or indirectly,
made offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration under the Securities
Act of any of the Capital Securities, the Guarantee or the Debentures
(collectively, the “Securities”) or any other securities to be issued, or which
may be issued, by the Purchasers.



               (b) Neither the
Company nor the Trust, nor any of their Affiliates, nor any
person acting on its or their behalf has (i) other than the Placement Agents,
offered for sale or solicited offers to purchase the Securities, (ii) engaged
or will engage, in any “directed selling efforts” within the meaning of
Regulation S under the Securities Act (“Regulation S”) with respect to the
Securities, or (iii) engaged in any form of offering, general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of any of the Securities.



               (c) The Securities
satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.



               (d) Neither the
Company nor the Trust is or, after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in this Agreement, will be an “investment company” or an
entity “controlled” by an “investment company,” in each case within the meaning
of Section 3(a) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”) without regard to Section 3(c) of the Investment
Company Act.



               (e) Neither the
Company nor the Trust has paid or agreed to pay to any person
or entity (other than the Placement Agents) any compensation for soliciting
another to purchase any of the Securities.



5






 





     5.2.      Organization, Standing and Qualification of Trust.
The Trust has been
duly created and is validly existing in good standing as a statutory trust
under the Connecticut Statutory Trust Act (the “Statutory Trust Act”) with the
power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under
the Operative Documents. The Trust is duly qualified to transact business as a
foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in
good standing would not have a material adverse effect on the Trust. The Trust
is not a party to or otherwise bound by any agreement other than the Operative
Documents. The Trust is and will, under current law, be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation.


     5.3.      Trust Agreement. The Trust Agreement has
been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company and the Administrators of the Trust, and, assuming due
authorization, execution and delivery by the Institutional Trustee, will be a
valid and binding obligation of the Company and such Administrators,
enforceable against them in accordance with its terms, subject to
(a) applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation and other laws relating to or affecting creditors’
rights generally, and (b) general principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) (“Bankruptcy and
Equity”). Each of the Administrators of the Trust is an employee or a director
of the Company or of a financial institution subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.


     5.4.      Guarantee Agreement and the Indenture.
Each of the Guarantee and the
Indenture has been duly authorized by the Company and, on the Closing Date will
have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.


     5.5.      Capital Securities and Common Securities.
The Capital Securities and the
Common Securities have been duly authorized by the Trust Agreement and, when
issued and delivered against payment therefor on the Closing Date to the
Purchasers, in the case of the Capital Securities, and to the Company, in the
case of the Common Securities, will be validly issued and represent undivided
beneficial interests in the assets of the Trust. None of the Capital Securities
or the Common Securities is subject to preemptive or other similar rights. On
the Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.


     5.6.      Debentures. The Debentures have been duly
authorized by the Company and,
at the Closing Date, will have been duly executed and delivered to the
Indenture Trustee for authentication in accordance with the Indenture, and,
when authenticated in the manner provided for in the Indenture and delivered
against payment therefor by the Trust, will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture
enforceable against the Company in accordance with their terms, subject to
Bankruptcy and Equity.


     5.7.      Power and Authority. This Agreement has
been duly authorized, executed
and delivered by the Company and the Trust and constitutes the valid and
binding obligation of the Company and the Trust, enforceable against the
Company and the Trust in accordance with its terms, subject to Bankruptcy and
Equity.


     5.8.      No Defaults. The Trust is not in violation of
the Trust Agreement or, to
the knowledge of the Administrators, any provision of the Statutory Trust Act.
The execution, delivery and performance


6






 


by the Company or the Trust of this Agreement or the Operative Documents to which it is a party, and the
consummation of the transactions contemplated herein or therein and the use of
the proceeds therefrom, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any property or assets of the Trust, the Company or any
of the Company’s Subsidiaries (as defined in Section 5.11 hereof) pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of any of them is subject, except for a conflict, breach,
default, lien, charge or encumbrance which could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect nor will
such action result in any violation of the Trust Agreement or the Statutory Trust Act or require
the consent, approval, authorization or order of any court or governmental
agency or body. As used herein, the term “Material Adverse Effect” means any
one or more effects that individually or in the aggregate are material and
adverse to the Offeror’s ability to consummate the transactions contemplated
herein or in the Operative Documents or any one or more effects that
individually or in the aggregate are material and adverse to the condition
(financial or otherwise), earnings, affairs, business, prospects or results of
operations of the Company and its Subsidiaries taken as whole, whether or not
occurring in the ordinary course of business.


     5.9.     Organization, Standing and Qualification of the
Company. The Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of Montana, with all requisite corporate power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of the Company
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.


     5.10.      Subsidiaries of the Company. Each of the
Company’s significant
subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the “Significant Subsidiaries”)) is listed in Exhibit C attached hereto
and incorporated herein by this reference. Each Significant Subsidiary has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction in which it is chartered or organized, with all requisite
power and authority to own its properties and conduct the business it transacts
and proposes to transact, and is duly qualified to transact business and is in
good standing as a foreign entity in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of any such
Significant Subsidiary to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect. All of the issued and outstanding
shares of capital stock of the Significant Subsidiaries (a) have been duly
authorized and are validly issued, (b) are fully paid and nonassessable, and
(c) are wholly owned, directly or indirectly, by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, restriction upon
voting or transfer, preemptive rights, claim, equity or other defect.


     5.11.     Permits. The Company and each of its
subsidiaries (as defined in Section
1-02(x) of Regulation S-X to the Securities Act) (the “Subsidiaries”) have all
requisite power and authority, and all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, to own or lease their respective
properties and to conduct their respective businesses as now being conducted,
except such authorizations, approvals, orders, licenses, certificates and
permits which, if not obtained and maintained, would not, singly or in the
aggregate, have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorizations, approvals, orders,
licenses, certificates or permits which, singly or in the aggregate, if the
failure to be so licensed or approved is the subject of an unfavorable
decision, ruling or finding, would, singly or in the aggregate, have a Material
Adverse Effect; and the Company and its Subsidiaries are in compliance with


7






 


all applicable laws, rules, regulations and orders and consents, the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.


     5.12.      Conflicts, Authorizations and Approvals.
Neither the Company nor any of
its Subsidiaries is in violation of its respective articles or certificate of
incorporation, charter or by-laws or similar organizational documents or in
default in the performance or observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement
or instrument to which either the Company or any of its Subsidiaries is a
party, or by which it or any of them may be bound or to which any of the
property or assets of the Company or any of its Subsidiaries is subject, the
effect of which violation or default in performance or observance would have,
singly or in the aggregate, a Material Adverse Effect.


     5.13.      Holding Company Registration and Deposit
Insurance. The Company is duly
registered (i) as a bank holding company or financial holding company under the
Bank Holding Company Act of 1956, as amended, and the regulations of the Board
of Governors of the Federal Reserve System or (ii) as a savings and loan
holding company under the Home Owners’ Loan Act of 1933, as amended, and the
regulations of the Office of Thrift Supervision, and the deposit accounts of
the Company’s Subsidiary depository institutions are insured by the Federal
Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by law
and the rules and regulations of the FDIC, and no proceedings for the
termination of such insurance are pending or threatened.


     5.14.      Financial Statements.


               (a) The consolidated
balance sheets of the Company and all of its
Subsidiaries as of December 31, 2002 and December 31, 2001 and related
consolidated income statements for the 2 years ended December 31, 2002 together
with the notes thereto, copies of each of which have been provided to the
Placement Agents (together, the “Financial Statements”), have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be disclosed therein) and fairly present in all
material respects the financial position and the results of operations and
changes in shareholders’ equity of the Company and all of its Subsidiaries as
of the dates and for the periods indicated. The books and records of the
Company and all of its Subsidiaries have been, and are being, maintained in all
material respects in accordance with generally accepted accounting principles
and any other applicable legal and accounting requirements and reflect only
actual transactions.



               (b) The information in
the Company’s report on form FR Y-9C dated December
31, 2002 (the “FR Y-9C”) previously provided to the Placement Agents fairly
presents in all material respects the financial position of the Company and all
of its Subsidiaries as of such date.



               (c) Since the
respective dates of the Financial Statements and the FR
Y-9C, there has been no material adverse change or development with respect to
the financial condition or earnings of the Company and all of its Subsidiaries,
taken as a whole.



               (d) The accountants of
the Company who certified the Financial Statements
are independent public accountants of the Company and its Subsidiaries within
the meaning of the Securities Act and the rules and regulations thereunder.



     5.15.      Exchange Act Reporting. The reports filed
with the Securities and
Exchange Commission (the “Commission”) by the Company under the Securities
Exchange Act of 1934, as amended (the “1934 Act”) and the regulations
thereunder at the time they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and such reports did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated


8






 


therein or necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading.


     5.16.      Regulatory Enforcement Matters. Neither
the Company nor any of its
Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been since January 1, 2000, a recipient of
any supervisory letter from, or since January 1, 2000, has adopted any board
resolutions at the request of, any Regulatory Agency (as defined below) that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies, their ability or authority to pay dividends or make distributions to
their shareholders or make payments of principal or interest on their debt
obligations, their management or their business (each, a “Regulatory
Agreement”), nor has the Company or any of its Subsidiaries been advised since
January 1, 2000, by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. There is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any of its
Subsidiaries. As used herein, the term “Regulatory Agency” means any federal
or state agency charged with the supervision or regulation of depository
institutions, bank, financial or savings and loan holding companies, or engaged
in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries.


     5.17.      No Material Change. Since
December 31, 2002, there has been no material
adverse change or development with respect to the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Company or its Subsidiaries on a consolidated basis, whether or not arising
in the ordinary course of business.


     5.18.      No Undisclosed Liabilities. Neither the
Company nor any of its
Subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
Subsidiaries since the date of the most recent balance sheet included in the
Financial Statements.


     5.19.      Litigation. No charge, investigation, action,
suit or proceeding is
pending or, to the knowledge of the Offerors, threatened, against or affecting
the Company or its Subsidiaries or any of their respective properties before or
by any courts or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein an unfavorable
decision, ruling or finding could have, singly or in the aggregate, a Material
Adverse Effect.


     5.20.      Deferral of Interest Payments on Debentures.
The Company has no present
intention to exercise its option to defer payments of interest on the
Debentures as provided in the Indenture. The Company believes that the
likelihood that it would exercise its right to defer payments of interest on
the Debentures as provided in the Indenture at any time during which the
Debentures are outstanding is remote because of the restrictions that would be
imposed on the Company’s ability to declare or pay dividends or distributions
on, or to redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company’s capital stock and on the Company’s ability to make any
payments of principal,


9






 


interest or premium on, or repay, repurchase or redeem,
any of its debt securities that rank pari passu in all respects with, or junior
in interest to, the Debentures.


Section 6. Representations and Warranties of the Placement Agents. Each
Placement Agent represents and warrants to the Offerors as to itself (but not
as to the other Placement Agent) as follows:


     6.1.     Organization, Standing and Qualification.


               (a) FTN Financial
Capital Markets is a division of First Tennessee Bank, N.A.,
a national banking association duly organized, validly existing and in good
standing under the laws of the United States, with full power and authority to
own, lease and operate its properties and conduct its business as currently
being conducted. FTN Financial Capital Markets is duly qualified to transact
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property or conducts its business so as
to require such qualification and in which the failure to so qualify would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.



               (b) Keefe, Bruyette
& Woods, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with
full power and authority to own, lease and operate its properties and conduct
its business as currently being conducted. Keefe, Bruyette & Woods, Inc. is
duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.



     6.2.      Power and Authority. The Placement Agent
has all requisite power and
authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject
to Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.


     6.3.      General Solicitation. In the case of the offer
and sale of the Capital Securities, no form of general
solicitation or general advertising was used by the Placement Agent or its
representatives including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.


     6.4.      Purchasers. The Placement Agent has
made such reasonable inquiry as is
necessary to determine that the Purchasers are acquiring the Capital Securities
for their own accounts and that the Purchasers do not intend to distribute the
Capital Securities in contravention of the Securities Act or any other
applicable securities laws.


     6.5.      Qualified Purchasers. The Placement Agent
has not offered or sold and
will not arrange for the offer or sale of the Capital Securities except (i) in
an offshore transaction complying with Rule 903 of Regulation S, or (ii) to
those the Placement Agent reasonably believes are “accredited investors” (as
defined in Rule 501 of Regulation D), or (iii) in any other manner that does
not require registration of the Capital Securities under the Securities Act.
In connection with each such sale, the Placement Agent has taken or will take
reasonable steps to ensure that the Purchasers are aware that (a) such sale is
being made in reliance on an exemption under the Securities Act and (b) future
transfers of the Capital Securities will not be made except in compliance with
applicable securities laws.


10






 


     6.6.      Offering Circulars. Neither the Placement
Agent nor its representatives
will include any non-public information about the Company, the Trust or any of
their affiliates in any registration statement, prospectus, offering circular
or private placement memorandum used in connection with any purchase of Capital
Securities without the prior written consent of the Trust and the Company.


Section 7. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agents and the Purchasers as follows:


     7.1.      Compliance with Representations and
Warranties. During the period from
the date of this Agreement to the Closing Date, the Offerors shall use their
best efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.


     7.2.      Sale and Registration of Securities. The
Offerors and their Affiliates
shall not nor shall any of them permit any person acting on their behalf (other
than the Placement Agents), to directly or indirectly (i) sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) that would or could be integrated with the sale
of the Capital Securities in a manner that would require the registration under
the Securities Act of the Securities or (ii) make offers or sales of any such
Security, or solicit offers to buy any such Security, under circumstances that
would require the registration of any of such Securities under the Securities
Act.


     7.3.      Use of Proceeds. The Trust shall use the
proceeds
from the sale of the Capital Securities to purchase the Debentures from the Company.


     7.4.      Investment Company. The Offerors shall not
engage, or permit any
Subsidiary to engage, in any activity which would cause it or any Subsidiary to
be an “investment company” under the provisions of the Investment Company Act.


     7.5.      Reimbursement of Expenses. If the sale of
the Capital Securities provided
for herein is not consummated (i) because any condition set forth in Section 3
hereof is not satisfied, or (ii) because of any refusal, inability or failure
on the part of the Company or the Trust to perform any agreement herein or
comply with any provision hereof other than by reason of a breach by the
Placement Agents, the Company shall reimburse the Placement Agents upon demand
for all of their pro rata share of out-of-pocket expenses (including reasonable
fees and disbursements of counsel) in an amount not to exceed $50,000.00 that
shall have been incurred by them in connection with the proposed purchase and
sale of the Capital Securities. Notwithstanding the foregoing, the Company
shall have no obligation to reimburse the Placement Agents for their
out-of-pocket expenses if the sale of the Capital Securities fails to occur
because the condition set forth in Section 3.6 is not satisfied or because
either of the Placement Agents fails to fulfill a condition set forth in
Section 4.


     7.6.      Directed Selling Efforts, Solicitation and
Advertising. In connection
with any offer or sale of any of the Securities, the Offerors shall not, nor
shall either of them permit any of their Affiliates or any person acting on
their behalf, other than the Placement Agents, to, (i) engage in any “directed
selling efforts” within the meaning of Regulation S, or (ii) engage in any form
of general solicitation or general advertising (as defined in Regulation D).


     7.7.      Compliance with Rule 144(d)(4) under the
Securities Act. So long as any
of the Securities are outstanding and are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during
any period in which they are not subject to and in compliance with Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or the Offerors are not exempt from such reporting requirements pursuant
to and in compliance with


11






 


Rule 12g3-2(b) under the Exchange Act, provide to
each holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser in connection with any proposed transfer,
any information required to be provided by Rule 144A(d)(4) under the Securities
Act, if applicable. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders, from time
to time of such restricted securities. The information provided by the
Offerors pursuant to this Section 7.7 will not, at the date thereof, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.


     7.8.      Option to Purchase. The Offerors
acknowledge that the Placement Agents
have an irrevocable option to purchase or arrange for the purchase of the
Capital Securities from the Purchasers, in whole or in part, at any time and
from time to time for one year following the Closing Date (the “Call Option”),
exercisable by delivering the notice attached as Exhibit B to the Subscription
Agreements to be entered into by each of the Purchasers (the “Option Exercise
Notice”). In order to facilitate exercise of the Call Option by the Placement
Agents, the Company shall execute in blank ten additional Capital Securities
certificates, to be delivered at Closing, such certificates to be completed
with the name of the transferee(s) to which the Capital
Securities, in whole or in part, will be transferred upon an exercise of a Call
Option and authenticated by the Institutional Trustee at the time of each such
transfer. Such additional Capital Securities certificates shall be held
pursuant to the terms of a Custodian Agreement attached as Exhibit D hereto.


     7.9.      Quarterly Reports. Within 50 days of
the end of each calendar year
quarter and within 100 days of the end of each calendar year during which the
Debentures are issued and outstanding, the Offerors shall submit to The Bank of
New York a completed quarterly report in the form attached hereto as Exhibit E,
with a copy provided to the applicable Purchaser during the period when it
holds any of the Capital Securities. If the Placement Agents exercise their
option under Section 7.8, in addition to the reporting obligations of the
Offerors to The Bank of New York and the Purchasers provided for in this
Section 7.9, the Offers shall submit to the trustee designated in the Option
Exercise Notice such period reports as may be required by such trustee in the
form and at such times as such trustee may require. The Offerors acknowledge
and agree that The Bank of New York and such designated trustee and its
successors and assigns is a third party beneficiary to this Section 7.9.


     7.10.      Book Entry Registration. Each Offeror will
cooperate with the Placement
Agents and use all commercially reasonable efforts to make the Capital
Securities, and in the event the Debentures are distributed to holders of the
Capital Securities, to make the Debentures, eligible for clearance and
settlement as book-entry securities through the facilities of DTC, and will
execute, deliver and comply with all representations made to, and agreements
with, DTC and Nasdaq’s PORTAL system.


Section 8. Covenants of the Placement Agents. The Placement Agents covenant
and agree with the Offerors that, during the period from the date of this
Agreement to the Closing Date, the Placement Agents shall use their best
efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 6 to be true as of Closing
Date, after giving effect to the transactions contemplated by this Agreement,
as if made on and as of the Closing Date. The Placement Agents further
covenant and agree not to engage in hedging transactions with respect to the
Capital Securities unless such transactions are conducted in compliance with
the Securities Act.


Section 9. Indemnification.


     9.1.      Indemnification Obligation. The Offerors shall
jointly and severally
indemnify and hold harmless the Placement Agents and the Purchasers and each of
their respective agents, employees, officers and directors and each person that
controls either of the Placement Agents or the Purchasers


12






 


within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and agents,
employees, officers and directors or any such controlling person of either of
the Placement Agents or the Purchasers (each such person or entity, an
“Indemnified Party”) from and against any and all losses, claims, damages,
judgments, liabilities or expenses, joint or several, to which such Indemnified
Party may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Offerors), insofar as such losses, claims, damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out
of, or are based upon, or relate to, in whole or in part, (a) any untrue
statement or alleged untrue statement of a material fact contained in any
information (whether written or oral) or documents executed in favor of,
furnished or made available to the Placement Agents or the Purchasers by the
Offerors, or (b) any omission or alleged omission to state in any information
(whether written or oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchasers by the Offerors a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Indemnified Party for any legal and other expenses as
such expenses are reasonably incurred by such Indemnified Party in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, judgments, liability, expense or action described in this
Section 9.1. In addition to their other obligations under this Section 9, the
Offerors hereby agree that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of, or
based upon, or related to the matters described above in this Section 9.1, they
shall reimburse each Indemnified Party on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, each
Indemnified Party shall promptly return such amounts to the Offerors together
with interest, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) announced from time
to time by First Tennessee Bank, N.A. (the “Prime Rate”). Any such interim
reimbursement payments which are not made to an Indemnified Party within 30
days of a request for reimbursement shall bear interest at the Prime Rate from
the date of such request.


     9.2.      Conduct of Indemnification Proceedings.
Promptly after receipt by an
Indemnified Party under this Section 9 of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Offerors under this Section 9, notify the Offerors in writing
of the commencement thereof; but, subject to Section 9.4, the omission to so
notify the Offerors shall not relieve them from any liability pursuant to
Section 9.1 which the Offerors may have to any Indemnified Party unless and to
the extent that the Offerors did not otherwise learn of such action and such
failure by the Indemnified Party results in the forfeiture by the Offerors of
substantial rights and defenses. In case any such action is brought against
any Indemnified Party and such Indemnified Party seeks or intends to seek
indemnity from the Offerors, the Offerors shall be entitled to participate in,
and, to the extent that they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
if the defendants in any such action include both the Indemnified Party and the
Offerors and the Indemnified Party shall have reasonably concluded that there
may be a conflict between the positions of the Offerors and the Indemnified
Party in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Offerors, the Indemnified Party
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
Indemnified Party. Upon receipt of notice from the Offerors to such
Indemnified Party of their election to so assume the defense of such action and
approval by the Indemnified Party of counsel, the Offerors shall not be liable
to such Indemnified Party under this Section 9 for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof unless (i) the Indemnified Party shall have employed such counsel in
connection


13






 


with the assumption of legal defenses in accordance with the proviso
in the preceding sentence (it being understood, however, that the Offerors
shall not be liable for the expenses of more than one separate counsel
representing the Indemnified Parties who are parties to such action), or (ii)
the Offerors shall not have employed counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel of such Indemnified Party shall be at the expense of the
Offerors.


     9.3.      Contribution. If the indemnification provided
for in this Section 9 is required by its terms,
but is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an Indemnified Party under Section 9.1 in respect of any losses,
claims, damages, liabilities or expenses referred to herein or therein, then
the Offerors shall contribute to the amount paid or payable by such Indemnified
Party as a result of any losses, claims, damages, judgments, liabilities or
expenses referred to herein (i) in such proportion as is appropriate to reflect
the relative benefits received by the Offerors, on the one hand, and the
Indemnified Party, on the other hand, from the offering of such Capital
Securities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offerors, on the one hand, and the Placement Agents, on
the other hand, in connection with the statements or omissions or inaccuracies
in the representations and warranties herein or other breaches which resulted
in such losses, claims, damages, judgments, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative benefits
received by the Offerors, on the one hand, and the Placement Agents, on the
other hand, shall be deemed to be in the same proportion, in the case of the
Offerors, as the total price paid to the Offerors for the Capital Securities
sold by the Offerors to the Purchasers (net of the compensation paid to the
Placement Agents hereunder, but before deducting expenses), and in the case of
the Placement Agents, as the compensation received by them, bears to the total
of such amounts paid to the Offerors and received by the Placement Agents as
compensation. The relative fault of the Offerors and the Placement Agents
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Offerors
or the Placement Agents and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The provisions set forth in Section 9.2 with respect to notice of commencement
of any action shall apply if a claim for contribution is made under this
Section 9.3; provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under Section 9.2
for purposes of indemnification. The Offerors and the Placement Agents agree
that it would not be just and equitable if contribution pursuant to this
Section 9.3 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in this Section 9.3. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages, judgments, liabilities or expenses
referred to in this Section 9.3 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. In no event shall the liability of the Placement Agents
hereunder be greater in amount than the dollar amount of the compensation (net
of payment of all expenses) received by the Placement Agents upon the sale of
the Capital Securities giving rise to such obligation. No person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.


     9.4.      Additional Remedies. The indemnity and
contribution agreements contained
in this Section 9 are in addition to any liability that the Offerors may
otherwise have to any Indemnified Party.


     9.5.      Additional Indemnification. The Company
shall indemnify and hold harmless
the Trust against all loss, liability, claim, damage and expense whatsoever, as
due from the Trust under Sections 9.1 through 9.4 hereof.


14






 


Section 10. Rights and Responsibilities of Placement Agents.


     10.1.      Reliance. In performing their duties
under this Agreement, the Placement Agents shall be
entitled to rely upon any notice, signature or writing which they shall in good
faith believe to be genuine and to be signed or presented by a proper party or
parties. The Placement Agents may rely upon any opinions or certificates or
other documents delivered by the Offerors or their counsel or designees to
either the Placement Agents or the Purchasers.


     10.2.      Rights of Placement Agents. In connection
with the performance of their
duties under this Agreement, the Placement Agents shall not be liable for any
error of judgment or any action taken or omitted to be taken unless the
Placement Agents were grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds
or otherwise incur any financial liability on behalf of the Purchasers in
connection with the performance of any of their duties hereunder. The
Placement Agents shall be under no obligation to exercise any of the rights or
powers vested in them by this Agreement.


Section 11. Miscellaneous.


     11.1.      Disclosure Schedule. The term
“Disclosure Schedule,” as used herein,
means the schedule, if any, attached to this Agreement that sets forth items
the disclosure of which is necessary or appropriate as an exception to one or
more representations or warranties contained in Section 5 hereof; provided,
that any item set forth in the Disclosure Schedule as an exception to a
representation or warranty shall be deemed an admission by the Offerors that
such item represents an exception, fact, event or circumstance that is
reasonably likely to result in a Material Adverse Effect. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 5. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.


     11.2.      Notices. Prior to the Closing, and thereafter
with respect to matters
pertaining to this Agreement only, all notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or overnight air courier guaranteeing next
day delivery:


          if to the Placement Agents, to:





	 	 
	 	FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117

Telecopier: 901-435-4706

Telephone: 800-456-5460

Attention: James D. Wingett 
	 	 
	 	        and








15






 






	 	 
	 	Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019

Telecopier: 212-403-2000

Telephone: 212-403-1004

Attention: Mitchell Kleinman, General Counsel







     with a copy to:




	 	 
	 	Lewis, Rice & Fingersh, L.C.

500 North Broadway, Suite 2000

St. Louis, Missouri 63102

Telecopier: 314-241-6056

Telephone: 314-444-7600

Attention: Thomas C. Erb, Esq.
	 	 
	 	        and









	 	 
	 	Sidley Austin Brown & Wood LLP

787 7th Avenue

New York, New York 10019

Telecopier: 212-839-5599

Telephone: 212-839-5300

Attention: Renwick Martin, Esq.




     if to the Offerors, to:





	 	 
	 	First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101

Telecopier: 406-225-5288

Telephone: 406-255-5371

Attention: Gary Brown




     with a copy to:




	 	 
	 	David R. Chisholm, Esq.

Christian, Samson, Jones & Chisholm, PLLC

310 West Spruce

Missoula, Montana 59807

Telecopier: 406-721-7776

Telephone: 406-721-7772

Attention: David R. Chisholm, Esq.




All such notices and communications shall be deemed to have been duly given (i)
at the time delivered by hand, if personally delivered, (ii) five business days
after being deposited in the mail, postage prepaid, if mailed, (iii) when
answered back, if telexed, (iv) the next business day after being telecopied,
or (v) the next business day after timely delivery to a courier, if sent by
overnight air courier guaranteeing next day
delivery. From and after the Closing, the foregoing notice provisions shall be
superseded by any notice provisions of the Operative Documents under which
notice is given. The Placement Agents, the


16






 


Company, and their respective
counsel, may change their respective notice addresses from time to time by
written notice to all of the foregoing persons.


     11.3.      Parties in Interest, Successors and Assigns.
Except as expressly set
forth herein, this Agreement is made solely for the benefit of the Placement
Agents, the Purchasers and the Offerors and any person controlling the
Placement Agents, the Purchasers or the Offerors and their respective
successors and assigns; and no other person shall acquire or have any right
under or by virtue of this Agreement. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.


     11.4.      Counterparts. This Agreement may be
executed by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.


     11.5.      Headings. The headings in this Agreement
are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.


     11.6.      Governing Law. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF
LAWS) OF THE STATE OF NEW YORK.


     11.7.      Entire Agreement. This Agreement,
together with the Operative Documents
and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, together with the Operative Documents and
the other documents delivered in connection with the transaction contemplated
by this Agreement, supersedes all prior agreements and understandings between
the parties with respect to such subject matter.


     11.8.      Severability. In the event that any one or
more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected,
it being intended that all of the Placement Agents’ and the Purchasers’ rights
and privileges shall be enforceable to the fullest extent permitted by law.


     11.9.      Survival. The Placement Agents and the
Offerors, respectively, agree
that the representations, warranties and agreements made by each of them in
this Agreement and in any certificate or other instrument delivered
pursuant hereto shall remain in full force and effect and shall survive the
delivery of, and payment for, the Capital Securities.


Signatures appear on the following page



17






 




     If this Agreement is satisfactory to you,
please so indicate by signing the acceptance of this Agreement and deliver such
counterpart to the Offerors whereupon this Agreement will become binding
between us in accordance with its terms.



	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	FIRST INTERSTATE BANCSYSTEM, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ TERRILL R. MOORE
	 	 	 	

	 	 	
Name:
	 	Terrill R. Moore
	 	 	
Title:
	 	Chief Financial Officer
	 	 	 	 	 
	 	 	FIRST INTERSTATE STATUTORY TRUST I
	 	 	 	 	 
	 	 	
By:
	 	/s/ TERRILL R. MOORE
	 	 	 	 	

	 	 	
Name:
	 	Terrill R. Moore
	 	 	
Title:
	 	Administrator



CONFIRMED AND ACCEPTED,

as of the date first set forth above



FTN FINANCIAL CAPITAL MARKETS,

a division of First Tennessee Bank, N.A.,

as a Placement Agent



	 	 	 
	By:	 	
/s/ JAMES D.WINGETT
	 	 	


	Name:	 	
James D. Wingett
	Title:	 	
Senior Vice President



KEEFE, BRUYETTE & WOODS, INC.

a New York corporation, as a Placement Agent




	 	 	 
	By:	 	
/s/ PETER J. WIRTH
	 	 	


	Name:	 	
Peter J. Wirth
	Title:	 	
Managing Director









18






 




EXHIBIT A



FORM OF SUBSCRIPTION AGREEMENT



FIRST INTERSTATE STATUTORY TRUST I

FIRST INTERSTATE BANCSYSTEM, INC.



SUBSCRIPTION AGREEMENT

March 26, 2003



     THIS SUBSCRIPTION AGREEMENT (this “Agreement”) made among First
Interstate
Statutory Trust I (the “Trust”), a statutory trust created under the
Connecticut Statutory Trust Act (Chapter 615 of Title 34 of the Connecticut
General Statutes, Section 500, et seq.), First Interstate BancSystem, Inc., a
Montana corporation, with its principal offices located at 401 North 31st
Street, 13th Floor, Billings, Montana 59101 (the “Company” and, collectively
with the Trust, the “Offerors”), and [           ] (the “Purchaser”), and, for
purposes of the rights and obligations in Section 1.3 only, FTN Financial
Capital Markets and Keefe, Bruyette & Woods, Inc. (the “Placement Agents”).


RECITALS:


     A.     The Trust desires to issue 40,000 of its Fixed/Floating
Rate Capital
Securities (the “Capital Securities”), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the “Offering”), to be issued pursuant to an Amended and Restated
Declaration of Trust (the “Declaration”) by and among the Company, U. S. Bank
National Association, as Institutional Trustee (“U. S. Bank”), the
administrators named therein, and the holders (as defined therein), which
Capital Securities are to be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise pursuant
to the terms of a Guarantee Agreement between the Company and U. S. Bank, as
trustee (the “Guarantee”); and


     B.     The proceeds from the sale of the Capital Securities will
be combined
with the proceeds from the sale by the Trust to the Company of its common
securities, and will be used by the Trust to purchase an equivalent amount of
Floating Rate Junior Subordinated Deferrable Interest Debentures of the Company
(the “Debentures”) to be issued by the Company pursuant to an indenture to be
executed by the Company and U. S. Bank, as trustee (the “Indenture”); and


     C.     In consideration of the premises and the mutual
representations and
covenants hereinafter set forth, the parties hereto agree as follows:


ARTICLE I



PURCHASE AND SALE OF CAPITAL SECURITIES



     1.1.      Upon the execution of this Agreement, the Purchaser hereby
agrees to
purchase from the Trust [           ] Capital Securities at a price equal to
$1,000.00 per Capital Security (the “Purchase Price”) and the Trust agrees to
sell such Capital Securities to the Purchaser for said Purchase Price. The
rights and preferences of the Capital Securities are set forth in the
Declaration. The Purchase Price is payable in immediately available funds on
March 26, 2003, or such other business day as may be designated by the
Purchaser, but in no event later than March 31, 2003 (the “Closing Date”). The
Offerors shall provide the Purchaser wire transfer instructions no later than 1
day following the date hereof.


A-1






 


     1.2.      The Placement Agreement, dated March 24, 2003 (the
“Placement
Agreement”), among the Offerors and the Placement Agents identified therein
(the “Placement Agents”) includes certain representations and warranties,
covenants and conditions to closing and certain other matters governing the
Offering. The Placement Agreement is hereby incorporated by reference into
this Agreement and the Purchaser shall be entitled to each of the benefits of
the Placement Agents and the Purchaser under the Placement Agreement and shall
be entitled to enforce the obligations of the Offerors under such Placement
Agreement as fully as if the Purchaser were a party to such Placement
Agreement.


     1.3.      Purchaser hereby grants to the Placement Agents an
irrevocable option
(the “Call Option”) to purchase, or arrange for the purchase of, the Capital
Securities in whole or in part from time to time, in an amount not to exceed
their stated aggregate liquidation amount of $[           ], plus accrued and
unpaid interest. The Call Option may be exercised by the Placement Agents at
any time and from time to time until March 26, 2004 (the “Expiration Date”). A
Call Option shall be exercised by delivering to Purchaser an exercise notice
substantially in the form of Exhibit A attached hereto, such notice to specify
the date on which the Capital Securities shall be purchased (the “Purchase
Date”) and the amount of the Capital Securities to be purchased. Each such
Call Option notice shall be delivered at least 5 business days prior to the
applicable Purchase Date. Purchaser shall use its best efforts to assist the
Placement Agents in effecting the transfer of the Capital Securities identified
in any Call Option notice, including sending notification or other
documentation to the Institutional Trustee to facilitate the book entry
transfer of such Capital Securities. The Purchaser shall not assign, sell,
convey or otherwise transfer the Capital Securities or any interest therein
until the Expiration Date except pursuant to the exercise of a Call Option.
For purposes of this Section 1.3, “Capital Securities” shall be deemed to
include any securities into which the Capital Securities are converted or for
which the Capital Securities are exchanged or substituted.


ARTICLE II



REPRESENTATIONS AND WARRANTIES OF PURCHASER



     2.1.      The Purchaser understands and acknowledges that none of
Capital
Securities, the Debentures nor the Guarantee have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not
be offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any
other applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.


     2.2.      The Purchaser represents and warrants that, except as
contemplated
under Section 1.3 hereof, it is purchasing the Capital Securities for its own
account, for investment, and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act or
other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to
its ability to resell such Capital Securities pursuant to an effective
registration statement under the Securities Act or under Rule 144A or any other
exemption from registration available under the Securities Act or any other
applicable securities law.


     2.3.      The Purchaser represents and warrants that neither the
Offerors nor
the Placement Agents are acting as a fiduciary or financial or investment
adviser for the Purchaser.


     2.4.      The Purchaser represents and warrants that it is not relying (for
purposes of making any investment decision or otherwise) upon any advice,
counsel or representations (whether written or oral) of the Placement Agents.


A-2






 


     2.5.      The Purchaser represents and warrants that (a) it has
consulted with
its own legal, regulatory, tax, business, investment, financial and accounting
advisers in connection herewith to the extent it has deemed necessary, (b) it
has had a reasonable opportunity to ask questions of and receive answers from
officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Capital
Securities, and any such questions have been answered to its satisfaction, (c)
it has had the opportunity to review all publicly available records and filings
concerning the Offerors and it has carefully reviewed such records and filings
that it considers relevant to making an investment decision, and (d) it has
made its own investment decisions based upon its own judgment, due diligence
and advice from such advisers as it has deemed necessary and not upon any view
expressed by the Offerors or the Placement Agents.


     2.6.      The Purchaser represents and warrants that it is a
“qualified
institutional buyer” as defined under Rule 144A under the Securities Act. If
the Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of Rule
144A under the Securities Act, it owns and invests on a discretionary basis not
less than U.S. $25,000,000.00 in securities of issuers that are not affiliated
with it. The Purchaser is not a participant-directed employee plan, such as a
401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or
(a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph
(a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless
investment decisions with respect to the plan are made solely by the fiduciary,
trustee or sponsor of such plan.


     2.7.      The Purchaser represents and warrants that on each day from
the date
on which it acquires the Capital Securities through and including the date on
which it disposes of its interests in the Capital Securities, either (i) it is
not (a) an “employee benefit plan” (as defined in Section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended (“ERISA”))
which is subject to the provisions of Part 4 of Subtitle B of Title I of ERISA,
or any entity whose underlying assets include the assets of any such plan (an
“ERISA Plan”), (b) any other “plan” (as defined in Section 4975(e)(1) of the
United States Internal Revenue Code of 1986, as amended (the “Code”)) which is
subject to the provisions of Section 4975 of the Code or any entity whose
underlying assets include the assets of any such plan (a “Plan”), (c) an entity
whose underlying assets include the assets of any such ERISA Plan or other Plan
by reason of Department of Labor regulation section 2510.3-101 or otherwise, or
(d) a governmental or church plan that is subject to any federal, state or
local law which is substantially similar to the provisions of Section 406 of
ERISA or Section 4975 of the Code (a “Similar Law”); or (ii) the purchase,
holding and disposition of the Capital Securities by it will satisfy the
requirements for exemptive relief under Prohibited Transaction Class Exemption
(“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar
exemption, or, in the case of a plan subject to a Similar Law, will not result
in a non-exempt violation of such Similar Law.


     2.8.      The Purchaser represents and warrants that it is acquiring the
Capital Securities as principal for its own account for investment and, except
as contemplated under Section 1.3 hereof, not for sale in connection with any
distribution thereof. It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were
not specifically solicited from any person owning a beneficial interest in it
for the purpose of enabling it to purchase any Capital Securities. The
Purchaser is not a (i) partnership, (ii) common trust fund or (iii) special
trust, pension, profit sharing or other retirement trust fund or plan in which
the partners, beneficiaries or participants, as applicable, may designate the
particular investments to be made or the allocation of any investment among
such partners, beneficiaries or participants, and it agrees that it shall not
hold the Capital Securities for the benefit of any other person and shall be
the sole beneficial owner thereof for all purposes and that it shall not sell
participation interests in the Capital Securities or enter into any other
arrangement pursuant to which any other person shall be entitled to a
beneficial interest in the distribution on the Capital Securities. The Capital
Securities purchased directly or indirectly by the Purchaser constitute an
investment of no more than 40% of its assets. The Purchaser understands and
agrees that any purported


A-3






 




transfer of the Capital Securities to a purchaser which would cause the
representations and warranties of this Section 2.8 to be inaccurate shall be
null and void ab initio and the Offerors retain the right to resell any Capital
Securities sold to non-permitted transferees.


     2.9.     The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations
and warranties specified herein, and to consummate the transactions
contemplated herein and it has full right and power to subscribe for Capital
Securities and perform its obligations pursuant to this Agreement.


     2.10.     The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification
or decree of, any governmental body, agency or court having jurisdiction over
the Purchaser, other than those that have been made or obtained, is necessary
or required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.


     2.11.     The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.


     2.12.     The Purchaser understands and acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.


     2.13.     The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.


ARTICLE III



MISCELLANEOUS



     3.1.     Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:



	 	 	 	 	 
	 	 	
To the Offerors:
	 	First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101

Attention: Gary Brown

Fax: 406-255-5288
	 	 	 	 	 
	 	 	
To the Purchaser:
	 	 
	 	 	 	 	

	 	 	 	 	

	 	 	 	 	

	 	 	 	 	

	 	 	 	 	




     Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.


A-4






 


     3.2.     This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.


     3.3.     Upon the execution and delivery of this Agreement by the Purchaser,
this Agreement shall become a binding obligation of the Purchaser with respect
to the purchase of Capital Securities as herein provided.


     3.4.     NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY
OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.


     3.5.     The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this
Agreement.


     3.6.     This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.


     3.7.     In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors’ and the Purchaser’s rights and
privileges shall be enforceable to the fullest extent permitted by law.


Signatures appear on the following page



A-5






 





     IN WITNESS WHEREOF, I have set my hand the day and year first written above.


[PURCHASER]



	 	 	 	 
	By:	 	 
	 
	 	

	 
	Print Name:	 	 
	 	
	 
	
Title:
	 	 	 
	 	
	 





     IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day
and year first written above.



	 	 	 	 	 
	 	 	FIRST INTERSTATE BANCSYSTEM, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
Name:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	FIRST INTERSTATE STATUTORY TRUST I
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
Name:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
Title:
	 	Administrator



A-6






 




EXHIBIT A TO SUBSCRIPTION AGREEMENT



FORM OF OPTION EXERCISE NOTICE



[DATE]












Ladies and Gentlemen:


     The undersigned hereby exercise their option to purchase, or arrange for
the purchase of [           ] of the Capital Securities of First Interstate
Statutory Trust I in accordance with the terms of the Subscription Agreement
dated March 26, 2003 among you, the undersigned, First Interstate BancSystem,
Inc. and First Interstate Statutory Trust I (the “Offerors”), such purchase to
be effective on [           ]. In accordance with Section 7.9 of the Placement
Agreement dated March 24, 2003 between the Offerors and the undersigned (the
“Placement Agreement”), periodic reports shall be delivered to
[           ] on each March 26, June 26, September 26 and December 26
during the term of the Capital Securities, commencing [           ], in the
form attached thereto.


     The Subscription Agreement provides that you will use your best efforts to
assist the undersigned in promptly effecting the transfer of the aforementioned
Capital Securities, including the completion and execution of any notification
necessary to facilitate the book entry transfer of such Capital Securities.


     Capitalized terms used in this notice and not otherwise defined shall have
the meanings ascribed to such terms in the Placement Agreement.


     By copy of this notice, the Institutional Trustee and Registrar are hereby
instructed to notify The Depository Trust Company of the transfer of Capital
Securities to [           ]. The undersigned hereby certify that this notice
has been delivered to the Purchaser and the Company, and U.S. Bank National
Association has no duty or obligation to provide such notice.



	 	 	 	 	 	 
	 	 	FTN FINANCIAL CAPITAL MARKETS
	 	 	 	 	 	 
	 	 	
By:	 	 	 
	 	 	 	 	

	 	 	
Name:	 	 	 
	 	 	 	 	

	 	 	
Title:	 	 	 
	 	 	 	 	

	 	 	 	 	 	 
	 	 	KEEFE, BRUYETTE & WOODS, INC.
	 	 	 	 	 	 
	 	 	
By:	 	 	 
	 	 	 	 	

	 	 	
Print Name:
	 	 	 	 	 	

	 	 	
Title:	 	 	 
	 	 	 	 	





	 	 	 
	cc:	 	
First Interstate BancSystem, Inc.

U.S. Bank National Association

as Escrow Agent, Registrar,

Institutional Trustee and Custodian



A-B-1






 



EXHIBIT B-1



FORM OF COMPANY COUNSEL OPINION



March 26, 2003




	 	 	 
	Preferred Term Securities IX, Ltd.

c/o Maples Finance Limited 

P. O. Box 1093 GT 

Queensgate House

South Church Street 

George Town, Grand Cayman

Cayman Islands 
	 	
FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117


Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019



Ladies and Gentlemen:



     We have acted as counsel to First Interstate BancSystem, Inc. (the
“Company”), a Montana corporation in connection with a certain Placement
Agreement, dated March 17, 2003, (the “Placement Agreement”), between the
Company and First Interstate Statutory Trust I (the “Trust”), on one hand, and
FTN Financial Capital Markets and Keefe, Bruyette & Woods, Inc. (the “Placement
Agents”), on the other hand. Pursuant to the Placement Agreement, and subject
to the terms and conditions stated therein, the Trust will issue and sell to
the purchasers named therein (the “Purchasers”), $40,000,000.00 aggregate
principal amount of Floating Rate Capital Securities (liquidation amount
$1,000.00 per capital security) (the “Capital Securities”).


     Capitalized terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.


     The law covered by the opinions expressed herein is limited to the law of
the United States of America and of the State of Montana.


     We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company’s Articles of Incorporation, as amended, and its By-Laws, as amended;
and (b) such corporate documents, records, information and certificates of the
Company and its Subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in
connection with the above-referenced transaction, of officers and other
representatives of the Company and its Subsidiaries and the Trust.


     As used herein, the phrase “to our knowledge” or “to the best of our
knowledge” or other similar phrase means the actual knowledge of the attorneys
who have had active involvement in the transactions described above or who have
prepared or signed this opinion letter, or who otherwise have devoted
substantial attention to legal matters for the Company.


     Based upon and subject to the foregoing and the further qualifications set
forth below, we are of the opinion as of the date hereof that:


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     1.          The Company is validly existing and in good standing under the laws of
the State of Montana and is duly registered as a savings and loan holding
company under the Home Owners’ Loan Act of 1933, as amended. Each of the
Significant Subsidiaries is validly existing and in good standing under the
laws of its jurisdiction of organization. Each of the Company and the
Significant Subsidiaries has full corporate power and authority to own or lease
its properties and to conduct its business as such business is currently
conducted in all material respects. To the best of our knowledge, all
outstanding shares of capital stock of the Significant Subsidiaries have been
duly authorized and validly issued, and are fully paid and nonassessable except
to the extent such shares may be deemed assessable under 12 U.S.C. Section
1831o or 12 U.S.C. Section 55, and are owned of record and beneficially,
directly or indirectly, by the Company.


     2.          The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The
issuance, sale and delivery of the Debentures by the Company and the issuance,
sale and delivery of the Trust Securities by the Trust do not give rise to any
preemptive or other rights to subscribe for or to purchase any shares of
capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either Company or the Subsidiaries is a party or by which
the Company or the Significant Subsidiaries may be bound.


     3.          The Company has all requisite corporate power to enter into and perform
its obligations under the Placement Agreement and the Subscription Agreement,
and the Placement Agreement and the Subscription Agreement have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy or other laws affecting creditors’
rights generally, and except as the indemnification and contribution provisions
thereof may be limited under applicable laws and certain remedies may not be
available in the case of a non-material breach.


     4.          Each of the Indenture, the Trust Agreement and the Guarantee Agreement
has been duly authorized, executed and delivered by the Company, and is a valid
and legally binding obligation of the Company enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity.


     5.          The Debentures have been duly authorized, executed and delivered by the
Company, are entitled to the benefits of the Indenture and are legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights
and remedies of creditors generally and of general principles of equity.


     6.          To the best of our knowledge, neither the Company, the Trust, nor any
other Subsidiaries of the Company is in breach or violation of, or default
under, with or without notice or lapse of time or both, its Articles of
Incorporation or Charter, By-Laws or other governing documents (including
without limitation, the Trust Agreement). The execution, delivery and
performance of the Placement Agreement and the Operative Documents and the
consummation of the transactions contemplated by the Placement Agreement and
the Operative Documents do not and will not (i) result in the creation or
imposition of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company or its Subsidiaries, or (ii) conflict
with, constitute a material breach or violation of, or constitute a material
default under, with or without notice or lapse of time or both, any of the
terms, provisions or conditions of


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(A)  the Articles of Incorporation or Charter, By-Laws or other governing
documents of the Company or its Subsidiaries, or (B) to the best of our
knowledge, any material contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, franchise, license or any other agreement or
instrument to which the Company or its Subsidiaries is a party or by which any
of them or any of their respective properties may be bound or (C) any order,
decree, judgment, franchise, license, permit, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality, domestic or
foreign, known to us having jurisdiction over the Company or its Subsidiaries
or any of their respective properties which, in the case of each of (i) or (ii)
above, is material to the Company and its Subsidiaries on a consolidated basis.


     7.          Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required
under the laws of the State of Montana in connection with the transactions
contemplated by the Placement Agreement and the Operative Documents in
connection with the offer and sale of the Capital Securities as contemplated by
the Placement Agreement and the Operative Documents.


     8.          To the best of our knowledge (i) no action, suit or proceeding at law
or in equity is pending or threatened to which the Offerors or their
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Offerors or their Subsidiaries
or any of their properties, before or by any court or governmental official,
commission, board or other administrative agency, authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding could reasonably
be expected to have a material adverse effect on the consummation of the
transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Offerors and their Subsidiaries on a
consolidated basis.


     9.          Assuming the truth and accuracy of the representations and warranties
of the Placement Agents in the Placement Agreement and the Purchasers in the
Subscription Agreements, it is not necessary in connection with the offering,
sale and delivery of the Capital Securities, the Debentures and the Guarantee
Agreement (or the Guarantee) to register the same under the Securities Act of
1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.


     10.     Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in the Placement Agreement will be, an “investment
company” or an entity “controlled” by an “investment company,” in each case
within the meaning of the Investment Company Act of 1940, as amended, without
regard to Section 3(c) of such Act.


     The opinion expressed in the first two sentences of numbered paragraph 1
of this Opinion Letter is based solely upon certain certificates and
confirmations issued by the applicable governmental officer or authority with
respect to each of the Company and the Significant Subsidiaries.


     With respect to the foregoing opinions, since no member of this firm is
actively engaged in the practice of law in the States of Connecticut or New
York, we do not express any opinions as to the laws of such states and have (i)
relied, with your approval, upon the opinion of Bingham McCutchen LLP with
respect to matters of Connecticut law and (ii) assumed, with your approval and
without rendering any opinion to such effect, that the laws of the State of New
York, in all respects material to this opinion, are substantively identical to
the laws of the State of Montana, without regard to conflict of law provisions.


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     This opinion is rendered to you solely pursuant to Section 3.1(a) of the
Placement Agreement. As such, it may be relied upon by you only and may not be
used or relied upon by any other person for any purpose whatsoever without our
prior written consent.


Very truly yours,




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EXHIBIT B-2



FORM OF CONNECTICUT COUNSEL OPINION



TO THE PARTIES LISTED

ON SCHEDULE I HERETO


Ladies and Gentlemen:


     We have acted as special counsel in the State of Connecticut (the “State”)
for First Interstate Statutory Trust I (the “Trust”), a Connecticut statutory
trust formed pursuant to the Amended and Restated Declaration of Trust (the
“Trust Agreement”) dated as of the date hereof, among First Interstate
BancSystem, Inc., a Montana corporation (the “Sponsor”), U. S. Bank National
Association, a national banking association (“U. S. Bank”), in its capacity as
Institutional Trustee (the “Institutional Trustee”), and Thomas W. Scott, Lyle
R. Knight and Terrill R. Moore, each, an individual, (each, an “Administrator”)
in connection with the issuance by the Trust to the Holders (as defined in the
Trust Agreement) of its capital securities (the “Capital Securities”) pursuant
to the Placement Agreement dated as of March 17, 2003 (the “Placement
Agreement”), the issuance by the Trust to the Sponsor of its Common Securities,
pursuant to the Trust Agreement and the acquisition by the Trust from the
Sponsor of Debentures, issued pursuant to the Indenture dated as of the date
hereof (the “Indenture”).


     The Institutional Trustee has requested that we deliver this opinion to
you in accordance with Section 3.1(b) of the Placement Agreement. Capitalized
terms not otherwise defined herein shall have the meanings specified in, or
defined by reference in or set forth in the Operative Documents (as defined
below).


     Our representation of the Trust has been as special counsel for the
limited purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied, with your permission, entirely upon (i)
the representations and warranties of the parties set forth in the Operative
Documents and (ii) certificates delivered to us by the management of U. S.
Bank, and have assumed, with your permission, without independent inquiry, the
accuracy of those representations, warranties and certificates.


     We have examined the following documents to which the Trust is a party,
each of which is dated the date hereof, unless otherwise noted:



		
	 	     (i)     the Trust Agreement;
	 
	 	     (ii)    the Placement Agreements;
	 
	 	     (iii)   the Subscription Agreements;
	 
	 	     (iv)    the Certificate of Common Securities;
	 
	 	     (v)     the Certificates of Capital Securities;
	 
	 	     (vi)    the Guarantee Agreement;
	 
	 	     (vii)   the Certificate of Trust filed with
the Secretary of State of the State of Connecticut dated
March 11, 2003; and



B-2-1






 





			
	 	     (viii)	a Certificate of Legal Existence for the Trust
obtained from the Secretary of State of the State of
Connecticut dated March 11, 2003 (the “Certificate of
Legal Existence”).



     The documents referenced in subparagraphs (i) through (vii) above are
hereinafter referred to collectively as the “Operative Documents.”


     We have also examined originals, or copies, certified or otherwise
identified to our satisfaction, of such other corporate and public records and
agreements, instruments, certificates and other documents as we have deemed
necessary or appropriate for the purposes of rendering this opinion. For
purposes of our opinion rendered in paragraph 1 below, with respect to the
legal existence of the Trust, our opinion relies entirely upon and is limited
by the Certificate of Legal Existence, which is attached hereto as Exhibit A.


     We have assumed, with your permission, the genuineness of all signatures
(other than those on behalf of U. S. Bank, the Guarantee Trustee, Indenture
Trustee, Institutional Trustee and the Trust), the conformity of the originals
of all documents reviewed by us as copies, the authenticity and completeness of
all original documents reviewed by us in original or copy form and the legal
competence of each individual executing any document (other than those
individuals executing documents on behalf of U. S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee and the Trust).


     When an opinion set forth below is given to the best of our knowledge, or
to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly and substantively in the
specific transactions to which this opinion relates and without any special or
additional investigation undertaken for the purposes of this opinion except as
indicated herein.


     For the purposes of this opinion we have made such examination of law as
we have deemed necessary. The opinions expressed below are limited solely to
the internal substantive laws of the State (as applied by courts located in the
State without regard to choice of law) and we express no opinion as to the laws
of any other jurisdiction. To the extent to which this opinion deals with
matters governed by or relating to the laws of any other state or jurisdiction,
we have assumed, with your permission, that the Operative Documents are
governed by the internal substantive laws of the State.


     We express no opinion as to (i) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to the obligations of any
applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Trust Agreement with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein
as to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents. No opinion is expressed herein as to the application or effect of
federal securities laws or as to the securities or so-called “Blue Sky” laws of
Connecticut or of any other state or other jurisdiction.


     Our opinion, with your permission, is further subject to the following
exceptions, qualifications and assumptions:



		
	 	     (a)     We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than U. S. Bank, the
Guarantee Trustee, Indenture Trustee, Institutional Trustee and the
Trust, as applicable, at all times relevant thereto, is validly existing
and in good standing under the laws of the jurisdiction in which it is
organized, and is qualified to



B-2-2






 





		
	 	do business and in good standing under the laws of each jurisdiction
where such qualification is required generally or necessary in order for
such party to enforce its rights under such Operative Documents, (ii)
each party to the Operative Documents, at all times relevant thereto, had
and has the full power, authority and legal right under its certificate
of incorporation, partnership agreement, by-laws, and other governing
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may
be (other than U. S. Bank, the Guarantee Trustee, Indenture Trustee,
Institutional Trustee or the Trust) to execute, deliver and to perform
its obligations under, the Operative Documents, and (iii) each party to
the Operative Documents other than U. S. Bank, the Guarantee Trustee,
Indenture Trustee, Institutional Trustee or the Trust has duly executed
and delivered each of such agreements and instruments to which it is a
party and that the execution and delivery of such agreements and
instruments and the transactions contemplated thereby have been duly
authorized by proper corporate or other organizational proceedings as to
each such party.




		
	 	     (b)     We have assumed without any independent investigation (i) that
the Institutional Trustee, the Sponsor and the Administrators have
received the agreed to and stated consideration for the incurrence of the
obligations applicable to it under the Trust Agreement and each of the
other Operative Documents, (ii) that each of the Operative Documents
(other than the Trust Agreement) is a valid, binding and enforceable
obligation of each party thereto other than the Trust, U. S. Bank and the
Institutional Trustee, as applicable; and, for the purposes of this
opinion letter, we herein also assume that each of the Operative
Documents (other than the Trust Agreement) constitutes a valid, binding
and enforceable obligation of U. S. Bank, the Guarantee Trustee and the
Indenture Trustee, as applicable under Connecticut and federal law (as to
which such matters we are delivering to you a separate opinion letter on
this date, which is subject to the assumptions, qualifications and
limitations set forth therein).




		
	 	     (c)     The enforcement of any obligations of U. S. Bank, the Sponsor
and the Administrators, as applicable, under the Trust Agreement and the
obligations of the Trust under the other Operative Documents may be
limited by the receivership, conservatorship and supervisory powers of
depository institution regulatory agencies generally, as well as by
bankruptcy, insolvency, reorganization, moratorium, marshaling or other
laws and rules of law affecting the enforcement generally of creditors’
rights and remedies (including such as may deny giving effect to waivers
of debtors’ or guarantors’ rights); and we express no opinion as to the
status under any fraudulent conveyance laws or fraudulent transfer laws
of any of the obligations of U. S. Bank, the Sponsor, the Administrators
or the Trust under any of the Operative Documents.




		
	 	     (d)     We express no opinion as to the enforceability of any particular
provision of the Trust Agreement or the other Operative Documents
relating to remedies after default.




		
	 	     (e)     We express no opinion as the availability of any specific or
equitable relief of any kind.




		
	 	     (f)     The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).




		
	 	     (g)     We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by
operation of law, (iii) waivers of any



B-2-3






 







		
	 	applicable defenses, setoffs, recoupments, or counterclaims, (iv)
waivers or variations of provisions which are not capable of waiver or
variation under Sections 1-102(3), 9-501(3) or other provisions of the
Uniform Commercial Code (“UCC”) of the State, (v) the grant of powers of
attorney to any person or entity, or (vi) exculpation or exoneration
clauses, indemnity clauses, and clauses relating to releases or waivers
of unmatured claims or rights.




		
	 	     (h)     We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter,
and we assume no responsibility to inform you of additional or changed
facts, or changes in law, of which we may become aware.
	 
	 	     (i)     We express no opinion as to any requirement that any party to
the Operative Documents (or any other persons or entities purportedly
entitled to the benefits thereof) qualify or register to do business in
any jurisdiction in order to be able to enforce its rights thereunder or
obtain the benefits thereof.



     Based upon the foregoing and subject to the limitations and qualifications
set forth herein, we are of the opinion that:


     1.     The Trust has been duly formed and is validly existing as a statutory
trust under the Connecticut Statutory Trust Act, Chapter 615 of Title 34 of the
Connecticut General Statutes, Section 500, et seq. (the “Act”).


     2.     The Trust Agreement constitutes a valid and binding obligation of U. S.
Bank and the Institutional Trustee enforceable against U. S. Bank and the
Institutional Trustee in accordance with the terms thereof.


     3.     The Trust Agreement constitutes a valid and binding obligation of the
Sponsor and the Administrators, enforceable against the Sponsor and the
Administrators in accordance with its terms.


     4.     The Trust has the requisite trust power and authority to (a) execute
and deliver, and to perform its obligations under, the Operative Documents, and
(b) perform its obligations under such Operative Documents.


     5.     Each of the Operative Documents to which the Trust is a party
constitutes a valid and binding obligation of the Trust, enforceable against
the Trust in accordance with the terms thereof.


     6.     The Capital Securities have been duly authorized by the Trust under the
Trust Agreement, and the Capital Securities, when duly executed and delivered
to the Holders in accordance with the Trust Agreement, the Placement Agreement
and the Subscription Agreement, will be validly issued, fully paid and
nonassessable and will evidence undivided beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust Agreement.


     7.     The Common Securities have been duly authorized by the Trust Agreement,
and the Common Securities, when duly executed and delivered to the Company in
accordance with the Trust Agreement, the Placement Agreements and the
Subscription Agreements and delivered and paid for in accordance therewith,
will be validly issued, fully paid and nonassessable (subject to Section 9.1(b)
of the Trust Agreement which provides that the Holders of Common Securities are
liable for debts and obligations of the Trust to the extent such debts and
obligations are not satisfied out of the Trust’s assets) and will evidence
undivided beneficial interests in the assets of the Trust and will be entitled
to the benefits of the Trust Agreement.


B-2-4






 


     8.     Neither the execution, delivery or performance by the Trust of the
Operative Documents, the consummation by the Trust of the transactions
contemplated thereby, nor compliance by the Trust with any of the terms and
provisions thereof, (a) violates the Trust Agreement, or, to the best of our
knowledge, contravenes or will contravene any provision of, or constitutes a
default under, or results in any breach of, or results in the creation of any
lien (other than as permitted under the Operative Documents) upon property of
the Trust under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, license or other
agreement or instrument, in each case known to us, to which it is a party or by
which it is bound or (b) violates any applicable Connecticut law governing the
Trust, or, to the best of our knowledge, any judgment or order of any court or
other tribunal, in each case known to us, applicable to or binding on it.


     9.     No consent, approval, order or authorization of, giving of notice to,
or registration with, or taking of any other action in respect of, any
Connecticut governmental authority regulating the Trust is required for the
execution, delivery, validity or performance of, or the carrying out by, the
Trust of any of the transactions contemplated by the Operative Documents, other
than any such consent, approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken.


     10.     The Holders, as the beneficial holders of the Capital Securities, will
be entitled to the same limitation of personal liability extended to
shareholders of domestic corporations organized under the laws of the State.


     11.     Under the Trust Agreement, the issuance of the Capital Securities is
not subject to preemptive rights.


     12.     Assuming that the Trust will not be taxable as a corporation for
federal income tax purposes, but rather will be classified for such purposes as
a grantor trust, the Trust will not be subject to any tax, fee or other
government charge under the laws of the State of Connecticut or any political
subdivision thereof.


     This opinion is rendered solely for the benefit of those institutions
listed on Schedule I hereto and their successors and assigns in connection with
the transactions contemplated by the Operative Documents and may not be used or
relied upon by any other person or for any other purpose.



	 	 	 
	 	 	
Very truly yours,

	 	 	 
	 	 	
BINGHAM MCCUTCHEN LLP



B-2-5






 



SCHEDULE I



U. S. Bank National Association



FTN Financial Capital Markets


Keefe, Bruyette & Woods, Inc.


Lewis, Rice & Fingersh, L.C.


First Interstate BancSystem, Inc.


Christian, Samson, Jones & Chisholm, PLLC


B-2-6






 





EXHIBIT A TO EXHIBIT B-2



CERTIFICATE OF LEGAL EXISTENCE



Included as Exhibit 4.8 to Registrant’s Form 10-Q for the quarter ended June
30, 2003.


B-2-7






 


EXHIBIT B-3



FORM OF TAX COUNSEL OPINION



First Interstate BancSystem, Inc.

c/o First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101



First Interstate Statutory Trust I

401 North 31st Street, 13th Floor

Billings, Montana 59101


FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117


Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019


Ladies and Gentlemen:


     We have acted as special tax counsel to First Interstate BancSystem, Inc.
and to First Interstate Statutory Trust I in connection with the proposed
issuance of (i) Floating Rate Capital Securities, liquidation amount $1,000.00
per Capital Security (the “Capital Securities”) of First Interstate Statutory
Trust I, a statutory business trust created under the laws of Connecticut (the
“Trust”), pursuant to the terms of the Amended and Restated Declaration of
Trust dated as of the date hereof by First Interstate BancSystem, Inc., a
Montana corporation (the “Company”), U. S. Bank National Association, as
institutional trustee, and Thomas W. Scott, Lyle R. Knight and Terrill R.
Moore, as Administrators (the “Trust Agreement”), (ii) Junior Subordinated
Deferrable Interest Debentures (the “Corresponding Debentures”) of the Company
issued pursuant to the terms of an Indenture dated as of the date hereof from
the Company to U. S. Bank National Association, as trustee (the “Indenture”),
which Debentures are to be sold by the Company to the Trust, and (iii) the
Guarantee Agreement of the Company with respect to the Capital Securities dated
as of the date hereof (the “Guarantee”) between the Company and U. S. Bank
National Association, as guarantee trustee.


     We have examined originals or copies, certified or otherwise identified to
our satisfaction, of documents, corporate records and other instruments as we
have deemed necessary or appropriate for purposes of this opinion including (i)
the Indenture, (ii) the form of the Corresponding Debentures attached as an
exhibit to the Indenture, (iii) the Trust Agreement, (iv) the Guarantee, and
(v) the form of Capital Securities Certificate attached as an exhibit to the
Trust Agreement (collectively the “Documents”). Furthermore, we have relied
upon certain representations made by the Company and upon the opinion of
Bingham McCutchen LLP as to certain matters of Connecticut law. In such
examination, we have assumed the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, the authenticity of the originals of
such latter documents, the genuineness of all signatures and the correctness of
all representations made therein. We have further assumed that there are no
agreements or understandings contemplated therein other than those contained in
the Documents.


B-3-1






 


     Based upon the foregoing, and assuming (i) that the final Documents will
be substantially identical to the forms examined, (ii) full compliance with all
the terms of the final Documents, and (iii) the accuracy of representations
made by the Company and delivered to us, we are of the opinion that:



	 	(a)	 	The Corresponding Debentures will be classified as
indebtedness of the Company for U.S. federal income tax purposes.
	 
	 	(b)	 	The Trust will be characterized as a grantor trust and not as
an association taxable as a corporation for U.S. federal income tax
purposes.



     The opinions expressed above are based on existing provisions of the
Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury
regulations, published interpretations by the Internal Revenue Service of the
Code and such Treasury regulations, and existing court decisions, any of which
could be changed at any time. Any such changes may or may not be retroactively
applied, and may result in federal income tax consequences that differ from
those reflected in the opinions set forth above. We note that there is no
authority directly on point dealing with securities such as the Capital
Securities or with transactions of the type described herein, and that the
authorities on which this opinion is based are subject to various
interpretations. Further, you should be aware that opinions of counsel have no
official status and are not binding on the Internal Revenue Service or the
courts. Accordingly, we can provide no assurance that the interpretation of
the federal income tax laws set forth in our opinions will prevail if
challenged by the IRS in an administrative or judicial proceeding.


     We have also assumed that each transaction contemplated herein will be
carried out strictly in accordance with the Documents. Any variance in the
facts may result in Federal income tax consequences that differ from those
reflected in the opinions set forth above.


     Additionally, we undertake no obligation to update this opinion in the
event there is either a change in the legal authorities, in the facts
(including the taking of any action by any party to any of the transactions
described in the Documents relating to such transactions) or in the Documents
on which this opinion is based, or an inaccuracy in any of the representations
upon which we have relied in rendering this opinion.


     We express no opinion with respect to any matter not specifically
addressed by the foregoing opinions, including state or local tax consequences,
or any federal, state, or local issue not specifically referred to and
discussed above including, without limitation, the effect on the matters
covered by this opinion of the laws of any other jurisdiction.


     This letter is delivered for the benefit of the specified addressees and
may not be relied upon by any other person. No portion of this letter may be
quoted or otherwise referred to in any document or delivered to any other
person or entity without the express written consent of Lewis, Rice & Fingersh,
L.C. This opinion letter is rendered as of the date set forth above.



	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	
LEWIS, RICE & FINGERSH, L.C.



B-3-2






 



Lewis, Rice & Fingersh, L.C.

500 N. Broadway, Suite 2000

St. Louis, Missouri 63102

Attention: Lawrence H. Weltman, Esq.




	 	 	 
	 	Re:	
Representations Concerning the Issuance of Floating Rate
Junior Subordinated Deferrable Interest Debentures (the
“Debentures”) to First Interstate Statutory Trust I (the “Trust”)
and Sale of Trust Securities (the “Trust Securities”) of the Trust



Ladies and Gentlemen:



     In accordance with your request, First Interstate BancSystem, Inc. (the
“Company”) hereby makes the following representations in connection with the
preparation of your opinion letter as to the United States federal income tax
consequences of the issuance by the Company of the Debentures to the Trust and
the sale of the Trust Securities.


     Company hereby represents that:


     1.     The sole assets of the Trust will be the Debentures, any interest paid
on the Debentures to the extent not distributed, proceeds of the Debentures, or
any of the foregoing.


     2.     The Company intends to use the net proceeds from the sale of the
Debentures for general corporate purposes.


     3.     The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Debentures, and (iii)
engaging only in activities necessary or incidental thereto.


     4.     The Trust was formed to facilitate direct investment in the assets of
the Trust, and the existence of multiple classes of ownership is incidental to
that purpose. There is no intent to provide holders of such interests in the
Trust with diverse interests in the assets of the Trust.


     5.     The Company intends to create a debtor-creditor relationship between
the Company, as debtor, and the Trust, as a creditor, upon the issuance and
sale of the Debentures to the Trust by the Company. The Company will (i) record
and at all times continue to reflect the Debentures as indebtedness on its
separate books and records for financial accounting purposes, and (ii) treat
the Debentures as indebtedness for all United States tax purposes.


     6.     During each year, the Trust’s income will consist solely of payments
made by the Company with respect to the Debentures. Such payments will not be
derived from the active conduct of a financial business by the Trust. Both the
Company’s obligation to make such payments and the measurement of the amounts
payable by the Company are defined by the terms of the Debentures. Neither the
Company’s obligation to make such payments nor the measurement of the amounts
payable by the Company is dependent on income or profits of Company or any
affiliate of the Company.


     7.     The Company expects that it will be able to make, and will make, timely
payment of amounts identified by the Debentures as principal and interest in
accordance with the terms of the Debentures with available capital or
accumulated earnings.


B-3-3






 


     8.     The Company presently has no intention to defer interest payments on
the Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company) or make any payment of principal of or interest or premium, if
any, on or repay, repurchase, or redeem any debt securities of the Company or
any affiliate of the Company that rank pari passu in all respects with or
junior in interest to the Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered into in
connection with the issuance of the Debentures.


     9.     Immediately after the issuance of the Debentures, the debt-to-equity
ratio of the Company (as determined for financial accounting purposes, but
excluding deposit liabilities from the Company’s debt) will be within standard
depository institution industry norms and, in any event, will be no higher than
four to one (4 : 1).


     10.     To the best of our knowledge, the Company is currently in compliance
with all federal, state, and local capital requirements, except to the extent
that failure to comply with any such requirements would not have a material
adverse effect on the Company and its affiliates.


     11.     The Company will not issue any class of common stock or preferred
stock senior to the Debentures during their term.


     12.     The Internal Revenue Service has not challenged the interest deduction
on any class of the Company’s subordinated debt in the last ten (10) years on
the basis that such debt constitutes equity for federal income tax purposes.


     The above representations are accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless
you are otherwise notified by us in writing. The undersigned understands that
you will rely on the foregoing in connection with rendering certain legal
opinions, and possesses the authority to make the representations set forth in
this letter on behalf of the Company.



	 	 
	 	Very truly yours,

	 	FIRST INTERSTATE BANCSYSTEM, INC




	 	 	 
	Date: March 24, 2003	By:    	
 
	 	 	



	 	Title: 	 
	 	 	





B-3-4






 



EXHIBIT C



SIGNIFICANT SUBSIDIARIES



First Interstate Bank

FIB Capital Trust

i_Tech Corporation



C-1






 





EXHIBIT D



FORM OF CUSTODIAN AGREEMENT



     This Custodian Agreement (this “Agreement”) is made and entered
into as of March 26, 2003 by and among FTN Financial Capital Markets, a
division of First Tennessee Bank, N.A., Keefe, Bruyette & Woods, Inc., a
New York corporation (collectively, the “Placement Agents”), First
Interstate BancSystem, Inc., a Montana corporation (the “Company” and,
together with the Placement Agents, the “Interested Parties”) and U.S.
Bank National Association, a national banking association (the
“Custodian”).


RECITALS



     A.     First Tennessee Bank National Association and Zions First
National Bank are purchasing from First Interstate Statutory Trust I, a
Connecticut statutory trust (the “Trust”), $               aggregate
liquidation amount of the Trust’s Floating Rate Capital Securities (the
“Capital Securities”).


     B.     The Purchasers intend to grant options (the “Call Options”) to the
Placement Agents to purchase the Capital Securities for the period
specified in such Purchaser’s Subscription Agreement in an amount not to
exceed the Capital Securities’ aggregate liquidation amount.


     C.     The Interested Parties intend to provide for the custody of
certain securities to be used to replace the Capital Securities upon
transfer of the Capital Securities on the terms set forth herein.


     D.     The Custodian is willing to hold and administer such securities
and to distribute the securities held by it in accordance with the
agreement of the Interested Parties and/or arbitral or judicial orders and
decrees as set forth in this Agreement.


     NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants herein contained and other good and valuable consideration (the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties by their execution hereof), the parties agree as follows:


          1.     Delivery of Securities. On or before the date hereof, the
Company shall deliver to the Custodian ten signed, unauthenticated and
undated Capital Securities certificates with no holder designated (the
“Replacement Securities”). The Custodian shall have no responsibility
for the genuineness, validity, market value, title or sufficiency for
any intended purpose of the Replacement Securities.



          2.     Timing of Release from Custody. Upon receipt of a copy of an
option exercise notice to be delivered in connection with the Placement
Agents’ exercise of a Call Option, on the effective date set forth in
such option exercise notice, the Custodian shall deliver the Replacement
Securities certificate(s) in the amount designated in the option
exercise notice to the Trustee for the purpose of completing and
authenticating the Replacement Securities certificate(s) in accordance
with the terms of the Declaration.



          Upon expiration of the Call Options, this Agreement shall terminate
and the Custodian and the Interested Parties shall be released from all
obligations hereunder.



D-1






 





          3.     Concerning the Custodian.



               (a)     Each Interested Party acknowledges and agrees that the
Custodian (i) shall not be responsible for any of the agreements
referred to or described herein (including without limitation the
Declaration), or for determining or compelling compliance therewith, and
shall not otherwise be bound thereby, (ii) shall be obligated only for
the performance of such duties as are expressly and specifically set
forth in this Agreement on its part to be performed, each of which are
ministerial (and shall not be construed to be fiduciary) in nature, and
no implied duties or obligations of any kind shall be read into this
Agreement against or on the part of the Custodian, (iii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve or cause it to incur any expense or liability unless it
shall have been furnished with acceptable indemnification, (iv) may rely
on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, certificate, request
or other document furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper person, and
shall have no responsibility for determining the accuracy thereof, and
(v) may consult counsel satisfactory to it, including in-house counsel,
and the opinion or advice of such counsel in any instance shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or advice of such counsel.



               (b)     The Custodian shall not be liable to anyone for any action taken
or omitted to be taken by it hereunder except in the case of the
Custodian’s negligence or willful misconduct in breach of the terms of
this Agreement. In no event shall the Custodian be liable for indirect,
punitive, special or consequential damage or loss (including but not
limited to lost profits) whatsoever, even if the Custodian has been
informed of the likelihood of such loss or damage and regardless of the
form of action.



               (c)     The Custodian shall have no more or less responsibility or
liability on account of any action or omission of any book-entry
depository, securities intermediary or other subcustodian employed by the
Custodian than any such book-entry depository, securities intermediary or
other subcustodian has to the Custodian, except to the extent that such
action or omission of any book-entry depository, securities intermediary
or other subcustodian was caused by the Custodian’s own negligence, bad
faith or willful misconduct in breach of this Agreement.



               (d)     The recitals contained herein shall be taken as the statements
of the Company, and the Custodian assumes no responsibility for the
correctness of the same. The Custodian makes no representations as to
the validity or sufficiency of this Agreement or the Capital Securities.
The Custodian shall not be accountable for the use or application by the
Company of any Capital Securities or the proceeds of any Capital
Securities.



          4.     Compensation, Expense Reimbursement and Indemnification.



               (a)     The Custodian hereby waives its customary fees for services
rendered hereunder.



               (b)     Each of the Interested Parties agree, jointly and severally, to
reimburse the Custodian on demand for all costs and expenses incurred in
connection with the administration of this Agreement or the performance
or observance of its duties hereunder which are in excess of its
customary compensation for normal services hereunder, including without
limitation, payment of any legal fees and expenses incurred by the
Custodian in connection with resolution of any claim by any party
hereunder.



               (c)     Each of the Interested Parties covenant and agree, jointly and
severally, to indemnify the Custodian (and its directors, officers and
employees) and hold it (and such directors,



D-2






 





officers and employees) harmless from and against any loss, liability,
damage, cost and expense of any nature incurred by the Custodian arising
out of or in connection with this Agreement or with the administration
of its duties hereunder, including but not limited to attorney’s fees
and other costs and expenses of defending or preparing to defend against
any claim of liability unless and except to the extent such loss,
liability, damage, cost and expense shall be caused by the Custodian’s
negligence, bad faith, or willful misconduct. The provisions in this
paragraph 4 shall survive the expiration of this Agreement.


          5.     Resignation. The Custodian may at any time resign as Custodian
hereunder by giving thirty (30) days’ prior written notice of
resignation to each of the Interested Parties. Prior to the effective
date of the resignation as specified in such notice, the Interested
Parties will issue to the Custodian a written instruction authorizing
redelivery of the Replacement Securities to a bank or trust company that
they select as successor to the Custodian hereunder. If, however, the
Interested Parties shall fail to name such a successor custodian within
twenty days after the notice of resignation from the Custodian, the
Placement Agent shall be entitled to name such successor custodian. If
no successor custodian is named by the Interested Parties or the
Placement Agent, the Custodian may apply to a court of competent
jurisdiction for appointment of a successor custodian.



          6.     Dispute Resolution. It is understood and agreed that should any
dispute arise with respect to the delivery, ownership, right of
possession, and/or disposition of the Replacement Securities, or should
any claim be made upon the Custodian or the Replacement Securities by a
third party, the Custodian upon receipt of notice of such dispute or
claim is authorized and shall be entitled (at its sole option and
election) to retain in its possession without liability to anyone, all
or any of said Replacement Securities until such dispute shall have been
settled either by the mutual written agreement of the parties involved
or by a final order, decree or judgment of a court in the United States
of America, the time for perfection of an appeal of such order, decree
or judgment having expired. The Custodian may, but shall be under no
duty whatsoever to, institute or defend any legal proceedings which
relate to the Replacement Securities.



          7.     Consent to Jurisdiction and Service. Each of the Interested
Parties hereby absolutely and irrevocably consent and submit to the
jurisdiction of the courts in the Commonwealth of Massachusetts and of
any Federal court located in said Commonwealth in connection with any
actions or proceedings brought against any of the Interested Parties (or
each of them) by the Custodian arising out of or relating to this
Agreement. In any such action or proceeding, the Interested Parties
each hereby absolutely and irrevocably (i) waives any objection to
jurisdiction or venue, (ii) waives personal service of any summons,
complaint, declaration or other process, and (iii) agrees that the
service thereof may be made by certified or registered first-class mail
directed to such party, as the case may be, at their respective
addresses in accordance with paragraph 9 hereof.



          8.     Force Majeure. The Custodian shall not be responsible for
delays or failures in performance resulting from acts beyond its
control. Such acts shall include but not be limited to acts of God,
strikes, lockouts, riots, acts of war, epidemics, governmental
regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other
disasters.



          9.     Notices. Any notice permitted or required hereunder shall be in
writing, and shall be sent by personal delivery, overnight delivery by a
recognized courier or delivery service, mailed by registered or
certified mail, return receipt requested, postage prepaid, or by
confirmed facsimile accompanied by mailing of the original on the same
day by first class mail, postage prepaid, in each case the parties at
their address set forth below (or to such other address as any such
party may hereafter designate by written notice to the other parties).



D-3






 






	 	 	 
	 	 	
If to the Placement Agents:

	 	 	 
	 	 	
FTN Financial Capital Markets

845 Crossover Lane, Suite 150

Memphis, Tennessee 38117

Attention: James D. Wingett

	 	 	 
	 	 	
Keefe, Bruyette & Woods, Inc.

787 7th Avenue

4th Floor

New York, New York 10019

	 	 	 
	 	 	
If to the Company:

	 	 	 
	 	 	
First Interstate BancSystem, Inc.

401 North 31st Street, 13th Floor

Billings, Montana 59101

Attention: Gary Brown

Fax: 406-255-5288

	 	 	 
	 	 	
If to the Custodian:

	 	 	 
	 	 	
U.S. Bank National Association

1 Federal Street – 3rd Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services Division

Attention: Paul D. Allen

Fax: 617-603-6665




          10.     Miscellaneous.



               (a)     Binding Effect. This Agreement shall be binding upon the
respective parties hereto and their heirs, executors, successors and
assigns.



               (b)     Modifications. This Agreement may not be altered or modified
without the express written consent of the parties hereto. No course of
conduct shall constitute a waiver of any of the terms and conditions of
this Agreement, unless such waiver is specified in writing, and then
only to the extent so specified. A waiver of any of the terms and
conditions of this Agreement on one occasion shall not constitute a
waiver of the other terms of this Agreement, or of such terms and
conditions on any other occasion.



               (c)     Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts.



               (d)     Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, and (b) certificates
and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The
parties agree that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not



D-4






 





such reproduction was made by a party in the regular course of business,
and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.


               (e)     Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day first above written.



	 	 	 
	FTN FINANCIAL CAPITAL MARKETS
	 	 
	By:
	 
	 	

	Print Name:	 
	 	

	
Title:	 
	 	

	 	 
	KEEFE, BRUYETTE & WOODS, INC
	 		 
	By:
	 
	 	

	Print Name:
	 
	 	

	Title:	 
	 	

	 
	U.S. BANK NATIONAL ASSOCIATION
	 		 
	By:
	 
	 	

	Print Name:
	 
	 	

	
Title:	 
	 	

	 
	FIRST INTERSTATE BANCSYSTEM, INC
	 		 
	By:
	 
	 	

	Print Name:
	 
	 	

	Title:	 
	 	




D-5






 



EXHIBIT E



FORM OF QUARTERLY REPORT



Preferred Term Securities IX, Ltd.

c/o The Bank of New York

Collateralized Debt Obligation Group

101 Barclay Street, 8E

New York, New York 10286

Attention: Franco B. Talavera

CDO Relationship Manager



BANK HOLDING COMPANY

As of [March 31, June 30, September 30 or December 31], 20__



	 	 	 	 	 
	Tier 1 to Risk Weighted Assets
	 	 	 	%
	 	 	 	
	 
	Ratio of Double Leverage
	 	 	 	%
	 	 	 	
	 
	Non-Performing Assets to Loans and OREO
	 	 	 	%
	 	 	 	
	 
	Ratio of Reserves to Non-Performing Loans
	 	 	 	%
	 	 	 	
	 
	Ratio of Net Charge-Offs to Loans
	 	 	 	%
	 	 	 	
	 
	Return on Average Assets (annualized)**
	 	 	 	%
	 	 	 	
	 
	Net Interest Margin (annualized)**
	 	 	 	%
	 	 	 	
	 
	Efficiency Ratio
	 	 	 	%
	 	 	 	
	 
	Ratio of Loans to Assets
	 	 	 	%
	 	 	 	
	 
	Ratio of Loans to Deposits
	 	 	 	%
	 	 	 	
	 
	Total Assets
	 	$	 	 
	 	 	 	
	 
	Year to Date Income
	 	$	 	 
	 	 	 	
	 








	*	 	A table describing the quarterly report calculation procedures is provided on
page D-2
	 
	**	 	To annualize Return on Average Assets and Net Interest Margin do the
following:
	 
	1th 	 	Quarter-multiply income statement item by 4, then divide by balance sheet

item(s)
	 
	2th 	 	Quarter-multiply income statement item by 2,then divide by balance sheet
item(s)
	 
	3th 	 	Quarter-divide income statement item by 3, then multiply by 4, then divide
by balance sheet item(s)
	 
	4th	 	 Quarter-should already be an annual number
	 


NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS

E-1






 



Financial Definitions




	 	 	 	 	 
	 	 	Corresponding FRY-9C or LP Line Items	 	 
	Report Item	 	with Line Item corresponding Schedules	 	Description of Calculation
	
	 	
	 	

	“Tier 1 Capital” to
Risk Weighted

Assets	 	
BHCK7206

Schedule HC-R
	 	Tier 1 Risk Ratio: Core Capital

(Tier 1)/ Risk-Adjusted Assets
	 	 	 	 	 
	 Ratio of Double Leverage	 	
(BHCP0365)/(BHCP3210)

Schedule PC in the LP
	 	Total equity investments in

subsidiaries divided by the total

equity capital. This field is

calculated at the parent company

level. “Subsidiaries” include bank,

bank holding company, and nonbank

subsidiaries.
	 	 	 	 	 
	Non-Performing
Assets to Loans and OREO	 	
(BHCK5525-BHCK3506+BHCK5526-BHCK
3507+BHCK2744)/(BHCK2122+BHCK274
4) Schedules HC-C, HC-M & HC-N
	 	Total Nonperforming Assets

(NPLs+Foreclosed Real Estate+Other

Nonaccrual & Repossessed Assets)/

Total Loans + Foreclosed Real Estate
	 	 	 	 	 
	Ratio of Reserves

to Non-Performing

Loans	 	
(BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)

Schedules HC & HC-N
	 	Total Loan Loss and Allocated

Transfer Risk Reserves/ Total

Nonperforming Loans (Nonaccrual +

Restructured)
	 	 	 	 	 
	Ratio of Net

Charge-Offs to

Loans	 	
(BHCK4635-BHCK4605)/(BHCK3516)

Schedules HI-B & HC-K
	 	Net charge offs for the period as a

percentage of average loans.
	 	 	 	 	 
	Return on Assets	 	
(BHCK4340/BHCK3368)

Schedules HI & HC-K
	 	Net Income as a percentage of Assets.
	 	 	 	 	 
	Net Interest Margin	 	
(BHCK4519)/(BHCK3515+BHCK3365+BHCK
3516+BHCK3401+BHCKB985)

Schedules HI Memorandum and HC-K
	 	(Net Interest Income Fully Taxable

Equivalent, if available / Average

Earning Assets)
	 	 	 	 	 
	Efficiency Ratio	 	
(BHCK4093)/(BHCK4519+BHCK4079)

Schedule HI
	 	(Noninterest Expense)/ (Net

Interest Income Fully Taxable

Equivalent, if available, plus

Noninterest Income)
	 	 	 	 	 
	Ratio of Loans to Assets	 	
(BHCKB528+BHCK5369)/BHCK2170)

Schedule HC
	 	Total Loans & Leases (Net of

Unearned Income & Gross of Reserve)/Total Assets
	 	 	 	 	 
	Ratio of Loans to Deposits	 	
(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)

Schedule HC
	 	Total Loans & Leases (Net of

Unearned Income & Gross of Reserve)/Total Deposits (Includes
Domestic and Foreign Deposits)
	 	 	 	 	 
	Total Assets	 	
(BHCK2170)

Schedule HC
	 	The sum of total assets. Includes

cash and balances due from

depository institutions; securities;

federal funds sold and securities

purchased under agreements to

resell; loans and lease financing

receivables; trading assets;

premises and fixed assets; other

real estate owned; investments in

unconsolidated subsidiaries and

associated companies; customer’s

liability on acceptances

outstanding; intangible assets; and

other assets.
	 	 	 	 	 
	Net Income	 	
(BHCK4300)

Schedule HI
	 	The sum of income (loss) before

extraordinary items and other

adjustments and extraordinary items;

and other adjustments, net of income

taxes.



E-2