SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8186
Inter-Regional Financial Group, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction (IRS Employer
of incorporation of organization) Identification
Number)
Dain Bosworth Plaza, 60 South Sixth Street
Minneapolis, Minnesota 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 371-7750
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of July 31, 1995, the Company had 8,097,515 shares of common
stock outstanding.
<PAGE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995
INDEX
Page
I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
II. OTHER INFORMATION:
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index of Exhibits
Exhibits
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
June 30, December 31,
1995 1994
------------------------
(Unaudited)
<S> <C> <C>
Assets:
Cash and cash equivalents $16,008 $22,764
Cash and short-term investments
segregated for regulatory purposes 421,000 338,000
Receivable from customers 637,080 710,647
Receivable from brokers and dealers 181,548 207,512
Securities purchased under agreements
to resell 263,529 198,561
Trading securities owned, at market 406,205 319,222
Equipment, leasehold improvements and
buildings, net 31,829 30,082
Other receivables 68,031 78,787
Deferred income taxes 29,001 29,001
Other assets 13,657 18,035
--------- ---------
$2,067,888 $1,952,611
========= =========
Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings $140,157 $150,193
Drafts payable 43,594 35,021
Payable to customers 882,073 868,541
Payable to brokers and dealers 203,792 212,954
Securities sold under repurchase
agreements 232,234 173,972
Trading securities sold, but not yet
purchased, at market 175,861 116,883
Accrued compensation 60,369 68,755
Other accrued expenses and accounts
payable 72,124 77,344
Accrued income taxes 6,828 6,505
Subordinated and other debt 43,983 47,023
--------- ---------
1,861,015 1,757,191
--------- ---------
Shareholders' equity:
Common stock 1,012 1,005
Additional paid-in capital 74,539 73,924
Retained earnings 131,322 120,491
--------- ---------
206,873 195,420
--------- ---------
$2,067,888 $1,952,611
========= =========
</TABLE>
<PAGE>
<TABLE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share amounts)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Principal transactions $46,339 $31,056 $90,476 $66,845
Commissions 40,334 31,198 73,673 70,326
Investment banking and
underwriting 18,988 24,368 36,876 52,246
Interest 27,110 17,011 52,409 32,266
Asset management 6,384 4,427 12,099 8,504
Correspondent clearing 2,944 2,763 5,523 5,944
Other 5,115 6,775 10,186 12,538
------- ------- ------- -------
Total revenues 147,214 117,598 281,242 248,669
Interest expense (16,841) (8,141) (32,028) 15,533)
------- ------- ------- -------
Net revenues 130,373 109,457 249,214 233,136
------- ------- ------- -------
Expenses excluding interest:
Compensation and benefits 83,490 69,344 161,386 148,068
Communications 9,860 9,136 19,912 17,686
Occupancy and equipment
rental 8,174 6,774 16,155 13,472
Travel and promotional 4,955 4,850 9,298 9,076
Floor brokerage and clearing
fees 2,550 2,452 5,021 4,697
Other 7,797 7,254 15,169 14,430
------- ------- ------- -------
Total expenses excluding
interest 116,826 99,810 226,941 207,429
Earnings:
Earnings before income
taxes 13,547 9,647 22,273 25,707
Income tax expense (4,911) (3,733) (8,074)
(9,622)
------- ------ ------- -------
Net earnings $8,636 $5,914 $14,199 $16,085
======= ====== ======= =======
Earnings per common and
common equivalent share:
Primary $1.04 $.70 $1.71 $1.90
======= ====== ======= =======
Fully diluted $1.03 $.70 $1.69 $1.90
======= ====== ======= =======
</TABLE>
<PAGE>
<TABLE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<CAPTION>
Six Months Ended June 30,
1995 1994
-------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $14,199 $16,085
Adjustments to reconcile earnings to
cash provided
(used) by operating activities:
Depreciation and amortization 4,395 3,753
Deferred income taxes (1,078) (2,613)
Other non-cash items 4,132 4,093
Cash and short-term investments
segregated for regulatory purposes (83,000) 206,005
Net receivable from/payable to
brokers and dealers 16,802 (17,848)
Securities purchased under
agreements to resell (64,968) (160,974)
Net trading securities owned and
trading securities sold, but not
yet purchased (28,005) 56,704
Short-term borrowings and drafts
payable of securities companies 13,537 (14,209)
Net payable to customers 87,099 (127,685)
Securities sold under repurchase
agreements 58,262 92,550
Accrued compensation (8,386) (32,622)
Other 7,565 (14,235)
------- -------
Cash provided by operating activities 20,554 9,004
------- -------
Cash flows from financing activities:
Proceeds from:
Issuance of common stock 625 387
Subordinated and other debt __ 237
Payments for:
Revolving credit agreement, net (15,000) __
Subordinated and other debt (3,040) (1,168)
Dividends on common stock (2,588) (1,962)
Purchase of Common Stock (783) (2,182)
-------- -------
Cash (used) by financing activities (20,786) (4,688)
-------- -------
Cash flows from investing activities:
Proceeds from investment dividends
and sales 174 641
Payments for equipment, leasehold
improvements and other (6,698) (6,738)
------- -------
Cash (used) for investing activities (6,524) (6,097)
------- -------
Increase/(decrease) in cash and cash
equivalents (6,756) (1,781)
Cash and cash equivalents:
At beginning of period 22,764 14,047
------- -------
At end of period $16,008 $12,266
======= =======
<FN>
Income tax payments totaled $7,697,000 and $187,000 and interest
payments totaled $30,781,000 and $13,984,000 during the six
months ended June 30, 1995 and 1994, respectively.
</TABLE>
<PAGE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Condensed Consolidated Financial Statements
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with the
instructions for Form 10-Q and do not include all the
information and footnotes required by generally accepted
accounting principles for complete financial statements and
should be read in conjunction with the consolidated financial
statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994. In
the opinion of management, all adjustments necessary for a
fair presentation of such interim consolidated financial
statements have been included. All such adjustments are of a
normal recurring nature. The results of operations for the
three-month and six month periods ended June 30, 1995, are not
necessarily indicative of results expected for subsequent
periods.
Certain prior year amounts in the financial statements have
been reclassified to conform to the 1995 presentation.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with Item 7
(Management's Discussion and Analysis) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
Summary
Consolidated net earnings increased $2.7 million and net
revenues increased $20.9 million during the 1995 second quarter
over the same quarter of 1994. The Company's Retail business
lines posted record results during the 1995 second quarter and
the Company's Fixed Income business lines posted results 30
percent higher than the second quarter of 1994. Consolidated net
earnings declined $1.9 million while net revenues increased $16.1
million during the first six months of 1995 versus the same
period of 1994. Earnings comparisons for the 1995 first half
were negatively impacted by the effects of operating expense
increases associated with the significant growth during 1994 in
the number of office locations and investment executives.
Earnings comparisons for the 1995 second quarter were positively
impacted by two primary factors : (1) the relative stability in
interest rates in the United States during the 1995 period versus
1994 (the Federal Reserve Board initiated the first of a series
of interest rate increases during the latter portion of the 1994
first quarter) and (2) the investments that the Company made in
growing its primary businesses during 1994 that enabled the
Company to capitalize on the second quarter 1995 resurgence of
stock and bond markets. Additionally, the industry-wide
transition from a five-day to a three-day settlement period ("T +
3") during June 1995 resulted in the Company recognizing two
additional days of business during the 1995 second quarter.
Management estimates that the T+3 transition had the effect of
increasing net earnings by approximately $700,000, or 8 cents per
share. Finally, net interest income continued to be a strong
contributor to consolidated earnings for the quarter and first
half due to favorable spreads on customer balances and an
increase in average margin loan balances compared to the 1994
periods.
Results of Operations:
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
(Unaudited, in thousands) 1995 1994 1995 1994
---------------------------------
<S> <C> <C> <C> <C>
Net revenues:
Dain Bosworth Incorporated $86,903 $68,003 $163,291 $148,644
Rauscher Pierce
Refsnes, Inc. 42,986 40,714 84,785 83,092
Corporate, other and
eliminations 484 740 1,138 1,400
------- ------- ------- -------
$130,373 $109,457 $249,214 $233,136
======= ======= ======= =======
Earnings (Loss) before
income taxes:
Dain Bosworth Incorporated $10,169 $5,884 $15,854 $17,296
Rauscher Pierce
Refsnes, Inc. 4,071 4,437 7,420 9,495
Corporate, other and
eliminations (693) (674) (1,001) (1,084)
------- ------- ------- -------
$13,547 $9,647 $22,273 $25,707
======== ======= ======= =======
</TABLE>
Principal transaction revenues increased $15.3 million, or
49 percent, during 1995 second quarter versus the second quarter
of 1994 due primarily to improved fixed income trading results,
especially in taxable fixed income products, and, to a lesser
degree, improved over-the-counter equity trading results. The
composition of the increase in principal transaction revenues for
the 1995 first half over the 1994 first half was similar. The
improved fixed income trading results for both the quarter and
year-to-date periods were primarily due to stronger fixed income
markets brought about by a more stable interest rate environment
than was present in 1994.
Commission revenues increased $9.1 million, or 29 percent,
for the quarter and $3.3 million, or 5 percent, for the first six
months as a result of increased sales of listed and over-the-
counter equity securities, a retail and institutional sales force
that was approximately 9 percent larger in 1995 than 1994, an
increase in the New York Stock Exchange's average daily trading
volume and higher securities prices. Partially offsetting the
items that positively impacted comparative commission revenue
numbers were decreases in commissions generated from sales of
mutual fund securities.
Investment banking and underwriting revenues declined $5.4
million, or 22 percent, in the second quarter and $15.4 million,
or 29 percent, in the first six months of 1995 versus the same
periods of 1994 resulting from lower levels of corporate and
municipal underwriting activity.
Net interest income increased $1.4 million, or 16 percent,
for the quarter and $3.6 million, or 22 percent, for the first
half over prior year levels due to increased margin loan
balances, which resulted largely from the 10-percent increase in
the average number of retail investment executives. Partially
offsetting the positive effect on net interest of margin loan
balances was additional interest expense incurred due to $27
million of subordinated, long-term debt entered into by Dain
Bosworth and Rauscher Pierce Refsnes late in the second half of
1994. As long as favorable interest rate spreads are maintained
and the level of interest-bearing accounts remains stable, the
Company expects net interest income to continue to be a
significant component of its earnings. The Company continues to
examine alternative cash management products and services that it
may offer to customers with credit balances in their accounts.
Management believes that implementation of new cash management
products and services would not have a material effect on net
earnings.
Asset management revenues increased $2.0 million, or 44
percent, for the quarter and $3.6 million, or 42 percent, for the
first half over prior year levels from higher levels of assets in
managed account programs at Dain Bosworth and Rauscher Pierce
Refsnes, as well higher levels of assets under management at IFG
Asset Management Services, Inc.
Compensation and benefits expense increased $14.1 million,
or 20 percent, during the 1995 second quarter and $13.3 million,
or 9 percent, during the 1995 first half versus the comparable
periods of 1994. The increase for the quarter is due primarily to
a 6-percent increase in the average number of employees,
increased commissions paid to revenue-producing employees
generating higher levels of operating revenues, increased
transition pay resulting from the recruitment of significant
numbers of investment executives during 1994 and increased
incentive compensation accruals due to higher levels of earnings.
The increase in compensation and benefits expense for the six-
month period is principally the result of a 9-percent increase in
the average number of employees, increased commissions paid to
revenue-producing employees and increased transition pay to
recruited investment executives. These increases were partially
offset by lower incentive compensation accruals resulting from
lower earnings than in the first six months of 1994.
Expenses other than compensation and benefits increased $2.9
million, or 9 percent, for the quarter and $6.2 million, or 10
percent, year-to-date largely as a result of head count-driven
increases in communications and market data service and increased
occupancy costs related to the larger number and expansion of
operating office locations.
During the 1995 first half, management took steps to
selectively pare expenses and reduce spending, generally in areas
not related to revenue production. Nonetheless, management
anticipates operating expenses will be somewhat higher during the
remainder of 1995 compared to 1994 due to the effects of
significant growth investments made during the last three
quarters of 1994. While the environment in which the Company
operates improved during the 1995 second quarter, management
anticipates exercising continued selectivity regarding
investments in the 1995 second half and also anticipates
continued efforts to control expenses throughout the
organization.
LIQUIDITY AND CAPITAL RESOURCES
As described in Note K to the Consolidated Financial
Statements of the Company's 1994 Annual Report on Form 10-K,
Regional Operations Group, Dain Bosworth and Rauscher Pierce
Refsnes must comply with certain regulations of the Securities
and Exchange Commission and the New York Stock Exchange, Inc.,
measuring capitalization and liquidity. All three broker-dealers
continue to operate above minimum net capital standards. At June
30, 1995, net capital was $49.4 million at Regional Operations
Group, which was 7.2 percent of aggregate debit balances and
$15.1 million in excess of the 5-percent requirement. At June
30, 1995, Dain Bosworth and Rauscher Pierce Refsnes had net
capital of $29.8 million and $18.6 million, respectively, in
excess of the $1 million requirement.
In April 1994 the Company's Board of Directors authorized a
plan to repurchase up to 400,000 shares of the Company's common
stock. Purchases of the common stock will be made from time to
time at prevailing market prices in the open market, by block
purchases, or in privately negotiated transactions. The
repurchased shares will be used for the Company's employee stock
option and other benefit plans, or for other corporate purposes.
Through December 31, 1994, the Company had repurchased 162,500
shares in accordance with this program at a cost of $3.6 million.
During the first half of 1995, 29,000 shares were repurchased at
a cost of approximately $800,000.
During the second quarter of 1995, the Company entered into
a $15 million revolving credit facility to replace its $15
million facility that was set to expire on June 30, 1995. The
new facility expires on June 30, 1997. As was the case with the
expiring facility, the new agreement will be used for advances to
subsidiaries and general corporate purposes.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company and its subsidiaries, Dain Bosworth and
Rauscher Pierce Refsnes, are defendants in numerous civil actions
and arbitrations incidental to their business involving alleged
violations of federal and state securities laws and other laws.
Some of these actions, including certain actions described in
more detail in previous filings and below, have been brought on
behalf of purported classes of plaintiffs claiming substantial
damages.
Rauscher Pierce Refsnes is one of 13 securities firm
defendants named in a purported class action Smith, et al. v.
Merrill Lynch & Co., Inc., et al. (SA CV-94-1063-LIIM), pending
in the United States District Court for the Central District of
California. The case arises out of the issuance of debt
securities by Orange County, California ("the County") and
participants in the Orange County Investment Pool ("the Pool
Participants") between July 1992 and December 1994 ("the class
period"). The County and the Orange County Investment Pool each
commenced Chapter 9 bankruptcy proceedings on December 6, 1994.
Several class action complaints against Merrill Lynch and certain
other defendants were filed shortly thereafter; the cases were
subsequently consolidated and amended to name additional
defendants, including Rauscher Pierce Refsnes. Rauscher Pierce
Refsnes was first served with the amended consolidated complaint
in March 1995. The named plaintiffs allegedly purchased
securities in numerous issues over the class period. Two of the
issues specified in the complaint that were purchased by named
plaintiffs involved Rauscher Pierce Refsnes as financial advisor
or underwriter: a $299.7 million one-year tax and revenue
anticipation note issue by a group of school districts in the
name of the County in July 1994 in which Rauscher Pierce Refsnes
was the financial advisor; and a $119.2 million long-term special
tax bond issue by a community facilities district in July 1992 in
which Rauscher Pierce Refsnes served as a co-managing underwriter
along with two other securities firms. Both such issues have
been paid in full or defeased. Plaintiffs purport also to
represent purchasers of other securities issued by the County or
Pool Participants during the class period, including securities
issued in additional transactions in which Rauscher Pierce
Refsnes acted as financial advisor, underwriter or pricing
consultant. Plaintiffs allege violation of federal securities
laws. They seek an unspecified amount of compensatory damages,
rescission and other relief. Motions to dismiss have been filed
on behalf of all defendants. Rauscher Pierce Refsnes believes
that it has substantial and meritorious defenses available and
plans to defend itself vigorously in this action.
The Company and Dain Bosworth have been named as defendants
in actions brought by nine insurance guaranty associations and
certain individuals in connection with losses suffered under
single premium deferred annuities issued by The Midwest Life
Insurance Company ("MWL"), a former subsidiary acquired by the
Company in 1980 and sold by it in early 1986. Such annuities
were primarily sold through the retail sales force of Dain
Bosworth and, to a limited extent, Rauscher Pierce Refsnes. MWL,
which was sold two times subsequent to its sale by the Company in
1986 and was relocated from Nebraska to Louisiana by the final
owners, Southshore Holding Corp., was declared insolvent and
ordered liquidated by the State of Louisiana in August 1991.
Generally, MWL policyholders have been reimbursed for their
losses up to $100,000 per holder by state guaranty funds. The
first of the actions, Karsian et al. v. IFG, Dain Bosworth and
Rauscher Pierce Refsnes, pending in the United States District
Court for the District of Colorado, was brought in August, 1993,
as a purported class action on behalf of Colorado policyholders
and was expanded in February 1994 to encompass a nationwide
class. The plaintiffs in this action allege common law fraud,
breach of fiduciary duty, negligence and negligent
misrepresentation, civil conspiracy, RICO claims, breach of
contract, and claims under the Investment Advisors Act of 1940
and various state laws. Subsequent to the filing of this action,
legislation was enacted in Colorado to make MWL policyholders
eligible for reimbursement by Colorado's guaranty association.
The class claim, as well as the RICO, breach of contract and
Investment Advisors Act claims were dismissed by the trial court
in July 1995. The other nine actions were brought by the Life
and Health Guaranty Associations of each of Iowa, Minnesota,
Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington
and Wyoming, which succeeded to the rights of policyholders they
reimbursed for MWL losses. These actions, which allege similar
claims to the Colorado action but do not name Rauscher Pierce
Refsnes as a defendant, were brought in April and May 1995 and
are pending in the following state courts: Iowa District Court,
Polk County; Hennepin County (Minnesota) District Court; Montana
First Judicial Court, Lewis & Clark County; Nebraska District
Court, Lancaster County; District Court, Cass County, North
Dakota; Oregon Circuit Court of Multanomah County; South Dakota
Second Judicial Circuit, Minnehaha County; Washington Superior
Court for King County; and Wyoming District Court for Laramie
County. The actions in Minnesota and South Dakota also are
joined in by individual plaintiffs alleged to have suffered
losses in excess of the amount reimbursed by the state guaranty
associations. In the aggregate plaintiffs seek in excess of $64
million in compensatory damages, as well as punitive damages,
interest, costs, attorneys' fees and other relief. The Company,
Dain Bosworth and Rauscher Pierce Refsnes believe they have
substantial and meritorious defenses available and plan to defend
themselves vigorously in these actions.
While the outcome of any litigation is uncertain,
management, based in part upon consultation with legal counsel as
to certain of the actions pending against it and its
subsidiaries, believes that the resolution of all such matters
will not have a material adverse effect on the Company's
consolidated financial condition.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the regular Annual Meeting of Stockholders of the
Company held on May 2, 1995, the stockholders elected nine
directors and ratified the appointment of KPMG Peat Marwick as
the registrant's independent auditors.
Voting results of each of these items were as follows:
Election of Directors:
<TABLE>
<CAPTION>
For Withheld
--------- --------
<S> <C> <C>
J.C. Appel 6,140,616 64,520
S. Boren 6,134,710 70,283
F.G. Fitz-Gerald 6,134,710 70,426
L. Perlman 6,135,938 69,198
C.A. Rundell, Jr. 6,142,317 62,819
Robert L. Ryan 6,146,528 58,608
A.R. Schulze, Jr. 6,139,842 65,294
D.A. Smith 6,139,889 65,247
I. Weiser 6,119,196 85,940
</TABLE>
Ratification of Appointment of Auditors:
For 6,122,191
Against 45,505
Abstain 37,440
Item 5. OTHER INFORMATION
Reference is made to Exhibit 28 filed herewith (Press
Release announcing Louis C. Fornetti as the registrant's
new chief financial officer).
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4.1 - Sixth Amendment to Term Loan Agreement
dated June 29, 1995.
Exhibit 4.2 - Credit Agreement Dated June 29, 1995.
Exhibit 10.1 - Restricted Stock Agreement between the Company
and Louis C. Fornetti dated July 17, 1995.
Exhibit 11 - Computation of Net Earnings Per Share
Exhibit 27 - Financial Data Schedule
Exhibit 28 - Press Release announcing Louis C. Fornetti
as the registrant's new chief financial officer.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
INTER-REGIONAL FINANCIAL GROUP, INC.
Registrant
Date: August 14, 1995 By Angela M. Chicoine
----------------------
Angela M. Chicoine
Vice President and Controller
(Principal Accounting
Officer)
<PAGE>
INTER-REGIONAL FINANCIAL GROUP, INC. AND SUBSIDIARIES
INDEX OF EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1995
Exhibit 4.1 - Sixth Amendment to Term Loan Agreement dated
June 29, 1995.
Filed herewith.
Exhibit 4.2 - Credit Agreement dated June 29, 1995.
Filed herewith.
Exhibit 10.1 - Restricted Stock Agreement between the Company
and Louis C. Fornetti dated July 17, 1995.
Filed herewith.
Exhibit 11 - Computation of Net Earnings Per Share
Filed herewith.
Exhibit 27 - Financial Data Schedule
Filed herewith.
Exhibit 28 - Press Release announcing Louis C. Fornetti as the
registrant's new chief financial officer.
Filed herewith
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from
Inter-Regional Financial Group, Inc.'s June 30, 1995 Form 10-Q and is qualifed
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 437008
<RECEIVABLES> 886659
<SECURITIES-RESALE> 263529
<SECURITIES-BORROWED> 0<F1>
<INSTRUMENTS-OWNED> 406205
<PP&E> 31829
<TOTAL-ASSETS> 2067888
<SHORT-TERM> 140157
<PAYABLES> 1201583
<REPOS-SOLD> 232234
<SECURITIES-LOANED> 0<F2>
<INSTRUMENTS-SOLD> 175861
<LONG-TERM> 43983
<COMMON> 1012
0
0
<OTHER-SE> 205861
<TOTAL-LIABILITY-AND-EQUITY> 2067888
<TRADING-REVENUE> 90476
<INTEREST-DIVIDENDS> 52409
<COMMISSIONS> 73673
<INVESTMENT-BANKING-REVENUES> 36876
<FEE-REVENUE> 12099<F3>
<INTEREST-EXPENSE> 32028
<COMPENSATION> 161386
<INCOME-PRETAX> 22273
<INCOME-PRE-EXTRAORDINARY> 14199
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14199
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.69
<FN>
<F1>Included in Receivables
<F2>Included in Payables
<F3>Includes fees from Asset Management only
</FN>
</TABLE>
EXHIBIT 11
<TABLE>
INTER-REGIONAL FINANCIAL GROUP, INC.
COMPUTATION OF NET EARNINGS PER SHARE
(Unaudited, amounts in thousands, except per-share data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
--------------------------------------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS
PER SHARE:
Net earnings $8,636 $5,914 $14,199 $16,085
====== ====== ====== ======
Average number of common
and common equivalent
shares outstanding:
Average common shares
outstanding 8,098 8,152 8,078 8,150
Incentive stock options 233 240 225 301
------ ------ ------ ------
8,331 8,392 8,303 8,451
====== ====== ====== ======
Primary earnings per
share $1.04 $.70 $1.71 $1.90
====== ====== ====== ======
EARNINGS PER SHARE ASSUMING
FULL DILUTION:
Net earnings $8,636 $5,914 $14,199 $16,085
====== ====== ====== ======
Average number of common
and common equivalent
shares outstanding:
Average common shares
outstanding 8,098 8,152 8,078 8,150
Incentive stock options 290 240 302 301
------ ------ ------ ------
8,388 8,392 8,380 8,451
====== ====== ====== ======
Fully diluted earnings
per share: $ 1.03 $.70 $1.69 $1,90
====== ====== ====== ======
</TABLE>
SIXTH AMENDMENT TO
TERM LOAN AGREEMENT
This Amendment is made as of this 29th day of June, 1995, by
and between INTER-REGIONAL FINANCIAL GROUP, INC., a Delaware
corporation (the "Borrower") and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Bank").
The Borrower and the Bank have entered into a Term Loan
Agreement dated as of October 16, 1992, as amended by a First
Amendment to Term Loan Agreement dated as of March 12, 1993, a
Second Amendment to Term Loan Agreement dated as of June 23,
1993, a Third Amendment to Term Loan Agreement dated as of
November 30, 1993, a Fourth Amendment to Term Loan Agreement
dated as of June 27, 1994 and a Fifth Amendment to Term Loan
Agreement dated as of September 30, 1994 (as amended, the "Loan
Agreement"), pursuant to which the Bank made the Term Loan to the
Borrower subject to the terms and conditions set forth in the
Loan Agreement.
The Term Loan made by the Bank to the Borrower under the Loan
Agreement is evidenced by the Term Note of the Borrower dated
October 16, 1992, payable to the order of the Bank in the
original principal of $2,000,000 (the "Term Note").
The Borrower has requested that the Bank amend certain
provisions of the Loan Agreement and the Bank is willing to do so
pursuant to the terms and conditions set forth in this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment,
unless specifically defined herein, shall have the meanings given
to such terms in the Loan Agreement.
2. Section 4.07 of the Loan Agreement is hereby
amended by adding the phrase "or which seeks a monetary recovery
against the Borrower or any Subsidiary in excess of $1,000,000"
after the words "Material Adverse Occurrence" at the end of said
Section 4.07.
3. Section 5.01(a) of the Loan Agreement is hereby
amended by deleting the phrase "together with a certificate of
the senior vice president and treasurer or the chief financial
officer of the Borrower" as it appears in the eighteenth through
twentieth lines thereof and by substituting therefor the phrase
"together with a certificate of the treasurer, the chief
financial officer or the controller of the Borrower".
4. Section 5.01(a) of the Loan Agreement is hereby
further amended by deleting the phrase "whether or not he has
knowledge" as it appears in the twenty-sixth and twenty-seventh
lines thereof and by substituting therefor the phrase "whether or
not he or she has knowledge".
5. Section 5.01(b) of the Loan Agreement is hereby
amended by deleting the phrase "certified by the senior vice
president and treasurer or chief financial officer of the
Borrower" as it appears in the seventeenth through nineteenth
lines thereof and by substituting the phrase "certified by the
treasurer, the chief financial officer or the controller of the
Borrower".
6. Section 5.01(b) of the Loan Agreement is hereby
further amended by deleting the phrase "whether or not he has
knowledge" as it appears in the twenty-eighth line thereof and by
substituting therefor the phrase "whether or not he or she has
knowledge".
7. Section 5.01(c) of the Loan Agreement is hereby
amended by deleting the phrase "certified by the senior vice
president and treasurer or chief financial officer of the
Borrower" as it appears in the fourteenth through seventeenth
lines thereof and by substituting therefor the phrase "certified
by the treasurer, chief financial officer or the controller of
the Borrower".
8. Section 5.01(g) of the Loan Agreement is hereby
amended by deleting existing Section 5.01(g) in its entirety and
by substituting therefor the following new Section 5.01(g):
"(g) as promptly as practicable (but in any event not later
than thirty (30) days after an officer of the Borrower
obtains knowledge of the commencement thereof, notice in
writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower or
any Subsidiary of the type described in Section 4.7 or which
seek a monetary recovery against the Borrower or such
Subsidiary in excess of $1,000,000;"
9. Section 5.08 of the Loan Agreement is hereby
amended by deleting existing Section 5.08 in its entirety and by
substituting therefor the following new Section 5.08:
"Section 5.08 Consolidated Net Worth. The Borrower will
maintain Consolidated Net Worth (i) from the date of this
Agreement through June 30, 2000 at an amount not less than
the greater of (A) $180,000,000 or (B) 90% of the Highest
Quarterly Reported Consolidated Net Worth."
10. Section 6.02(b) of the Loan Agreement is hereby
amended by deleting existing Section 6.02(b) in its entirety and
by substituting therefor the following new Section 6.02(b):
"(b) indebtedness of the Borrower to the Bank and First Bank
National Association under that certain Credit Agreement
dated as of June 29, 1995, as the same may be amended or
restated from time to time."
11. Section 6.03(c) of the Loan Agreement is hereby
amended by deleting existing Section 6.03(c) in its entirety and
by substituting therefor the following new Section 6.03(c):
"(c) in addition to any guaranties set forth in Exhibit D,
guaranties by the Borrower of indebtedness (including
capitalized lease obligations) and operating leases of the
Subsidiaries (other than the guaranties permitted by
Sections 6.03(d) and 6.03(e)); provided that the sum of the
aggregate principal amount of indebtedness guaranteed plus
the aggregate amount of all payments under operating leases
guaranteed under this clause shall not exceed $3,000,000;"
12. Section 6.04(c)(iii) of the Loan Agreement is
hereby amended by deleting existing Section 6.04(c)(iii) in its
entirety and by substituting therefor the following new
Section 6.04(c)(iii):
"(iii) the sum of all cash consideration paid, the current
market value, as of the date of such investment, of all
property (excluding stock of the Borrower) given and all
Indebtedness incurred or assumed (excluding in acquisitions
of stock, liabilities of the acquired Person other than
those assumed in writing, if any, by the Borrower) in
connection with all acquisitions under this subsection (c)
and all acquisitions under Section 6.04A(b) does not exceed
the aggregate amount of $25,000,000;"
13. Section 6.04(d) of the Loan Agreement is hereby
amended by deleting existing Section 6.04(d) in its entirety and
by substituting therefor the following new Section 6.04(d):
"(d) in addition to transactions permitted by subsections
(a) through (c) above and subsection (e) below, investments
in (valued as of the date of such investment) or loans or
advances to Subsidiaries, provided that:
(i) the aggregate amount of such investments, loans or
advances which are to Subsidiaries other than ROG and
which have a term or maturity of more than six months
when made shall not exceed $25,000,000 in the aggregate
at any one time outstanding; and
(ii) the aggregate amount of such investments, loans
or advances in or to ROG shall be without limitation;"
14. Section 6.04A(c) of the Loan Agreement is hereby
amended by deleting existing Section 6.04A(c) in its entirety and
by substituting therefor the following new Section 6.04A(c):
"(c) the sum of all cash consideration paid, the current
market value, as of the date of such investment, of all
property (excluding stock of the Borrower) and Indebtedness
incurred or assumed (excluding in stock acquisitions,
liabilities of the acquired Person other than those assumed
in writing, if any, by the Acquiring Subsidiary) in
connection with all acquisitions under this Section 6.04A
and under Section 6.04(c)(iii) does not exceed the aggregate
amount of $25,000,000."
15. Section 6.09 of the Loan Agreement is hereby
amended by deleting the amount "$10,000,000" as it appears in the
first sentence of Section 6.09 and the amount "$15,000,000" as it
appears in the second sentence thereof and by substituting for
each such amount the amount "$20,000,000".
16. Section 6.11 of the Loan Agreement is hereby
amended by deleting the amount "$1,500,000" as it appears therein
and by substituting therefor the amount "$3,000,000".
17. Section 7.01(i) of the Loan Agreement is hereby
amended by deleting the amount "$100,000" as it appears therein
and by substituting therefor the amount "$500,000".
18. The Borrower hereby represents and warrants to
the Bank that:
(a) The Borrower has all requisite power and
authority, corporate or otherwise, to conduct its business,
to own its properties and to execute and deliver this
Amendment and perform all of its obligations under the Loan
Agreement, as amended by this Amendment, and under the Term
Note.
(b) The execution, delivery and performance by the
Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, and under the Term Note has been
duly authorized by all necessary corporate action on the
part of the Borrower and do not and will not (1) require any
consent or approval of the stockholders of the Borrower, or
any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (2) violate any
provision of any law, rule or regulation (including, without
limitation, Regulation X of the Board of Governors of the
Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to the
Borrower or of the Certificate of Incorporation or Bylaws of
the Borrower, (3) result in a breach of or constitute a
default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which the
Borrower is a party or by which the Borrower or its
properties may be bound or affected, or (4) result in, or
require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower.
(c) The Loan Agreement, as amended by this Amendment,
and the Term Note constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms.
(d) All of the representations and warranties
contained in Article IV of the Loan Agreement are
correct on and as of the date hereof, except to the
extent that such representations and warranties relate
solely to an earlier date.
19. This Agreement shall be of no force or effect
until the Bank shall have received the following, in form and
substance satisfactory to the Bank:
(a) A copy of the resolutions adopted by the Board of
Directors of the Borrower authorizing the execution and
delivery of this Amendment, certified as having been duly
adopted prior to and as being in effect on the date of this
Amendment; and
(b) A signed copy of an opinion of counsel for the
Borrower, addressed to the Bank in form and content
acceptable to the Bank.
20. On the date this Amendment becomes effective, all
references in the Loan Agreement to "this Agreement" and all
references in the Term Note to the "Term Loan Agreement" shall be
deemed to refer to the Loan Agreement as amended by this
Amendment.
21. Except as explicitly amended by this Amendment,
all of the original terms and conditions of the Loan Agreement
and the Term Note shall remain in full force and effect.
22. The Borrower hereby agrees to pay all reasonable
fees and disbursements of counsel to the Bank for the services
performed by such counsel in connection with the preparation of
this Amendment and any documents or instruments incidental
thereto.
23. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and
all such counterparts, taken together, shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above
written.
INTER-REGIONAL FINANCIAL
GROUP, INC.
By Daniel J. Reuss
-------------------------
Its Senior Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By Edward J. Meyer, Jr.
-------------------------
Its Vice President
INTER-REGIONAL FINANCIAL GROUP, INC.
------------------------
CREDIT AGREEMENT
Dated as of June 29, 1995
------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Agent
<PAGE>
CREDIT AGREEMENT
This Agreement is made as of this 29th day of June, 1995, by
and among INTER-REGIONAL FINANCIAL GROUP, INC., a Delaware
corporation (the "Borrower"), the financial institutions that
have executed this Agreement (the "Banks") and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association,
as agent for such financial institutions (the "Agent").
RECITALS
The Borrower, the Banks and the Agent have entered into a
Credit Agreement dated as of June 23, 1993, as amended by a First
Amendment to Credit Agreement dated as of November 30, 1993, by a
Second Amendment to Credit Agreement dated as of June 27, 1994,
and by a Third Amendment to Credit Agreement dated as of
September 30, 1994 (as amended, the "Existing Credit Agreement")
pursuant to which the Banks agreed, severally but not jointly, to
make loans to the Borrower on the terms and conditions set forth
in the Existing Credit Agreement.
Loans made by the Banks under the Existing Credit Agreement
are evidenced by promissory notes dated as of June 23, 1993
executed by the Borrower in favor of each Bank (each, an
"Existing Note"). The Existing Notes mature on June 30, 1995.
At the Borrower's request, the Banks have agreed to continue
to make loans to the Borrower, the Agent has agreed to issue
certain irrevocable standby letters of credit for the account of
the Borrower, and the Agent has agreed to continue to serve as
Agent in the making of such loans and the issuance of such
letters of credit, on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, the parties hereto agree that the Existing
Credit Agreement shall be amended and restated as follows:
<PAGE>
I
Definitions
I.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular; and
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles.
"Advance" means an advance by the Banks to the Borrower
pursuant to Section 2.1.
"Agent" means Norwest Bank Minnesota, National Association,
as agent for the Banks hereunder.
"Applicable Margin" means (i) 1.125% with respect to the
Revolving Notes; provided, however, that the Applicable Margin
with respect to the Revolving Notes shall be increased by 2.00%
at any time an Event of Default is existing under this Agreement
and (ii) 1.75% with respect to the Term Notes; provided, however,
that the Applicable Margin with respect to the Term Notes shall
be increased by 2.00% at any time an Event of Default is existing
under this Agreement. The Applicable Margin will automatically
change upon the occurrence of an Event of Default and upon the
waiver or cure of such Event of Default to the written
satisfaction of the Banks, such change to be deemed effective as
of the first day following the day on which such Event of Default
occurred or was waived or cured to the written satisfaction of
the Banks.
"Commitment" means, in the case of each Bank, the amount set
forth opposite such Bank's name on the signature page hereof,
unless said amount is reduced pursuant to Section 2.8, in which
event it means the amount to which said amount is reduced, or
such Bank's commitment to lend such amount, as the context may
require.
"Commitment Fee", as to each Bank, means the fee described in
Section 2.6.
"Commitment Termination Date" means June 30, 1997, or such
earlier date upon which the Commitments are terminated pursuant
to Section 2.8 or 7.2 hereof.
"Consolidated Net Worth" means the stockholders' equity of
the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with generally accepted accounting
principles.
"Debt" of any Person means (i) all items of indebtedness or
liability which in accordance with generally accepted accounting
principles would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of that Person
at the date as of which Debt is to be determined, and (ii)
indebtedness secured by any mortgage, pledge, lien or security
interest existing on property owned by such Person, whether or
not the indebtedness secured thereby shall have been assumed, and
(iii) guaranties and endorsements (other than for purposes of
collection in the ordinary course of business) by such Person and
other contingent obligations of such Person in respect of, or to
purchase or otherwise acquire, indebtedness of others.
"Default" means an event that, with notice or passage of time
or both, would constitute an Event of Default.
"Domestic Business Day" means a day on which the Agent and
the Banks are open for business in Minneapolis, Minnesota.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each trade or business (whether or
not incorporated) which together with the Borrower would be
treated as a single employer under Section 4001 of ERISA.
"Eurodollar Business Day" means a day other than a Saturday
or Sunday on which the Agent and the Banks are open for business
in Minneapolis, Minnesota and on which dealings in U.S. dollar
deposits are carried on in the London interbank market.
"Event of Default" has the meaning specified in Section 7.1.
"Existing Credit Agreement" has the meaning set forth in the
Recitals.
"Existing Notes" has the meaning set forth in the Recitals.
"Federal Funds Rate" means the rate per annum equal to the
rate determined by the Agent to be the rate at which overnight
federal funds are offered by members of the Federal Reserve
System through federal funds brokers for overnight federal funds
transactions in an amount approximately equal to the principal
balance of the Advances or Term Loans, as the case may be, which
shall bear interest at such rate, it being understood that the
Federal Funds Rate for any day which is not a Domestic Business
Day shall be the Federal Funds Rate for the next preceding
Domestic Business Day.
"Fixed Rate" means the annual rate equal to the sum (rounded
off to the nearest one hundredth of one percent) of (i) the rate
obtained by dividing (a) the average rate (rounded up to the
nearest one hundredth of one percent) determined by the Agent to
be the average bid rate quoted to the Agent for funds to be made
available on the first day of the Term Loans by New York
certificate of deposit dealers of recognized standing selected by
the Agent for the purchase in the secondary market of the
certificates of deposit of the Agent denominated in U.S. dollars
in an amount approximately equal to the amount of the Term Loans
and maturing on the Term Loan Final Maturity Date, by (b) a
percentage equal to 100% minus the Federal Reserve System reserve
requirement (expressed as a percentage) applicable to such
certificates of deposit, and (ii) the Federal Deposit Insurance
Corporation assessment (expressed as a percentage) applicable to
such certificates of deposit, and (iii) the Applicable Margin;
provided, however, if the Agent, in its sole discretion,
determines that no market exists for its certificates of deposit
in an amount approximately equal to the amount of the Term Loans
and maturing on the Term Loan Final Maturity Date, the Fixed Rate
shall be a substantially comparable index selected by the Agent
plus the Applicable Margin.
"Floating Rate" for any day means the Federal Funds Rate plus
the Applicable Margin, as determined by the Agent at or about
11:00 a.m. Minneapolis time on such day (or if such day is not a
Domestic Business Day, on the preceding Domestic Business Day).
"Highest Quarterly Reported Consolidated Net Worth" means the
highest Consolidated Net Worth reported by the Borrower during
the term of this Agreement on any of the annual audit reports
required by Section 5.1(a) or on any of the quarterly financial
statements required by Section 5.1(b).
"Indebtedness" of any Person means, for purposes of Section
6.4(c)(ii), Section 6.4(c)(iii), Section 6.4A(b) and Section
6.4A(c), as of the date of determination, (i) all indebtedness of
such Person for borrowed money, excluding any indebtedness of
such Person under any line of credit provided to such Person
solely for the purpose of carrying firm securities or customer
margin securities of such Person and also excluding miscellaneous
liabilities of such Person incurred in the ordinary course of
business, including, without limitation, drafts payable, payables
to customers, payables to broker/dealers, repurchase agreements,
securities sold short and miscellaneous accrued liabilities, and
(ii) all capitalized lease obligations of such Person having a
maturity of one year or more.
"Interest Period" means, with respect to any LIBO Rate
quotation, the period beginning on (and including) the Eurodollar
Business Day elected by the Borrower and ending on (but
excluding) the date which numerically corresponds to such date
one (1), two (2), three (3) or if available, as determined by the
Agent in its sole discretion, six (6) months thereafter (or, if
such month has no numerically corresponding day, on the last
Eurodollar Business Day of such month); provided, however, that:
(i) if an Interest Period would otherwise end on a
day which is not a Eurodollar Business Day, such Interest
Period shall end on the next following Eurodollar Business
Day (unless such next following Eurodollar Business Day is
the first Eurodollar Business Day of a calendar month, in
which case such Interest Period shall end on the next
preceding Eurodollar Business Day); and
(ii) any Interest Period elected by the Borrower with
respect to Advances made under Section 2.1 shall end on or
before June 30, 1997 and any Interest Period elected by the
Borrower with respect to the Term Loans shall end on or
before the Term Loan Final Maturity Date.
"L/C Amount" means the sum of (i) the aggregate face amount
of any issued and outstanding Standby Letters of Credit and (ii)
the unpaid amount of the Obligation of Reimbursement.
"LIBO Base Rate" shall mean, with respect to an Interest
Period, the rate per annum equal to the rate (rounded up to the
nearest one hundredth of one percent) determined by the Agent to
be a rate at which U.S. dollar deposits are offered to major
banks in the London interbank eurodollar market for funds to be
made available on the first day of such Interest Period and
maturing at the end of such Interest Period, as determined by the
Agent (Minneapolis time) on the second Eurodollar Business Day
prior to the beginning of such Interest Period.
"LIBO Rate" shall mean, with respect to an Interest Period,
the rate obtained by adding (i) the Applicable Margin to (ii) the
rate obtained by dividing (a) the applicable LIBO Base Rate by
(b) a percentage (expressed as a decimal) prescribed by the Board
of Governors of the Federal Reserve System (or any successor
thereto) for determining reserve requirements applicable to
eurodollar fundings (currently referred to as "Eurocurrency
Liabilities" in Regulation D) or any other reserve requirements
applicable to a member bank of the Federal Reserve System with
respect to such eurodollar liabilities.
"Loan Documents" means this Agreement, the Notes and the
Standby Letter of Credit Applications.
"Material Adverse Occurrence" shall mean any occurrence,
whether or not insured against (including, without limitation,
any adverse determination in any litigation, arbitration or
governmental investigation or proceeding) which will materially
adversely affect the present or prospective consolidated
financial condition or operations of Borrower and its
Subsidiaries or materially adversely impair the ability of
Borrower to perform its obligations under the Loan Documents.
"Material Subsidiary" shall mean
(a) for so long as they shall be Subsidiaries of
Borrower, Dain Bosworth Incorporated, Rauscher Pierce
Refsnes, Inc. and ROG; and
(b) for any fiscal year of Borrower, any other Subsidiary
of Borrower (i) which contributed (or, in the case of
any Subsidiary acquired during such fiscal year, would
have contributed, if acquired, at the beginning of the
preceding fiscal year) more than 10% of the revenues of
Borrower and its Subsidiaries on a consolidated basis
during the preceding fiscal year or (ii) which had (or,
in the case of any Subsidiary acquired during such
fiscal year, would have had, if acquired on the last
day of the preceding fiscal year) aggregate assets in
excess of 10% of the assets of Borrower and its
Subsidiaries on a consolidated basis at the close of
the preceding fiscal year.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"Notes" means the Revolving Notes or the Term Notes, as the
case may be.
"Obligation of Reimbursement" has the meaning specified in
Section 2.17 hereof.
"Percentage" means, with respect to each Bank, the percentage
set forth opposite such Bank's signature on this Agreement.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" means an employee benefit plan or other plan
maintained for employees of the Borrower or any ERISA Affiliate
and subject to Title I of the ERISA.
"ROG" means Regional Operations Group, Inc., a Minnesota
Corporation, formerly known as IFG Information Services, Inc.
"Reportable Event" means (i) a "reportable event" described
in Section 4043 of ERlSA, and the regulations issued thereunder;
or (ii) a withdrawal from any Plan, as described in Section 4063
of ERISA; or (iii) an action to terminate a Plan for which a
notice is required to be filed under Section 4041 of ERISA; or
(iv) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; or (v) a
complete or partial withdrawal from a Multiemployer Plan as
described in Sections 4203 and 4205 of ERISA.
"Revolving Note" has the meaning specified in Section 2.2.
"Special Account" means a cash collateral account maintained
by the Agent in connection with Standby Letters of Credit, as
contemplated by Section 2.17.
"Standby Letter of Credit" has the meaning specified in
Section 2.17 hereof.
"Standby Letter of Credit Application" has the meaning
specified in Section 2.17 hereof.
"Subordinated Debt" means the Debt of the Borrower which is
subordinated in right of payment, in the form set forth in
Exhibit F or pursuant to other subordination provisions
acceptable to the Banks, to all indebtedness of the Borrower to
the Banks under this Agreement.
"Subsidiary" means any corporation of which more than 50% of
the outstanding shares of capital stock having general voting
power under ordinary circumstances to elect a majority of the
board of directors of such corporation, whether or not at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency, is at
the time directly or indirectly owned by,the Borrower, by the
Borrower and one or more other Subsidiaries, or by one or more
other Subsidiaries.
"Subsidiary Group" means any direct Subsidiary of the
Borrower and the Subsidiaries of such direct Subsidiary.
"Term Loan" has the meaning specified in Section 2.4.
"Term Loan Fee", as to each Bank, means the fee described in
Section 2.7.
"Term Loan Final Maturity Date" has the meaning specified in
Section 2.4.
"Term Note" has the meaning specified in Section 2.4.
II
Amount and Terms of the Revolving Loans
II.1 Revolving Loans. Each Bank agrees, severally
but not jointly, on the terms and subject to the conditions
hereinafter set forth, to make the Bank's Percentage of the
Advances requested by the Borrower from time to time during the
period from the date hereof to and including the Commitment
Termination Date, in an aggregate amount not to exceed at any
time outstanding that Bank's respective Commitment less that
Bank's Percentage of the L/C Amount. Each Advance shall be in
the amount of $500,000 or an integral multiple of $50,000 if
greater than $500,000, or, if the Borrower elects a LIBO Rate
pursuant to Section 2.5(a), at least $1,000,000 or an integral
multiple of $100,000 if greater than $1,000,000. Within the
limits of the Commitments, the Borrower may borrow, prepay
pursuant to Section 2.9 and reborrow under this Section 2.1.
II.2 The Revolving Notes. The Advances made by each
Bank under Section 2.1 shall be evidenced by and repayable with
interest in accordance with a single promissory note of the
Borrower (a "Revolving Note") payable to the order of such Bank,
substantially in the form of Exhibit A hereto, appropriately
completed and dated the date of closing hereunder. Each
Revolving Note shall bear interest on the unpaid principal amount
thereof from the date thereof until fully paid at the rate or
rates determined pursuant to Section 2.5(a) hereof. In the event
that the Term Loans contemplated by Section 2.4 are not made by
the Banks to the Borrower on June 30, 1997, the outstanding
principal balance of the Revolving Notes and all accrued interest
thereon shall be due and payable on June 30, 1997.
II.3 Making the Revolving Loans.
(a) Each Advance shall be made on prior written
notice from the Borrower to the Agent or telephonic request
from any person purporting to be authorized to request
Advances on behalf of the Borrower, which notice or request
shall specify the date of the requested Advance and the
amount thereof. The notice or request must be received by
the Agent no later than 10:00 a.m. (Minneapolis time) on the
date of the requested Advance. The Borrower shall promptly
confirm each telephonic request for an Advance by executing
and delivering an appropriate confirmation certificate, in
the form of Exhibit G hereto, to the Agent. The Borrower
shall be obligated to repay all Advances notwithstanding the
failure of the Agent to receive such confirmation and
notwithstanding the fact that the person requesting same was
not in fact authorized so to do. Any request for an
Advance,whether written or telephonic, shall be deemed to be
a representation that the statements set forth in Section
3.2 are correct.
(b) Upon receipt of notice of a requested Advance,
the Agent shall promptly notify each Bank of such Bank's
Percentage of the Advance. Not later than 1:00 p.m.
(Minneapolis time) on the date of the requested Advance,
each Bank shall make available its Percentage of such
Advance in immediately available funds to the Agent at its
address specified in Section 9.3. Upon fulfillment of the
applicable conditions set forth in Article III, the Agent
shall disburse the amount of the requested Advance by
crediting the same to the Borrower's demand deposit account
maintained with the Agent or in such other manner as the
Agent and the Borrower may from time to time agree by prior
written notice.
II.4 Term Loan. If (i) the Banks' receive a written
request from the Borrower at any time from May 1, 1997 through
and including June 15, 1997 requesting that the Banks convert the
Advances evidenced by the Revolving Notes into term loans and
(ii) the Borrower had positive earnings before income taxes and
extraordinary items for at least two of the three fiscal quarters
of the Borrower ended prior to the Borrower's fiscal quarter
ended June 30, 1997 (as established by the financial statements
delivered by the Borrower to the Banks for such fiscal quarters),
each of the Banks agrees, severally, but not jointly, on the
terms and subject to the conditions hereinafter set forth, to
make a single term loan (the "Term Loan") to the Borrower, on
June 30, 1997, in an amount equal to the outstanding principal
balance of the Advances made by such Bank to the Borrower and
evidenced by the Borrower's Revolving Note in favor of such Bank,
and having a final maturity date of either June 30, 1998, June
30, 1999 or June 30, 2000, as selected by the Borrower in its
written request for such Term Loan (as so selected, the "Term
Loan Final Maturity Date"). The proceeds of each Bank's Term
Loan shall be simultaneously applied by such Bank to the
prepayment of such Bank's Revolving Note, whereupon such Bank's
Revolving Note shall be returned to the Borrower marked "Replaced
by Term Note" and the Commitment of such Bank shall be
automatically terminated. Each Bank's Term Loan shall be
evidenced by a single promissory note of the Borrower (a "Term
Note"), payable to the order of such Bank, substantially in the
form of Exhibit B hereto, appropriately completed, dated June 30,
1997. Each Term Note shall provide for the repayment of the Term
Loan evidenced by such Term Note in equal monthly installments of
principal sufficient to fully amortize the Term Loan by the Term
Loan Final Maturity Date, with the first such monthly installment
commencing on the last day of July, 1997 and continuing on the
last day of each month thereafter until the Term Loan Final
Maturity Date, when the remaining principal balance and all
accrued interest thereon shall be due and payable. Each Term
Note shall bear interest on the unpaid principal amount thereof
from the date thereof until fully paid at the rate or rates
determined pursuant to Section 2.5(b). The written request by
the Borrower to the Banks requesting the Term Loans shall specify
the selected Term Loan Final Maturity Date of either June 30,
1998, June 30, 1999 or June 30, 2000 and shall be deemed to be a
representation by the Borrower that the statements set forth in
Section 3.2 are correct. On or before June 30, 1997, the
Borrower shall deliver to each Bank its respective Term Note,
appropriately completed and properly executed on behalf of the
Borrower.
II.5 Interest.
(a) Interest on the Revolving Loans. The principal
balance of the Revolving Notes from time to time outstanding
shall bear interest at the Floating Rate, unless the
Borrower elects a LIBO Rate pursuant to this Section 2.5(a).
At the election of the Borrower, which may be exercised from
time to time, the Borrower may request in writing or by
telephone that the Agent quote the LIBO Rate which would be
applicable for the portion of the outstanding principal
balance of the Revolving Notes or for a new Advance under
the Revolving Notes and for the Interest Period indicated by
the Borrower in its quotation request. The portion of the
outstanding balance of the Revolving Notes or the new
Advance under the Revolving Notes for which a LIBO Rate
quotation is requested (i) must be at least $1,000,000 or an
integral multiple of $100,000 if greater than $1,000,000,
(ii) must not otherwise bear interest at a LIBO Rate at any
time during the respective Interest Period on account of any
other acceptance of a LIBO Rate hereunder and (iii) must not
be subject to being repaid during the proposed Interest
Period by any regularly scheduled principal payment. A
request for a LIBO Rate quotation must be received by the
Agent before 10:00 a.m. (Minneapolis time) on the day two
Eurodollar Business Days before the first day of the
proposed Interest Period. The Agent will quote the LIBO
Rate to the Borrower before 11:00 a.m. (Minneapolis time) on
the day two Eurodollar Business Days before the first day of
the proposed Interest Period. The Borrower shall
immediately either accept or reject the LIBO Rate quotation
by telephone. If the Borrower does not immediately accept a
LIBO Rate quotation, the quotation shall be deemed to have
been rejected. Upon acceptance of a LIBO Rate quotation,
the quoted LIBO Rate shall be the interest rate applicable
for the proposed Interest Period to the portion of the
outstanding principal balance of the Revolving Notes or the
new Advance under the Revolving Notes to which the quotation
related (and the remaining part of the principal balance of
the Revolving Notes, if any, shall continue to bear interest
at the rate or rates applicable to such amounts). The
portion of each Bank's Advances bearing interest at a LIBO
Rate for a specified Interest Period shall be that Bank's
Percentage of all Advances bearing interest at a LIBO Rate
for that specified Interest Period. At the termination of
such Interest Period, the interest rate applicable to the
portion of the principal balance of the Revolving Notes to
which the accepted LIBO Rate quotation was applicable or the
new Advance under the Revolving Notes shall bear interest at
the Floating Rate unless a new LIBO Rate quotation is
accepted by the Borrower. Notwithstanding anything
contained in this Section to the contrary, the Agent shall
have no obligation to quote a LIBO Rate for any Interest
Period if the Agent, in its sole discretion, determines that
deposits in amounts equal to the amount for which the LIBO
Rate quotation has been requested and maturing at the end of
the proposed Interest Period are not readily available to
the Agent from major banks in the London interbank market in
an amount equal to the amount for which the LIBO Rate
quotation has been requested and maturing at the end of the
proposed Interest Period.
(b) Interest on the Term Loans.
(i) Election of either the Fixed Rate
Alternative under Section 2.5(b)(ii) or the Floating
Rate/LIBO Rate Alternative under Section 2.5(b)(iii).
On or before 10:00 a.m. (Minneapolis time) on the day
two Eurodollar Business Days before the day on which
the Banks will make the Term Loans available to the
Borrower in accordance with Section 2.4, the Borrower
shall request by telephone that the Agent quote to the
Borrower (A) the Fixed Rate which would be available
for the Term Loans under Section 2.5(b)(ii) and (B) the
current Floating Rate or the initial LIBO Rate which
would be available for the Term Loans under Section
2.5(b)(iii). Upon timely receipt of such quotation
request from the Borrower, the Agent will, on or before
11:00 a.m. (Minneapolis time) on the day of such
quotation request, quote to the Borrower by telephone
(A) the Fixed Rate which would be available for the
Term Loans under Section 2.5(b)(ii) and (B) the current
Floating Rate or the initial LIBO Rate which would be
available for the Term Loans under Section 2.5(b)(iii).
Upon receipt of such quotation by telephone from the
Agent, the Borrower shall immediately elect either to
have the Term Loans bear interest under Section
2.5(b)(ii) or to have the Term Loans bear interest
under Section 2.5(b)(iii) at either the Floating Rate
or the LIBO Rate, and once made, such election, as
between Section 2.5(b)(ii) and Section 2.5(b)(iii),
shall be irrevocable and shall remain in force through
and including the Term Loan Final Maturity Date. In
the event that the Borrower fails to timely request the
quotation contemplated by this Section 2.5(b)(i) or if,
after the Borrower has received such quotation from the
Agent, the Borrower fails to immediately elect either
to have the Term Loans bear interest under Section
2.5(b)(ii) or to bear interest under Section
2.5(b)(iii), the Term Loans shall bear interest at the
Floating Rate under Section 2.5(b)(iii) below until
such time as the Borrower elects a LIBO Rate for the
Term Loans in accordance with the provisions of Section
2.5(b)(iii).
(ii) Fixed Rate Alternative. If elected by the
Borrower pursuant to Section 2.5(b)(i), the principal
balance of the Term Notes from time to time outstanding
shall bear interest at the Fixed Rate.
(iii) Floating Rate/LIBO Rate Alternative. If
elected by the Borrower pursuant to Section 2.5(b)(i)
or if the Borrower fails to make an election pursuant
to Section 2.5(b)(i), the principal balance of the Term
Notes from time to time outstanding shall bear interest
at the Floating Rate, unless the Borrower elects a LIBO
Rate pursuant to this Section 2.5(b)(iii). At the
election of the Borrower, which may be exercised from
time to time, the Borrower may request in writing or by
telephone that the Agent quote the LIBO Rate which
would be applicable for the portion of the outstanding
principal balance of the Term Notes and for the
Interest Period indicated by the Borrower in its
quotation request. The portion of the outstanding
balance of the Term Notes for which a LIBO Rate
quotation is requested (i) must be at least $1,000,000
or an integral multiple of $100,000 if greater than
$1,000,000, (ii) must not otherwise bear interest at a
LIBO Rate at any time during the respective Interest
Period on account of any other acceptance of a LIBO
Rate hereunder and (iii) must not be subject to being
repaid during the proposed Interest Period by any
regularly scheduled principal payment. A request for a
LIBO Rate quotation must be received by the Agent
before 10:00 a.m. (Minneapolis time) on the day two
Eurodollar Business Days before the first day of the
proposed Interest Period. The Agent will quote a LIBO
Rate to the Borrower before 11:00 a.m. (Minneapolis
time) on the day two Eurodollar Business Days before
the first day of the proposed Interest Period. The
Borrower shall immediately either accept or reject the
LIBO Rate quotation by telephone. If the Borrower does
not immediately accept a LIBO Rate quotation, the
quotation shall be deemed to have been rejected. Upon
acceptance of a LIBO Rate quotation, the quoted LIBO
Rate shall be the interest rate applicable for the
proposed Interest Period to the portion of the
outstanding principal balance of the Term Notes to
which the quotation related (and the remaining part of
the principal balance of the Term Notes, if any, shall
continue to bear interest at the rate or rates
applicable to such amounts). The portion of each
Bank's Term Loan bearing interest at a LIBO Rate for a
specified Interest Period shall be that Bank's
Percentage of all Term Loans bearing interest at a LIBO
Rate for that specified Interest Period. At the
termination of such Interest Period, the interest rate
applicable to the portion of the principal balance of
the Term Notes to which the accepted LIBO Rate
quotation was applicable shall bear interest at the
Floating Rate unless a new LIBO Rate quotation is
accepted by the Borrower. Notwithstanding anything
contained in this Section to the contrary, the Agent
shall have no obligation to quote a LIBO Rate for any
Interest Period if the Agent, in its sole discretion,
determines that deposits in amounts equal to the amount
for which the LIBO Rate quotation has been requested
and maturing at the end of the proposed Interest Period
are not readily available to the Agent from major banks
in the London interbank market in an amount equal to
the amount for which the LIBO Rate quotation has been
requested and maturing at the end of the proposed
Interest Period.
II.6 Commitment Fees. The Borrower agrees to pay to
the Agent for the account of each Bank a commitment fee at the
rate of 1/2 of 1% per annum on the average daily unused amount of
the Commitments from the date hereof to and including the
Commitment Termination Date, payable quarterly in arrears on the
first day of each January, April, July and October during the
term of the Commitments, commencing July 1, 1995, provided that
the commitment fee remaining unpaid shall be due and payable on
the Commitment Termination Date.
II.7 Term Loan Conversion Fee. The Borrower agrees
to pay to the Agent for the account of each Bank on the date the
Term Loans are made available to the Borrower a term loan
conversion fee in an amount equal to (i) 1/8 of 1% of the
original principal amounts of the Term Loans in the event the
Term Loan Final Maturity Date is June 30, 1998, (ii) 1/4 of 1% of
the original principal amounts of the Term Loans in the event the
Term Loan Final Maturity Date is June 30, 1999, or (iii) 3/8 of
1% of the original principal amounts of the Term Loans in the
event the Term Loan Final Maturity Date is June 30, 2000.
II.8 Termination or Reduction of the Commitments.
The Borrower shall have the right at any time and from time to
time upon five Domestic Business Days' prior notice to the Agent
permanently to terminate in whole or permanently to reduce in
part the Commitments, pro rata as to each Bank based on its
Percentage, without penalty or premium, provided that each
partial reduction shall be in the amount of $3,000,000 or an
integral multiple thereof, and provided further that no reduction
shall reduce the sum of the Commitments to an amount less than
(i) the aggregate amount of the Advances outstanding under the
Revolving Notes at the time plus (ii) the L/C Amount.
II.9 Voluntary Prepayments. The Borrower may, upon
one Domestic Business Day's notice to the Agent, prepay the Notes
then outstanding in whole at any time or from time to time in
part, without penalty or premium; provided, however, that (i) any
prepayment of the full amount of the Notes at a time when the
Banks have no further Commitments hereunder shall include accrued
interest thereon; (ii) each partial prepayment shall be in the
principal amount of $500,000 or an integral multiple of $50,000
if greater than $500,000; (iii) any prepayment of any portion of
the principal balance of the Notes then outstanding which, at the
time of such prepayment, bears interest at a LIBO Rate or a Fixed
Rate, shall be accompanied by the compensation calculated in
accordance with Section 2.14 hereof and (iv) any partial
prepayment of the Term Notes shall be applied to principal
installments thereunder in inverse order of maturity.
II.10 Computation of Interest and Fees; Payment of
Interest. Interest under the Notes and the fees hereunder shall
be computed on the basis of actual number of days elapsed in a
year of 360 days. Interest accruing through the last day of each
month on the portions of the Notes bearing interest at the
Floating Rate or the Fixed Rate shall be payable on the last day
of such month and at maturity (whether stated maturity or by
reason of acceleration) or earlier prepayment in full unless the
Commitments remain outstanding. Interest accruing through the
last day of each month on the portions of the Notes bearing
interest at a LIBO Rate shall be payable on the last day of such
month, at expiration of the applicable Interest Period and at
maturity (whether stated maturity or by reason of acceleration)
or earlier prepayment in full unless the Commitments remain
outstanding.
II.11 Payment. All payments of principal of and
interest under the Notes and of the fees hereunder shall be made
to the Agent at its address specified in Section 9.3 in
immediately available funds. The Borrower agrees that the amount
shown on the books and records of the Agent and the Banks as
being the aggregate amount of Advances and Term Loans outstanding
shall be prima facie evidence of the principal amount of the
Revolving Notes and the Term Notes, as the case may be. The
Borrower hereby authorizes the Agent to charge against the
Borrower's account with the Agent an amount equal to the
principal installments of the Term Loan, accrued interest and
fees from time to time due and payable to the Banks under the
Notes then outstanding or hereunder. The Agent shall send the
Borrower notice of any such charges against the Borrower's
account and a statement showing the calculation of such charges
within five Domestic Business Days of such charges. Upon
receiving any payment for the account of the Banks, the Agent
will promptly pay each Bank its Percentage of such payment.
II.12 Payment on Non-Business Days. Whenever any
payment to be made hereunder or under the Notes shall be stated
to be due on a day which is not a Domestic Business Day, such
payment may be made on the next succeeding Domestic Business Day,
and such extension of time shall in such case be included in the
computation of payment of interest on the Notes or the fees
hereunder, as the case may be.
II.13 Use of Proceeds. The proceeds of the Advances
shall be used by the Borrower, first, to pay the Existing Notes
in full and, thereafter, for investment in and subordinated
lending to the Subsidiaries, for bridge financing of specific
transactions of the Subsidiaries, and for general corporate
purposes of the Borrower. The proceeds of the Term Loans shall
be used by the Borrower to pay the Revolving Notes in full.
II.14 Fees on LIBO Advances and Fixed Rate Advances
and Term Loans and Indemnity. In addition to any interest
payable on the Advances and Term Loans made hereunder and any
fees or other amounts payable hereunder, the Borrower agrees:
(a) If at any time any applicable law, rule or
regulation or the interpretation or administration thereof
by any governmental authority (including, without
limitation, Regulation D of the Federal Reserve Board):
(i) shall subject any Bank to any tax, duty or
other charges (including, but not limited to, any tax
designed to discourage the purchase or acquisition of
foreign securities or debt instruments by United States
nationals) with respect to this Agreement, or shall
materially change the basis of taxation of payments to
such Bank of the principal of or interest on any
portion of the Notes bearing interest at a LIBO Rate or
a Fixed Rate (except for the imposition of or changes
in respect of the rate of tax on the overall net income
of the Bank); or
(ii) shall impose or deem applicable or increase any
reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or
credit extended by such Bank because of any portion of
the Notes bearing interest at a LIBO Rate or a Fixed
Rate and the result of any of the foregoing is to
increase the cost to the Bank of maintaining its
Commitment or making or maintaining any portion of the
Notes at a LIBO Rate or a Fixed Rate, or to reduce the
amount of any sum received or receivable by the Bank
with respect to any portion of the Notes bearing
interest at a LIBO Rate or a Fixed Rate;
then within 30 days after the demand by such Bank the Borrower
agrees to pay the Bank such additional amount or amounts as
will compensate such Bank for such increased cost or
reduction. A certificate in reasonable detail of such Bank
setting forth the basis for the determination of such
additional amount or amounts shall be promptly submitted by
such Bank to the Borrower and shall, in the absence of
manifest error, be final and conclusive as to such amount or
amounts.
(b) The Borrower shall also compensate either Bank
for all losses and expenses in respect of any interest or
other consideration paid by such Bank to lenders of funds
borrowed by it or deposited with it to maintain any portion
of the Notes bearing interest at a LIBO Rate or a Fixed Rate
which such Bank may sustain to the extent not otherwise
compensated for hereunder and not mitigated by the
reemployment of such funds if any prepayment of any portion
of the Notes bearing interest at a LIBO Rate or a Fixed Rate
occurs on a date which is not the expiration date of the
relevant Interest Period as a consequence of a voluntary
prepayment pursuant to Section 2.9 or of any Event of
Default under this Agreement. Such compensation shall equal
an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount so
paid or prepaid for the period from the date of such payment
or prepayment to the last day of the then current Interest
Period or Term Loan Final Maturity Date, as the case may be,
for such portion of the Notes at the LIBO Rate or the Fixed
Rate provided for herein minus (ii) the yield (including
both interest and discount) on a hypothetical United States
Treasury Security that could be purchased on the date of
prepayment and maturing on (or about) the last day of the
current Interest Period or the Term Loan Final Maturity
Date, as the case may be, for such portion of the Notes,
such amount to be discounted to its present value using the
yield on such hypothetical Treasury Security as the
applicable discount factor discounted monthly, provided that
no compensation shall be payable (and no credit or rebate
shall be required) if the yield described in clause (ii)
above exceeds the rate described in clause (i). Any such
compensation shall be payable at the time of any voluntary
prepayment, or at the time of any payment resulting from an
Event of Default. A certificate as to any such loss or
expense (including calculations, in reasonable detail,
showing how the Bank being compensated computed such loss or
expense) shall be promptly submitted by such Bank to the
Borrower and shall, in the absence of manifest error, be
final and conclusive as to the amount thereof.
II.15 Capital Adequacy. If any Bank determines at
any time that such Bank's Return has been reduced as a result of
any Capital Adequacy Rule Change, such Bank may require the
Borrower to pay to such Bank the amount necessary to restore that
Bank's Return to what it would have been had there been no
Capital Adequacy Rule Change. For purposes of this Section:
(a) "Return", for any calendar quarter or shorter
period, means the percentage determined by dividing (i) the
sum of interest and ongoing fees earned by a Bank under this
Agreement during such period, by (ii) the average capital
such Bank is required to maintain during such period as a
result of its being a party to this Agreement, as determined
by such Bank based upon its total capital requirements and a
reasonable attribution formula that takes account of the
Capital Adequacy Rules then in effect. Return may be
calculated for a Bank for each calendar quarter and for the
shorter period between the end of a calendar quarter and the
date of termination in whole of this Agreement.
(b) "Capital Adequacy Rule" means any law, rule,
regulation or guideline regarding capital adequacy that
applies to a Bank, or the interpretation thereof by any
governmental or regulatory authority. Capital Adequacy
Rules include rules requiring financial institutions to
maintain total capital in amounts based upon percentages of
outstanding loans, binding loan commitments and letters of
credit.
(c) "Capital Adequacy Rule Change" means any change
in any Capital Adequacy Rule occurring after the date of
this Agreement, but the term does not include any changes in
applicable requirements that at the date of this Agreement
are scheduled to take place under the existing Capital
Adequacy Rules or any increases in the capital that a Bank
is required to maintain to the extent that the increases are
required due to a regulatory authority's assessment of that
Bank's financial condition.
The initial notice sent by a Bank shall be sent as promptly as
practicable after such Bank learns that its Return has been
reduced, shall include a demand for payment of the amount
necessary to restore that Bank's Return for the quarter in which
the notice is sent, and shall state in reasonable detail the
cause for the reduction in that Bank's Return and that Bank's
calculation of the amount of such reduction. Thereafter, the
applicable Bank may send a new notice during each calendar
quarter setting forth the calculation of the reduced Return for
that quarter and including a demand for payment of the amount
necessary to restore that Bank's Return for that quarter. A
Bank's calculation in any such notice shall, in the absence of
manifest error, be final and conclusive.
II.16 Amendment Fee. The Borrower agrees to pay to
the Agent, for the pro rata account of the Banks in accordance
with their respective Percentages, an amendment fee of $5,000 for
each material amendment to this Agreement requested by the
Borrower, which fee shall be due and payable within ten (10) days
after the execution and delivery of any such amendment.
II.17 Standby Letters of Credit.
(a) Subject to the terms and conditions set forth in
this Section 2.17 and in Article III, the Agent shall issue
one or more irrevocable standby letters of credit for the
account of the Borrower (each a "Standby Letter of Credit")
from time to time during the period from the date hereof to
and including the Commitment Termination Date, in an
aggregate amount at any time outstanding not to exceed the
sum of the Commitments of the Banks less the sum of (i) all
outstanding Advances hereunder and (ii) the unpaid amount of
the Obligation of Reimbursement.
(b) Each Bank hereby unconditionally and irrevocably
accepts for its account and risk an undivided participating
interest in the obligations of the Agent with respect to
each Standby Letter of Credit. Each Bank's participation in
a Standby Letter of Credit shall be that Bank's Percentage
of the face amount of such Standby Letter of Credit.
(c) No Letter of Credit shall be issued with an
expiry date later than the Commitment Termination Date in
effect as of the date of issuance.
(d) Whenever the Borrower desires to obtain issuance
of a Standby Letter of Credit, the Borrower shall request
the same by written notice to the Agent or telephonic
request to the Agent from any person purporting to be
authorized to request issuance of a Standby Letter of Credit
on behalf of the Borrower, which notice or request shall
specify the date of the requested issuance (which date shall
be a Domestic Business Day). Prior to the requested date of
issuance, the Borrower shall provide the Agent with an
application for Standby Letter of Credit (each a "Standby
Letter of Credit Application") duly executed in the form of
Exhibit H hereto. The terms and conditions set forth in
each such Standby Letter of Credit Application shall
supplement the terms and conditions hereof, but in the event
of inconsistency between the terms of any such Standby
Letter of Credit Application and the terms hereof, the terms
hereof shall control. Any request for the issuance of a
Standby Letter of Credit under this Section 2.17 shall be
deemed to be a representation by the Borrower that (i) the
conditions set forth in this Section 2.17 have been met, and
(ii) the statements set forth in Section 3.2 hereof are
correct as of the time of the request.
(e) The Agent shall promptly notify each Bank of the
issuance of a Standby Letter of Credit and of the face
amount of such Standby Letter of Credit.
(f) The Borrower shall pay to the Agent for the
account of the Banks a Standby Letter of Credit fee (i) with
respect to Standby Letters of Credit issued with an
expiration date less than sixty (60) days after the date of
issuance, equal to three quarters of one percent (.75%) per
annum of the face amount of each such Standby Letter of
Credit issued hereunder and (ii) with respect to Standby
Letter of Credit issued with an expiration date sixty (60)
or more days after the date of issuance, equal to one and
one-eighth percent (1.125%) per annum of the face amount of
each such Standby Letter of Credit issued hereunder. Such
Standby Letter of Credit fee shall be computed for the
period commencing on the date of issuance of a Standby
Letter of Credit and ending on the expiration date thereof,
and shall be payable quarterly in arrears or in full upon
the earlier expiration of such Standby Letter of Credit. In
addition, the Borrower agrees to pay to the Agent for the
account of the Agent, on written demand by the Agent, the
administrative fees charged by the Agent in the ordinary
course of business in connection with the honoring of drafts
under any Standby Letter of Credit, and all other activity
with respect to the Standby Letters of Credit at the then-
current rates published by the Agent generally.
(g) Draws under any Letter of Credit shall be
reimbursed to the Agent in accordance with the applicable
Standby Letter of Credit Application and as follows:
(i) Whenever a draft under a Standby Letter of
Credit is presented to the Agent for payment, the
Borrower hereby agrees to immediately reimburse the
Agent for the amount paid by the Agent under the
Standby Letter of Credit, plus any and all reasonable
charges and expenses that the Agent may pay or incur
relative to such draw, plus interest on all such
amounts, charges and expenses as set forth below (all
such amounts are hereinafter referred to, collectively,
as the "Obligation of Reimbursement").
(ii) The Borrower hereby agrees to pay the Agent on
demand interest on all amounts, charges and expenses
payable by the Borrower to the Agent under this
Section 2.17, accrued from the date any such draft,
charge or expense is paid by the Agent until payment in
full by the Borrower at the Floating Rate.
(iii) If the Borrower fails to pay to the Agent
promptly the amount of its Obligation of Reimbursement
in accordance with the terms hereof and the Standby
Letter of Credit Application pursuant to which such
Standby Letter of Credit was issued, the Agent is
hereby irrevocably authorized and directed, in its sole
discretion, to make a Floating Rate Advance under
Section 2.1 hereof in an amount sufficient to discharge
the Obligation of Reimbursement, including all interest
accrued thereon but unpaid at the time of such Advance,
and each Bank's Percentage of such Advance shall be
added to the outstanding principal balance of such
Bank's Revolving Note.
(iv) The obligations of the Borrower arising under
this Agreement shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance
with the terms of this Agreement, under all
circumstances whatsoever, including (without
limitation) the following circumstances: (A) payment by
or on behalf of the Agent under any Standby Letter of
Credit against presentation of a draft or certificate
which does not comply with the terms of such Standby
Letter of Credit; (B) any lack of validity or
enforceability of any Standby Letter of Credit or any
other agreement or instrument relating to any Standby
Letter of Credit (collectively the "Related
Documents"); (C) any amendment or waiver of or any
consent to departure from all or any of the Related
Documents; (D) the existence of any claim, setoff,
defense or other right which the Borrower may have at
any time, against any beneficiary or any transferee of
any Standby Letter of Credit (or any persons or
entities for whom any such beneficiary or any such
transferee may be acting), or other person or entity,
whether in connection with this Agreement, the
transactions contemplated herein or in the Related
Documents or any unrelated transactions; or (E) any
statement or any other document presented under any
Standby Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect whatsoever; provided, however, that the
Borrower shall have a claim against the Agent and the
Banks, and the Agent and the Banks shall be liable to
the Borrower to the extent, but only to the extent, of
any direct, as opposed to consequential, damages
suffered by the Borrower which were caused by:
(i) the willful misconduct or gross negligence of
the Agent, the Banks, or any of them, in
determining whether documents presented under any
Standby Letter of Credit comply with the terms of
such Standby Letter of Credit; or
(ii) the willful or grossly negligent failure of
the Agent, the Banks, or any of them, to pay under
any Standby Letter of Credit after the
presentation to the Agent of a draft and
certificate strictly complying with the terms and
conditions of such Standby Letter of Credit.
(h) The Agent will endeavor to promptly notify each
Bank whenever a draft under a Standby Letter of Credit is
presented to the Agent for payment. If the Agent makes any
payment pursuant to the terms of any Standby Letter of
Credit and is not immediately reimbursed by the Borrower,
the Agent shall promptly notify each Bank of such payment
and shall direct each Bank to pay such Bank's Percentage of
the unreimbursed amount. Upon receipt of any such
notification prior to 1:00 p.m. (Minneapolis time) on a
Domestic Business Day, the recipient Bank shall be
unconditionally and irrevocably obligated to pay its
Percentage of the unreimbursed amount to the Agent in
immediately available funds prior to the close of business
on such date. Notices received after 1:00 p.m. (Minneapolis
time) shall be deemed to have been received on the following
Domestic Business Day. If payment is not made by a Bank
when due hereunder, interest on the unpaid amount shall
accrue from the date of the Agent's notification through the
date of payment at the Federal Funds Rate. After making
payment to the Agent under this subsection in connection
with a Standby Letter of Credit, a Bank shall be entitled to
participate to the extent of its Percentage in any
reimbursement obtained from the Borrower in respect of such
Standby Letter of Credit or in any amount added to the
outstanding principal balance of such Bank's Revolving Note
pursuant to Section 2.17(g) above.
(i) On the Commitment Termination Date or earlier
termination of the Commitments, the Borrower shall pay the
Agent in immediately available funds for deposit in the
Special Account an amount equal to the maximum aggregate
amount available to be drawn under all Standby Letters of
Credit then outstanding, assuming compliance with all
conditions for drawing thereunder. Amounts on deposit in
the Special Account may be applied by the Agent at any time
or from time to time to the Borrower's Obligation of
Reimbursement or any other obligations of the Borrower to
the Banks arising under this Agreement, in the Agent's sole
discretion, and shall not be subject to withdrawal by the
Borrower so long as the Agent maintains a security interest
therein. The Agent agrees to transfer any balance in the
Special Account to the Borrower at such time as the Agent is
required to release its security interest in the Special
Account under applicable law.
(j) The Borrower hereby pledges, and grants to the
Agent, as agent for itself and for the other Banks, a
security interest in, all funds held in the Special Account
from time to time and all proceeds thereof, as security for
the payment of all present and future Obligations of
Reimbursement and all other amounts due and to become due
from the Borrower to any Bank pursuant to this Agreement.
The Agent shall have full ownership and control of the
Special Account, and the Borrower shall have no right to
withdraw the funds maintained in the Special Account.
III
Conditions of Lending
III.1 Conditions Precedent to the Initial Advance.
The obligation of each Bank to make the initial Advance is
subject to the condition precedent that the Agent shall have
received on or before the day of such Advance all of the
following, each dated (unless otherwise indicated) such day, in
form and substance satisfactory to the Agent:
(a) The Revolving Notes, properly executed on behalf
of the Borrower.
(b) A certified copy of the resolutions of the Board
of Directors of the Borrower evidencing approval of this
Agreement and the Revolving Notes and other matters
contemplated hereby.
(c) Copies of the Certificate of Incorporation and
Bylaws of the Borrower, certified by the Secretary or
Assistant Secretary of the Borrower as being true and
correct copies thereof.
(d) Certificate of good standing of the Borrower,
dated not more than ten days before the date hereof from its
state of incorporation.
(e) A signed copy of an opinion of counsel for the
Borrower, addressed to the Banks as to matters referred to
in Sections 4.1, 4.2, 4.3 and 4.7, and as to such other
matters as the Banks may reasonably request, with that
opinion being acceptable to the Banks' counsel. In the case
of Section 4.1, the opinion as to licensing and
qualification of the Borrower and each Subsidiary may be
limited to the State where the headquarters of the Borrower
and each such Subsidiary is located. In the case of
Sections 4.2(iii) and (iv) and 4.7, the opinion may be to
the best knowledge of such counsel, and, in the case of
Section 4.3, insofar as it relates to enforcement of
remedies, it may be subject to applicable bankruptcy,
insolvency, reorganization or similar laws affecting the
rights of creditors generally from time to time, and to
general equity principles.
(f) A signed copy of a certificate of the Secretary
or an Assistant Secretary of the Borrower which shall
certify the names of the officers of the Borrower authorized
to sign this Agreement and the Notes and the other documents
or certificates to be delivered pursuant to this Agreement
by the Borrower or any of its officers, including requests
for Advances, together with the true signatures of such
officers. The Agent may conclusively rely on such
certificate until it shall receive a further certificate of
the Secretary or Assistant Secretary of the Borrower
canceling or amending the prior certificate and submitting
the signatures of the officers named in such further
certificate.
(g) Such other documents and information as the Agent
may reasonably request.
III.2 Conditions Precedent to All Advances, to the
Term Loan and to the Issuance of All Standby Letters of Credit.
The obligation of each Bank to make each Advance under Section
2.1 (including the initial Advance) and to make the Term Loan
under Section 2.4 and the obligation of the Agent to issue any
Standby Letter of Credit under Section 2.17 shall be subject to
the further condition precedent that on the date of such Advance,
Term Loan or Standby Letter of Credit, as the case may be:
(a) the representations and warranties contained in
Article IV are correct on and as of the date of such
Advance, Term Loan or Standby Letter of Credit, as the case
may be, as though made on and as of such date, except to the
extent that such representations and warranties relate
solely to an earlier date; and
(b) no event has occurred and is continuing, or would
result from such Advance, Term Loan or Standby Letter of
Credit, as the case may be, which constitutes a Default or
an Event of Default.
IV
Representations and Warranties
The Borrower represents and warrants to the Banks as follows:
IV.1 Corporate Existence and Power. The Borrower
and each Material Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly licensed or qualified
to transact business in all jurisdictions where the character of
the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary.
The Borrower has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under,
the Loan Documents.
IV.2 Authorization of Borrowing; No Conflict as to
Law or Agreements. The execution, delivery and performance by
the Borrower of the Loan Documents, and the borrowings from time
to time hereunder have been duly authorized by all necessary
corporate action and do and will not (i) require any consent or
approval of the stockholders of the Borrower, or any
authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule
or regulation (including, without limitation, Regulation X of the
Board of Governors of the Federal Reserve System) or of any
order, writ, injunction or decree presently in effect having
applicability to the Borrower or of the Certificate of
Incorporation or Bylaws of the Borrower, (iii) result in a breach
of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be
bound or affected, or (iv) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature upon or
with respect to any of the properties now owned or hereafter
acquired by the Borrower.
IV.3 Legal Agreements. This Agreement constitutes,
and the Notes, when executed and delivered by the Borrower
hereunder, will constitute, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms.
IV.4 Subsidiaries. Exhibit C hereto is a complete
and correct list of all present Subsidiaries and of the
percentage of the ownership of the Borrower or any other
Subsidiary in each as of the date of this Agreement. Except as
otherwise indicated in that Exhibit, all shares of each
Subsidiary owned by the Borrower or by any such other Subsidiary
are validly issued and fully paid and non-assessable.
IV.5 Financial Condition. The Borrower has
heretofore furnished the following financial statements to the
Banks: the audited annual financial statements of the Borrower as
of December 31, 1994, and the unaudited financial statements of
the Borrower for the three months ending May 31, 1995. Said
financial statements fairly present the financial condition of
the Borrower and its Subsidiaries on the dates thereof and the
results of their operations for the fiscal periods then ended,
and were prepared in accordance with generally accepted
accounting principles (except that unaudited interim statements
do not include footnotes or a statement of cash flows). The
Borrower's fiscal year ends as of each December 31.
IV.6 Adverse Change. There has been no Material
Adverse Occurrence in the business, properties or condition
(financial or otherwise) of the Borrower or any Subsidiary since
the date of the latest financial statement referred to in
Section 4.5.
IV.7 Litigation. Except as disclosed to the Banks
on Exhibit D hereto as of the date hereof and, otherwise, as
disclosed to the Banks from time to time in writing by the
Borrower, there are no actions, suits, proceedings or
arbitrations pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary or
the properties of the Borrower or any Subsidiary before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, if determined
adversely to the Borrower or that Subsidiary, would constitute a
Material Adverse Occurrence or which seeks a monetary recovery
against the Borrower or any Subsidiary in excess of $1,000,000.
IV.8 Regulations U and G. The Borrower is not
engaged in the business of extending or maintaining credit for
the purpose of purchasing or carrying margin stock (within the
meaning of Regulations U and G of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any
Advance or of the Term Loans will be used to purchase or carry
any margin stock or to extend or maintain credit to others for
the purpose of purchasing or carrying any margin stock.
IV.9 Taxes. The Borrower and each Subsidiary has
paid or caused to be paid to the proper authorities when due all
federal, state and local taxes required to be withheld by it. The
Borrower and each Subsidiary has filed all federal, state and
local tax returns which to the knowledge of the officers of the
Borrower are required to be filed, and the Borrower and each
Subsidiary have paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become
due.
IV.10 Titles and Liens. The Borrower or one of its
Subsidiaries has good title to each of the properties and assets
reflected in the latest balance sheet referred to in Section 4.5
(other than any sold, as permitted by Section 6.6), free and
clear of all mortgages, security interests, liens and
encumbrances, except for mortgages, security interests and liens
permitted by Section 6.1 and covenants, restrictions, rights,
easements and minor irregularities in title which do not
materially interfere with the business or operations of the
Borrower or such Subsidiary as presently conducted.
IV.11 ERISA. No Plan established or maintained by
the Borrower or any ERISA Affiliate of the Borrower which is
subject to Part 3 of Subtitle B of Title I of ERISA had an
accumulated funding deficiency (as such term is defined in
Section 302 of ERISA) in excess of $1,000,000 as of the last day
of the most recent fiscal year of such Plan ended prior to the
date hereof, and no liability to the Pension Benefit Guaranty
Corporation or the Internal Revenue Service in excess of such
amount has been, or is expected by the Borrower or any ERISA
Affiliate of the Borrower to be, incurred with respect to any
Plan of the Borrower or any ERISA Affiliate of the Borrower.
IV.12 Stock Exchange Membership. Each Subsidiary
engaged in the business of a securities broker or dealer is a
member in good standing of the New York Stock Exchange.
IV.13 Investment Company Act. The Borrower is not an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
V
Affirmative Covenants of the Borrower
So long as any Note or any Obligation of Reimbursement shall
remain unpaid or any Standby Letter of Credit shall remain
outstanding or the Commitments shall be outstanding, the Borrower
will comply with the following requirements, unless each Bank
shall otherwise consent in writing:
V.1 Financial Statements. The Borrower will deliver
to the Banks:
(a) as soon as available, and in any event within
90 days after the end of each fiscal year of the Borrower, a
copy of the annual audit report of the Borrower prepared on
a consolidated basis with the unqualified opinion of KPMG
Peat Marwick or other independent certified public
accountants selected by the Borrower and acceptable to the
Banks, which annual report shall include the consolidated
balance sheet of the Borrower and its Subsidiaries as at the
end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for the fiscal year then
ended, all in reasonable detail and all prepared in
accordance with generally accepted accounting principles
applied on a basis consistent with the accounting practices
applied in the annual financial statements referred to in
Section 4.5 (except as to any change noted and concurred
with by the Borrower's independent certified public
accountants), together with a certificate of the treasurer,
the chief financial officer or the controller of the
Borrower stating that such financial statements have been
prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting
practices reflected in the annual financial statements
referred to in Section 4.5 (except as to any change noted
and concurred with by the Borrower's independent certified
public accountants) and whether or not he or she has
knowledge of the occurrence of any Default or Event of
Default hereunder and, if so, stating in reasonable detail
the facts with respect thereto;
(b) as soon as available and in any event within
45 days after the end of each quarter of each fiscal year of
the Borrower (including the quarter ending in December),
consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as at the end of such quarter
and related consolidated and consolidating statements of
earnings and retained earnings of the Borrower and its
Subsidiaries for such quarterly period and for the year to
date, in reasonable detail and stating in comparative form
the figures for the corresponding date and period in the
previous year, all prepared in accordance with generally
accepted accounting principles (excluding footnotes and
statement of cash flows) applied on a basis consistent with
the accounting practices reflected in the annual financial
statements referred to in Section 4.5 (except as to any
change noted and concurred with by the Borrower's
independent certified public accountants) and certified by
the treasurer, the chief financial officer or the controller
of the Borrower, subject to year-end audit adjustments; and
accompanied by a certificate of that officer stating
(i) that such financial statements have been prepared in
accordance with generally accepted accounting principles
applied on a basis consistent with the accounting practices
reflected in the annual financial statements referred to in
Section 4.5 (except as to any change noted and concurred
with by the Borrower's independent certified public
accountants), and (ii) whether or not he or she has
knowledge of the occurrence of any Default or Event of
Default hereunder not reported before that time and remedied
and, if so, stating in reasonable detail the facts with
respect thereto and (iii) all relevant facts in reasonable
detail to evidence, and the computations as to, whether or
not the Borrower is in compliance with the requirements set
forth in Sections 5.8, 6.4, 6.8, 6.9 and 6.11;
(c) as soon as available and in any event within
30 days after the end of each calendar month which is not a
quarter-end month, consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries at the end of
such month and related consolidated and consolidating
statements of earnings and retained earnings of the Borrower
and its Subsidiaries for such month, in reasonable detail,
all prepared in accordance with generally accepted
accounting principles (excluding footnotes and statement of
cash flows) applied on a basis consistent with the
accounting practices reflected in the annual financial
statements referred to in Section 4.5 (except as to any
change noted and concurred with by the Borrower's
independent certified public accountants) and certified by
the treasurer, chief financial officer or the controller of
the Borrower subject to year-end audit adjustments; and
accompanied by a certificate of that officer as required in
subparagraph (b) above;
(d) as soon as available and in any event within
45 days after the end of each calendar month, the management
report of the Borrower customarily prepared by the Borrower
for its internal use;
(e) promptly upon their distribution, copies of all
financial statements, reports and proxy statements which the
Borrower shall have sent to all (or substantially all) of
its stockholders;
(f) promptly after the sending or filing thereof,
copies of all FOCUS II reports, proposed subordination
filings and notices of all violations of rules and
regulations of the Securities and Exchange Commission or any
national securities exchange which the Borrower or any
Subsidiary shall file with the Securities and Exchange
Commission or any national securities exchange;
(g) as promptly as practicable (but in any event not
later than 30 days) after an officer of the Borrower obtains
knowledge of the commencement thereof, notice in writing of
all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower or
any Subsidiary of the type described in Section 4.7 or which
seek a monetary recovery against the Borrower or such
Subsidiary in excess of $1,000,000;
(h) as promptly as practicable (but in any event not
later than five business days) after an officer of the
Borrower or any Subsidiary obtains knowledge of the
occurrence of any event which constitutes a Material Adverse
Occurrence, a Default or Event of Default, notice of such
occurrence, together with a detailed statement by a
responsible officer of the Borrower or the appropriate
Subsidiary of the steps being taken by the Borrower or the
appropriate Subsidiary to cure the effect of such event;
(i) immediately upon the occurrence thereof, notice
of the suspension or expulsion of any Subsidiary from
membership in the New York Stock Exchange;
(j) promptly upon becoming aware of the occurrence of
any Reportable Event or any "prohibited transaction," as
such term is defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA, in connection with any Plan or
any trust created thereunder, a written notice specifying
the nature thereof, what action the Borrower has taken, is
taking or proposes to take with respect thereto, and, when
known, any action taken or threatened by the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or
the Department of Labor with respect thereto;
(k) with reasonable promptness copies of (i) all
notices received by the Borrower or any of its ERISA
Affiliates of the Pension Benefit Guaranty Corporation's
intent to terminate any Plan or to have a trustee appointed
to administer any Plan; (ii) upon request of the Agent the
annual report (Form 5500 Series), including any supporting
schedules, filed by the Borrower or any of its ERISA
Affiliates with the Internal Revenue Service with respect to
each Plan; and (iii) all notices received by the Borrower or
any of its ERISA Affiliates from a Multiemployer Plan
concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA; and
(l) promptly upon any Material Subsidiary entering
into any agreement restricting such Material Subsidiary's
ability to make any payment to the Borrower (including,
without limitation, the payment of dividends, the
reimbursement of management and other intercompany charges,
expenses and accruals, the making of loans and advances or
the repayment of advances and other investments) in a manner
which is more onerous than restrictions applicable to such
Material Subsidiary under another agreement then in effect,
a certificate of the vice president and treasurer or chief
financial officer of the Borrower setting forth a
description of such restriction, a calculation showing the
effect, if any, of such restriction on all payments made by
such Material Subsidiary to the Borrower during the
preceding fiscal year had such restriction been in effect
and a projection of all payments (none of which shall be
inconsistent with such restriction) made or to be made by
such Material Subsidiary to the Borrower during the then
current fiscal year; and
(m) such other information respecting the financial
condition and results of operations of the Borrower or any
Subsidiary as the Agent or the Banks may from time to time
reasonably request.
V.2 Books and Records; Inspection and Examination.
The Borrower will keep, and will cause each Subsidiary to keep,
accurate books of record and account for itself in which true and
complete entries will be made in accordance with generally
accepted accounting principles consistently applied (except as to
any change noted and concurred with by the Borrower's independent
certified public accountants) and, upon request of either Bank,
will give any representative of such Bank access to, and permit
such representative to examine, copy or make extracts from, any
and all such books and records and related documents in its
possession, to inspect any of its properties and to discuss its
affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as
often as such Bank may reasonably request.
V.3 Compliance with Laws. The Borrower will, and
will cause each Subsidiary to, comply with the requirements of
applicable laws and regulations, the non-compliance with which
would materially and adversely affect its business or the
consolidated financial condition of the Borrower and its
Subsidiaries.
V.4 Payment of Taxes and Other Claims. The Borrower
will pay or discharge, and will cause each Subsidiary to pay or
discharge, when due, (a) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on
which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims
for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon any properties of the Borrower or
any Subsidiary; provided, that neither the Borrower nor any
Subsidiary shall be required to pay any such tax, assessment,
charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
V.5 Maintenance of Properties. The Borrower will
keep and maintain, and will cause each Subsidiary to keep and
maintain, all of its properties necessary or useful in its
business in good condition, repair and working order; provided,
however, that nothing in this Section shall prevent the Borrower
or any Subsidiary from discontinuing the operation and
maintenance of any of its properties if such discontinuance is,
in the judgment of the Borrower or the appropriate Subsidiary,
desirable in the conduct of its business and not disadvantageous
in any material respect to the Banks as holders of the Notes.
V.6 Insurance. The Borrower will, and will cause
each Subsidiary to, obtain and maintain insurance with insurers
believed by the Borrower to be responsible and reputable, in such
amounts and against such risks as is usually carried by companies
engaged in similar business and owning similar properties in the
same general areas in which the Borrower or such Subsidiary
operates.
V.7 Preservation of Corporate Existence. The
Borrower will, and will cause each Material Subsidiary to,
preserve and maintain its corporate existence and all of its
rights, privileges and franchises; provided, however, that
neither the Borrower nor any Material Subsidiary shall be
required to preserve any of its rights, privileges and franchises
if its Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Borrower or the appropriate Material Subsidiary and that the
loss thereof is not disadvantageous in any material respect to
the Banks as holders of the Notes.
V.8 Consolidated Net Worth. The Borrower will
maintain Consolidated Net Worth (i) from the date of this
Agreement through June 30, 2000 at an amount not less than the
greater of (A) $180,000,000 or (B) 90% of the Highest Quarterly
Reported Consolidated Net Worth.
V.9 Net Capital Rule. The Borrower will cause any
Subsidiary subject to the Securities and Exchange Commission's
Rule 15c3-1 to at all times maintain its net capital as required
thereby.
VI
Negative Covenants
So long as any Note or any Obligation of Reimbursement shall
remain unpaid or any Standby Letter of Credit shall remain
outstanding or the Commitments shall be outstanding, the Borrower
agrees that, without the prior written consent of each Bank:
VI.1 Liens. The Borrower will not create, incur,
assume or suffer to exist any mortgage, deed of trust, pledge,
lien, security interest, or other charge or encumbrance of any
nature on any of its assets, now owned or hereafter acquired, or
assign or otherwise convey any right to receive income;
excluding, however, from the operation of the foregoing:
(a) liens for taxes or assessments or other
governmental charges to the extent not required to be paid
by Section 5.4;
(b) Subject to Section 6.9 and Section 6.11, purchase
money mortgages, liens, or security interests (which term
for purposes of this subsection shall include conditional
sale agreements or other title retention agreements and
leases in the nature of title retention agreements including
capitalized lease obligations) upon or in property acquired
after the date hereof, or mortgages, liens or security
interests existing in such property at the time of
acquisition thereof; and
(c) mortgages, deeds of trust, pledges, liens,
security interests and assignments securing any indebtedness
for borrowed money, and capitalized lease obligations, in
existence on the date hereof listed in Exhibit E hereto.
VI.2 Indebtedness. The Borrower will not incur,
create, assume or permit to exist any indebtedness or liability
on account of deposits or advances or any indebtedness for
borrowed money, or any other indebtedness or liability evidenced
by notes, bonds, debentures or similar obligations, except:
(a) indebtedness evidenced by the Notes or arising or
existing in connection with any Standby Letter of Credit;
(b) indebtedness of the Borrower in existence on the
date hereof and listed in Exhibit E hereto, but not
including any extensions or renewals thereof;
(c) indebtedness of the Borrower to a Subsidiary;
(d) Subordinated Debt, or renewals thereof;
(e) subject to Section 6.9 and 6.11, purchase money
indebtedness of the Borrower secured by liens permitted by
subsection (b) of Section 6.1;
(f) a term loan of the Borrower with Norwest Bank
Minnesota, National Association, in an amount not to exceed
at any time $2,000,000;
(g) indebtedness incurred or assumed by the Borrower
in connection with acquisitions permitted by Section
6.4(c)(ii) and Section 6.4(c)(iii);
(h) indebtedness incurred or assumed by an Acquiring
Subsidiary in connection with acquisitions permitted by
Section 6.4A(b) and Section 6.4A(c); and
(i) indebtedness of the Borrower to any of the Banks
on account of irrevocable standby letters of credit (other
than the Standby Letters of Credit) issued by any such Bank
for the account of the Borrower, provided that (i) each such
letter of credit is issued to support obligations of Insight
Investment Management, Inc., a subsidiary of the Borrower,
to deliver securities to any unit investment trust, (ii)
each such letter of credit is issued with an expiry date not
later than 30 days after the date of issuance and (iii) the
aggregate face amount of all such letters of credit issued
and outstanding at any time plus all unpaid reimbursement
obligations of the Borrower in connection with all such
letters of credit does not exceed at any time $30,000,000.
VI.3 Guaranties. The Borrower will not assume,
guarantee, endorse or otherwise become directly or contingently
liable in connection with any obligations of any other Person,
except:
(a) the endorsement of negotiable instruments by the
Borrower for deposit or collection or similar transactions
in the ordinary course of business;
(b) guaranties, endorsements and other direct or
contingent liabilities in connection with the obligations of
other Persons in existence on the date hereof and listed in
Exhibit E hereto;
(c) in addition to any guaranties set forth in
Exhibit E, guaranties by the Borrower of indebtedness
(including capitalized lease obligations) and operating
leases of the Subsidiaries (other than the guaranties
permitted by Sections 6.3(d) and 6.3(e)); provided that the
sum of the aggregate principal amount of indebtedness
guaranteed plus the aggregate amount of all payments under
operating leases guaranteed under this clause shall not
exceed $3,000,000;
(d) a guaranty by the Borrower in favor of Norwest
Bank Minnesota, National Association of (i) subordinated
loans of up to $10,000,000 from Norwest Bank Minnesota,
National Association to Dain Bosworth Incorporated, and
(ii) a subordinated loan of $3,500,000 from Norwest Bank
Minnesota, National Association to Rauscher Pierce Refsnes,
Inc.; and
(e) a guaranty by the Borrower in favor of First Bank
National Association of (i) subordinated loans of up to
$10,000,000 from First Bank National Association to Dain
Bosworth Incorporated, and (ii) a subordinated loan of
$3,500,000 from First Bank National Association to Rauscher
Pierce Refsnes, Inc.
VI.4 Investments by Borrower. The Borrower will not
purchase or hold beneficially any stock or other securities or
evidences of indebtedness of, make or permit to exist any loans
or advances to, or make any investment or acquire any interest
whatsoever in, any other Person, except:
(a) in addition to transactions permitted by
subsections (b) through (e), investments in direct
obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America
having a maturity of one year or less, commercial paper
issued by U.S. corporations rated "A-1" or "A-2" by Standard
& Poors Corporation or "P-1" or "P-2" by Moody's Investors
Service or certificates of deposit or bankers' acceptances
having a maturity of one year or less issued by members of
the Federal Reserve having deposits in excess of
$100,000,000;
(b) in addition to transactions permitted by
subsections (a), (c), (d) and (e), investments in and loans
or advances to Subsidiaries, which investments, loans or
advances are existing on the date hereof and listed in
Exhibit E hereto, including any renewals or extensions
thereof provided that any such renewal or extension thereof
shall not increase the amount of any such investments, loans
or advances;
(c) in addition to transactions permitted by
subsections (a), (b), (d) and (e), initial investments to
acquire all or substantially all the assets or stock of any
Person that, after such investment, would be a Subsidiary,
provided that:
(i) the market value of all stock (which shall
consist solely of the stock of the Borrower) given by
the Borrower in connection with each acquisition under
this subsection does not exceed, for any fiscal year of
the Borrower, 30% of Consolidated Net Worth as of the
end of the most recent fiscal quarter for which
financial statements have been delivered to the Banks
pursuant to Section 5.1(b);
(ii) the sum of all cash consideration paid, the
current market value, as of the date of such
investment, of all property (excluding stock of the
Borrower) given and all Indebtedness incurred or
assumed (excluding in acquisitions of stock,
liabilities of the acquired Person other than those
assumed in writing, if any, by the Borrower) in
connection with each such acquisition under this
subsection does not exceed, for any fiscal year of the
Borrower, 10% of Consolidated Net Worth as of the end
of the most recent fiscal quarter for which financial
statements have been delivered to the Banks pursuant to
Section 5.1(b);
(iii) the sum of all cash consideration paid, the
current market value, as of the date of such
investment, of all property (excluding stock of the
Borrower) given and all Indebtedness incurred or
assumed (excluding in acquisitions of stock,
liabilities of the acquired Person other than those
assumed in writing, if any, by the Borrower) in
connection with all acquisitions under this
subsection (c) and all acquisitions under
Section 6.4A(b) does not exceed the aggregate amount of
$25,000,000;
(d) in addition to transactions permitted by
subsections (a) through (c) above and subsection (e) below,
investments in (valued as of the date of such investment) or
loans or advances to Subsidiaries, provided that:
(i) the aggregate amount of such investments,
loans or advances which are to Subsidiaries other than
ROG and which have a term or maturity of more than six
months when made shall not exceed $25,000,000 in the
aggregate at any one time outstanding; and
(ii) the aggregate amount of such investments, loans
or advances in or to ROG shall be without limitation.
(e) in addition to transactions permitted by
subsections (a) through (d) above, any investment in or loan
or advance to any Person other than a Subsidiary provided
that, after giving effect to such investment, loan or
advance, the aggregate amount of all such investments, loans
or advances made pursuant to this subsection (e) shall not
exceed, during any fiscal year of the Borrower, 1% of
Consolidated Net Worth as, of the end of the previous fiscal
year.
Section 6.4A Investments by Subsidiaries. The Borrower will
not permit any Subsidiary (for purposes of this Section, an
"Acquiring Subsidiary") to make initial investments to acquire
all or substantially all the assets or stock of any Person that,
after such investment, would be a Subsidiary unless:
(a) the market value of all stock (which shall consist solely
of the stock of the Borrower) given by such Acquiring
Subsidiary in connection with each such acquisition does not
exceed, for any fiscal year of the Borrower, 30% of
Consolidated Net Worth as of the end of the most recent
fiscal quarter for which financial statements have been
delivered to the Banks pursuant to Section 5.1(b);
(b) the sum of all cash consideration paid, the current
market value, as of the date of such investment, of all
property (excluding stock of the Borrower) given and all
Indebtedness incurred or assumed (excluding in stock
acquisitions, liabilities of the acquired Person, other than
those assumed in writing, if any, by the Acquiring
Subsidiary) by such Acquiring Subsidiary in connection with
each such acquisition does not exceed 10% of the
Consolidated Net Worth as of the end of the most recent
fiscal quarter for which financial statements have been
delivered to the Banks pursuant to Section 5.1(b); and
(c) the sum of all cash consideration paid, the current
market value, as of the date of such investment, of all
property (excluding stock of the Borrower) and Indebtedness
incurred or assumed (excluding in stock acquisitions,
liabilities of the acquired Person other than those assumed
in writing, if any, by the Acquiring Subsidiary) in
connection with all acquisitions under this Section 6.4A and
under Section 6.4(c)(iii) does not exceed the aggregate
amount of $25,000,000.
VI.5 Sale of Assets. Subject to section 6.6, the
Borrower will not, and will not permit any Material Subsidiary
to, sell, lease, assign, transfer or otherwise dispose of all or
a substantial part of its assets (whether in one transaction or
in a series of transactions) to any other Person other than in
the ordinary course of business, if such transaction or
transactions would be material to the Borrower and its
Subsidiaries on a consolidated basis, except that a wholly owned
Subsidiary of the Borrower may sell, lease, or transfer all or a
substantial part of its assets to the Borrower or another wholly
owned Subsidiary of the Borrower, and the Borrower or such other
wholly owned Subsidiary, as the case may be, may acquire all or
substantially all of the assets of the Subsidiary so to be sold,
leased or transferred to it.
VI.6 Restrictions on Issuance and Sale of Subsidiary
Stock. The Borrower will not:
(a) permit any Subsidiary to issue or sell any shares
of stock of any class of any Subsidiary to any other Person
(other than the Borrower or a wholly owned Subsidiary of the
Borrower), except for the purpose of qualifying directors or
satisfying preemptive rights or of paying a common stock
dividend on, or splitting, common stock of such Subsidiary;
or
(b) sell, transfer or otherwise dispose of any shares
of stock of any class (except to a wholly owned Subsidiary
of the Borrower or to qualify directors) of any subsidiary
or permit any Subsidiary to sell, transfer or otherwise
dispose of (except to the Borrower or a wholly owned
Subsidiary of the Borrower or to qualify directors) any
shares of stock of any class of any other Subsidiary.
VI.7 Consolidation and Merger. The Borrower will
not, and will not permit any Subsidiary to, consolidate with or
merge into any Person, or permit any other Person to merge into
it, or acquire (in a transaction analogous in purpose or effect
to a consolidation or merger) all or substantially all the assets
of any other Person; provided, however, that the restrictions
contained in this Section shall not apply to or prevent the
following actions so long as such action would not result in a
Default:
(a) the consolidation or merger of a Subsidiary with,
or a conveyance or transfer of its assets to, the Borrower
(if the Borrower shall be the continuing or surviving
corporation) or another then existing wholly owned
Subsidiary of the Borrower; or
(b) the acquisition of all or substantially all the
assets or stock of any Person in compliance with
Sections 6.4(c) or 6.4A.
VI.8 Subordinated Debt. The Borrower will not
(i) make any payment of any Subordinated Debt except as expressly
permitted by the subordination provisions thereof, (ii) give
security for all or any part of such Subordinated Debt;
(iii) amend or cancel the subordination provisions of such
Subordinated Debt; (iv) take or omit to take any action whereby
the subordination of such Subordinated Debt or any part thereof
to the Notes might be terminated, impaired or adversely affected;
or (v) omit to give the Agent prompt written notice of any
default under any agreement or instrument relating to such
Subordinated Debt by reason whereof such Subordinated Debt might
become or be declared to be immediately due and payable;
provided, however, that the prohibition set forth in clause (i)
above shall not apply to acquisitions by the Borrower of any
Subordinated Debt provided that such acquisitions are in exchange
for, or funded with proceeds from the sale of, the Borrower's
newly issued common or preferred stock.
VI.9 Expenditures for Fixed Assets. The Borrower
will not enter into any capitalized lease obligations having a
carrying value in excess of $20,000,000 in the aggregate at any
time outstanding. The Borrower will not, and will not permit any
Subsidiary to, make any capital expenditure, including
capitalized lease obligations permitted in this Section, if,
after giving effect to such expenditure, the aggregate amount of
such expenditures made by the Borrower and its Subsidiaries
combined will exceed $20,000,000 in any calendar year.
VI.10 Fiscal Year. The Borrower will not change the
ending date of its fiscal year from December 31.
VI.11 Operating Lease Obligations. The Borrower will
not enter into any operating lease subsequent to the date of this
Agreement if, after giving effect to such operating lease, the
aggregate amount of payments of the Borrower under all operating
leases of the Borrower in any fiscal year would exceed
$3,000,000.
VI.12 Dividends of the Borrower. The Borrower will
not declare or pay any dividends on any shares of any class of
stock of the Borrower or directly or indirectly apply any assets
of the Borrower to the redemption, retirement, purchase or other
acquisition of any shares of any class of stock of the Borrower
if an Event of Default has occurred and is continuing or if,
after giving effect to any such proposed declaration, payment or
application, an Event of Default would have occurred and be
continuing.
VI.13 Dividends of Material Subsidiaries of the
Borrower. The Borrower will not permit any Material Subsidiary
to enter into any credit agreement with any Person which
prohibits or otherwise limits in any way or to any extent the
ability of such Material Subsidiary to declare or pay dividends
to the Borrower.
VII
Events of Default, Rights and Remedies
VII.1 Events of Default. "Event of Default",
wherever used herein, means any one of the following events:
(a) Default in the payment of any interest on or
principal of any of the Notes or any Obligation of
Reimbursement when it becomes due and payable; or
(b) Default in the payment of any fees required under
Section 2.6 or 2.7 when the same become due and payable; or
(c) Default in the performance, or breach, of any
covenant or agreement on the part of the Borrower contained
in Section 5.8 hereof; or
(d) Default in the performance, or breach, of any
covenant or agreement of the Borrower in this Agreement or
any Standby Letter of Credit Application (other than a
covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section specifically dealt
with), and the continuance of such default or breach for a
period of 30 days after there has been given, by delivery or
first class mail to the Borrower, a written notice
specifying such default or breach and requiring it to be
remedied; or
(e) The Borrower or any Subsidiary shall be or become
insolvent, or admit in writing its inability to pay its
debts, as they mature, or make an assignment for the benefit
of creditors; or the Borrower or any, Subsidiary shall apply
for or consent to the appointment of any receiver, trustee,
or similar officer for it or for all or any substantial part
of its property; or such receiver, trustee or similar
officer shall be appointed without the application or
consent of the Borrower or any Subsidiary, as the case may
be, and such appointment shall continue undischarged for a
period of 30 days; or the Borrower or any Subsidiary shall
constitute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation
or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by
petition, application or otherwise) against the Borrower or
any Subsidiary; or any judgment, writ, warrant of attachment
or execution or similar process shall be issued or levied
against a substantial part of the property of the Borrower
or any Subsidiary and such judgment, writ, or similar
process shall not be released, vacated or fully bonded
within 30 days after its issue or levy; or
(f) A petition shall be filed by or against the
Borrower or any Subsidiary under the United States
Bankruptcy Code naming the Borrower or that Subsidiary as
debtor; or
(g) Any representation or warranty made by the
Borrower in this Agreement or by the Borrower (or any of its
officers) in any certificate, instrument, or statement
contemplated by or made or delivered pursuant to or in
connection with this Agreement, shall prove to have been
incorrect in any material respect when made; or
(h) The rendering against the Borrower of one or more
final judgments, decrees or orders for the payment of money
in the aggregate in excess of $3,000,000 and the continuance
of such judgment, decree or order unsatisfied and in effect
for any period of 30 consecutive days without a stay of
execution; or
(i) A default in payment of indebtedness aggregating
$500,000 or more under any bond, debenture, note or other
evidence of indebtedness of the Borrower or of any
Subsidiary (other than to Norwest Bank Minnesota, National
Association or to First Bank National Association) or under
any indenture or other instrument under which any such
evidence of indebtedness has been issued or by which it is
governed and the payment of such indebtedness shall be
accelerated or the holder of such indebtedness shall have
notified the Borrower of such default; or
(j) Any of the following shall have occurred and
result in liability to the Borrower in excess of $1,000,000:
any Plan shall have been terminated resulting in liability
to the Borrower, or a trustee shall have been appointed by
an appropriate United States District Court to administer
any Plan, or the Pension Benefit Guaranty Corporation shall
have instituted proceedings to terminate any Plan or to
appoint a trustee to administer any Plan, or withdrawal
liability shall have been asserted by a Multiemployer Plan;
or the Borrower or any ERISA Affiliate of the Borrower shall
have incurred any liability to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service or the Department
of Labor, or shall have incurred any unfunded liability (as
computed on a termination basis) owed to Plan participants
or their beneficiaries, in excess of $1,000,000 with respect
to any Plan; or any Reportable Event that the Agent
determines in good faith might constitute grounds for such
termination or appointment or for the imposition of such
liability shall have occurred and be continuing; or
(k) The New York Stock Exchange, any other national
securities exchange of which a Subsidiary is a member or on
which such Subsidiary has qualified for privileges or the
National Association of Securities Dealers, Inc. shall make
a decision or enter an order that (i) suspends such
Subsidiary in whole or in material part for a period
exceeding 60 days, or (ii) revokes such Subsidiary's
membership or privileges, or (iii) takes any other action
which will materially adversely affect the operations of
such Subsidiary; or
(l) The Securities and Exchange Commission shall
enter an order that (i) suspends for over 30 days or revokes
the registration of any Subsidiary as a broker or as a
dealer or both, (ii) suspends any Subsidiary as a member of
a national securities association or national securities
exchange in whole or in material part for a period exceeding
30 days, (iii) expels any Subsidiary as a member of a
national securities association or a national securities
exchange, or (iv) takes any other action which will
materially adversely affect the operations of any
Subsidiary; or
(m) The Securities Investor Protection Corporation
shall make an application for a decree adjudicating that
customers of any Subsidiary are in need of protection under
the Securities Investor Protection Act of 1970 and such
Subsidiary fails to obtain the dismissal of such application
within 30 days; or
(n) The Net Capital Ratio of ROG shall be below 6%
for any two consecutive calendar months or either Dain
Bosworth Incorporated or Rauscher Pierce Refsnes, Inc. shall
have net capital below $4,000,000 for any two consecutive
calendar months. For purposes of this subsection "Net
Capital Ratio" shall mean the net capital of ROG as a
percentage of aggregate debit items in accordance with the
Alternative Net Capital computation method; or
(o) An Event of Default (as defined therein) shall
have occurred and be continuing under that certain Term Loan
Agreement dated as of October 16, 1992, as the same has
heretofore or may hereafter be amended or restated from time
to time; or
(p) The Borrower shall repudiate, purport to revoke,
or fail to perform any of its obligations under any guaranty
given by the Borrower in favor of Norwest Bank Minnesota,
National Association or First Bank National Association; or
(q) A default in the payment of or performance (and,
in the case of a default in the performance of any
obligation other than a payment obligation, the continuance
of such default for a period of 30 days after there has been
given, by delivery or first class mail, written notice
specifying such default) of any obligation of the Borrower,
Dain Bosworth Incorporated, Rauscher Pierce Refsnes, Inc.,
ROG or any other Subsidiary of the Borrower to Norwest Bank
Minnesota, National Association or to First Bank National
Association under any bond, debenture, note or other
evidence of indebtedness or under any indenture, loan
agreement or other instrument under which such evidence of
indebtedness has been issued (other than a default in whose
performance is elsewhere in this Section specifically dealt
with).
The Agent shall send written notice to the Borrower pursuant to
Section 7.1(d) upon the request of either Bank.
VII.2 Rights and Remedies. Upon the occurrence of an
Event of Default or at any time thereafter until such Event of
Default is cured to the written satisfaction of each of the Banks
and upon request by either of the Banks, the Agent shall exercise
any or all of the following rights and remedies:
(a) Stop making Advances to the Borrower under
Section 2.1 and Section 2.3;
(b) By notice to the Borrower, declare the
Commitments to be terminated, whereupon the same shall
forthwith terminate;
(c) Not make the Term Loans to the Borrower under
Section 2.4;
(d) By notice to the Borrower, declare the entire
unpaid principal amount of the Notes then outstanding, all
interest accrued and unpaid thereon, and all fees and other
amounts payable under this Agreement to be forthwith due and
payable, whereupon such Notes, all such accrued interest and
all such fees and other amounts shall become and be
forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower;
(e) If any Standby Letter of Credit remains
outstanding, the Agent may, by notice to the Borrower,
require the Borrower to deposit in the Special Account
immediately available funds equal to the aggregate face
amount of all such outstanding Standby Letters of Credit;
and
(f) Exercise any other rights and remedies available
to the Banks by law or agreement.
In addition, upon the occurrence of an Event of Default or at any
time thereafter until such Event of Default is cured to the
written satisfaction of each of the Banks, each Bank may, without
notice to the Borrower and without further action, apply any and
all money owing by such Bank to the Borrower to payment of such
Bank's Note, including accrued interest, and of all fees and
other amounts owing by the Borrower hereunder. Notwithstanding
the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(f) hereof, the entire unpaid principal
amount of the Notes, all interest accrued and unpaid thereon, and
all fees and other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest
or notice of any kind.
VIII
The Agent
VIII.1 Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms hereof or
thereof, together with all such powers as are reasonably
incidental thereto. Each Bank agrees to reimburse the Agent for
such Bank's Percentage of all reasonable out-of-pocket expenses
(including attorneys' fees) incurred by the Agent hereunder or in
enforcing the Bank's rights hereunder or under the Notes. As to
any matters not expressly provided for by this Agreement, the
Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining
from acting) upon receipt of the same instruction from both
Banks; provided, however, that except for action expressly
required of the Agent hereunder, the Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it
shall be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action, and that
the Agent shall not in any event be required to take any action
which is contrary to this Agreement, the Loan Documents or
applicable law.
VIII.2 Agent and Affiliates. Norwest Bank
Minnesota, National Association ("Norwest") shall have the same
rights and powers under this Agreement as the other Bank and may
exercise or refrain from exercising the same as though it were
not the Agent, and Norwest and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business
with the Borrower or any affiliate of the Borrower as if it were
not the Agent hereunder.
VIII.3 Action by Agent. The obligations of the
Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent shall
not be required to take any action with respect to any Event of
Default or Default, except as expressly provided in Article VII
and subject to the provisions of Section 8.1.
VIII.4 Consultation with Experts. The Agent may
consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any
action taken, or omitted to be taken, by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
VIII.5 Liability of Agent. Neither the Agent nor
any of its directors, officers, agents, or employees shall be
liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of all of the
Banks other than the Agent or (ii) in the absence of its own
gross negligence or willful misconduct. Neither the Agent nor
any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder;
(ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of any of the Loan Documents. The
Agent shall not incur any liability in acting in reliance upon
any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, or similar writing) believed by
it to be genuine or to be signed by the proper party or parties.
VIII.6 Indemnification. Each Bank hereby
indemnifies and holds harmless the Agent, as well the Agent's
directors, officers, agents and employees, ratably according to
their respective Percentages from and against any and all losses,
liabilities, actions, suits, judgments, demands, damages, costs,
disbursements, or expenses (including attorney's fees and
expenses) of any kind or nature whatsoever, which are imposed on,
incurred by, or asserted against the Agent or its directors,
officers, agents or employees in any way relating to arising out
of this Agreement or the Loan Documents, or any action taken or
omitted to be taken by the Agent in connection therewith;
provided, however, that no Bank shall be liable for any portion
of any such losses, liabilities, actions, suits, judgments,
demands, damages, costs, disbursements or expenses resulting
solely from the gross negligence or willful misconduct of the
Agent.
IX
Miscellaneous
IX.1 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Agent or any Bank in exercising any
right, power or remedy under the Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy under the Loan Documents. The remedies provided in the
Loan Documents are cumulative and not exclusive of any remedies
provided by law.
IX.2 Amendments, Etc. No amendment, modification,
termination or waiver of any provision of any Loan Document, or
consent to any departure by the Borrower therefrom shall be
effective unless the same shall be in writing and signed by each
Bank. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar
or other circumstances.
IX.3 Addresses for Notices, Etc. Except as
otherwise expressly provided herein, all notices, requests,
demands and other communications provided for under the Loan
Documents shall be in writing and mailed by first class mail with
postage prepaid, or personally delivered or sent by telecopy to
the applicable party at its address indicated below:
If to the Borrower:
Inter-Regional Financial Group, Inc.
Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Attention: Senior Vice President and Treasurer
Telecopy No. (612) 371-7755
If to the Agent:
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0105
Attention: Vice President, Financial Institutions
Division
Telecopy No. (612) 667-7251
or, if to a Bank, mailed or personally delivered at its address
appearing on the signature pages hereof or at its telecopy number
appearing on the signature pages hereto, or, as to each party, at
such other address or telecopy number as shall be designated by
such party in a written notice to the other party complying as to
delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be effective (i)
if mailed, two Domestic Business Days after it has been deposited
in the mails with postage prepaid, addressed as aforesaid, (ii)
if personally delivered, when personally delivered, and (iii) if
sent by telecopy, when receipt is confirmed by the recipient
thereof, except that notices or requests to the Agent pursuant to
any of the provisions of Article II shall not be effective until
received by the Agent.
IX.4 Costs and Expenses. The Borrower agrees to pay
on demand all out-of-pocket costs and expenses incurred by the
Agent in connection with the negotiation, preparation, execution,
administration or amendment of the Loan Documents and the other
instruments and documents to be delivered hereunder and
thereunder, including the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto, and all
out-of-pocket expenses incurred by the Agent or any Bank in
connection with the enforcement of the Loan Documents and other
instruments and documents to be delivered hereunder and
thereunder, including the reasonable fees and out-of-pocket
expenses of legal counsel retained by the Agent or any Bank with
respect thereto.
IX.5 Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which counterparts of this Agreement taken together shall
constitute but one and the same instrument.
IX.6 Binding Effect, Assignment. The Loan Documents
shall be binding upon and inure to the benefit of the Borrower
and the Banks and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights
thereunder or any interest therein without the prior written
consent of all of the Banks and any assignment without said
consent shall be void.
IX.7 Governing Law. The Loan Documents shall be
governed by, and construed in accordance with, the laws of the
State of Minnesota.
IX.8 Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof.
IX.9 Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
IX.10 Indemnity. The Borrower hereby agrees to
indemnify, exonerate and hold each Bank, the Agent and each of
the officers, directors, employees and agents of each Bank and
the Agent (the "Bank Parties") free and harmless from and against
any action, cause of action, suit, liability and damage
("Liabilities") and all expenses incurred in connection therewith
(including, without limitation, reasonable attorneys' fees),
incurred by any Bank Party as a result of, arising out of or
relating to any transaction financed or to be financed in whole
or in part directly or indirectly with proceeds of any Advance or
Term Loan hereunder, except those Liabilities arising on account
of any Bank Party's gross negligence or willful misconduct.
IX.11 Amendment and Restatement. This Agreement is
an amendment to and complete restatement of the Existing Credit
Agreement and the indebtedness hereunder is a renewal of the
indebtedness thereunder.
X
Intercreditor Provisions
X.1 Pro Rata Sharing of Payments Applied to the
Notes. Each Bank agrees that if it shall apply any payment
(whether received by such Bank directly from the Borrower, by
exercising any right of setoff or counterclaim or otherwise) to
the principal and interest owing to such Bank under this
Agreement which application is in an amount greater than the
amount of payment applied by the other Bank to the principal and
interest owing to such other Bank under this Agreement, the Bank
applying such proportionately greater amount shall purchase such
participations in the obligations of the Borrower to the other
Bank, and such adjustments shall be made, as may be required so
that such payments of principal and interest with respect to
amounts owed by the Borrower to the Banks under this Agreement
shall be shared by the Banks pro rata based upon their respective
Percentages; provided, that nothing in this Section shall impair
the right of a Bank to receive any payment or to exercise any
right or remedy, including, without limitation, any right of
setoff or counterclaim and to apply the amount so received or
recovered to the payment of the Borrower's indebtedness to such
Bank other than the Borrower's indebtedness to such Bank under
this Agreement; provided, further, however, that if any such
payment shall be recovered or must otherwise be restored, such
purchase in respect thereof shall be rescinded, without interest.
X.2 Transfers of Notes. Each Bank shall be entitled
to sell participations in its Note then outstanding and its
interest in this Agreement, provided that the participant agrees
in writing that it does not have any right to vote or to direct
such Bank to vote with respect to any matters. Any other
transfer by a Bank of any interest in its Note or this Agreement
requires the written consent of the other Bank. In the event
that the holder of any Note (including any Bank) shall transfer
such Note as permitted by this Agreement, it shall immediately so
advise the Agent (which shall give prompt notice thereof to the
Borrower) of such transfer. The Agent shall be entitled to
assume conclusively that no transfer of any Note has been made by
any holder (including, any Bank) unless and until the Agent
receives notice to the contrary. Any request made or consent
given hereunder at any time by the then holder of any Note shall
be binding on any transferee of such Note.
X.3 Credit Decisions. Each Bank acknowledges that it
has made and relied upon, and will continue to make and rely
upon, its own independent investigation of the financial
condition and affairs of the Borrower and its own credit decision
to extend its Commitment and make Advances hereunder from time to
time.
X.4 Regulations U and G. Each Bank represents that
it in good faith is not relying, either directly or indirectly
upon any stock (as such term is defined in Regulations U and G
promulgated by the Board of Governors of the Federal Reserve
System) as collateral security for the extension or maintenance
by it of any credit provided for hereunder.
X.5 Other Transactions. Nothing contained herein
shall preclude any Bank or the Agent from engaging in any
transaction, in addition to those contemplated by this Agreement,
with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary would be permitted to engage with any
other Person.
X.6 No Beneficiaries. No third party is intended to
be the beneficiary of this Agreement.
X.7 Notice. Each Bank agrees to provide to the other
Bank a copy of any notice of default or acceleration relating to
indebtedness of the Borrower or any Subsidiary of the Borrower to
such Bank (other than under this Agreement) simultaneously with
such Bank's delivery of such notice to the Borrower. This
Section 10.7 is for the exclusive benefit of the Banks (and not
for the benefit of the Borrower or its Subsidiaries) and the
failure of a Bank to provide such simultaneous notice to the
other Bank shall not impair in any way the effectiveness of any
such notice given by such Bank to the Borrower or to any
Subsidiary of the Borrower.
[the remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
INTER-REGIONAL FINANCIAL GROUP, INC.
By Daniel J. Reuss
------------------------
Its Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Agent
By Edward J. Meyer, Jr.
------------------------
Its Vice President
Commitment: $7,500,000 NORWEST BANK MINNESOTA, NATIONAL
Percentage: 50% ASSOCIATION
By Edward J. Meyer, Jr.
------------------------
Its Vice President
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0105
Attention: Vice President,
Financial Institutions Division
Telecopy No. (612) 667-7251
Commitment: $7,500,000 FIRST BANK NATIONAL ASSOCIATION
Percentage: 50%
By Jose A. Peris
-----------------------
Its Vice President
First Bank Place MPFP0702
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Jose Peris
Telecopy No. (612) 973-0825
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A Revolving Note
Exhibit B Term Note
Exhibit C Schedule of Subsidiaries
Exhibit D Schedule of Litigation
Exhibit E Permitted Liens, Indebtedness and
Contingent Liabilities
Exhibit F Debt Subordination Agreement
Exhibit G Confirmation Certificate
Exhibit H Application and Agreement for Irrevocable
Standby Letter of Credit
<PAGE>
EXHIBIT A
REVOLVING NOTE
$7,500,000 Minneapolis, Minnesota
June 29, 1995
For value received, the undersigned, INTER-REGIONAL
FINANCIAL GROUP, INC., a Delaware corporation, hereby promises to
pay on June 30, 1997, to the order of _______________________,
(the "Bank"), at the main office of the Bank in Minneapolis,
Minnesota, or at any other place designated at any time by the
Bank, in lawful money of the United States of America and in
immediately available funds, the principal sum of Seven Million
Five Hundred Thousand Dollars ($7,500,000) or, if less, the
aggregate unpaid principal amount of all Advances (as defined in
the Credit Agreement) made by the Bank to the undersigned under
the Credit Agreement (defined below), together with interest on
the principal amount hereunder remaining unpaid from time to time
(the "Principal Balance") computed on the basis of the actual
number of days elapsed and a 360-day year, from the date hereof
until this Note is fully paid at the rate or rates and at the
times provided in the Credit Agreement of even date herewith by
and between the undersigned, the Bank, [First Bank National
Association] [Norwest Bank Minnesota, National Association] and
Norwest Bank Minnesota, National Association, as agent, as the
same may be amended or restated from time to time (the "Credit
Agreement").
This Note is a Revolving Note issued pursuant to, and
is subject to, the Credit Agreement, which, among other things,
provides for acceleration of the maturity hereof upon the
occurrence of an Event of Default (as defined in the Credit
Agreement).
This Note shall be immediately due and payable
(including unpaid interest accrued hereon) without demand or
notice thereof upon filing of a petition by or against the
undersigned under the United States Bankruptcy Code.
The undersigned hereby agrees to pay all costs of
collection, including reasonable attorneys' fees and legal
expenses, in the event this Note is not paid when due, whether or
not legal proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
INTER-REGIONAL FINANCIAL GROUP, INC.
By ______________________________
Its ______________________________
<PAGE>
EXHIBIT B
TERM NOTE
$______________ Minneapolis, Minnesota
June 30, 1997
For value received, the undersigned, INTER-REGIONAL
FINANCIAL GROUP, INC., a Delaware corporation, hereby promises to
pay on June 30, ____, to the order of _______________________,
(the "Bank"), at the main office of the Bank in Minneapolis,
Minnesota, or at any other place designated at any time by the
Bank, in lawful money of the United States of America and in
immediately available funds, the principal sum of _______________
______________________________________________ ($______________),
together with interest on the principal amount hereunder
remaining unpaid from time to time (the "Principal Balance")
computed on the basis of the actual number of days elapsed and a
360-day year, from the date hereof until this Note is fully paid
at the rate or rates and at the times provided in the Credit
Agreement dated as of June __, 1995, by and between the
undersigned, the Bank, [First Bank National Association] [Norwest
Bank Minnesota, National Association] and Norwest Bank Minnesota,
National Association, as agent, as the same has heretofore and
may hereafter be amended or restated from time to time (the
"Credit Agreement").
The Principal Balance shall be payable in __ equal
monthly installments of $______________ each, commencing on the
last day of July, 1997 and continuing on the same day of each
month thereafter until June 30, ____, when the entire remaining
Principal Balance and all accrued interest thereon shall be due
and payable.
This Note is a Term Note issued pursuant to, and is
subject to, the Credit Agreement, which, among other things,
provides for acceleration of the maturity hereof upon the
occurrence of an Event of Default (as defined in the Credit
Agreement).
This Note shall be immediately due and payable
(including unpaid interest accrued hereon) without demand or
notice thereof upon filing of a petition by or against the
undersigned under the United States Bankruptcy Code.
The undersigned hereby agrees to pay all costs of
collection, including reasonable attorneys' fees and legal
expenses, in the event this Note is not paid when due, whether or
not legal proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
INTER-REGIONAL FINANCIAL GROUP, INC.
By______________________________
Its______________________________
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, dated as of this 17th day of July, 1995, is
made by and between Louis C. Fornetti, a resident of the State of
Minnesota ("Employee"), and Inter-Regional Financial Group, Inc.,
a Delaware corporation (the "Company").
WHEREAS, Employee has been offered and has accepted the
position of Executive Vice President, Chief Financial Officer and
Treasurer of the Company; and
WHEREAS, the Company has agreed to grant Employee restricted
shares of the Company's Common Stock, par value $.125 per share
(the "Common Stock"), upon the terms and subject to the
conditions and other provisions set forth herein;
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Grant of Shares. Upon the terms and subject to
the conditions and other provisions set forth herein, effective
upon the commencement of Employee's employment by the Company,
Employee shall be and is hereby granted 12,200 restricted shares
of Common Stock (the "Shares"). The Shares may be either
authorized but unissued shares or shares purchased by the Company
in the open market.
Section 2. Vesting Schedule. The Shares granted to
Employee under this Agreement shall be subject to certain
restrictions and forfeiture as set forth in Section 3 below until
vested in accordance with the terms of this Agreement. Unless
forfeited pursuant to Section 3 below or accelerated pursuant to
Section 4 below, the Shares shall become vested according to the
following schedule: 50% on December 31, 1996 and 50% on
December 31, 1997.
Section 3. Restrictions and Forfeiture. Except as
otherwise set forth in Section 4 below, Employee may not sell,
transfer, pledge, subject to lien, assign or otherwise
hypothecate the Shares until such Shares have become vested in
accordance with the terms of Section 2 above. Any unvested
Shares shall be entirely forfeited (but any cash dividends
previously paid with respect thereto shall be retained by
Employee) in the event that Employee resigns from or abandons his
employment with the Company or is terminated by the Company for
"cause" (as defined below) prior to the vesting date with respect
thereto. For purposes of this Agreement, termination for "cause"
shall mean any termination of Employee's employment with the
Company as the result of any misconduct the Company reasonably
believes has been engaged in by Employee, including, without
limitation, Employee's violation of any law, rule or regulation
applicable to the Company or its business, Employee's wrongful
appropriation of funds or violation of any other applicable
Company policy, Employee's commission of any gross misdemeanor
or felony or any sanction of Employee by the Securities Exchange
Commission or any other governmental or self-regulatory body
having jurisdiction over the Company and/or its business.
Section 4. Lapse of Restrictions and Acceleration of
Vesting. All restrictions on the Shares set forth in Section 3
above shall lapse and the Shares shall become immediately fully
vested upon the earliest to occur of the following:
(a) The date of Employee's death or "disability"
(as defined below);
(c) The date on which Employee's employment with
the Company terminates, other than as a result of
Employee's resignation from or abandonment of his
employment or as a result of any termination by the
Company for "cause"; or
(d) The tenth day following the date on which a
"change in control" (as defined below) has occurred.
For purposes of this Agreement, "disability" shall mean
long-term disability as defined in the Company's Profit Sharing
Plan or any other plan of the Company then in effect which
generally defines "disability" for its participants.
For purposes of this Agreement, "change in control" shall
mean:
(I) The public announcement (which, for purposes
of this definition), shall include, without limitation,
a report filed pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") that any person, entity or "group,"
within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, other than the Company or any of its
subsidiaries, or the IFG Stock Bonus Plan or any other
employee benefit plan of the Company or any of its
subsidiaries, or any entity holding shares of Common
Stock organized, appointed or established for, or
pursuant to the terms of, any such plan, has become the
beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of
the combined voting power of the Company's then
outstanding voting securities in a transaction or
series of transactions;
(ii) The "continuing directors" (as defined
below) cease to constitute a majority of the Company's
Board of Directors;
(iii) The Company's shareholders approve (A) any
consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's stock
would be converted into cash, securities or other
property, other than a merger of the Company in which
shareholders immediately prior to the merger have the
same proportionate ownership of stock of the surviving
corporation immediately after the merger; (B) any sale,
lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or
substantially all of the assets of the Company; or (C)
any plan of liquidation or dissolution of the Company;
or
(iv) A majority of the continuing directors
determine, in their sole and absolute discretion, that
there has been a change in control of the Company.
For purposes of this Agreement, "continuing director" shall
mean any person who is a member of the Company's Board of
Directors, while such a person is a member of the Board, who is
not an "acquiring person" (as defined below) or an "affiliate" or
"associate" (as defined below) of an acquiring person, or a
representative of an acquiring person or of any such affiliate or
associate, and who (A) was a member of the Board on the date of
this Agreement, or (B) subsequently becomes a member of the
Board, if such person's initial nomination for election or
initial election to the Board is recommended or approved by a
majority of the continuing directors. "Acquiring person" shall
mean any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) who or which, together with all
affiliates and associates of such person, is the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the
Company's then outstanding securities, but shall not include the
Company, any subsidiary of the Company or any employee benefit
plan of the Company or of any subsidiary of the Company or any
entity holding shares of Common Stock organized, appointed or
established for, or pursuant to the terms of, any such plan; and
"affiliate" and "associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act.
Section 5. Rights as a Shareholder. The Shares will be
represented by a stock certificate registered in the name of
Employee. Except as otherwise provided in this Agreement,
Employee will have all voting, dividend, liquidation and other
rights with respect to the Shares as if such Employee were a
holder of record of shares of unrestricted Common Stock;
provided, however, that if any dividend is declared and paid by
the Company in any form other than cash, such noncash dividend
shall be subject to the same vesting schedule, forfeiture terms
and other restrictions as are applicable to the Shares on which
such dividends were paid.
Section 6. Enforcement of Restrictions. To enforce the
restrictions contained in this Agreement, a legend will be placed
on the stock certificates representing the shares stating that
such shares are subject to certain restrictions and referencing
this Agreement. In addition, until all of the Shares become
fully vested, the Company will retain the stock certificates,
together with duly endorsed stock powers therefor, in its
custody, subject, however, to the right of the Employee to
request delivery of any vested Shares as set forth in Section 7
below.
Section 7. Distribution of Shares. Upon becoming fully
vested in accordance with the terms of this Agreement, the Shares
shall become shares of unrestricted Common Stock and any legends
regarding the restrictions contained in this Agreement affixed to
the certificates representing the Shares shall be removed.
Employee shall be entitled to request delivery of the certificate
or certificates representing such unrestricted Shares at any time
after such vesting has occurred. The Company shall cause
delivery of such certificate or certificates to be made as soon
as practicable after all of the Shares become vested or after
receipt of a request from Employee with respect to any vested
portion of the Shares.
Section 8. Adjustments to Shares. In the event of any
reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off or any other change
in the corporate structure or shares of the Company), the Shares
shall be adjusted or replaced with the number and kind of
securities determined on the same basis as for all other issued
and outstanding shares of Common Stock.
Section 9. Securities Law and Other Restrictions.
Notwithstanding any other provision of this Agreement, Employee
may not sell, assign, transfer or otherwise dispose of the Shares
unless there is in effect with respect to such shares a
registration statement under the Securities Act of 1933, as
amended (the "Securities Act") and any applicable state
securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws. The Company
may condition any such sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of
Common Stock, as may be deemed necessary or advisable by the
Company in order to comply with such securities law or other
restrictions.
Section 10. Beneficiaries. Employee shall have the right
to designate in writing one or more beneficiaries to receive the
Shares in the event of his death prior to receiving full
distribution thereof, and may change or revoke any prior
beneficiary designation by similar instrument in writing prior to
his death. No such designation, change or revocation shall be
effective unless executed by Employee and delivered to the
Company during the lifetime of the Employee. If Employee shall
fail to designate a beneficiary or, having revoked a prior
beneficiary designation, shall fail to designate a new
beneficiary, or in the event the Employee's beneficiary
designation shall fail, in whole or in part, for any reason,
then the undistributed Shares shall be paid to the personal
representative of Employee's estate.
Section 11. Amendments. No change, modification or
amendment of this Agreement shall be valid unless the same is in
writing and signed by both parties hereto.
Section 12. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed effective as of the date and year first written
above.
Louis C. Fornetti
----------------------
Louis C. Fornetti
Inter-Regional Financial
Group, Inc.
By Irving Weiser
----------------------
President and
Chief Executive Officer
INTER-REGIONAL FINANCIAL GROUP NAMES
LOUIS FORNETTI CHIEF FINANCIAL OFFICER
MINNEAPOLIS, August 7, 1995 -- Inter-Regional Financial Group
(NYSE: IFG), parent company of regional broker-dealers Dain
Bosworth Incorporated, Minneapolis, and Rauscher Pierce Refsnes,
Inc., Dallas, today named Louis C. Fornetti executive vice
president, chief financial officer and treasurer. Fornetti, 45,
is a member of the IFG Executive Committee. In addition to
directing IFG's financial strategy, Fornetti has management
responsibility for financial controls and reporting as well as
the treasury, investor and corporate communications, legal and
corporate audit functions.
"We are delighted to be adding an executive of Lou Fornetti's
stature in the financial services industry to IFG's senior
executive team," stated Irving Weiser, IFG's chairman and chief
executive officer. "After a long and thoughtful search, we are
confident that Lou is just the right person to succeed John C.
Appel, who served as IFG's CFO before being promoted to president
and chief operating officer of Dain Bosworth in early 1994."
Previously, Fornetti was senior vice president and chief
financial officer of American Express Financial Advisors
(formerly IDS) in Minneapolis. He joined IDS as vice president
and corporate controller in 1985, was promoted to senior vice
president in 1988, and CFO in 1993. From 1979 to 1985 he was
with the St. Paul Companies, beginning as an accounting officer
of St. Paul Fire and Marine and being promoted up through the
ranks to vice president and corporate controller of the parent
company in 1983. From 1972 to 1979 he was with the accounting
firm of KPMG Peat Marwick in St. Paul.
A certified public accountant, Fornetti is a graduate of
Northern Michigan University in Marquette, Michigan. He and his
family make their home in Apple Valley, Minnesota.
Inter-Regional Financial Group is, through Dain Bosworth
Incorporated and Rauscher Pierce Refsnes, Inc., one of the
nation's largest full-service regional brokerage and investment
banking companies. IFG's two broker-dealers serve individual,
institutional, corporate and governmental clients in 24 states,
predominantly in the western half of the United States. IFG also
is the parent company of Regional Operations Group, an operations
and technology services subsidiary, and IFG Asset Management
Services, Inc., a financial services subsidiary which includes
Insight Investment Management, adviser to the Great Hall Funds.
The company's common stock is traded on the New York Stock
Exchange under the symbol IFG.
###
FOR MORE INFORMATION, CONTACT: B. J. French, (612) 371-2363
