SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 10-Q/A
Amendment No. 1 to Current Report
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8186
Dain Rauscher Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation of organization)
Dain Rauscher Plaza, 60 South Sixth Street
Minneapolis, Minnesota 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 371-2711
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 April 30, 1998, the Company had 12,383,313 shares of common
stock outstanding.
The undersigned registrant, Dain Rauscher Corporation (the
"Company"), hereby amends exhibits filed with its Current Report
on Form 10-Q for the quarter ended March 31, 1998 (initially
filed with the Commission on May 15, 1998) as indicated in Item 6
below.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits
Item No. Item Method of Filing
4 Amended and Restated Credit Agreement Filed herewith.
dated March 20, 1998.
4.1 Restated Certificate of Incorporation of Filed herewith.
the Company, as amended to date.
10 Employment Agreement dated March 31, 1998 Filed herewith.*
between the Company and Kenneth J. Wessels.
11 Computation of Net Earnings Per Share. Filed herewith.*
27 Financial Data Schedule (3 months ended Filed herewith.*
March 31, 1998).
27.1 Financial Data Schedule (Year ended Filed herewith.
December 31, 1996; 3 months ended March 31,
1997; 6 months ended June 30, 1997; 9 months
ended September 30, 1997).
27.2 Financial Data Schedule (Year ended Filed herewith.
December 31, 1995; 3 months ended March 31,
1996; 6 months ended June 30, 1996; 9 months
ended September 30, 1996).
99 Cautionary Statements for Purposes of the Filed herewith.
"Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.
* Refers to original Form 10-Q for the quarter ended March 31,
1998 filed on May 15, 1998.
SIGNATURES
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.
DAIN RAUSCHER CORPORATION
Registrant
Date: May 27, 1998 By David J. Parrin
-------------------------------
David J. Parrin
Senior Vice President
and Controller
(Principal Accounting Officer)
DAIN RAUSCHER CORPORATION
INDEX OF EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q/A
FOR QUARTER ENDED MARCH 31, 1998
(a) Exhibits
Item No. Item Method of Filing
4 Amended and Restated Credit Agreement Filed herewith.
dated March 20, 1998.
4.1 Restated Certificate of Incorporation Filed herewith.
of the Company, as amended to date.
10 Employment Agreement dated March 31, 1998 Filed herewith.*
between the Company and Kenneth J. Wessels.
11 Computation of Net Earnings Per Share. Filed herewith.*
27 Financial Data Schedule (3 months ended Filed herewith.*
March 31, 1998).
27.1 Financial Data Schedule (Year ended Filed herewith.
December 31, 1996; 3 months ended March 31,
1997; 6 months ended June 30, 1997; 9 months
ended September 30, 1997).
27.2 Financial Data Schedule (Year ended Filed herewith.
December 31, 1995; 3 months ended March 31,
1996; 6 months ended June 30, 1996; 9 months
ended September 30, 1996).
99 Cautionary Statements for Purposes of the Filed herewith.
"Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.
* Refers to original Form 10-Q for the quarter ended March 31,
1998 filed on May 15, 1998.
_________________________________________________________________
_________________________________________________________________
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 20, 1998
Among
DAIN RAUSCHER CORPORATION,
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION and
THE CHASE MANHATTAN BANK, as Banks and Co-Agents,
and THE BANK OF NEW YORK,
as a Bank
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1
Section 1.1 Defined Terms 1
Section 1.2 Accounting Terms and Calculations 10
Section 1.3 Computation of Time Periods 11
Section 1.4 Other Definitional Terms 11
ARTICLE II TERMS OF LENDING 11
Section 2.1 The Loans 11
(a) Revolving Loans 11
(b) Swing Line Loans 11
(c) Term Loans 12
Section 2.2 Advance Options 12
Section 2.3 Borrowing Procedures 12
(a) Request by Borrower 12
(b) Funding of Agent 13
Section 2.4 Continuation or Conversion of Loans 13
Section 2.5 The Notes 14
(a) Revolving Notes 14
(b) Swing Line Note 14
(c) Term Notes 14
Section 2.6 Funding Losses 15
Section 2.7 Refunding of Swing Line Loans 15
Section 2.8 Letters of Credit 17
Section 2.9 Extension of the Termination Date 21
Section 2.10 Use of Proceeds 23
ARTICLE III INTEREST AND FEES 23
Section 3.1 Interest 23
(a) Eurodollar Advances 23
(b) Federal Funds Rate Advances 23
(c) Interest After Maturity 24
Section 3.2 Facility Fees 24
Section 3.3 Computation 24
Section 3.4 Payment Dates 24
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF
THE CREDIT AND SETOFF 24
Section 4.1 Repayment 24
Section 4.2 Optional Prepayments 25
Section 4.3 Optional Reduction or Termination of Commitments
25
Section 4.4 Payments 25
Section 4.5 Proration of Payments 25
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS AND LETTERS OF
CREDIT 26
Section 5.1 Increased Costs 26
Section 5.2 Deposits Unavailable or Interest Rate
Unascertainable or Inadequate; Impracticability 27
Section 5.3 Changes in Law Rendering Eurodollar Advances
Unlawful 27
Section 5.4 Capital Adequacy 27
Section 5.5 Discretion of the Banks as to Manner of Funding
28
ARTICLE VI CONDITIONS PRECEDENT 28
Section 6.1 Conditions of Initial Loan or Initial Letters of
Credit 28
Section 6.2 Conditions Precedent to all Loans and all Letters of
Credit 29
ARTICLE VII REPRESENTATIONS AND WARRANTIES 30
Section 7.1 Organization, Standing, Etc. 30
Section 7.2 Authorization and Validity 30
Section 7.3 No Conflict; No Default 30
Section 7.4 Government Consent 30
Section 7.5 Financial Statements and Condition 31
Section 7.6 Litigation and Contingent Liabilities 31
Section 7.7 Compliance 31
Section 7.8 Environmental, Health and Safety Laws 31
Section 7.9 ERISA 31
Section 7.10 Margin Regulations 32
Section 7.11 Ownership of Property; Liens 32
Section 7.12 Taxes 32
Section 7.13 Trademarks, Patents 32
Section 7.14 Investment Company Act 32
Section 7.15 Public Utility Holding Company Act 33
Section 7.16 Subsidiaries 33
Section 7.17 Registered Broker-Dealer; Membership 33
Section 7.18 Assessments by the Securities Investor Protection
Corporation 33
ARTICLE VIII AFFIRMATIVE COVENANTS 33
Section 8.1 Financial Statements and Reports 33
Section 8.2 Corporate Existence 35
Section 8.3 Insurance 35
Section 8.4 Payment of Taxes and Claims 35
Section 8.5 Inspection 36
Section 8.6 Maintenance of Properties 36
Section 8.7 Books and Records 36
Section 8.8 Compliance 36
Section 8.9 ERISA 36
Section 8.10 Environmental Matters 36
Section 8.11 General Net Capital Requirement 36
ARTICLE IX NEGATIVE COVENANTS 36
Section 9.1 Merger and Consolidation 37
Section 9.2 Sale of Assets 37
Section 9.3 Plans 37
Section 9.4 Change in Nature of Business 37
Section 9.5 Ownership of Stock in Material Subsidiaries 37
Section 9.6 Other Agreements 37
Section 9.7 Restricted Payments 38
Section 9.8 Investments 38
Section 9.9 Indebtedness and Contingent Liabilities 38
Section 9.10 Liens 40
Section 9.11 Transactions with Related Parties 40
Section 9.12 Fiscal Year 40
Section 9.13 Minimum Consolidated Net Worth 41
Section 9.14 Minimum Net Capital Required for Dain Rauscher
Incorporated 41
Section 9.15 WAH Subordinated Debentures 41
ARTICLE X EVENTS OF DEFAULT AND REMEDIES 41
Section 10.1 Events of Default 41
Section 10.2 Remedies 43
Section 10.3 Letters of Credit 43
Section 10.4 Offset 44
ARTICLE XI THE AGENT 44
Section 11.1 Appointment and Grant of Authority 44
Section 11.2 Non Reliance on Agent 44
Section 11.3 Responsibility of the Agent and Other Matters 45
Section 11.4 Action on Instructions 46
Section 11.5 Indemnification 46
Section 11.6 U.S. Bank and Affiliates 46
Section 11.7 Notice to Holder of Notes 46
Section 11.8 Successor Agent 46
ARTICLE XII MISCELLANEOUS 47
Section 12.1 No Waiver and Amendment 47
Section 12.2 Amendments, Etc. 47
Section 12.3 Assignments 48
(a) Assignments 48
(b) Effectiveness of Assignments 48
(c) Tax Matters 49
(d) Information 49
(e) Federal Reserve Bank 49
Section 12.4 Costs, Expenses and Taxes; Indemnification 49
Section 12.5 Notices 50
Section 12.6 Successors 50
Section 12.7 Severability 50
Section 12.8 Subsidiary References 50
Section 12.9 Captions 50
Section 12.10 Entire Agreement 50
Section 12.11 Counterparts 51
Section 12.12 Confidentiality of Information 51
Section 12.13 Governing Law 51
Section 12.14 Consent to Jurisdiction 51
Section 12.15 Waiver of Jury Trial 51
Section 12.16 Restatement of Original Credit Agreement 52
Section 12.17 Survival of Certain Provisions of this Agreement
52
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 20, 1998, is by and
among DAIN RAUSCHER CORPORATION, a Delaware corporation (the
"Borrower"), the banks or financial institutions listed on the
signature pages hereof or which hereafter become parties hereto
by means of assignment and assumption as hereinafter described
(individually referred to as a "Bank" or collectively as the
"Banks"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, as agent for the Banks (in such capacity, the
"Agent").
RECITALS
WHEREAS, the Borrower and certain of the Banks have entered
into a Credit Agreement dated as of June 27, 1997 (as amended,
the "Original Credit Agreement"), pursuant to which such Banks,
subject to the terms and conditions set forth therein, agreed to
make loans to the Borrower and agreed to issue letters of credit
for the account of the Borrower;
WHEREAS, the obligation of the Borrower to repay the
revolving loans made by such Banks under the Original Credit
Agreement is evidenced by the Revolving Notes of the Borrower
dated June 27, 1997, payable to the order of such Banks (the
"Original Revolving Notes");
WHEREAS, the obligation of the Borrower to repay the swing
line loans made by the Swing Line Bank under the Original Credit
Agreement is evidenced by the Swing Line Note of the Borrower
dated June 27, 1997, payable to the order of the Swing Line Bank
(the "Original Swing Line Note");
WHEREAS, the Borrower has requested, among other things,
that (i) such Banks consent to the WAH Acquisition (defined
below), (ii) the Termination Date be extended, and (iii) The Bank
of New York be added as a Bank.
WHEREAS, the Banks are willing to grant the requests of the
Borrower pursuant to the terms of this Agreement, which shall
constitute an amendment to and a complete restatement of the
Original Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the Borrower and the Banks hereby agree
as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the
following respective meanings (and such meanings shall be equally
applicable to both the singular and plural form of the terms
defined, as the context may require):
"Advance": The portion of the outstanding Loans bearing
interest at an identical rate for an identical Interest Period,
provided that all Federal Funds Rate Advances shall be deemed a
single Advance. An Advance may be a "Eurodollar Advance" or
"Federal Funds Rate Advance" (each, a "type" of Advance).
"Adverse Event": The occurrence of any event that could
have material adverse effect on the business, operations,
property, assets or condition (financial or otherwise) of the
Borrower and the Subsidiaries as a consolidated enterprise or on
the ability of the Borrower or any other party obligated
thereunder to perform its obligations under the Loan Documents.
"Aggregate Commitment": The aggregate of the Commitments of
the Banks, being initially $50,000,000, as the same may be
reduced from time to time pursuant to Section 4.3.
"Aggregate Debit Items": With respect to any Person at any
time, the aggregate debit items of such Person at such time as
computed in accordance with the Formula for Determination of
Reserve Requirements for Brokers and Dealers, Exhibit A to Rule
15c3-3.
"Agent": U.S. Bank National Association, as agent for the
Banks hereunder and each successor, as provided in Section 11.8,
who shall act as Agent.
"Agreement": This Amended and Restated Credit Agreement, as
it may be amended, modified, supplemented, restated or replaced
from time to time.
"Applicable Eurodollar Rate Margin": A percentage equal to
(i) sixty-one one-hundredths of one percent (.61%) at all times
when the Borrower's senior debt (A) is not rated by Moody's or by
Standard & Poors, (B) if rated by Moody's and Standard & Poors,
has a rating of less than BBB- by Moody's and has a rating of
less than Baa3 by Standard & Poors, (C) if rated only by Moody's,
has a rating of less than BBB- by Moody's, or (D) if rated only
by Standard & Poors, has a rating of less than Baa3 by Standard &
Poors, and (ii) forty-five one-hundredths of one percent (.45%)
at all times when the Borrower's senior debt (A) if rated by
Moody's and Standard & Poors, has a rating of BBB- or better by
Moody's or has a rating of Baa3 or better by Standard & Poors,
(B) if rated only by Moody's, has a rating of BBB- or better by
Moody's, or (C) if rated only by Standard & Poors, has a rating
of Baa3 or better by Standard & Poors.
"Applicable Facility Fee Percentage": A percentage equal to
(i) fourteen one-hundredths of one percent (.14%) at all times
when the Borrower's senior debt (A) is not rated by Moody's or by
Standard & Poors, (B) if rated by Moody's and Standard & Poors,
has a rating of less than BBB- by Moody's and has a rating of
less than Baa3 by Standard & Poors, (C) if rated only by Moody's,
has a rating of less than BBB- by Moody's, or (D) if rated only
by Standard & Poors, has a rating of less than Baa3 by Standard &
Poors, and (ii) ten one-hundredths of one percent (.10%) at all
times when the Borrower's senior debt (A) if rated by Moody's and
Standard & Poors, has a rating of BBB- or better by Moody's or
has a rating of Baa3 or better by Standard & Poors, (B) if rated
only by Moody's, has a rating of BBB- or better by Moody's, or
(C) if rated only by Standard & Poors, has a rating of Baa3 or
better by Standard & Poors.
"Applicable Federal Funds Rate Margin": A percentage equal
to (i) eighty-five one-hundredths of one percent (.85%) at all
times when the Borrower's senior debt (A) is not rated by Moody's
or by Standard & Poors, (B) if rated by Moody's and Standard &
Poors, has a rating of less than BBB- by Moody's and has a rating
of less than Baa3 by Standard & Poors, (C) if rated only by
Moody's, has a rating of less than BBB- by Moody's, or (D) if
rated only by Standard & Poors, has a rating of less than Baa3 by
Standard & Poors, and (ii) seventy one-hundredths of one percent
(.70%) at all times when the Borrower's senior debt (A) if rated
by Moody's and Standard & Poors, has a rating of BBB- or better
by Moody's or has a rating of Baa3 or better by Standard & Poors,
(B) if rated only by Moody's, has a rating of BBB- or better by
Moody's, or (C) if rated only by Standard & Poors, has a rating
of Baa3 or better by Standard & Poors.
"Applicable Letter of Credit Margin": A percentage equal to
(i) sixty-eight one-hundredths of one percent (.68%) at all times
when the Borrower's senior debt (A) is not rated by Moody's or by
Standard & Poors, (B) if rated by Moody's and Standard & Poors,
has a rating of less than BBB- by Moody's and has a rating of
less than Baa3 by Standard & Poors, (C) if rated only by Moody's,
has a rating of less than BBB- by Moody's, or (D) if rated only
by Standard & Poors, has a rating of less than Baa3 by Standard &
Poors, and (ii) fifty-two one-hundredths of one percent (.52%) at
all times when the Borrower's senior debt (A) if rated by Moody's
and Standard & Poors, has a rating of BBB- or better by Moody's
or has a rating of Baa3 or better by Standard & Poors, (B) if
rated only by Moody's, has a rating of BBB- or better by Moody's,
or (C) if rated only by Standard & Poors, has a rating of Baa3 or
better by Standard & Poors.
"Assignee": As defined in Section 12.3(a).
"Assignment": As defined in Section 12.3(a).
"Assignment and Assumption Agreement": As defined in
Section 12.3(a).
"Business Day": Any day (other than a Saturday, Sunday or
legal holiday in the State of Minnesota or the State of New York)
on which national banks are permitted to be open in Minneapolis,
Minnesota, and national banks and state member banks are
permitted to be open in New York, New York, and, with respect to
Eurodollar Advances, a day on which dealings in Dollars may be
carried on by the Agent in the London interbank market.
"Capitalized Lease": Any lease which is or should be
capitalized on the books of the lessee in accordance with GAAP.
"Code": The Internal Revenue Code of 1986, as amended, or
any successor statute, together with regulations thereunder.
"Commitment": In the case of each Bank, the amount set
forth opposite such Bank's signature on the signature page of
this Agreement (or in the relevant Assignment and Assumption
Agreement for such Bank), as the same may be reduced from time to
time pursuant to Section 4.3 , or, as the context may require,
the agreement of each Bank to make Loans to the Borrower and to
participate in Swing Line Loans made to the Borrower and Letters
of Credit issued for the account of the Borrower up to such
amount, subject to the terms and conditions of this Agreement.
"Compliance Certificate": A certificate in the form of
Exhibit F, duly completed and signed by the treasurer or the
chief financial officer of the Borrower.
"Consolidated Net Income": The Borrower's consolidated net
income as determined in accordance with GAAP.
"Consolidated Net Worth": As of any date of determination,
the sum of the amounts set forth on the consolidated balance
sheet of the Borrower as the sum of the common stocks, preferred
stock, additional paid-in capital and retained earnings of the
Borrower (excluding treasury stock) as determined in accordance
with GAAP.
"Dain Rauscher Incorporated": Dain Rauscher Incorporated, a
Minnesota corporation.
"Dain Rauscher Incorporated Credit Agreement": The Credit
Agreement to be entered into on or about March 30, 1998, by and
among the Agent, the Banks and Dain Rauscher Incorporated
pursuant to which the Banks will loan $80,000,000 to Dain
Rauscher Incorporated, as the same may be amended, modified,
supplemented, restated or replaced from time to time.
"Dain Rauscher Lending Services": Dain Rauscher Lending
Services, Inc., a Minnesota corporation.
"Default": Any event which, with the giving of notice to
the Borrower or lapse of time, or both, would constitute an Event
of Default.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended, and any successor statute, together with
regulations thereunder.
"ERISA Affiliate": Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower
is a member and which is treated as a single employer under
Section 414 of the Code.
"Eurodollar Advance": An Advance designated as such in a
notice of borrowing under Section 2.3 or a notice of continuation
or conversion under Section 2.4.
"Eurodollar Interbank Rate": The average offered rate for
deposits in United States Dollars (rounded upwards, if necessary,
to the nearest 1/16 of 1%) for delivery of such deposits on the
first day of an Interest Period of a Eurodollar Advance, for the
number of days comprised therein (except in the case of a one (1)
week or two (2) week Interest Period, such rate shall be
determined on the basis of the number of days comprised in a one
(1) month Interest Period), which appears on the Reuters Screen
LIBO Page as of 11:00 a.m., Minneapolis time (or such other time
as of which such rate appears) on the Business Day that is two
Business Days preceding the first day of the Interest Period
(except in the case of a one (1) week Interest Period, such rate
shall be determined on the Business Day which is the first
Business Day of the Interest Period) or the rate for such
deposits determined by the Agent at such time based on such other
published service of general application as shall be selected by
the Agent for such purpose; provided, that in the event that the
Reuters Screen LIBO Page and such other published services of
general application are unavailable, the Agent may determine the
rate based on rates offered to the Agent for deposits in United
States Dollars (rounded upwards, if necessary, to the nearest
1/16 of 1%) in the interbank eurodollar market at such time for
delivery on the first day of the Interest Period for the number
of days comprised therein. "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuter Monitor Money
Rates Service (or such other page as may replace the LIBO Page on
that service for the purpose of displaying London interbank
offered rates of major banks for United States Dollar deposits).
"Eurodollar Rate (Reserve Adjusted)": A rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%)
calculated for the Interest Period of a Eurodollar Advance in
accordance with the following formula:
ERRA = Eurodollar Interbank Rate
1.00 - ERR
In such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA"
means "Eurodollar Rate (Reserve Adjusted)", in each instance
determined by the Agent for the applicable Interest Period. The
Agent's determination of all such rates for any Interest Period
shall be conclusive in the absence of manifest error.
"Eurodollar Reserve Rate": A percentage equal to the daily
average during such Interest Period of the aggregate maximum
reserve requirements (including all basic, supplemental, marginal
and other reserves), as specified under Regulation D of the
Federal Reserve Board, or any other applicable regulation that
prescribes reserve requirements applicable to Eurocurrency
liabilities (as presently defined in Regulation D) or applicable
to extensions of credit by the Agent the rate of interest on
which is determined with regard to rates applicable to
Eurocurrency liabilities. Without limiting the generality of the
foregoing, the Eurocurrency Reserve Requirement shall reflect any
reserves required to be maintained by the Agent against (i) any
category of liabilities that includes deposits by reference to
which the Eurodollar Interbank Rate is to be determined, or (ii)
any category of extensions of credit or other assets that
includes Eurodollar Advances.
"Event of Default": Any event described in Section 10.1.
"Facility Fees": As defined in Section 3.2.
"Federal Funds Rate": For any date of determination, the
interest rate per annum determined by U.S. Bank to be equal to
the average rate for overnight federal funds transactions with
members of the Federal Reserve System, arranged by federal funds
brokers, applicable to federal funds transactions on that date.
"Federal Funds Rate Advance": An Advance designated as such
in a notice of borrowing under Section 2.3 or a notice of
continuation or conversion under Section 2.4.
"Federal Reserve Board": The Board of Governors of the
Federal Reserve System or an successor thereto.
"GAAP": Generally accepted accounting principles as applied
in the preparation of the audited financial statements of Interra
Financial Incorporated (now Dain Rauscher Corporation), Dain
Bosworth Incorporated, Rauscher Pierce Refsnes, Inc. and Interra
Clearing Services Inc. (Dain Bosworth Incorporated, Rauscher
Pierce Refsnes, Inc. and Interra Clearing Services Inc. are now
merged into Dain Rauscher Incorporated) referred to in Section
7.5.
"Indebtedness": Without duplication, all obligations,
contingent or otherwise, which in accordance with GAAP should be
classified upon the obligor's balance sheet as liabilities, but
in any event including the following (whether or not they should
be classified as liabilities upon such balance sheet): (a)
obligations secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the obligation secured
thereby shall have been assumed and whether or not the obligation
secured is the obligation of the owner or another party; (b) any
obligation for the deferred purchase price of any property or
services, except Trade Accounts Payable, (c) any obligation as
lessee under any Capitalized Lease; (d) all guaranties,
endorsements and other contingent obligations in respect to
Indebtedness of others; (e) all repurchase transactions and all
swap transactions which are included as liabilities or
obligations under GAAP; and (f) undertakings or agreements to
reimburse or indemnify issuers of letters of credit.
"Interest Period" Either (a) for any Eurodollar Advance,
the period commencing on the borrowing date of such Eurodollar
Advance or the date a Federal Funds Rate Advance is converted
into such Eurodollar Advance, or the last day of the preceding
Interest Period for such Eurodollar Advance, as the case may be,
and ending on the numerically corresponding day one (1) week, two
(2) weeks, one (1) month, two (2) months, three (3) months or six
(6) months thereafter, as selected by the Borrower pursuant to
Section 2.3 or Section 2.4; provided, that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding
Business Day unless such next succeeding Business Day falls in
another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;
(ii) any Interest Period of one (1), two (2), three (3) or
six (6) months which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the
Termination Date.
"Lien": Any security interest, mortgage, pledge, lien,
hypothecation, judgment lien or similar legal process, charge,
encumbrance, title retention agreement or analogous instrument or
device (including, without limitation, the interest of the
lessors under Capitalized Leases and the interest of a vendor
under any conditional sale or other title retention agreement).
"Letters of Credit": As defined in Section 2.8(a).
"Letter of Credit Agreements": As defined in Section
2.8(c)(ix).
"Letter of Credit Participation Amount": As defined in
Section 2.8(a).
"Letter of Credit Obligations": The aggregate amount of all
possible drawings under all Letters of Credit plus all amounts
drawn under any Letter of Credit and not reimbursed by the
Borrower under the applicable Letter of Credit Agreement.
"Loans": The Revolving Loans and the Swing Line Loans or
the Term Loans, as the case may be.
"Loan Documents": This Agreement, the Notes, each Letter of
Credit Agreement and each other instrument, document, guaranty,
security agreement, mortgage, or other agreement executed and
delivered by the Borrower or any guarantor or party granting
security interests in connection with this Agreement, the Loans
or the Letter of Credit Obligations or any collateral for the
Loans or the Letter of Credit Obligations.
"Material Subsidiary":
(a) For so long as it shall be a Subsidiary of the Borrower,
Dain Rauscher Incorporated; and
(b) For any fiscal year of the Borrower, any other Subsidiary of
the 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.
"Moody's": Moody's Investors Services.
"Net Capital": Net Capital shall mean "net capital" as
defined in Rule 15c3-1.
"Notes": The Revolving Notes and the Swing Line Note or the
Term Notes, as the case may be.
"Original Credit Agreement": As defined in the Recitals to
this Agreement.
"Original Revolving Notes": As defined in the Recitals to
this Agreement.
"Original Swing Line Note": As defined in the Recitals to
this Agreement.
"Payment Date": Each of the following: (a) with respect to
each Eurodollar Advance, the last day of each Interest Period
and, if such Interest Period is in excess of three (3) months, on
the last day of each three (3) month period occurring after the
commencement of such Interest Period prior to the last day of
such Interest Period; (b) with respect to each Federal Funds Rate
Advance and for any fees including, without limitation, Facility
Fees, the last day of each calendar month, (c) unless the Banks
shall have made the Term Loans to repay the Revolving Loans in
accordance with the provisions of Section 2.1(c), the Termination
Date; and (d) if the Banks shall have made the Terms Loans to
repay the Revolving Loans in accordance with the provisions of
Section 2.1(c), the Term Loan Maturity Date.
"PBGC": The Pension Benefit Guaranty Corporation,
established pursuant to Subtitle A of Title IV of ERISA, and any
successor thereto or to the functions thereof.
"Percentage": As to any Bank, the percentage set forth
opposite such Bank's signature on the signature page of this
Agreement (or in the relevant Assignment and Assumption Agreement
for such Bank) (i.e., the proportion, expressed as a percentage,
that such Bank's Commitment bears to the Aggregate Commitment).
"Person": Any natural person, corporation, partnership,
joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.
"Plan": An employee benefit plan or other plan, maintained
for employees of the Borrower or of any ERISA Affiliate, and
subject to Title IV of ERISA or Section 412 of the Code.
"Reference Rate": The rate of interest from time to time
publicly announced by U.S. Bank as its "reference rate." U.S.
Bank may lend to its customers at rates that are at, above or
below the Reference Rate. For purposes of determining any
interest rate which is based on the Reference Rate, such interest
rate shall change on the effective date of any change in the
Reference Rate.
"Related Party": Any Person (other than a Subsidiary): (a)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with,
the Borrower, or (b) 5% or more of the equity interest of which
is beneficially owned or held by the Borrower or a Subsidiary.
The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Refunded Swing Line Loans": As defined in Section 2.7(a).
"Regulations T, U and X": Regulations T, U and X of the
Board of Governors of the Federal Reserve System.
"Reportable Event": A reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
Section, with respect to a Plan, excluding, however, such events
as to which the PBGC by regulation has waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the
minimum funding standard of Section 412 of the Code and Section
302 of ERISA shall be a reportable event regardless of the
issuance of any such waivers in accordance with Section 412(d) of
the Code.
"Required Banks": Those Banks whose total Percentage of the
Commitments equals or exceeds 66-2/3%, or if the Commitments have
been terminated, those Banks whose share of the outstanding
principal of the Loans constitutes at least 66-2/3% of the
aggregate outstanding principal of all Loans.
"Revolving Loans": The Loans described in Section 2.1(a).
"Revolving Notes": The promissory notes of the Borrower
described in Section 2.5(a), substantially in the form of Exhibit
A-1, as such promissory notes may be amended, modified or
supplemented from time to time, and such term shall include any
substitutions for, or renewals of, such promissory notes.
"Rule 15c3-1": Rule 15c3-1 of the General Rules and
Regulations as promulgated by the Securities and Exchange
Commission under the Securities and Exchange Act of 1934, as
amended (17 CFR 240.15c3-1), as such Rule may be amended from
time to time, or any rule or regulation which replaces Rule 15c3-
1.
"Rule 15c3-3": Rule 15c3-3 of the General Rules and
Regulations as promulgated by the Securities and Exchange
Commission under the Securities and Exchange Act of 1934, as
amended (17 CFR 240.15c3-3), as such Rule may be amended from
time to time, or any rule or regulation which replaces Rule 15c3-
3.
"Subsidiary": Any Person of which or in which the Borrower
and its other Subsidiaries own directly or indirectly 50% or more
of: (a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a
majority of the board of directors of such Person, if it is a
corporation, (b) the capital interest or profit interest of such
Person, if it is a partnership, joint venture, limited liability
company or similar entity, or (c) the beneficial interest of such
Person, if it is a trust, association or other unincorporated
organization.
"Standard & Poors": Standard & Poors Corporation.
"Swing Line Commitment": $5,000,000, or, as the context may
require, the agreement of the Swing Line Bank to make the Swing
Line Loans to the Borrower subject to the terms and conditions of
this Agreement.
"Swing Line Bank": U.S. Bank.
"Swing Line Loans": The Loans described in Section 2.1(b).
"Swing Line Note": The promissory note of the Borrower
described in Section 2.5(b), substantially in the form of Exhibit
A-2, as such promissory note may be amended, modified or
supplemented from time to time, and such term shall include any
substitutions for, or renewals of, such promissory note.
"Swing Line Participation Amount": As defined in Section
2.7(b).
"Term Loans": The Loans described in Section 2.1(c).
"Term Notes": The promissory notes of the Borrower
described in Section 2.5(c), substantially in the form of Exhibit
A-3, as such promissory notes may be amended, modified or
supplemented from time to time, and such term shall include any
substitutions for, or renewals of, such promissory notes.
"Term Loan Maturity Date": The second (2nd) anniversary of
the date on which the Banks make the Term Loans to the Borrower
under Section 2.1(c).
"Termination Date": The earliest of (a) March 19, 1999, or
such later date to which the Termination Date is extended
pursuant to the provisions of Section 2.9, (b) the date on which
the Commitments are terminated pursuant to Section 10.2 hereof or
(c) the date on which the Commitments are reduced to zero
pursuant to Section 4.3 hereof.
"Trade Accounts Payable": The trade accounts payable of any
Person with a maturity of not greater than 90 days incurred in
the ordinary course of such Person's business.
"Unrefunded Swing Line Loans": As defined in Section
2.7(b).
"U.S. Bank": U.S. Bank National Association, in its
individual capacity and not as Agent hereunder.
"WAH": Collectively, Wessels, Arnold & Henderson Group,
L.L.C., a Delaware limited liability company, and Wessels, Arnold
& Henderson, L.L.C., a Delaware limited liability company.
"WAH Acquisition": The acquisition and merger of WAH into
Dain Rauscher Incorporated, with Dain Rauscher Incorporated as
the surviving corporation, pursuant to the terms and conditions
of the WAH Acquisition Agreement.
"WAH Acquisition Agreement": The Agreement and Plan of
Merger dated as of February 8, 1998, among Dain Rauscher
Corporation, Dain Rauscher Incorporated and WAH.
"WAH Subordinated Debentures": The subordinated debentures
issued by the Borrower to the members of WAH in the aggregate
principal amount of $30,000,000, with the entire principal
balance of such subordinated debentures being due and payable on
March 31, 2003.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms
used herein shall be interpreted and all accounting
determinations hereunder (including, without limitation,
determination of compliance with financial ratios and
restrictions in Articles VIII and IX hereof) shall be made in
accordance with GAAP consistently applied. Any reference to
"consolidated" financial terms shall be deemed to refer to those
financial terms as applied to the Borrower and its Subsidiaries
in accordance with GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in
the computation of a period of time from a specified date to a
later specified date, unless otherwise stated the word "from"
means "from and including" and the word "to" or "until" each
means "to but excluding."
Section 1.4 Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. References to
Sections, Exhibits, schedules and like references are to this
Agreement unless otherwise expressly provided.
ARTICLE II TERMS OF LENDING
Section 2.1 The Loans.
(a) Revolving Loans. Subject to the terms and conditions of
this Agreement and in reliance upon the warranties of the
Borrower in this Agreement, each Bank agrees, severally and not
jointly, to make revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower from time to
time from the date hereof until the Termination Date, during
which period the Borrower may repay and reborrow in accordance
with the provisions hereof, provided, that (i) the aggregate
unpaid principal amount of such Bank's Revolving Loans, such
Bank's Letter of Credit Participation Amount and such Bank's
Swing Line Participation Amount at any one time shall not exceed
its Commitment, and (ii) the aggregate unpaid principal amount of
all outstanding Loans and all Letter of Credit Obligations shall
not at any time exceed the Aggregate Commitment. The Revolving
Loans shall be made by the Banks on a pro rata basis, calculated
for each Bank based on its Percentage.
(b) Swing Line Loans. Subject to the terms and conditions of
this Agreement and in reliance upon the warranties of the
Borrower in this Agreement, the Swing Line Bank agrees to make
revolving loans (each a "Swing Line Loan" and, collectively, the
"Swing Line Loans") to the Borrower from time to time from the
date hereof until the Termination Date, during which period the
Borrower may repay and reborrow in accordance with the provisions
hereof, provided, that the aggregate unpaid principal amount of
the Swing Line Loans at any one time outstanding shall not exceed
the Swing Line Commitment. The Borrower acknowledges that the
Swing Line Bank contemplates that a Swing Line Loan will not be
outstanding for more than six (6) consecutive Business Days, and
in no event shall a Swing Line Loan be outstanding for more than
ten (10) consecutive calendar days.
(c) Term Loans. Provided that no Default or Event of Default
shall have occurred and be continuing and subject to the other
terms and conditions of this Agreement and in reliance upon the
warranties of the Borrower in this Agreement, each Bank agrees,
severally and not jointly, to make a single term loan (each a
"Term Loan" and, collectively, the "Term Loans") to the Borrower,
on the Termination Date, in an amount equal to the then
outstanding principal balance of the Revolving Loans made by such
Bank to the Borrower. The proceeds of each Bank's Term Loan
shall be simultaneously applied by such Bank to the repayment 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. The Borrower shall deliver to each Bank its
respective Term Note, appropriately completed and properly
executed on behalf of the Borrower, prior to the funding of the
Term Loans.
Section 2.2 Advance Options. The Revolving Loans and the Term
Loans shall consist of Eurodollar Advances and Federal Funds Rate
Advances, as shall be selected by the Borrower, except as
otherwise provided herein. The Swing Line Loans shall be Federal
Funds Rate Advances, and may not be converted into Eurodollar
Advances. Any combination of types of Advances may be
outstanding at the same time, except that the total number of
outstanding Eurodollar Advances shall not exceed three (3) at any
one time. Each Eurodollar Advance shall be in a minimum amount
of $1,000,000 or in an integral multiple of $500,000 above such
amount. Each Federal Funds Rate Advance shall be in an amount
that is an integral multiple of $500,000. Federal Funds Rate
Advances shall not be outstanding for more than ten (10)
consecutive calendar days.
Section 2.3 Borrowing Procedures.
(a) Request by Borrower. Any request by the Borrower for a Loan
shall be in writing, or by telephone promptly confirmed in
writing, and must be given so as to be received by the Agent not
later than:
(i) 10:00 a.m., Minneapolis time, on the date of any requested
Revolving Loans that shall be comprised of Federal Funds Rate
Advances;
(ii) 10:00 a.m., Minneapolis time, on the date of any requested
Revolving Loans that shall be, or shall include, a Eurodollar
Advance having an Interest Period of one (1) week;
(iii) 10:00 a.m., Minneapolis time, two (2) Business days
prior to the date of any requested Revolving Loans that shall be,
or shall include, a Eurodollar Advance having an Interest Period
of two (2) weeks or longer;
(iv) 2:00 p.m., Minneapolis time, on the date of any requested
Swing Line Loan; or
(v) at any time during the period from May 1 through June 15
prior to the Termination Date for the Term Loans.
Each request for a Loan shall specify (1) the borrowing date
(which shall be a Business Day), (2) the amount of such Loan and
if Revolving Loans or Term Loans, the type or types of Advances
comprising such Loans, and (3) if such Revolving Loans or Term
Loans shall include Eurodollar Advances, the initial Interest
Periods for such Eurodollar Advances.
(b) Funding of Agent. The Agent shall promptly notify each
other Bank of the receipt of such request, the matters specified
therein, and of such Bank's Percentage of the requested Loans.
On the date of the requested Revolving Loans, each Bank shall
provide its share of the requested Loans to the Agent in
immediately available funds not later than 1:00 p.m., Minneapolis
time. On the date of any requested Swing Line Loans, the Swing
Line Bank shall provide the requested Swing Line Loan to the
Agent in immediately available funds not later than 4:00 p.m.,
Minneapolis time. Unless the Agent determines that any
applicable condition specified in Article VI has not been
satisfied, the Agent will make the requested Loans available to
the Borrower at the Agent's principal office in Minneapolis,
Minnesota in immediately available funds not later than 5:00 p.m.
(Minneapolis time) on the lending date so requested. If the
Agent has made a Loan to the Borrower on behalf of a Bank but has
not received the amount of such Loan from such Bank by the time
herein required, such Bank shall pay interest to the Agent on the
amount so advanced at the Federal Funds Rate from the date of
such Loan to the date funds are received by the Agent from such
Bank, such interest to be payable with such remittance from such
Bank of the principal amount of such Loan (provided, however,
that the Agent shall not make any Loan on behalf of a Bank if the
Agent has received prior notice from such Bank that it will not
make such Loan). If the Agent does not receive payment from such
Bank by the next Business Day after the date of any Loan, the
Agent shall be entitled to recover such Loan, with interest
thereon at the rate then applicable to such Loan, on demand, from
the Borrower, without prejudice to the Agent's and the Borrower's
rights against such Bank. If such Bank pays the Agent the amount
herein required with interest at the overnight Federal Funds Rate
before the Agent has recovered from the Borrower, such Bank shall
be entitled to the interest payable by the Borrower with respect
to the Loan in question accruing from the date the Agent made
such Loan.
Section 2.4 Continuation or Conversion of Loans. The Borrower
may elect to (i) continue any outstanding Eurodollar Advance from
one Interest Period into a subsequent Interest Period to begin on
the last day of the earlier Interest Period, or (ii) convert any
outstanding Advance into another type of Advance (on the last day
of an Interest Period only, in the instance of a Eurodollar
Advance), by giving the Agent notice in writing, or by telephone
promptly confirmed in writing, given so as to be received by the
Agent not later than:
(a) 10:00 a.m., Minneapolis time, on the date of the requested
continuation or conversion, if the continuing or converted
Advance shall be a Federal Funds Rate Advance;
(b) 10:00 a.m., Minneapolis time, on the date of the requested
continuation or conversion, if the continuing or converted
Advance shall be a Eurodollar Advance having an Interest Period
of one (1) week; or
(c) 10:00 a.m., Minneapolis time, two (2) Business days prior to
the date of the requested continuation or conversion, if the
continuing or converted Advance shall be a Eurodollar Advance
having an Interest Period of two (2) weeks or longer.
Each notice of continuation or conversion of an Advance shall
specify (i) the effective date of the continuation or conversion
date (which shall be a Business Day), (ii) the amount and the
type or types of Advances following such continuation or
conversion (subject to the limitation on amount set forth in
Section 2.2), and (iii) for continuation as, or conversion into,
Eurodollar Advances, the Interest Periods for such Advances.
Absent timely notice of continuation or conversion, each
Eurodollar Advance shall automatically convert into a Federal
Funds Rate Advance on the last day of an applicable Interest
Period, unless paid in full on such last day. No Advance shall
be continued as, or converted into, a Eurodollar Advance if a
Default or Event of Default shall exist or if the shortest
Interest Period for such Advance may not transpire prior to the
Termination Date in the case of a Revolving Loan or the Term Loan
Maturity Date in the case of a Term Loan.
Section 2.5 The Notes. The Loans shall be evidenced by the
following Notes:
(a) Revolving Notes. The Revolving Loans of each Bank shall be
evidenced by a promissory note of the Borrower (each a "Revolving
Note" and collectively for all Banks, the "Revolving Notes"),
substantially in the form of Exhibit A-1 hereto, in the amount of
such Bank's Commitment originally in effect and dated as of the
date of this Agreement (or dated as of the relevant date of the
Assignment and Assumption Agreement for such Bank). The
Revolving Notes have been issued in replacement of, and in
substitution for, but not in payment of, the Original Revolving
Notes. Each Bank shall enter in its respective records the
amount of each Revolving Loan, the rate or rates of interest
borne by its Revolving Loans and the payments made on the
Revolving Loans, and such records shall be deemed conclusive
evidence of the subject matter thereof, absent manifest error.
(b) Swing Line Note. The Swing Line Loans of the Swing Line
Bank shall be evidenced by a promissory note of the Borrower (the
"Swing Line Note "), substantially in the form of Exhibit A-2
hereto, in the amount of the Swing Line Commitment. The Swing
Line Note has been issued in replacement of, and in substitution
for, but not in payment of, the Original Swing Line Note. The
Swing Line Bank shall enter in its records the amount of each
Swing Line Loan and the payments made on the Swing Line Loans,
and such records shall be deemed conclusive evidence of the
subject matter thereof, absent manifest error.
(c) Term Notes. The Term Loan of each Bank shall be evidenced
by a promissory note of the Borrower (each a "Term Note" and,
collectively for all Banks, the "Term Notes"), substantially in
the form of Exhibit A-3 hereto, in the amount of such Bank's
outstanding Revolving Advances immediately prior to making the
Term Loan and dated as of the Termination Date. Each Bank shall
enter in its respective records the amount of its Term Loan, the
rate or rates of interest borne by its Term Loan and the payments
made on its Term Loan, and such records shall be deemed
conclusive evidence of the subject matters thereof, absent
manifest error.
Section 2.6 Funding Losses. The Borrower will indemnify each
Bank upon demand against any loss or expense which such Bank may
sustain or incur (including, without limitation, any loss or
expense sustained or incurred in obtaining, liquidating or
employing deposits or other funds acquired to effect, fund, or
maintain any Advance) as a consequence of (i) any failure of the
Borrower to make any payment when due of any amount due hereunder
or under any Note, (ii) any failure of the Borrower to borrow,
continue or convert an Advance on a date specified therefor in a
notice thereof, or (iii) any payment (including, without
limitation, any payment pursuant to Section 4.2, 4.3 or 10.2),
prepayment or conversion of any Eurodollar Advance on a date
other than the last day of the Interest Period for such Advance.
Determinations by each Bank for purposes of this Section 2.6 of
the amount required to indemnify such Bank shall be conclusive in
the absence of manifest error. Without limiting the effect of
the foregoing, each Bank's loss under clause (ii) or (iii) above
with respect to a Eurodollar Advance shall include an amount
equal to the excess, if any, of (a) the amount of interest that
otherwise would have accrued on the principal amount so paid, so
prepaid, so not borrowed, so not converted or so not continued
for the period from the date of such payment or such failure to
borrow, convert or continue to the last day of then current
Interest Period for such Eurodollar Advance (or, in the case of a
failure to borrow, convert or continue, the Interest Period for
such Eurodollar Advance that would have commenced on the date
specified for such borrowing, conversion on continuation) at the
applicable rate of interest (or the rate of interest which would
have been applicable) for such Eurodollar Advance provided herein
over (b) the amount of interest that otherwise would have accrued
on such principal amount at a rate per annum equal to the
interest component of the amount such Bank would have bid in the
London interbank market for dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities
comparable to such Interest Period (as reasonably determined by
such Bank).
Section 2.7 Refunding of Swing Line Loans.
(a) The Swing Line Bank, at any time and from time to time in
its sole and absolute discretion may, on behalf of the Borrower
(which hereby irrevocably directs the Swing Line Bank to act on
its behalf), upon notice given by the Swing Line Bank no later
than 10:00 a.m., Minneapolis time, on the relevant refunding
date, request each Bank to make, and each Bank hereby agrees to
make, a Revolving Loan (which shall be a Federal Funds Rate
Advance), in an amount equal to such Bank's Percentage of the
aggregate amount of the Swing Line Loans (the "Refunded Swing
Line Loans") outstanding on the date of such notice, to refund
such Swing Line Loans. Each Bank shall make the amount of such
Revolving Loan available to the Agent in immediately available
funds, no later than 1:00 p.m., Minneapolis time, on the date of
such notice. The proceeds of such Revolving Loans shall be
distributed by the Agent to the Swing Line Bank and immediately
applied by the Swing Line Bank to repay the Refunded Swing Line
Loans.
(b) If, for any reason, Revolving Loans may not be (as
determined by the Agent in its sole discretion), or are not, made
pursuant to Section 2.7(a) to repay Swing Line Loans, then,
effective on the date such Revolving Loans would otherwise have
been made, each Bank severally, unconditionally and irrevocably
agrees that it shall purchase a participating interest in such
Swing Line Loans ("Unrefunded Swing Line Loans") in an amount
equal to the amount of Revolving Loans which would otherwise have
been made by such Bank pursuant to Section 2.7(a). Each Bank
will immediately transfer to the Agent, in immediately available
funds, the amount of its participation (the "Swing Line
Participation Amount"), and the proceeds of such participation
shall be distributed by the Agent to the Swing Line Bank in such
amount as will reduce the amount of the participating interest
retained by the Swing Line Bank in its Swing Line Loans.
(c) Whenever, at any time after the Swing Line Bank has received
from any Bank such Bank's Swing Line Participation Amount, the
Swing Line Bank receives any payment on account of the Swing Line
Loans, the Swing Line Bank will distribute to such Bank its Swing
Line Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which
such Bank's participating interest was outstanding and funded
and, in the case of principal and interest payments, to reflect
such Bank's pro rata portion of such payment if such payment is
not sufficient to pay the principal of and interest on all Swing
Line Loans then due); provided, however, that in the event that
such payment received by the Swing Line Bank is required to be
returned, such Bank will return to the Swing Line Bank any
portion thereof previously distributed to it by the Swing Line
Bank.
(d) Each Bank's obligation to make the Revolving Loans referred
to in Section 2.7(a) and to purchase participating interests
pursuant to Section 2.7(b) shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or
other right which such Bank or the Borrower may have against the
Swing Line Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an
Event of Default or the failure to satisfy any of the other
conditions precedent specified in Article VI; (iii) any adverse
change in the condition (financial or otherwise) of the Borrower;
(iv) any breach of this Agreement or any other Loan Document by
the Borrower or any Bank; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of
the foregoing. Notwithstanding the foregoing, a Bank shall not
have any obligation to make a Revolving Loan pursuant to Section
2.7(a) or to purchase a participating interest in a Swing Line
Loan pursuant to Section 2.7(b) if (A) a Default or an Event of
Default shall have occurred and be continuing at the time such
Swing Line Loan was made or if any other condition precedent set
forth in Section 6.2 was not satisfied at the time such Swing
Line Loan was made and (B) such Bank shall have provided written
notice to the Swing Line Bank, received by the Swing Line Bank at
least one (1) Business Day prior to the date on which such Swing
Line Loan was made, that such Default or Event of Default has
occurred and is continuing or that such other condition precedent
set forth in Section 6.2 is not capable of being satisfied, and,
as a result thereof, that such Bank will not make Revolving Loans
pursuant to Section 2.7(a) or purchase participating interests in
Swing Line Loans pursuant to Section 2.7(b) while such Default or
Event of Default is continuing or while such other condition
precedent is not capable of being satisfied.
Section 2.8 Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of
this Agreement and in reliance upon the warranties of the
Borrower in this Agreement, upon request by the Borrower, the
Agent shall issue letters of credit for the account of the
Borrower (such letters of credit as any of them may be amended,
supplemented, extended or confirmed from time to time, being
herein collectively called the "Letters of Credit") subject to
the following: (i) compliance by the Borrower with all
conditions precedent set forth in Article VI hereof, (ii) entry
by the Borrower into Letter of Credit Agreements and such other
documents deemed appropriate by the Agent for the issuance of
such Letters of Credit at least three (3) Business Days prior to
the date of any requested Letter of Credit, (iii) satisfaction of
the Agent with the form and substance of each such Letter of
Credit, and (iv) the absence of any statutory or regulatory
change or directive affecting the issuance by the Agent of
letters of credit. Upon the date of the issuance of a Letter of
Credit, the Agent shall be deemed, without further action by any
party hereto, to have sold to each Bank, and each Bank shall be
deemed without further action by any party hereto, to have
purchased from the Agent, a participation, in its Percentage, in
such Letter of Credit and the related Letter of Credit
Obligations (the "Letter of Credit Participation Amount").
(b) Each Bank's purchase of a participating interest in a Letter
of Credit pursuant to Section 2.8(a) shall be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Bank or the
Borrower may have against the Agent, the Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to
satisfy any of the other conditions precedent in Article VI;
(iii) any adverse change in the condition (financial or
otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower or any Bank; (v) the
expiry date of any Letter of Credit occurring after such Bank's
Commitment has terminated or (vi) any other circumstance,
happening or event whatsoever, whether or not similar to any of
the foregoing. Notwithstanding the foregoing, a Bank shall not
have any obligation to purchase a participating interest in a
Letter of Credit pursuant to Section 2.8(a) if (A) a Default or
an Event of Default shall have occurred and be continuing at the
time such Letter of Credit was issued or if any other condition
precedent set forth in Section 6.2 was not satisfied at the time
such Letter of Credit was issued and (B) such Bank shall have
provided written notice to the Agent, received by the Agent at
least one (1) Business Day prior to the date on which such Letter
of Credit was issued, that such Default or Event of Default has
occurred and is continuing or that such other condition precedent
set forth in Section 6.2 is not capable of being satisfied, and,
as a result thereof, that such Bank will not purchase
participating interests in Letters of Credit pursuant to Section
2.8(a) while such Default or Event of Default is continuing or
while such other condition precedent is not capable of being
satisfied.
(c) Additional Provisions. The following additional provisions
shall apply to each Letter of Credit:
(i) Upon receipt of any request for a Letter of Credit, the
Agent shall notify each Bank of the contents of such request and
of such Bank's Percentage of the amount of such proposed Letter
of Credit.
(ii) Each Letter of Credit shall have an expiry date of one (1)
year or less from the date of issuance of such Letter of Credit.
(iii) No Letter of Credit may be issued if, after giving
effect to such Letter of Credit, the Letter of Credit Obligations
shall exceed the Aggregate Commitment minus the aggregate
outstanding principal amount of the Loans. The Commitment of
each Bank shall be deemed to be utilized for all purposes of this
Agreement in an amount equal to such Bank's Letter of Credit
Participation Amount.
(iv) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment thereunder, Agent shall promptly notify
the Borrower and each Bank as to the amount to be paid as a
result of such demand and the payment date. If at any time the
Agent shall have made a payment to a beneficiary of such Letter
of Credit in respect of a drawing or in respect of an acceptance
created in connection with a drawing under such Letter of Credit,
each Bank will pay to Agent immediately upon demand by the Agent
at any time during the period commencing after such payment until
reimbursement thereof in full by the Borrower, an amount equal to
such Bank's Percentage of such payment, together with interest on
such amount for each day from the date of demand for such payment
(or, if such demand is made after 2:00 p.m. Minneapolis time on
such date, from the next succeeding Business Day) to the date of
payment by such Bank of such amount at a rate of interest per
annum equal to the Federal Funds Rate for such period.
(v) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the Agent for any amount paid by
the Agent upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind,
all of which are hereby waived. Such reimbursement may, subject
to satisfaction of the conditions in Article VI hereof and to the
available Commitments of the Banks (after adjustment in the same
to reflect the elimination of the corresponding Letter of Credit
Obligation), be made by the borrowing of Revolving Loans. The
Agent will pay to each Bank such Bank's Percentage of all amounts
received from the Borrower for application in payment, in whole
or in part, of a Letter of Credit Obligation, but only to the
extent such Bank has made payment to the Agent in respect of such
Letter of Credit pursuant to clause (iv) above.
(vi) The Borrower's obligation to reimburse the Agent for any
amount paid by the Agent upon any drawing under any Letter of
Credit shall be performed strictly in accordance with the terms
of this Agreement and the applicable Letter of Credit Agreement
under any and all circumstances whatsoever and irrespective of
(A) any lack of validity or enforceability of any Letter of
Credit, any Letter of Credit Agreement or this Agreement, or any
term or provision therein, (B) any draft or other document
presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein
being untrue or inaccurate in any respect, (C) payment by the
Agent under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter
of Credit, or (D) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but
for the provisions of this clause (vi), constitute a legal or
equitable discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder. Neither the Agent nor the
Banks shall have any liability or responsibility by reason of or
in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence
arising from causes beyond the control of the Agent; provided
that the foregoing shall not be construed to excuse the Agent
from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect
of which are hereby waived by the Borrower to the extent
permitted by applicable law) suffered by the Borrower that are
caused by the Agent's failure to exercise care when determining
whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the Agent (as finally
determined by a court of competent jurisdiction), the Agent shall
be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality
thereof, the parties hereto expressly agree that, with respect to
documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the
Agent may, in its sole discretion, either accept and make payment
upon such documents without responsibility for further
investigation or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(vii) The Borrower will pay to Agent a letter of credit fee
with respect to each Letter of Credit equal to an amount,
calculated on the basis of the face amount of each Letter of
Credit, in each case for the period from and including the date
of issuance of such Letter of Credit to and including the date of
expiration or termination thereof, at a per annum rate equal to
the Applicable Letter of Credit Margin plus $250, such fee to be
due and payable in advance on the date of the issuance thereof.
From each such letter of credit fee paid by the Borrower, the
Agent will retain for its own account, in consideration of the
Agent's fronting such Letter of Credit, a fee equal to seven one-
hundredths of one percent (.07%) of the face amount of such
Letter of Credit (the "Agent's Letter of Credit Fronting Fee").
After deducting the Agent's Letter of Credit Fronting Fee, the
Agent will pay to each Bank an amount equal to the product of
such Bank's Percentage times the remainder of such letter of
credit fee (after taking into account the Agent's retention of
the Agent's Letter of Credit Fronting Fee). The Borrower agrees
to provide written notice to the Agent within three (3) Business
Days of the Borrower's senior debt becoming rated by Moody's or
by Standard & Poors or, once the Borrower's senior debt has
become so rated, of any change in the rating of the Borrower's
senior debt by Moody's or by Standard & Poors. Any reduction in
the Applicable Letter of Credit Margin shall become effective
with respect to all Letters of Credit issued after the Borrower
has provided three (3) Business Day's prior written notice to the
Agent of the rating or change in rating of the Borrower's senior
debt which entitles the Borrower to a reduction in the Applicable
Letter of Credit Margin. Any increase in the Applicable Letter
of Credit Margin shall become effective with respect to all
Letters of Credit issued after the earlier to occur of (i) the
date which is three (3) Business Days after the date on which the
Agent becomes aware of a rating change in the Borrower's senior
debt which subjects the Borrower to an increase in the Applicable
Letter of Credit Margin, or (ii) the date which is three (3)
Business Days after the Borrower has notified the Agent in
writing of the rating change in the Borrower's senior debt which
subjects the Borrower to an increase in the Applicable Letter of
Credit Margin.
(viii) In addition to the letter of credit fee described in
clause (vii) above, the Borrower agrees to pay to the Agent for
the Account of Agent, on written demand of the Agent from time to
time, the administrative fees charged by the Agent in the
ordinary course of business in connection with the honoring of
drafts under Letters of Credit and all other activity with
respect to Letters of Credit at the then-current rates of the
Agent. All fees under clause (vii) above and under this clause
(viii) shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed.
(ix) The issuance by the Agent of each Letter of Credit shall, in
addition to the other conditions precedent specified in this
Agreement, be subject to the condition precedent that the
Borrower shall have executed and delivered such applications and
other instruments and agreements relating to such Letter of
Credit as the Agent shall have reasonably requested (the "Letter
of Credit Agreements"). In the event of a conflict between the
terms of this Agreement and the terms of any Letter of Credit
Agreement (including the charging of any fees other than normal
and customary reimbursable expenses), the terms hereof shall
control.
(d) Indemnification: Release. Borrower hereby indemnifies and
holds harmless the Agent and each Bank from and against any and
all claims and damages, losses, liabilities, costs or expenses
which the Agent or such Bank may incur (or which may be claimed
against the Agent or such Bank by any Person whatsoever),
regardless of whether caused in whole or in part by the
negligence of any of the indemnified parties, in connection with
the execution and delivery of any Letter of Credit or transfer of
or payment or failure to pay under any Letter of Credit; provided
that the Borrower shall not be required to indemnify any party
seeking indemnification for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence
of the party seeking indemnification, or (ii) by the failure by
the party seeking indemnification to pay under any Letter of
Credit after the presentation to it of a request required to be
paid under applicable law.
(e) Borrower's Ability to Obtain Letters of Credit outside of
this Agreement. Nothing in this Section 2.8 is intended to limit
the ability of the Borrower to obtain letters of credit outside
of this Agreement from financial institutions other than the
Banks, provided that, after giving effect to any such letter of
credit outside of this Agreement, the Borrower shall be in
compliance with all provisions of this Agreement, including,
without limitation, Section 9.9.
Section 2.9 Extension of the Termination Date.
(a) The Borrower may, by notice to the Agent in substantially
the form of Exhibit G hereto (a copy of which notice the Agent
shall promptly deliver to each of the Banks) not less than sixty
(60) days and not more than ninety (90) days prior to the
Termination Date then in effect (the "Current Termination Date"),
request that the Banks extend their respective Commitments for an
additional 364 days from the Extension Consent Date (as defined
below). Each Bank, acting in its sole discretion, shall, by
notice to the Agent in substantially the form of Exhibit H hereto
and given no later than the date occurring thirty (30) days prior
to the Current Termination Date (such date, the "Extension
Consent Date"), advise the Agent whether or not such Bank agrees
to such extension; provided that each Bank that determines not to
extend the Current Termination Date (a "Non-Extending Bank")
shall notify the Agent of such fact promptly after such
determination (but in any event no later than the Extension
Consent Date) and any Bank that does not so advise the Agent on
or before the Extension Consent Date shall be deemed to be a Non-
Extending Bank. The election of any Bank to agree to such
extension shall not obligate any other Bank to so agree. The
Borrower shall have the right to request an extension of the
Termination Date pursuant to this Section 2.9 not more than three
(3) times.
(b) The Agent shall notify the Borrower which Banks, if any,
have elected to extend the Current Termination Date not later
than twenty-one (21) days prior to the Current Termination Date.
If (and only if) Banks holding at least two-thirds (66 2/3%) of
the Aggregate Commitment shall have agreed to extend the Current
Termination Date in accordance with the provisions of Section
2.9(a), then, effective as of the Current Termination Date, the
Termination Date shall be extended to the date falling 364 days
after the Current Termination Date (provided, if such date is not
a Business Day, then the Termination Date as so extended shall be
the next preceding Business Day). If Banks holding more than two-
thirds (66 2/3%) but less than all of the Aggregate Commitment
shall have elected to extend the Current Termination Date, the
Commitment of each such extending Bank shall remain unchanged
through the new Termination Date and the Aggregate Commitment
shall be reduced to the aggregate of the Commitments of such
extending Banks.
(c) Notwithstanding the foregoing, the extension of the
Termination Date shall not be effective with respect to any Bank
unless:
(i) no Default or Event of Default shall have occurred and be
continuing on each of the date of the notice requesting such
extension, the applicable Extension Consent Date and the
applicable Current Termination Date;
(ii) each of the representations and warranties of the Borrower
in Article VII hereof shall be true and correct on and as of each
of the date of the notice requesting such extension, the
applicable Extension Consent Date and the applicable Current
Termination Date with the same force and effect as if made on and
as of each such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as
of such specific date);
(iii) each Non-Extending Bank shall have been paid in full by
the Borrower on or before the Current Termination Date all
amounts owing to such Bank hereunder and under the other Loan
Documents; and
Even if the Termination Date is extended as aforesaid by certain
of the Banks, the Commitment of each Non-Extending Bank shall
terminate on the applicable Current Termination Date.
(d) If the Borrower shall have requested an extension of the
Current Termination Date pursuant to this Section 2.9, the Agent
shall, simultaneously with the Agent's notice to the Borrower,
notify each Bank as to whether or not the Current Termination
Date shall have been so extended, specifying the individual
Commitments of the respective Banks and the Aggregate Commitment
of the Banks after giving effect to such extension. If requested
by the Agent, the Borrower and the Banks shall enter into such
amendments to this Agreement as the Agent shall require to
evidence any extension of the Current Termination Date.
Section 2.10 Use of Proceeds. The proceeds of the Loans and the
Letters of Credit shall be used by the Borrower for its general
corporate purposes.
ARTICLE III INTEREST AND FEES
Section 3.1 Interest.
(a) Eurodollar Advances. The unpaid principal amount of each
Eurodollar Advance shall bear interest prior to maturity at a
rate per annum equal to the Eurodollar Rate (Reserve Adjusted) in
effect for each Interest Period for such Eurodollar Advance plus
the Applicable Eurodollar Margin. The Borrower agrees to provide
written notice to the Agent within three (3) Business Days of the
Borrower's senior debt becoming rated by Moody's or by Standard &
Poors or, once the Borrower's senior debt has become so rated, of
any change in the rating of the Borrower's senior debt by Moody's
or by Standard & Poors. Any reduction in the Applicable
Eurodollar Margin shall become effective three (3) Business Days
after the Borrower has so notified the Agent in writing of the
rating or change in rating of the Borrower's senior debt which
entitles the Borrower to a reduction in the Applicable Eurodollar
Margin. Any increase in the Applicable Eurodollar Margin shall
become effective on the earlier to occur of (i) the date which is
three (3) Business Days after the date on which the Agent becomes
aware of a rating change in the Borrower's senior debt which
subjects the Borrower to an increase in the Applicable Eurodollar
Margin, or (ii) the date which is three (3) Business Days after
the Borrower has notified the Agent in writing of the rating
change in the Borrower's senior debt which subjects the Borrower
to an increase in the Applicable Eurodollar Margin.
(b) Federal Funds Rate Advances. The unpaid principal amount of
each Federal Funds Rate Advance shall bear interest prior to
maturity at a rate per annum equal to the Federal Funds Rate plus
the Applicable Federal Funds Rate Margin. The Borrower agrees to
provide written notice to the Agent within three (3) Business
Days of the Borrower's senior debt becoming rated by Moody's or
by Standard & Poors or, once the Borrower's senior debt has
become so rated, of any change in the rating of the Borrower's
senior debt by Moody's or by Standard & Poors. Any reduction in
the Applicable Federal Funds Rate Margin shall become effective
three (3) Business Days after the Borrower has so notified the
Agent in writing of the rating or change in rating of the
Borrower's senior debt which entitles the Borrower to a reduction
in the Applicable Federal Funds Rate Margin. Any increase in the
Applicable Federal Funds Rate Margin shall become effective on
the earlier to occur of (i) the date which is three (3) Business
Days after the date on which the Agent becomes aware of a rating
change in the Borrower's senior debt which subjects the Borrower
to an increase in the Applicable Federal Funds Rate Margin, or
(ii) the date which is three (3) Business Days after the Borrower
has notified the Agent in writing of the rating change in the
Borrower's senior debt which subjects the Borrower to an increase
in the Applicable Federal Funds Rate Margin.
(c) Interest After Maturity. Any amount of the Loans not paid
when due, whether at the date scheduled therefor or earlier upon
acceleration, shall bear interest until paid in full at a rate
per annum equal to the greater of (i) two percent (2.00%) in
excess of the rate applicable to the unpaid principal amount
immediately before it became due, or (ii) two percent (2.00%) in
excess of the Reference Rate in effect from time to time.
Section 3.2 Facility Fees. The Borrower shall pay fees (the
"Facility Fees") to the Agent for the account of the Banks in an
amount determined by applying the Applicable Facility Fee
Percentage to the amount of the Aggregate Commitment of the Banks
for the period from the date of this Agreement to the Termination
Date. The Borrower agrees to provide written notice to the Agent
within three (3) Business Days of the Borrower's senior debt
becoming rated by Moody's or by Standard & Poors or, once the
Borrower's senior debt has become so rated, of any change in the
rating of the Borrower's senior debt by Moody's or by Standard &
Poors. Any reduction in the Applicable Facility Fee Percentage
shall become effective three (3) Business Days after the Borrower
has so notified the Agent in writing of the rating or change in
rating of the Borrower's senior debt which entitles the Borrower
to a reduction in the Applicable Facility Fee Percentage. Any
increase in the Applicable Facility Fee Percentage shall become
effective on the earlier to occur of (i) the date which is three
(3) Business Days after the date on which the Agent becomes aware
of a rating change in the Borrower's senior debt which subjects
the Borrower to an increase in the Applicable Facility Fee
Percentage, or (ii) the date which is three (3) Business Days
after the Borrower has notified the Agent in writing of the
rating change in the Borrower's senior debt which subjects the
Borrower to an increase in the Applicable Facility Fee
Percentage.
Section 3.3 Computation. Interest and Facility Fees shall be
computed on the basis of actual days elapsed and a year of 360
days.
Section 3.4 Payment Dates. Accrued interest under Section
3.1(a) and (b) and Facility Fees shall be payable on the
applicable Payment Dates. Accrued interest under Section 3.1(c)
shall be payable on demand.
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT AND SETOFF
Section 4.1 Repayment. Unless the Banks shall have made the
Term Loans to repay the Revolving Loans in accordance with the
provisions of Section 2.1(c), the outstanding principal balance
of the Revolving Loans and of the Swing Line Loans, together with
all accrued and unpaid interest thereon, shall be due and payable
on the Termination Date. The outstanding principal balance of
each Term Loan shall be due and payable in seven (7) equal
quarterly installments sufficient to fully amortize the principal
balance of such Term Loan on the Term Loan Maturity Date, with
the first such quarterly installment commencing on the last day
of the month of September immediately following the making of the
Term Loans, and with subsequent quarterly installments continuing
on the last day of each December, March, June and September
thereafter until the Term Loan Maturity Date, when the remaining
outstanding principal balance of such Term Loan, and all accrued
interest thereon, shall be due and payable.
Section 4.2 Optional Prepayments. The Borrower may, upon at
least one (1) Business Days' prior written or telephonic notice
received by the Bank, prepay the Loans, in whole or in part, at
any time subject to the provisions of Section 2.6, without any
other premium or penalty. Any such prepayment must be
accompanied by accrued and unpaid interest on the amount prepaid.
Each partial prepayment shall be in an amount of $500,000 or an
integral multiple thereof. Any partial prepayment of the Term
Loans shall be applied to the Term Loans in inverse order of
their maturity.
Section 4.3 Optional Reduction or Termination of Commitments.
The Borrower may, at any time, upon no less than three (3)
Business Days prior written or telephonic notice received by the
Agent, reduce the Commitments of all Banks, such reduction to be
in a minimum amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and to be applied ratably to the
Commitments of the respective Banks. Upon any reduction in the
Commitments pursuant to this Section, the Borrower shall pay to
the Agent for the account of the Banks the amount, if any, by
which the aggregate unpaid principal amount of outstanding Loans
plus the Letter of Credit Obligations exceeds the total
Commitments of all Banks as so reduced. Amounts so paid cannot
be reborrowed. The Borrower may, at any time, upon not less than
three (3) Business Days prior written notice to the Agent,
terminate the Commitments in their entirety. Upon termination of
the Commitments pursuant to this Section, the Borrower shall pay
to the Agent for the account of the Banks the full amount of all
outstanding Loans, all accrued and unpaid interest thereon, all
unpaid Facility Fees accrued to the date of such termination and
all other unpaid obligations of the Borrower to the Banks
hereunder. All payments described in this Section are subject to
the provisions of Section 2.6. Notwithstanding the foregoing,
the Commitments may not be terminated or reduced to an amount
below outstanding Letter of Credit Obligations if Letters of
Credit are outstanding.
Section 4.4 Payments. Payments and prepayments of principal of,
and interest on, the Notes, the Letter of Credit Obligations and
all fees, expenses and other obligations under the Loan Documents
shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on
the dates due at the main office of the Agent in Minneapolis,
Minnesota. Funds received on any day after such time shall be
deemed to have been received on the next Business Day. The Agent
shall promptly distribute in like funds to each Bank its
Percentage share of each such payment of principal, interest and
Facility Fees. Subject to the definition of the term "Interest
Period", whenever any payment to be made under this Agreement,
the Notes or the other Loan Documents shall be stated to be due
on a day which is not a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time
shall be included in the computation of any interest or fees.
Section 4.5 Proration of Payments. If any Bank or other holder
of a Loan shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset, pursuant to the
guaranty hereunder, or otherwise) on account of principal of,
interest on, or fees with respect to any Loan, or payment of any
Letter of Credit Obligations, in any case in excess of the share
of payments and other recoveries of other Banks or holders, such
Bank or other holder shall purchase from the other Banks or
holders, in a manner to be specified by the Agent, such
participations in the Loans or Letter of Credit Obligations held
by such other Banks or holders as shall be necessary to cause
such purchasing Bank or other holder to share the excess payment
or other recovery ratably with each of such other Banks or
holders; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from
such purchasing Bank or holder, the purchase shall be rescinded
and the purchase price restored to the extent of such recovery,
but without interest.
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
AND LETTERS OF CREDIT
Section 5.1 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof, or compliance by the
Banks with any request or directive (whether or not having the
force of law) from any court, central bank, governmental
authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Loan, the
Notes, the Letters of Credit or the Commitments is imposed,
modified or deemed applicable, or the basis of taxation of
payments to any Bank of interest or principal of the Loans or of
the Facility Fees (other than taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has
its principal office) is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Bank is imposed, modified or
deemed applicable; or
(c) any other condition affecting this Agreement or the
Commitments is imposed on any Bank or the relevant funding
markets;
and such Bank determines that, by reason thereof, the cost to
such Bank of making or maintaining the Loans, issuing or
participating in the Letters of Credit or extending its
Commitment is increased, or the amount of any sum receivable by
such Bank hereunder or under the Notes in respect of any Loan is
reduced;
then, the Borrower shall pay to such Bank upon demand such
additional amount or amounts as will compensate such Bank (or the
controlling Person in the instance of (c) above) for such
additional costs or reduction (provided that such Bank has not
been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Simultaneously with
such Bank's demand for any such additional amount, the Bank shall
submit to the Borrower a certificate in reasonable detail of such
Bank setting forth the basis for the determination of such
additional amount payable under this Section 5.1. Determinations
by each Bank for purposes of this Section 5.1 of the additional
amounts required to compensate such Bank shall be conclusive in
the absence of manifest error. In determining such amounts, the
Banks may use any reasonable averaging, attribution and
allocation methods.
Section 5.2 Deposits Unavailable or Interest Rate
Unascertainable or Inadequate; Impracticability. If the Agent
determines (which determination shall be conclusive and binding
on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest
Period for any Eurodollar Advance are not available in the
relevant markets or that, by reason of circumstances affecting
such market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Interbank Rate for such Interest
Period;
(b) the Eurodollar Rate (Reserve Adjusted) will not adequately
and fairly reflect the cost to the Banks of making or funding the
Eurodollar Advance for a relevant Interest Period; or
(c) the making or funding of Eurodollar Advances has become
impracticable as a result of any event occurring after the date
of this Agreement which, in the opinion of the Agent, materially
and adversely affects such Advances or any Bank's Commitment or
the relevant market;
the Agent shall promptly give notice of such determination to the
Borrower, and (i) any notice of a new Eurodollar Advance
previously given by the Borrower and not yet borrowed or
converted shall be deemed to be a notice to make a Federal Funds
Rate Advance, and (ii) the Borrower shall be obligated to either
prepay in full any outstanding Eurodollar Advances, without
premium or penalty on the last day of the current Interest Period
with respect thereto or convert any such Eurodollar Advance to a
Federal Funds Rate Advance on such last day.
Section 5.3 Changes in Law Rendering Eurodollar Advances
Unlawful. If at any time due to the adoption of any law, rule,
regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central
bank, governmental authority, agency or instrumentality, or
comparable agency charged with the interpretation or
administration thereof, or for any other reason arising
subsequent to the date of this Agreement, it shall become
unlawful or impossible for any Bank to make or fund any
Eurodollar Advance, the obligation of such Bank to provide such
Advance shall, upon the happening of such event, forthwith be
suspended for the duration of such illegality or impossibility.
If any such event shall make it unlawful or impossible for the
Bank to continue any Eurodollar Advance previously made by it
hereunder, such Bank shall, upon the happening of such event,
notify the Agent and the Borrower thereof in writing, and the
Borrower shall, at the time notified by such Bank, either convert
each such unlawful Advance to a Federal Funds Rate Advance or
repay such Advance in full, together with accrued interest
thereon, subject to the provisions of Section 2.6.
Section 5.4 Capital Adequacy. The Borrower shall pay directly
to each Bank from time to time on request of such Bank such
amounts as such Bank may determine to be necessary to compensate
such Bank (or, without duplication, the bank holding company of
which such Bank is a subsidiary) for any costs that it determines
are attributable to the maintenance by such Bank (or such bank
holding company), pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the
force of law and whether or not failure to comply therewith would
be unlawful) of any court or governmental or monetary authority
(i) following any Regulatory Change or (ii) implementing at the
national level any risk-based capital guideline or other
requirement (whether or not having the force of law and whether
or not the failure to comply therewith would be unlawful)
hereafter issued by any government or governmental or supervisory
authority implementing the Basle Accord (including, without
limitation, the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208,
Appendix A; 12 CFR Part 225, Appendix A) and the Final Risk-Based
Capital Guidelines of the Office of the Comptroller of the
Currency (12 CFR Part 3, Appendix A)), of capital in respect of
its Commitment, Loans or participation in Letters of Credit (such
compensation to include, without limitation, an amount equal to
any reduction of the rate of return on assets or equity of such
Bank (or such bank holding company) to a level below that which
such Bank (or such bank holding company) could have achieved but
for such law, regulation, interpretation, directive or request).
Simultaneously with such Bank's request for any such amount, the
Bank shall submit to the Borrower a certificate in reasonable
detail of such Bank setting forth the basis for the determination
of such amount payable under this Section 5.4. Determinations by
each Bank for purposes of this Section 5.4 shall be conclusive in
the absence of manifest error. In determining such amounts, the
Banks may use any reasonable averaging, attribution and
allocation methods. For purposes of this Section 5.4,
"Regulatory Change" shall mean, with respect to any Bank, any
change after the date of this Agreement in Federal, state or
foreign law or regulations (including, without limitation,
Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks
(other than those applying solely to banks formally determined by
the applicable regulator to be in a financially troubled
condition) including such Bank of or under any Federal, state or
foreign law or regulations (whether or not having the force of
law and whether or not failure to comply therewith would be
unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof. For
purposes of this Section 5.4, "Basle Accord" shall mean the
proposals for risk-based capital framework described by the Basle
Committee on Banking Regulations and Supervisory Practices in its
paper entitled "International Convergence of Capital Measurement
and Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement
thereof.
Section 5.5 Discretion of the Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of
all or any part of the Loans in any manner it elects; it being
understood, however, that for purposes of this Agreement, all
determinations hereunder shall be made as if the Banks had
actually funded and maintained each Eurodollar Advance during the
Interest Period for such Advance through the purchase of deposits
having a term corresponding to such Interest Period and bearing
an interest rate equal to the Eurodollar Interbank Rate for such
Interest Period.
ARTICLE VI CONDITIONS PRECEDENT
Section 6.1 Conditions of Initial Loan or Initial Letters of
Credit. The obligation of the Banks to make the initial Loan
hereunder or of the Agent to issue the initial Letter of Credit
hereunder shall be subject to the satisfaction of the conditions
precedent, in addition to the applicable conditions precedent set
forth in Section 6.2 below, that the Agent shall have received
all of the following, in form and substance satisfactory to the
Agent, each duly executed and certified or dated the date of the
initial Loan or the initial Letter of Credit, as applicable, or
such other date as is satisfactory to the Agent:
(a) The Revolving Notes and the Swing Line Note executed by a
duly authorized officer (or officers) of the Borrower.
(b) A copy of the corporate resolution of the Borrower
authorizing the execution, delivery and performance of the Loan
Documents, certified by the Secretary or an Assistant Secretary
of the Borrower.
(c) An incumbency certificate showing the names and titles, and
bearing the signatures of, the officers of the Borrower
authorized to execute the Loan Documents and to request Loans and
Letters of Credit hereunder, certified by the Secretary or an
Assistant Secretary of the Borrower.
(d) A copy of the Articles or Certificate of Incorporation of
the Borrower with all amendments thereto, certified by the
appropriate governmental official of the jurisdiction of its
incorporation.
(e) A Certificate of Good Standing for the Borrower in the
jurisdiction of its incorporation, certified by the appropriate
governmental officials.
(f) A copy of the By-Laws of the Borrower with all amendments
thereto, certified by the Secretary or an Assistant Secretary of
the Borrower.
(g) An opinion of counsel to the Borrower, addressed to the
Agent and the Banks, in form and content acceptable to the Agent
and its counsel
Section 6.2 Conditions Precedent to all Loans and all Letters of
Credit. The obligation of the Banks to make any Loan hereunder
(including the initial Loan) and of the Agent to issue any Letter
of Credit hereunder (including the initial Letter of Credit)
shall be subject to the satisfaction of the following conditions
precedent (and any request for a Loan or a Letter of Credit shall
be deemed a representation and warranty by the Borrower that the
following have been satisfied):
(a) Before and after giving effect to such Loan or such Letter
of Credit, as applicable, the representations and warranties
contained in Article VII shall be true and correct, as though
made on the date of such Loan or such Letter of Credit, as
applicable (except to the extent that any such representation or
warranty is expressly stated to have been made as of a specific
date, then such representation or warranty shall be true and
correct as of such specific date).
(b) Before and after giving effect to such Loan or such Letter
of Credit, as applicable, no Default or Event of Default shall
have occurred and be continuing.
ARTICLE VII REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this
Agreement, to grant the Commitments and to make Loans and to
issue Letters of Credit hereunder, the Borrower represents and
warrants to the Agent and the Banks:
Section 7.1 Organization, Standing, Etc. The Borrower and each
of its corporate Subsidiaries are corporations duly incorporated
and validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and have all
requisite corporate power and authority to carry on their
respective businesses as now conducted and to (in the instance of
the Borrower) enter into the Loan Documents and to perform its
obligations under the Loan Documents. The Borrower and each of
its Subsidiaries are duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character
of the properties owned, leased or operated by it or the business
conducted by it makes such qualification necessary.
Section 7.2 Authorization and Validity. The execution, delivery
and performance by the Borrower of the Loan Documents have been
duly authorized by all necessary corporate action by the
Borrower, and the Loan Documents constitute the legal, valid and
binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws
affecting creditors' rights generally and subject to limitations
on the availability of equitable remedies.
Section 7.3 No Conflict; No Default. The execution, delivery
and performance by the Borrower of the Loan Documents will not
(a) violate any provision of any law, statute, rule or regulation
or any order, writ, judgment, injunction, decree, determination
or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Borrower, (b)
violate or contravene any provisions of the Articles (or
Certificate) of Incorporation or by-laws of the Borrower, or (c)
result in a breach of or constitute a default under any
indenture, loan or credit agreement or any other agreement, lease
or instrument to which the Borrower is a party or by which it or
any of its properties may be bound or result in the creation of
any Lien on any asset of the Borrower or any Subsidiary. Neither
the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order,
writ, judgment, injunction, decree, determination or award or any
such indenture, loan or credit agreement or other agreement,
lease or instrument in any case in which the consequences of such
default or violation could constitute an Adverse Event. No
Default or Event of Default has occurred and is continuing.
Section 7.4 Government Consent. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental or public
body or authority is required on the part of the Borrower to
authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents.
Section 7.5 Financial Statements and Condition. The audited
financial statements of Interra Financial Incorporated (now the
Borrower) as of December 31, 1997 and of Dain Bosworth
Incorporated, Rauscher Pierce Refsnes, Inc. and Interra Clearing
Services Inc. (Dain Bosworth Incorporated, Rauscher Pierce
Refsnes, Inc. and Interra Clearing Services Inc. have now been
merged into Dain Rauscher Incorporated) as of December 31, 1997,
and the unaudited pro forma consolidating balance sheets of Dain
Rauscher Incorporated as of December 31, 1997, as heretofore
furnished to the Banks, have been prepared in accordance with
GAAP on a consistent basis and fairly present the financial
condition of the foregoing entities as at such dates and the
results of their operations and changes in financial position for
the respective periods then ended. As of the dates of such
financial statements, none of the foregoing entities had any
material obligation, contingent liability, liability for taxes or
long-term lease obligation which is not reflected in such
financial statements or in the notes thereto. Since December 31,
1997, no Adverse Event has occurred.
Section 7.6 Litigation and Contingent Liabilities. Except as
described in Exhibit B, there are no actions, suits or
proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary or
any of their properties before any court or arbitrator, or by any
governmental agency or instrumentality which, if determined
adversely to the Borrower or such Subsidiary, could constitute an
Adverse Event. Except as described in Exhibit C, neither the
Borrower nor any Subsidiary has any contingent liabilities which
are material to the Borrower and the Subsidiaries as a
consolidated enterprise.
Section 7.7 Compliance. The Borrower and its Subsidiaries are
in compliance with all statutes and governmental rules and
regulations applicable to them, except where failure to be in
compliance, individually or in the aggregate, could not
reasonably be expected to result in an Adverse Event.
Section 7.8 Environmental, Health and Safety Laws. There does
not exist any violation by the Borrower or any Subsidiary of any
applicable federal, state or local law, rule or regulation or
order of any government, governmental department, board, agency
or other instrumentality relating to environmental, pollution,
health or safety matters which will or threatens to impose a
material liability on the Borrower or a Subsidiary or which would
require a material expenditure by the Borrower or such Subsidiary
to cure. Neither the Borrower nor any Subsidiary has received
any notice to the effect that any part of its operations or
properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the
subject of any governmental investigation evaluating whether any
remedial action is needed to respond to any release of any toxic
or hazardous waste or substance into the environment, the
consequences of which non-compliance or remedial action could
constitute an Adverse Event.
Section 7.9 ERISA. Each Plan complies with all material
applicable requirements of ERISA and the Code and with all
material applicable rulings and regulations issued under the
provisions of ERISA and the Code setting forth those
requirements. No Reportable Event, other than a Reportable Event
for which the reporting requirements have been waived by
regulations of the PBGC, has occurred and is continuing with
respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no
event or condition which would permit the institution of
proceedings to terminate any Plan under Section 4042 of ERISA.
The current value of the Plans' benefits guaranteed under Title
IV or ERISA does not exceed the current value of the Plans'
assets allocable to such benefits.
Section 7.10 Margin Regulations. Certain of the Material
Subsidiaries of the Borrower are broker-dealers subject to
Regulation T. The Material Subsidiaries of the Borrower which
are subject to Regulation T maintain procedures and internal
controls reasonably adapted to insure that such Material
Subsidiaries do not extend or maintain credit to or for their
respective customers other than in accordance with the provisions
of Regulation T. Neither the making of any Loan hereunder, nor
the use of the proceeds thereof, will violate the provisions of
Regulation T, U or X.
Section 7.11 Ownership of Property; Liens. Each of the Borrower
and the Subsidiaries has good and marketable title to its real
properties and good and sufficient title to its other properties,
including all properties and assets referred to as owned by the
Borrower and its Subsidiaries in the audited financial statement
of the Borrower referred to in Section 7.5 (other than property
disposed of since the date of such financial statement in the
ordinary course of business). None of the properties, revenues
or assets of the Borrower is subject to a Lien, except for (a)
Liens disclosed in the financial statements referred to in
Section 7.5, (b) Liens listed on Exhibit D, or (c) Liens allowed
under Section 9.10.
Section 7.12 Taxes. Each of the Borrower and the Subsidiaries
has filed all federal, state and local tax returns required to be
filed and has paid or made provision for the payment of all taxes
due and payable pursuant to such returns and pursuant to any
assessments made against it or any of its property and all other
taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or
charges the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with
respect to which reserves in accordance with GAAP have been
provided on the books of the Borrower). No tax Liens have been
filed and no material claims are being asserted with respect to
any such taxes, fees or charges. The charges, accruals and
reserves on the books of the Borrower in respect of taxes and
other governmental charges are adequate.
Section 7.13 Trademarks, Patents. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the
patents, trademarks, trade names, service marks and copyrights,
and applications therefor, and all technology, know-how,
processes, methods and designs used in or necessary for the
conduct of its business, without known conflict with the rights
of others.
Section 7.14 Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company
"controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
Section 7.15 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" of a
holding company or of a subsidiary company of a holding company
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
Section 7.16 Subsidiaries. Exhibit E sets forth as of the date
of this Agreement a list of all Subsidiaries which are directly
owned by the Borrower and which are currently operating and the
number and percentage of the shares of each class of capital
stock owned beneficially or of record by the Borrower therein,
and the jurisdiction of incorporation of each such Subsidiary.
Section 7.17 Registered Broker-Dealer; Membership. Each
Subsidiary engaged in the business of a securities broker-dealer
is duly registered with the Securities and Exchange Commission as
a broker-dealer and is a member in good standing of the National
Association of Securities Dealers, Inc. and of the New York
Stock Exchange, Inc.
Section 7.18 Assessments by the Securities Investor Protection
Corporation. Each Subsidiary engaged in the business of a
securities broker-dealer is not in arrears with respect to any
assessment made upon it by the Securities Investor Protection
Corporation.
ARTICLE VIII AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the
Commitments are terminated or expire and the Loans, the Letter of
Credit Obligations and all other liabilities of the Borrower to
the Banks and/or the Agent hereunder and under the other Loan
Documents have been paid in full, the Borrower agrees that:
Section 8.1 Financial Statements and Reports. The Borrower will
furnish 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, the annual audit
reports of the Borrower and Dain Rauscher Incorporated and the
unaudited financial statements of Dain Rauscher Lending Services
prepared on a consolidated basis and in conformity with GAAP,
consisting of at least statements of income, cash flow and
stockholders' equity, and a consolidated balance sheet as at the
end of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified
without qualification by certified public independent auditors of
recognized standing selected by the Borrower and acceptable to
the Agent.
(b) Together with the audited financial statements required
under Section 8.1(a), a statement by the firm of certified public
independent auditors performing such audit stating that it has
reviewed this Agreement and that in performing its examination
nothing came to its attention that caused it to believe that any
Default or Event of Default exists in respect of the Borrower's
covenants set forth in Sections 9.8, 9.9, 9.13 or 9.14, or, if
such Default or Event of Default exists, describing its nature.
(c) As soon as available and in any event within 45 days after
the end of each fiscal quarter of each fiscal year of the
Borrower, copies of the unaudited consolidated and consolidating
balance sheets and income statements of the Borrower and its
Subsidiaries prepared in accordance with GAAP applied on a basis
consistent with the accounting practices applied in the annual
audit reports referred to in Section 8.1(a), signed by the
Borrower's treasurer or chief financial officer, for such quarter
and for the period from the beginning of such fiscal year to the
end of such quarter.
(d) Together with the financial statements furnished by the
Borrower under Sections 8.1(a) and 8.1(c), a Compliance
Certificate signed by the treasurer or the chief financial
officer of the Borrower demonstrating in reasonable detail
compliance (or noncompliance, as the case may be) with each of
the financial ratios and restrictions contained in Article IX and
stating that as at the date of each such financial statement
there did not exist any Default or Event of Default or, if such
Default or Event of Default existed, specifying the nature and
period of existence thereof and what action the Borrower proposes
to take with respect thereto.
(e) Immediately upon becoming aware of any Default or Event of
Default, a notice describing the nature thereof and what action
the Borrower proposes to take with respect thereto.
(f) Immediately upon becoming aware of the occurrence, with
respect to any Plan, of any Reportable Event (other than a
Reportable Event for which the reporting requirements have been
waived by PBGC regulations) or any "prohibited transaction" (as
defined in Section 4975 of the Code), a notice specifying the
nature thereof and what action the Borrower proposes to take with
respect thereto, and, when received, copies of any notice from
PBGC of intention to terminate or have a trustee appointed for
any Plan.
(g) As soon as available and in any event within 15 days after
mailing or filing thereof, copies of all financial statements,
reports and proxy statements mailed to the Borrower's
shareholders.
(h) As soon as available and in any event within 15 days after
filing thereof, copies of all quarterly FOCUS reports, proposed
subordination filings and notices of all material violations of
rules and regulations of the Securities and Exchange Commission
or any material securities exchange which the Borrower or any
Subsidiary shall file with the Securities and Exchange Commission
or any material securities exchange;
(i) Immediately upon becoming aware of the occurrence thereof,
notice of the suspension or expulsion of any Subsidiary from
membership in the New York Stock Exchange, Inc. or from
membership in the National Association of Securities Dealers,
Inc.;
(j) Immediately upon becoming aware of the occurrence thereof,
notice of the institution of any litigation, arbitration or
governmental proceeding which could result in an Adverse Event,
notice of any development in any pending litigation, arbitration
or governmental proceeding which could result in an Adverse Event
and notice of the rendering of a judgment or decision in any
litigation, arbitration or governmental proceeding which could
result in an Adverse Event, and, in any such circumstance, the
steps being taken by the Person affected by such circumstance.
(k) Immediately upon becoming aware of the occurrence thereof,
notice of any violation as to any environmental matter by the
Borrower or any Subsidiary and of the commencement of any
judicial or administrative proceeding relating to health, safety
or environmental matters (i) in which an adverse determination or
result could result in the revocation of or have a material
adverse effect on any operating permits, air emission permits,
water discharge permits, hazardous waste permits or other permits
held by the Borrower or any Subsidiary which are material to the
operations of the Borrower or such Subsidiary, or (ii) which will
or threatens to impose a material liability on the Borrower or
such Subsidiary to any Person or which will require a material
expenditure by the Borrower or such Subsidiary to cure any
alleged problem or violation.
(l) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and
the Subsidiaries as any Bank may reasonably request.
Section 8.2 Corporate Existence. The Borrower will, and will
cause each Subsidiary to, maintain its corporate existence in
good standing under the laws of its jurisdiction of incorporation
and its qualification to transact business in each jurisdiction
in which the character of the properties owned, leased or
operated by it or the business conducted by it makes such
qualification necessary.
Section 8.3 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain with financially sound and reputable
insurance companies such insurance as may be required by law and
such other insurance in such amounts and against such hazards as
is customary in the case of reputable corporations engaged in the
same or similar business and similarly situated.
Section 8.4 Payment of Taxes and Claims. The Borrower will, and
will cause each Subsidiary to, file all tax returns and reports
which are required by law to be filed by it and pay before they
become delinquent all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or
demands of any kind (including, without limitation, those of
suppliers, mechanics, carriers, warehouses, landlords and other
like Persons) which, if unpaid, might result in the creation of a
Lien upon its property; provided that the foregoing items need
not be paid if they are being contested in good faith by
appropriate proceedings, and as long as the Borrower's or such
Subsidiary's title to its property is not materially adversely
affected, its use of such property in the ordinary course of its
business is not materially interfered with and adequate reserves
with respect thereto have been set aside on the Borrower's or
such Subsidiary's books in accordance with GAAP.
Section 8.5 Inspection. The Borrower will, and will cause each
Subsidiary to, permit any Person designated by any Bank to visit
and inspect any of its properties, corporate books and financial
records, to examine and to make copies of its books of accounts
and other financial records, and to discuss the affairs, finances
and accounts of the Borrower and the Subsidiaries with, and to be
advised as to the same by, its officers at such reasonable times
and intervals as such Bank may designate.
Section 8.6 Maintenance of Properties. The Borrower will, and
will cause each Subsidiary to, maintain its properties used or
useful in the conduct of its business in good condition, repair
and working order, and supplied with all necessary equipment, and
make all necessary repairs, renewals, replacements, betterments
and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 8.7 Books and Records. The Borrower will, and will
cause each Subsidiary to, keep adequate and proper records and
books of account in which full and correct entries will be made
of its dealings, business and affairs.
Section 8.8 Compliance. The Borrower will, and will cause each
Subsidiary to, comply in all respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, except where failure to be in
compliance, individually or in the aggregate, could not
reasonably be expected to result in an Adverse Event.
Section 8.9 ERISA. The Borrower will, and will cause each
Subsidiary to, maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all
material applicable rulings and regulations issued under the
provisions of ERISA and of the Code.
Section 8.10 Environmental Matters. The Borrower will, and will
cause each Subsidiary to, observe and comply with all laws,
rules, regulations and orders of any government or government
agency relating to health, safety, pollution, hazardous materials
or other environmental matters to the extent non-compliance could
result in a material liability or otherwise constitute or result
in an Adverse Event.
Section 8.11 General Net Capital Requirement. The Borrower will
cause each Subsidiary subject to Rule 15c3-1 to at all times
maintain its Net Capital as required by Rule 15c3-1.
ARTICLE IX NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the
Commitments are terminated or expire and the Loans, the Letter of
Credit Obligations and all other liabilities of the Borrower to
the Banks and/or the Agent hereunder and under the other Loan
Documents have been paid in full, the Borrower agrees that:
Section 9.1 Merger and Consolidation. The Borrower will not,
and will not permit any Subsidiary to, merge or consolidate or
enter into any analogous reorganization or transaction with any
Person; provided, however, that the restrictions contained in
this Section 9.1 shall not apply to or prevent the following so
long as no Event of Default exists:
(a) any wholly-owned Subsidiary may be merged with or liquidated
into the Borrower (if the Borrower is the surviving corporation)
or any other wholly-owned Subsidiary of the Borrower; and
(b) the acquisition of all or substantially all of the assets or
stock of any Person to the extent permitted by Section 9.8(g).
Section 9.2 Sale of Assets. The Borrower will not, and will not
permit any Material Subsidiary to, sell, transfer, lease or
otherwise convey all or any substantial part of its assets other
than in the ordinary course of business and except for sales or
other transfers by a wholly-owned Subsidiary to the Borrower or
another wholly-owned Subsidiary of the Borrower.
Section 9.3 Plans. The Borrower will not, and will not permit
any Material Subsidiary to, permit any condition to exist in
connection with any Plan which might constitute grounds for the
PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan, permit any Plan to
terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property,
revenue or asset of the Borrower or any Material Subsidiary or
permit the underfunded amount of Plan benefits guaranteed under
Title IV of ERISA to exceed $5,000,000.
Section 9.4 Change in Nature of Business. The Borrower will
not, and will not permit any Subsidiary to, conduct any business
other than the business of the Borrower or of such Subsidiary
carried on as of the date hereof and such other businesses which
are related to the broker-dealer, investment banking and related
financial services activities of the Borrower or such Subsidiary.
Section 9.5 Ownership of Stock in Material Subsidiaries. The
Borrower will not, and will not permit any Material Subsidiary
to, take any action which would result in a decrease in the
Borrower's ownership interest in any Material Subsidiary
(including, without limitation, decrease in the percentage of the
shares of any class of stock in a Material Subsidiary).
Section 9.6 Other Agreements. The Borrower will not, and will
not permit any Material Subsidiary to, enter into any agreement,
bond, note or other instrument with or for the benefit of any
Person other than the Banks which would: (a) contain a covenant
generally prohibiting the Borrower or such Material Subsidiary
from granting Liens to the Banks; provided, however, nothing in
this Section 9.6(a) shall prohibit any Material Subsidiary from
granting Liens in specific assets to other Persons and from
agreeing not to grant Liens in such specific assets to the Banks;
(b) be violated or breached by the Borrower's performance of its
obligations under the Loan Documents; or (c) prohibit or
otherwise limit in any way or to any extent the ability of any
Subsidiary to declare or pay dividends to the Borrower.
Section 9.7 Restricted Payments. The Borrower will not, and
will not permit any Subsidiary to, either: (a) purchase or redeem
or otherwise acquire for value any shares of the Borrower's or
any Subsidiary's stock, declare or pay any dividends thereon
(other than stock dividends and dividends payable solely to the
Borrower), make any distribution on, or payment on account of the
purchase, redemption, defeasance or other acquisition or
retirement for value of, any shares of the Borrower's or any
Subsidiary's stock or set aside any funds for any such purpose
(other than payment to, or on account of or for the benefit of,
the Borrower only) if a Default or Event of Default has occurred
and is continuing or if, after giving effect to any such
purchases, redemption, acquisition, dividend, distribution or
payment, a Default or an Event of Default would have occurred and
be continuing; or (b) directly or indirectly make any payment on,
or redeem, repurchase, defease, or make any sinking fund payment
on account of, or any other provision for, or otherwise pay,
acquire or retire for value, any Indebtedness of the Borrower or
any Subsidiary that is subordinated in right of payment to the
Loans (whether pursuant to its terms or by operation of law),
except for regularly-scheduled payments of interest and principal
(which shall not include payments contingently required upon
occurrence of a change of control or other event) that are not
otherwise prohibited hereunder or under the document or agreement
stating the terms of such subordination.
Section 9.8 Investments. The Borrower will not make, and the
Borrower will not permit to exist, any direct or indirect
investment (whether by means of equity, debt or otherwise) by the
Borrower in any other Person, except:
(a) Investments by the Borrower in Dain Rauscher Incorporated;
(b) Investments by the Borrower or Dain Rauscher Incorporated in
Subsidiaries other than Dain Rauscher Incorporated in an
aggregate amount not to exceed at any time eight percent (8%) of
the Borrower's Consolidated Net Worth;
(c) Investments made after the date of this Agreement to acquire
all or substantially all of the assets or stock of other Persons,
provided that (i) the sum of all cash consideration paid, the
current market value (as of the date of such Investment) of all
property given and all Indebtedness incurred and assumed in
connection with all such investments made after the date of this
Agreement shall not exceed an aggregate amount of $100,000,000
and (ii) any Person whose assets or stock are so acquired shall
be engaged solely in a business carried on by the Borrower or a
Subsidiary of the Borrower on the date of this Agreement. The
investments made by the Borrower to acquire WAH pursuant to the
WAH Acquisition Agreement shall be excluded for purposes of
determining the Borrower's compliance with this Section 9.8(c).
Section 9.9 Indebtedness and Contingent Liabilities. The
Borrower will not incur, create, issue, assume or suffer to exist
any Indebtedness or agree to maintain the net worth of or working
capital of, or provide funds to, satisfy any other financial
covenants applicable to, any other Person, except:
(a) Indebtedness under this Agreement and the other Loan
Documents;
(b) Current liabilities of the Borrower, other than for borrowed
money, incurred in the ordinary course of business;
(c) Indebtedness (other than Indebtedness permitted under
Sections 9.9(a), 9.9(d) and 9.9(e)) in an aggregate amount not to
exceed at any time $50,000,000; provided, however, that the sum
of the Borrower's Indebtedness permitted under this Section
9.9(c) and the Borrower's guarantees permitted under Section
9.9(d) below shall not exceed at any time an aggregate amount of
$125,000,000 (the WAH Subordinated Debentures (i) shall not be
included as Indebtedness for purposes of determining the
Borrower's compliance with the $50,000,000 requirement of this
Section 9.9(c) and (ii) shall be included as Indebtedness for
purposes of determining the Borrower's compliance with the
$125,000,000 requirement of this Section 9.9(c);
(d) Guarantees by the Borrower of Indebtedness for borrowed
money of Dain Rauscher Lending Services in an aggregate amount
not to exceed at any time $100,000,000; provided, however, that
(i) such guarantees shall be permitted only for so long as the
Borrower and Dain Rauscher Lending Services are in compliance
with each of the following requirements: (A) the credit
facilities under which Dain Rauscher Lending Services has
incurred such guaranteed Indebtedness are made available by one
or more of the Banks, (B) the aggregate amount of such guaranteed
Indebtedness which Dain Rauscher Lending Services may borrow
under such credit facilities shall not exceed at any time an
aggregate amount of $100,000,000, (C) all of such guaranteed
Indebtedness shall be secured by Dain Rauscher Lending Services'
pledge of the underlying loans made by Dain Rauscher Lending
Services to its customers, including the stock pledged by
customers of Dain Rauscher Lending Services to Dain Rauscher
Lending Services, (D) if the stock pledged by the customers of
Dain Rauscher Lending Services to Dain Rauscher Lending Services
are subject to Rule 144/Rule 145 restrictions, such pledged stock
meets Rule 144/Rule 145 requirements for saleability and are not
subject to a lockup or other restrictions; and (E) all loans made
by Dain Rauscher Lending Services to its customers meet the
following maximum loan to market value collateral requirements
with respect to the stock pledged by such customers: (1) with
respect to each loan at the time such loan is made, the ratio of
the loan amount to the market value of the pledged stock is not
more than 50% and (2) with respect to each loan at all times
after the time such loan is made, the ratio of the loan amount to
the market value of the pledged stock value is not more than 65%;
and (ii) the sum of the Borrower's guarantees of Indebtedness for
borrowed money of Dain Rauscher Lending Services permitted under
this Section 9.9(d) and the Borrower's Indebtedness permitted
under Section 9.9(c) above shall not exceed at any time the
aggregate amount of $125,000,000 (the WAH Subordinated Debentures
shall be included as Indebtedness for purposes of determining the
Borrower's compliance with the $125,000,000 requirement of this
Section 9.9(d)(ii));
(e) Guaranties by the Borrower of existing subordinated loans to
Dain Bosworth and Rauscher Pierce Refsnes in the aggregate amount
of $15,083,324 as of the date of this Agreement and maturing on
October 1, 1998; provided, however, that this exception shall not
apply to any extension or renewal of such loans or to any
increase in the principal amounts thereof;
(f) The WAH Subordinated Debentures.
Section 9.10 Liens. The Borrower will not create, incur, assume
or suffer to exist any Lien with respect to any of its property,
revenues or assets now owned or hereafter arising or acquired,
except:
(a) Liens in connection with the acquisition of property after
the date hereof by way of purchase money mortgage, conditional
sale or other title retention agreement, Capitalized Lease or
other deferred payment contract, and attaching only to the
property being acquired if the Indebtedness secured thereby does
not exceed 100% of the fair market value of such property at the
time of acquisition thereof;
(b) Liens existing on the date of this Agreement and disclosed
on Exhibit D hereto;
(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other
social security obligations, in the ordinary course of business
of the Borrower or a Subsidiary;
(d) Liens for taxes, fees, assessments and governmental charges
not delinquent or to the extent that payments therefor shall not
at the time be required to be made in accordance with the
provisions of Section 8.4; and
(e) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like
nature incurred in the ordinary course of business.
Section 9.11 Transactions with Related Parties. The Borrower
will not, and will not permit any Subsidiary to, enter into or be
a party to any transaction or arrangement, including, without
limitation, the purchase, sale, lease or exchange of property or
the rendering of any service, with any Related Party, except in
the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or the applicable Subsidiary's
business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not a Related Party.
Section 9.12 Fiscal Year. The Borrower will not change the
ending date of its fiscal year from December 31.
Section 9.13 Minimum Consolidated Net Worth. The Borrower will
not permit its Consolidated Net Worth at any time to be less than
the sum of (i) $250,000,000 plus (ii) thirty percent (30%) of the
sum of the Consolidated Net Income of the Borrower (with any
consolidated net loss during any fiscal quarter counting as zero)
for each fiscal quarter of the Borrower commencing with the
fiscal quarter of the Borrower ending June 30, 1997.
Section 9.14 Minimum Net Capital Required for Dain Rauscher
Incorporated. The Borrower will not permit the Net Capital of
Dain Rauscher Incorporated at any time to be less than the
greater of (i) $70,000,000, or (ii) seven percent (7%) of the
Aggregate Debit Items of Dain Rauscher Incorporated.
Section 9.15 WAH Subordinated Debentures. Except as currently
provided in the WAH Subordinated Debentures, the Borrower will
not prepay the WAH Subordinated Debentures and will not amend,
alter or otherwise change in any way any of the provisions of the
WAH Subordinated Debentures.
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of
Default:
(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal on any of the
Notes, any Letter of Credit Obligation or any fee or other amount
required to be made to the Banks pursuant to the Loan Documents;
(b) Any representation or warranty made or deemed to have been
made by or on behalf of the Borrower or any Subsidiary by any of
the Loan Documents or by or on behalf of the Borrower or any
Subsidiary in any certificate, statement, report or other writing
furnished by or on behalf of the Borrower to the Banks pursuant
to the Loan Documents shall prove to have been false or
misleading in any material respect on the date as of which the
facts set forth are stated or certified or deemed to have been
stated or certified;
(c) The Borrower shall fail to comply with Section 8.2 or
Section 8.11 hereof or any Section of Article IX hereof other
than Section 9.14, or (ii) shall fail to comply with Section 9.14
hereof and such failure shall continue unremedied until the
earlier to occur of (A) five (5) Business Days after the date on
which either the principal financial officer or the principal
accounting officer of the Borrower becomes aware of such failure,
or (B) twenty-one (21) calendar days after the date on which the
Borrower failed to be in compliance with Section 9.14;
(d) The Borrower shall fail to comply with any agreement,
covenant, condition, provision or term contained in the Loan
Documents (and such failure shall not constitute an Event of
Default under any of the other provisions of this Section 10.1)
and such failure to comply shall continue for 30 calendar days
after notice thereof to the Borrower;
(e) The Borrower or any Subsidiary shall become insolvent or
shall generally not pay its debts as they mature or shall apply
for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower or such Subsidiary
or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a
custodian, trustee or receiver shall be appointed for the
Borrower or a Subsidiary or for a substantial part of the
property thereof and shall not be discharged within 30 days;
(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be
instituted by or against the Borrower or a Subsidiary;
(g) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower or a Material Subsidiary,
or the Borrower or any Material Subsidiary shall take any
corporate action to approve institution of, or acquiescence in,
such a proceeding;
(h) A judgment or judgments for the payment of money in excess
of the sum of $10,000,000 in the aggregate shall be rendered
against the Borrower and/or its Subsidiaries and the Borrower or
such Subsidiary shall not discharge the same or provide for its
discharge in accordance with its terms, or procure a stay of
execution thereof, prior to any execution on such judgments by
such judgment creditor, within 30 days from the date of entry
thereof, and within said period of 30 days, or such longer period
during which execution of such judgment shall be stayed, appeal
therefrom and cause the execution thereof to be stayed during
such appeal;
(i) The institution by the Borrower or any ERISA Affiliate of
steps to terminate any Plan if in order to effectuate such
termination, the Borrower or any ERISA Affiliate would be
required to make a contribution to such Plan or would incur a
liability or obligation to such Plan in excess of $5,000,000, or
the institution by the PBGC of steps to terminate any Plan;
(j) Indebtedness of the Borrower (other than Indebtedness under
this Agreement) and/or a Subsidiary in an aggregate amount of
$5,000,000 or more shall be accelerated, or the Borrower and/or a
Subsidiary shall fail to pay any such Indebtedness in an
aggregate amount of $5,000,000 or more when due (or, in case any
such Indebtedness is payable on demand, when demanded), or any
event shall occur or condition shall exist and shall continue for
more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting (any required
notice having been given and grace period having expired) the
holder of any such Indebtedness in an aggregate amount of
$5,000,000 or more or any trustee or other Person acting on
behalf of such holder to cause, such Indebtedness in an aggregate
amount of $5,000,000 or more to become due prior to its stated
maturity or to realize upon any collateral given as security
therefor; or
(k) The New York Stock Exchange, Inc., any other national
securities exchange of which a Material Subsidiary is a member or
on which such Material 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 Material
Subsidiary, or (ii) revokes such Material Subsidiary's membership
or privileges, or (iii) takes any other action which will
materially adversely affect the operations of such Material
Subsidiary; or
(l) The Securities and Exchange Commission shall enter an order
that (i) suspends or revokes the registration of any Material
Subsidiary as a broker or as a dealer or both, (ii) suspends any
Material Subsidiary as a member of a national securities
association or national securities exchange, (iii) expels any
Material 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 Material 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; or
(n) Any Person, or group of Persons acting in concert, shall own
or shall have acquired more than thirty percent (30%) of the
shares of any voting class of stock of the Borrower; or
(o) A Default, Event of Acceleration or Event of Default (each
as defined therein) shall occur under the Dain Rauscher
Incorporated Credit Agreement.
Section 10.2 Remedies. If (a) any Event of Default described in
Sections 10.1(e), (f) or (g) shall occur with respect to the
Borrower, the Commitments shall automatically terminate and the
outstanding unpaid principal balance of the Notes, the accrued
interest thereon and all other obligations of the Borrower to the
Banks and the Agent under the Loan Documents shall automatically
become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may take
any or all of the following actions (and shall take any or all of
the following actions on direction of the Required Banks): (i)
declare the Commitments terminated, whereupon the Commitments
shall terminate, (ii) declare that the outstanding unpaid
principal balance of the Notes, the accrued and unpaid interest
thereon and all other obligations of the Borrower to the Banks
and the Agent under the Loan Documents to be forthwith due and
payable, whereupon the Notes, all accrued and unpaid interest
thereon and all such obligations shall immediately become due and
payable, in each case without demand or notice of any kind, all
of which are hereby expressly waived, anything in this Agreement,
the Notes or the other Loan Documents to the contrary
notwithstanding, (iii) exercise all rights and remedies under the
Loan Documents and under any other instrument, document or
agreement between the Borrower and the Agent or the Banks, and
(iv) enforce all rights and remedies available under any
applicable law.
Section 10.3 Letters of Credit. In addition to the foregoing
remedies, if any Event of Default described in Section 10.1(e),
(f) or (g) shall have occurred, or if any other Event of Default
shall have occurred and the Agent shall have declared that the
principal balance of the Notes is due and payable, the Borrower
shall pay to the Agent an amount equal to all Letter of Credit
Obligations. Such payment shall be in immediately available
funds or in similar cash collateral acceptable to the Agent and
shall be pledged to the Agent for the ratable benefit of the
Banks. Such amount shall be held by the Agent in a cash
collateral account until the outstanding Letters of Credit are
terminated without payment or are paid and the Letter of Credit
Obligations with respect thereto are payable. In the event the
Borrower defaults in the payment of any Letter of Credit
Obligations, the proceeds of the cash collateral account shall be
applied to the payment thereof. The Borrower acknowledges and
agrees that the Banks would not have an adequate remedy at law
for failure by the Borrower to pay immediately to the Agent the
amount provided under this Section, and that the Agent shall, on
behalf of the Banks, have the right to require the Borrower to
perform specifically such undertaking whether or not any of the
Letter of Credit Obligations are due and payable. Upon the
failure of the Borrower to make any payment required under this
Section, the Agent, on behalf of the Banks, may proceed to use
all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Agent. The balance of
any payment due under this Section shall bear interest payable on
demand until paid in full at a per annum rate equal to the
Reference Rate plus three percent (3.00%).
Section 10.4 Offset. In addition to the remedies set forth in
Sections 10.2 and 10.3, upon the occurrence of any Event of
Default or at any time thereafter while such Event of Default
continues, each Bank or any other holder of any Note may offset
any and all balances, credits, deposits (general or special, time
or demand, provisional or final), accounts or monies of the
Borrower then or thereafter with such Bank or such other holder,
or any obligations of such Bank or such other holder of the Note,
against the Indebtedness then owed by the Borrower to such Bank.
ARTICLE XI THE AGENT
Section 11.1 Appointment and Grant of Authority. Each Bank
hereby appoints the Agent, and the Agent hereby agrees to act, as
agent under this Agreement. The Agent shall have and may
exercise such powers under this Agreement as are specifically
delegated to the Agent by the terms hereof, together with such
other powers as are reasonably incidental thereto. Each Bank
hereby authorizes, consents to, and directs the Borrower to deal
with the Agent as the true and lawful agent of such Bank to the
extent set forth herein.
Section 11.2 Non Reliance on Agent. Each Bank agrees that it
has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower
and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent, and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Agent
shall not be required to keep informed as to the performance or
observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower.
Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the affairs, financial condition or business of the Borrower (or
any of its related companies) which may come into the Agent's
possession.
Section 11.3 Responsibility of the Agent and Other Matters.
(a) The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and those duties and
liabilities shall be subject to the limitations and
qualifications set forth in this Section. The duties of the
Agent shall be mechanical and administrative in nature.
(b) Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted
(whether or not such action taken or omitted is within or without
the Agent's responsibilities and duties expressly set forth in
this Agreement) under or in connection with this Agreement, or
any other instrument or document in connection herewith, except
for gross negligence or willful misconduct. Without limiting the
foregoing, neither the Agent nor any of its directors, officers
or employees shall be responsible for, or have any duty to
examine:
(i) the genuineness, execution, validity, effectiveness,
enforceability, value or sufficiency of (a) this Agreement, the
Notes or the other Loan Documents, or (b) any document or
instrument furnished pursuant to or in connection with this
Agreement, the Notes or the other Loan Documents,
(ii) the collectibility of any amounts owed by the Borrower,
(iii) any recitals or statements or representations or
warranties in connection with this Agreement, the Notes or the
other Loan Documents,
(iv) any failure of any party to this Agreement to receive any
communication sent, or
(v) the assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Borrower.
(c) The Agent shall be entitled to act, and shall be fully
protected in acting upon, any communication in whatever form
believed by the Agent in good faith to be genuine and correct and
to have been signed or sent or made by a proper Person. The
Agent may consult counsel and shall be entitled to act, and
shall be fully protected in any action taken in good faith, in
accordance with advice given by counsel. The Agent may employ
agents and attorneys-in-fact and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact
selected by the Agent with reasonable care. The Agent shall not
be bound to ascertain or inquire as to the performance or
observance of any of the terms, provisions or conditions of this
Agreement, the Notes or the other Loan Documents on the
Borrower's part.
Section 11.4 Action on Instructions. The Agent shall be
entitled to act or refrain from acting, and in all cases shall be
fully protected in acting or refraining from acting under this
Agreement, the Notes or the other Loan Documents or any other
instrument or document in connection herewith or therewith in
accordance with instructions in writing from (i) the Required
Banks except for instructions which under the express provisions
hereof must be received by the Agent from all the Banks, and (ii)
in the case of such instructions which under the express
provisions hereof must be received by the Agent from all of the
Banks, from all of the Banks.
Section 11.5 Indemnification. To the extent the Borrower does
not reimburse and save the Agent harmless according to the terms
hereof for and from all costs, expenses and disbursements in
connection herewith or with the other Loan Documents, such costs,
expenses and disbursements to the extent reasonable shall be
borne by the Banks ratably in accordance with their Percentages
and the Banks hereby agree on such basis (a) to reimburse the
Agent for all such reasonable costs, expenses and disbursements
on request of the Agent and (b) to indemnify and save harmless
the Agent against and from any and all losses, obligations,
penalties, actions, judgments and suits and other reasonable
costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent,
arising out of or in connection with this Agreement, the Notes or
the other Loan Documents or any instrument or document in
connection herewith or therewith, or any request of the Banks,
including without limitation the reasonable costs, expenses and
disbursements in connection with defending itself against any
claim or liability, or answering any subpoena, related to the
exercise or performance of any of its powers or duties under this
Agreement, the Notes or the other Loan Documents or the taking of
or refraining from taking any action under or in connection with
this Agreement, the Notes or the other Loan Documents.
Section 11.6 U.S. Bank and Affiliates. With respect to U.S.
Bank's Commitment and any Loans by U.S. Bank under this Agreement
and any Note and any interest of U.S. Bank in any Note, U.S. Bank
shall have the same rights, powers and duties under this
Agreement and any such Note as any other Bank and may exercise
the same as though it were not the Agent. U.S. Bank and its
affiliates may accept deposits from, lend money to, and generally
engage, and continue to engage, in any kind of business with the
Borrower as if U.S. Bank were not the Agent.
Section 11.7 Notice to Holder of Notes. The Agent may deem and
treat the payees of the Notes as the owners thereof for all
purposes unless the Agent shall have given its consent to the
assignment thereof in accordance with the provisions of Section
12.3. Any request, authority or consent of any holder of any
Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note.
Section 11.8 Successor Agent. The Agent may resign at any time
by giving at least 30 days written notice thereof to the Banks
and the Borrower. Upon any such resignation, the Borrower shall
have the right to appoint a successor Agent from among the Banks,
subject to such selected Bank being willing to accept such
appointment; provided, however, if a Default or Event of Default
shall exist such successor Agent shall be selected solely by the
Required Banks and such successor Agent need not be approved by
the Borrower. If no successor Agent shall have been appointed in
accordance with the preceding sentence and shall have accepted
such appointment within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, but shall not
be required to, on behalf of the Banks, appoint a successor Agent
and such successor Agent need not be approved by the Borrower.
ARTICLE XII MISCELLANEOUS
Section 12.1 No Waiver and Amendment. No failure on the part of
the Agent, the Banks or the holders of the Notes to exercise and
no delay in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument,
document or agreement delivered or to be delivered to the Agent
and/or the Banks hereunder or in connection herewith are
cumulative and not exclusive of any remedies provided by law. No
notice to or demand on the Borrower not required hereunder or
under the other Loan Documents shall in any event entitle the
Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of the
Agent, the Banks or the holders of the Notes to any other or
further action in any circumstances without notice or demand.
Section 12.2 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Borrower and the Agent
upon direction of the Required Banks and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless agreed to by the Agent
and all of the Banks:
(a) increase the amounts of or extend the terms of the
Commitments or subject the Banks to any additional obligations;
(b) reduce the principal of, or interest (including the rate of
interest) on, the Notes or any fees or other amounts payable
hereunder;
(c) change the requirement that payments of principal of, and
interest on, the Revolving Notes or Term Notes, as applicable, be
made pro rata to the Banks on the basis of the outstanding
principal amount of the Revolving Loans or Term Loans, as
applicable;
(d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable
hereunder;
(e) change the definition of Required Banks or amend this
Section 12.2;
provided, further that amendments, waivers or consents affecting
the rights of the Agent shall also require the consent of the
Agent.
Section 12.3 Assignments.
(a) Assignments. Each Bank shall have the right, subject to the
further provisions of this Sections 12.3, to sell or assign all
or any part of its Commitments, Loans, Letter of Credit
Obligations, Notes, and other rights and obligations under this
Agreement and the other Loan Documents (such transfer, an
"Assignment") to any commercial lender, other financial
institution or other entity (an "Assignee"). Upon such
Assignment becoming effective as provided in Section 12.3(b), the
assigning Bank shall be relieved from the portion of its
Commitment, its Swing Line Participation Amount, its Letter of
Credit Participation Amount, its obligations to indemnify the
Agent and its other obligations hereunder to the extent assumed
and undertaken by the Assignee, and to such extent the Assignee
shall have assumed such portion of the assigning Bank's
Commitment, its Swing Line Participation Amount, its Letter of
Credit Participation Amount and such other obligations hereunder
and the Assignee shall have the rights of a "Bank" hereunder.
Notwithstanding the foregoing, unless otherwise consented to by
the Borrower and the Agent, each Assignment shall be in an amount
not less than (i) the entire amount of the assigning Bank's
Commitment and related rights and obligations, or (ii)
$10,000,000 of the assigning Bank's Commitment and related rights
and obligations hereunder, or an integral multiple of $1,000,000
if above such amount. Each Assignment shall be documented by an
agreement among the assigning Bank, the Assignee, the Agent, and
so long as no Default or Event of Default exists, the Borrower
(an "Assignment and Assumption Agreement") in form and substance
satisfactory to the Agent.
(b) Effectiveness of Assignments. An Assignment shall become
effective hereunder when all of the following conditions
precedent shall have occurred: (i) the Agent shall have given its
written consent to such Assignment evidenced by the Agent's
execution of the applicable Assignment and Assumption Agreement,
(ii) so long as no Default or Event of Default exists, the
Borrower shall have given its written consent to such Assignment
evidenced by the Borrower's execution of the applicable
Assignment and Assumption Agreement, unless the Assignee is
already a Bank under this Agreement in which case no consent is
required from the Borrower, (iii) either the assigning Bank or
the Assignee shall have paid a processing fee of $3,500 to the
Agent for the Agent's own account, (iv) the Assignee shall have
submitted to the Agent the Assignment and Assumption Agreement,
in which the Assignee shall have agreed in writing to have
irrevocably assumed and undertaken the transferred portion of the
assigning Bank's obligations hereunder (including, without
limitation, the transferred portion of the Swing Line
Participation Amount, the Letter of Credit Participation Amount
and the obligations to indemnify the Agent hereunder), with a
copy for the Borrower, and shall have provided to the Agent
information the Agent shall have reasonably requested to make
payments to the Assignee, and (v) the assigning Bank, the
Assignee and the Agent shall have agreed upon a date upon which
the Assignment shall become effective. Upon the Assignment
becoming effective, (A) the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the
assigning Bank and the Assignee; and (B) the Agent shall forward
all payments of interest, principal, fees and other amounts that
would have been made to the assigning Bank, in proportion to the
percentage of the assigning Bank's rights transferred, to the
Assignee.
(c) Tax Matters. No Bank shall be permitted to enter into any
Assignment with any Assignee who is not a United States Person
unless such Assignee represents and warrants to such Bank that,
as at the date of such Assignment, it is entitled to receive
interest payments without withholding or deduction of any taxes
and such Assignee executes and delivers to such Bank on or before
the date of execution and delivery of documentation of such
Assignment, a United States Internal Revenue Service Form 1001 or
4224, or any successor to either of such forms, as appropriate,
properly completed an claiming complete exemption from
withholding and deduction of all Federal Income Taxes. A "United
States Person" means any citizen, national or resident of the
United States, any corporation or other entity created or
organized in or under the laws of the United States or any
political subdivision hereof or any estate or trust, in each case
that is not subject to withholding of United States Federal
income taxes or other taxes on payment of interest, principal of
fees hereunder.
(d) Information. Each Bank may provide to any Assignee or to
any prospective Assignee copies of all Loan Documents and any and
all financial information in such Bank's possession concerning
the Borrowers and its Subsidiaries which has been delivered to
such Bank by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Bank by or on
behalf of the Borrower in connection with such Bank's credit
evaluation of the Borrower prior to entering into this Agreement.
(e) Federal Reserve Bank. Nothing herein stated shall limit the
right of any Bank to assign any of its interest herein, in any
Note and in the other Loan Documents to a Federal Reserve Bank.
Section 12.4 Costs, Expenses and Taxes; Indemnification. The
Borrower agrees, whether or not any Loan is made hereunder or any
Letter of Credit is issued hereunder, to pay on demand the
following out-of-pocket costs and expenses incurred in connection
with the following matters: (i) all out-of-pocket costs and
expenses of the Agent (including the reasonable fees and expenses
of outside counsel to the Agent) in connection with the
preparation, execution and delivery of the Loan Documents and the
preparation, negotiation and execution of any and all amendments
to each thereof and (ii) all out-of-pocket costs and expenses of
the Agent and each of the Banks in connection with the
enforcement of the Loan Documents. The Borrower agrees to pay,
and save the Banks harmless from all liability for, any stamp or
other taxes which may be payable with respect to the execution or
delivery of the Loan Documents. The Borrower agrees to defend,
protect, indemnify, and hold harmless the Agent and each and all
of the Banks, each of their respective affiliates and each of the
respective officers, directors, employees and agents of each of
the foregoing (each an "Indemnified Person" and collectively, the
"Indemnified Persons") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever, including, without limitation, the fees and
disbursements of counsel to such Indemnified Persons, in any
manner relating to or arising out of or in connection with the
making of loans under this Agreement or under the Dain Rauscher
Incorporated Credit Agreement, this Agreement, the Dain Rauscher
Incorporated Credit Agreement or the WAH Acquisition; provided,
however, that the Borrower shall have no obligation to an
Indemnified Person with respect to any of the foregoing to the
extent resulting from the gross negligence or willful misconduct
of such Indemnified Person or arising solely from claims between
one such Indemnified Person and another such Indemnified Person.
Section 12.5 Notices. Except when telephonic notice is
expressly authorized by this Agreement, any notice or other
communication to any party in connection with this Agreement
shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or
United States mail (postage prepaid) addressed to such party at
the address specified on the signature page hereof, or at such
other address as such party shall have specified to the other
party hereto in writing. All periods of notice shall be measured
from the date of delivery thereof if manually delivered, from the
date of sending thereof if sent by telegram, telex or facsimile
transmission, from the first (1st) Business Day after the date of
sending if sent by overnight courier, or from four (4) days after
the date of mailing if mailed; provided, however, that any notice
to the Agent under Article II hereof shall be deemed to have been
given only when received by the Agent.
Section 12.6 Successors. This Agreement shall be binding upon
the Borrower, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the
Borrower, the Banks and the Agent and the successors and assigns
of the Banks. The Borrower shall not assign its rights or duties
hereunder without the written consent of the Banks.
Section 12.7 Severability. Any provision of the Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.8 Subsidiary References. The provisions of this
Agreement relating to Subsidiaries shall apply only during such
times as the Borrower has one or more Subsidiaries.
Section 12.9 Captions. The captions or headings herein and any
table of contents hereto are for convenience only and in no way
define, limit or describe the scope or intent of any provision of
this Agreement.
Section 12.10 Entire Agreement. The Loan Documents embody the
entire agreement and understanding between the Borrower, the
Banks and the Agent with respect to the subject matter hereof and
thereof. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof.
Section 12.11 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
Section 12.12 Confidentiality of Information. The Agent and
each Bank shall use reasonable efforts to assure that information
about the Borrower and its Subsidiaries and their operations,
affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the
Agent or such Bank pursuant to the provisions hereof is used only
for the purposes of this Agreement and any other relationship
between any Bank and the Borrower and shall not be divulged to
any Person other than the Banks, their affiliates and their
respective officers, directors, employees and agents, except:
(a) to their attorneys and accountants, (b) in connection with
the enforcement of the rights of the Banks hereunder and under
the other Loan Documents or otherwise in connection with
applicable litigation, (c) in connection with assignments and the
solicitation of prospective assignees referred to in Section
12.3, provided that the disclosing Bank complies with Section
9.6(d) and (d) as may otherwise be required or requested by any
regulatory authority having jurisdiction over any Bank or by any
applicable law, rule, regulation or judicial process, in the
opinion of such Bank's counsel, such opinion concerning the
making of such disclosure to be binding on the parties hereto.
No Bank shall incur any liability to the Borrower by reason of
any disclosure expressly permitted by this Section 12.12.
Section 12.13 Governing Law. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
Section 12.14 Consent to Jurisdiction. AT THE OPTION OF THE
BANKS, THIS AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR
ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE
BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY
FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE BANKS AT
THEIR OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO
ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 12.15 Waiver of Jury Trial. THE BORROWER WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT, THE NOTES
OR THE OTHER LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
Section 12.16 Restatement of Original Credit Agreement. This
Agreement constitutes an amendment to, and a complete restatement
of, the Original Credit Agreement.
Section 12.17 Survival of Certain Provisions of this Agreement.
In consideration of the Agent's and the Banks' entering into this
Agreement and the Dain Rauscher Incorporated Credit Agreement,
and making the loans and other credit accommodations available
thereunder, the Borrower hereby irrevocably agrees as follows:
(i) the Borrower's covenant under Section 9.8 of this Agreement
shall survive until the last to occur of (a) the payment in full
of all obligations of the Borrower to the Agent and/or the Banks
under this Agreement, (b) the termination of the Commitment of
the Banks to make loans and to issue letters of credit for the
account of the Borrower under this Agreement, and (c) the payment
in full of all obligations of Dain Rauscher Incorporated to the
Agent and/or the Banks under the Dain Rauscher Incorporated
Credit Agreement, and (ii) the Borrower's covenants and
obligations under Section 12.4 of this Agreement shall survive
forever notwithstanding the repayment in full of all obligations
of the Borrower to the Agent and/or or the Banks under this
Agreement, the termination of the Commitment of the Banks to make
loans and to issue letters of credit for the account of the
Borrower under this Agreement and the payment in full of all
obligations of Dain Rauscher Incorporated to the Agent and/or the
Banks under the Dain Rauscher Incorporated Credit Agreement. The
Borrower specifically acknowledges and agrees that the Borrower's
violation of its covenants under Section 9.8 of this Agreement
will harm the Agent and the Banks to such an extent that monetary
damages alone would be an inadequate remedy. Therefore, in the
event of any violation by the Borrower of its covenants under
Section 9.8 of this Agreement, the Agent and the Banks (in
addition to all other remedies which the Agent and/or the Banks
may have by law or agreement) shall be entitled to a temporary
restraining order, injunction and other equitable relief (without
posting any bond or other security) restraining the Borrower from
committing or continuing such violation. If any provision or
application of this Section 12.17 is held unlawful or
unenforceable in any respect, this Section 12.17 shall be revised
or applied in a manner that renders it lawful and enforceable to
the fullest extent possible.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above.
DAIN RAUSCHER CORPORATION
By John C. Appel
Title Vice Chairman and
Chief Financial Officer
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Attention: Daniel Marcotte
Fax: (612) 371-7951
Commitment: U.S. BANK NATIONAL ASSOCIATION,
$15,000,000 as Agent and a Bank
Percentage: 30%
By Jose A. Peris
Title Senior Vice President and
Division Manager
601 2nd Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Vice President, Financial
Services Division
Fax: (612) 973-0832
Commitment: NORWEST BANK MINNESOTA,
$15,000,000 NATIONAL ASSOCIATION
Percentage: 30%
By Edward J. Meyer, Jr.
Title Vice President
Financial Institutions
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0105
Attention: Vice President, Financial
Institutions Division
Fax: (612) 667-7251
Commitment: THE CHASE MANHATTAN BANK
$15,000,000
Percentage: 30% By Diane M. Leslie
Title Managing Director
Broker/Dealer Division
Broker-Dealer Division
21st Floor
One Chase Manhattan Plaza
New York, New York 10081
Attention: Diane Leslie
Fax: (212) 552-5287
Commitment: THE BANK OF NEW YORK
$5,000,000
Percentage: 10% By Joseph Ciacciarelli
Title Vice President
One Wall Street
First Floor
New York, New York 10286
Attention: Joe Ciacciarelli
Fax: (212) 809-9375
M1:358468.03
EXHIBIT A-1 TO
CREDIT AGREEMENT
REVOLVING NOTE
$[Commitment] Minneapolis, Minnesota
March 20, 1998
FOR VALUE RECEIVED, the undersigned, DAIN RAUSCHER
CORPORATION, a Delaware corporation (the "Borrower"), promises to
pay to the order of [BANK] (the "Bank"), on the Termination Date,
or other due date or dates determined under the Credit Agreement
hereinafter referred to, the principal sum of___________________
__________________________________ AND 00/100 DOLLARS
($[Commitment]), or if less, the then aggregate unpaid principal
amount of the Revolving Loans (as such term is defined in the
Credit Agreement) as may be borrowed by the Borrower from the
Bank under the Credit Agreement. All Revolving Loans and all
payments of principal shall be recorded by the holder in its
records which records shall be conclusive evidence of the subject
matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the
Bank interest on the aggregate unpaid principal amount hereof
from time to time outstanding from the date hereof until paid in
full at the rates per annum which shall be determined in
accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit
Agreement.
All payments of principal and interest under this Note shall
be made in lawful money of the United States of America in
immediately available funds at the office of U.S. Bank National
Association, at 601 2nd Ave. S., Minneapolis, Minnesota 55402-
4302, or at such other place as may be designated by the Agent to
the Borrower in writing.
This Note is a Revolving Note referred to in, and evidences
Revolving Loans incurred by the Borrower to the Bank under, an
Amended and Restated Credit Agreement of even date herewith
(herein, as it may be restated, amended, modified or supplemented
from time to time, called the "Credit Agreement") among the
Borrower, the Banks, as defined therein (including the Bank) and
U.S. Bank National Association, as Agent, to which Credit
Agreement reference is made for a statement of the terms and
provisions thereof, including those under which the Borrower is
permitted and required to make prepayments and repayments of
principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or
otherwise, severally waive presentment, demand, protest and
notice of dishonor in connection with this Note.
This Note is made under and governed by the internal laws of
the State of Minnesota.
DAIN RAUSCHER CORPORATION
By
Title
M1:358468.03
EXHIBIT A-2 TO
CREDIT AGREEMENT
SWING LINE NOTE
$5,000,000 Minneapolis, Minnesota
March 20, 1998
FOR VALUE RECEIVED, the undersigned, DAIN RAUSCHER
CORPORATION, a Delaware corporation (the "Borrower"), promises to
pay to the order of U.S. BANK NATIONAL ASSOCIATION (the "Bank"),
on the Termination Date, or other due date or dates determined
under the Credit Agreement hereinafter referred to, the principal
sum of FIVE MILLION AND 00/100 DOLLARS ($5,000,000), or if less,
the then aggregate unpaid principal amount of the Swing Line
Loans (as such term is defined in the Credit Agreement) as may be
borrowed by the Borrower from the Bank under the Credit
Agreement. All Swing Line Loans and all payments of principal
shall be recorded by the holder in its records which records
shall be conclusive evidence of the subject matter thereof,
absent manifest error.
The Borrower further promises to pay to the order of the
Bank interest on the aggregate unpaid principal amount hereof
from time to time outstanding from the date hereof until paid in
full at the rates per annum which shall be determined in
accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit
Agreement.
All payments of principal and interest under this Note shall
be made in lawful money of the United States of America in
immediately available funds at the office of U.S. Bank National
Association, at 601 2nd Ave. S., Minneapolis, Minnesota 55402-
4302, or at such other place as may be designated by the Agent to
the Borrower in writing.
This Note is the Swing Line Note referred to in, and
evidences the Swing Line Loans incurred by the Borrower to the
Bank under, an Amended and Restated Credit Agreement of even date
herewith (herein, as it may be restated, amended, modified or
supplemented from time to time, called the "Credit Agreement")
among the Borrower, the Banks, as defined therein (including the
Bank) and U.S. Bank National Association, as Agent, to which
Credit Agreement reference is made for a statement of the terms
and provisions thereof, including those under which the Borrower
is permitted and required to make prepayments and repayments of
principal of such indebtedness and under which such indebtedness
may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or
otherwise, severally waive presentment, demand, protest and
notice of dishonor in connection with this Note.
This Note is made under and governed by the internal laws of
the State of Minnesota.
DAIN RAUSCHER CORPORATION
By
Title
M1:358468.03
EXHIBIT A-3 TO
CREDIT AGREEMENT
TERM NOTE
$[Amount of Term Loan] Minneapolis, Minnesota
______________, ____
FOR VALUE RECEIVED, the undersigned, DAIN RAUSCHER
CORPORATION, a Delaware corporation (the "Borrower"), promises to
pay to the order of [BANK] (the "Bank"), on _______________,
____, or other due date or dates determined under the Credit
Agreement hereinafter referred to, the principal sum of__________
__________________________________ AND 00/100 DOLLARS ($Term Loan
Amount). All payments of principal under this Note shall be
recorded by the holder in its records which records shall be
conclusive evidence of the subject matter thereof, absent
manifest error.
The principal balance hereof shall be payable in seven (7)
equal quarterly installments of $____________ each, commencing on
the last day of _______________, ____, and continuing on the last
day of each December, March, June and September thereafter until
_______________, _____ (the "Term Loan Maturity Date"), when the
entire remaining principal balance hereof shall be due and
payable.
The Borrower further promises to pay to the order of the
Bank interest on the aggregate unpaid principal amount hereof
from time to time outstanding from the date hereof until paid in
full at the rates per annum which shall be determined in
accordance with the provisions of the Credit Agreement. Accrued
interest shall be payable on the dates specified in the Credit
Agreement.
All payments of principal and interest under this Note shall
be made in lawful money of the United States of America in
immediately available funds at the office of U.S. Bank National
Association, at 601 2nd Ave. S., Minneapolis, Minnesota 55402-
4302, or at such other place as may be designated by the Agent to
the Borrower in writing.
This Note is a Term Note referred to in, and evidences the
Term Loan incurred by the Borrower to the Bank under, an Amended
and Restated Credit Agreement of even date herewith (herein, as
it may be restated, amended, modified or supplemented from time
to time, called the "Credit Agreement") among the Borrower, the
Banks, as defined therein (including the Bank) and U.S. Bank
National Association, as Agent, to which Credit Agreement
reference is made for a statement of the terms and provisions
thereof, including those under which the Borrower is permitted
and required to make prepayments and repayments of principal of
such indebtedness and under which such indebtedness may be
declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or
otherwise, severally waive presentment, demand, protest and
notice of dishonor in connection with this Note.
This Note is made under and governed by the internal laws of
the State of Minnesota.
DAIN RAUSCHER CORPORATION
By
Title
M1:358468.03
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
INTER-REGIONAL FINANCIAL GROUP, INC.
FIRST: The name of this Corporation is Inter-Regional
Financial Group, Inc.
SECOND: The registered office of the Corporation in the
State of Delaware is to be located at The Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801. The name
of the registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any part
of the world in any capacity in any lawful act or activity
for which corporations may be organized under the General
Corporation Law of Delaware, and the Corporation shall be
authorized to exercise and enjoy all powers, rights and
privileges which corporations organized under the General
Corporation Law of Delaware may have under the laws of the
State of Delaware as in force from time to time, including
without limitation all powers, rights and privileges
necessary or convenient to carry out all those acts and
activities in which it may lawfully engage.
FOURTH: Section 1. Shares, Classes and Series
Authorized. The total number of shares of stock which this
Corporation is authorized to issue is 22,501,940 shares, of
which 20,000,000 shares of the par value of $.125 per share are
designated Common Stock, and 2,000,000 shares of the par value of
$1.00 per share are designated $1 Par Value Preferred
Stock, 1,940 shares of the par value of $100 per share are
designated 7% Convertible Preferred Stock and 500,000 shares
of the par value of $16.00 per share are designated as $16
Par Value Preferred Stock. The $1 Par Value Preferred Stock,
the 7% Convertible Preferred Stock and the $16 Par Value
Preferred Stock are herein collectively referred to as the
"Preferred Stock".
The Preferred Stock is hereby authorized to be issued from time
to time in one or more series, the shares of each series to
have such voting powers, full or limited, or no voting power,
and such designations, preferences and relative,
participating, optional or other special rights and
qualifications, limitations or restrictions thereof and may be
convertible into, or exchangeable for, at the option of either
the holder or the Corporation or upon the happening of a
specified event, shares of any other class or classes or any
other series of the same or any other class or classes of
capital stock of the Corporation at such price or prices or at
such rate or rates of exchange and with such adjustments as
shall be stated and expressed in the Certificate of
Incorporation or any amendment thereto or in the resolution or
resolutions adopted by the Board of Directors providing for
the issue thereof.
Section 2. Description of Capital Stock. The following is a
description of each of the classes of capital stock which the
Corporation has authority to issue with the
designations, preferences, voting powers and participating,
optional or other special rights and the qualifications,
limitations or restrictions thereof:
PREFERRED STOCK
A. Rights and Restrictions of Preferred Stock.
Authority is hereby expressly vested in the Board of
Directors of the Corporation, subject to the provisions of this
Article FOURTH and to the limitations prescribed by law,
to authorize the issue from time to time of one or more series
of Preferred Stock and with respect to each such series to fix
by resolution or resolutions adopted by the affirmative
vote of a majority of the whole Board of Directors providing
for the issue of such series the voting powers, full or
limited, if any, of the shares of such series and the
designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or
restrictions thereof. The authority of
the Board of Directors with respect to each series
shall include, but not be limited to:
(1) The designation of such series.
(2) The dividend rate of such series, the
conditions and dates upon which such dividends shall be
payable, the relation which such dividends shall bear to
the dividends payable on any other class or classes or
series of the Corporation's capital stock, and whether
such dividends shall be cumulative or non-cumulative.
(3) Whether the shares of such series shall be
subject to redemption by the Corporation or the holder or
both or upon the happening of a specified event, and, if
made subject to any such redemption, the times or events, prices
and other terms and conditions of such redemption.
(4) The terms and amount of any sinking fund
provided for the purchase or redemption of the shares of such
series.
(5) Whether or not the shares of such series
shall be convertible into, or exchangeable for, at the option of
either the holder or the Corporation or upon the happening of a
specified event, shares of any other class or classes or of
any other series of the same or any other class or classes of
the Corporation's capital stock, and, if provision be
made for conversion or exchange, the times or events, prices,
rates, adjustments, and other terms and conditions of such
conversions or exchanges.
(6) The restrictions, if any, on the issue or
reissue of any additional Preferred Stock.
(7) The rights of the holders of the shares of such
series upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(8) The provisions as to voting, optional
and/or other special rights and preferences, if any.
7% CONVERTIBLE PREFERRED STOCK
B. Dividends. The holders of 7% Convertible Preferred
Stock shall be entitled to receive, when and as declared
by the Board of Directors, out of any funds legally available
for such purpose, cash dividends at the rate of $7.00 per
annum per share, payable semi-annually on the first day of June
and December of each year. Such dividends shall be cumulative
on the 7% Convertible Preferred Stock from the date of original
issue and shall be cumulative whether or not earned. In no event shall
any dividend (other than dividends payable in Common Stock of
the Corporation) be paid or declared nor shall any distribution
be made on the Common Stock nor shall any Common Stock be
purchased, redeemed or otherwise acquired by the Corporation
for value nor shall any monies be paid to or set aside or made
available for a purchase fund or sinking fund for the purchase
or redemption of any Common Stock unless all dividends on the 7%
Convertible Preferred Stock for all past semi-annual dividend periods
and for the then current semi-annual dividend period shall have been paid
or declared and a sum sufficient for the payment thereof set apart for payment.
C. Dissolution, Liquidation and Winding Up. In the
event of any dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary,
the holders of 7% Convertible Preferred Stock shall be
entitled to receive in cash out of the assets of the
Corporation an amount equal to $100 per share, together with
an amount equal to dividends accumulated and unpaid thereon
to the date of distribution before any payment shall be made or any
assets distributed to the holders of Common Stock as a
distribution of assets on such liquidation, dissolution or
winding up. If the assets available are not sufficient
to pay in full the amounts so payable to the holders of all 7%
Convertible Preferred Stock, the holders of 7% Convertible
Preferred Stock shall share ratably in any distribution of
assets in proportion to the full amounts to which they would
otherwise be entitled. The consolidation or merger of
the Corporation into or with any other corporation or
corporations pursuant to the statutes of the State of Delaware
shall not be deemed liquidation, dissolution or winding up of
the Corporation with the meaning of any of the provisions of
this section.
D. Voting Rights. The holders of 7% Convertible
Preferred Stock shall be entitled to one vote per share.
E. Redemption. From and after June 30, 1977, the 7%
Convertible Preferred Stock may be redeemed as a whole at any
time or in part from time to time at the option of the
Corporation by resolution of the Board of Directors at the
redemption price of $100 per share together with an amount
equal to accrued and unpaid dividends thereon to the redemption
date. If less than all of the outstanding shares of 7%
Convertible Preferred Stock are to be redeemed pursuant to
this paragraph, the shares to be redeemed shall be
determined either by lot or pro rata in such manner as the Board
of Directors may prescribe.
If at any time (whether before or after June 30, 1977) a
holder of 7% Convertible Preferred Stock shall not be approved by
the New York Stock Exchange, Inc. (the "NYSE") or by the
Board of Governors of the NYSE, and such approval shall be
required, the Corporation may redeem all, but not less than all,
of the shares of 7% Convertible Preferred Stock held by such holder
at the redemption price of $100 per share together with an amount
equal to accrued and unpaid dividends thereon to the redemption
date.
Notice of every redemption of 7% Convertible Preferred
Stock shall be mailed, addressed to the holders of record of
the shares to be redeemed at their respective addresses as they
appear on the stock books of the Corporation, not less than
one month and not more than three months prior to the date
fixed for redemption. Notice of such redemption shall
simultaneously be given to the NYSE.
If notice of redemption shall have been duly given as
aforesaid, and if, on or before the redemption date specified
in the notice, all funds necessary for the redemption shall
have been deposited in trust with a bank or trust company in
good standing and doing business at any place within the
United States of America, having capital, surplus and
undivided profits aggregating at least $1,000,000, and
designated in the notice of redemption, for the pro rata
benefit of the holders of the shares so called for redemption,
so as to be and continue to be available therefor, then from and
after the date of such deposit, notwithstanding that any
certificate for 7% Convertible Preferred Stock so called for
redemption shall not have been surrendered for
cancellation, the shares represented thereby shall no longer
be deemed outstanding, the dividends thereon shall cease to
accumulate from and after the date fixed for redemption, and
all rights with respect to the 7% Convertible Preferred Stock
so called for redemption shall forthwith on the date of such
deposit cease and terminate, except only the right
of the holders thereof to receive the redemption price of shares
so redeemed, including accrued dividends to the redemption
date, but without interest, and, in the case of such deposit,
any conversion rights not theretofore expired shall cease
and terminate. Any funds deposited by the Corporation
pursuant to this paragraph and unclaimed at the end of six
years after the date fixed for redemption shall be repaid to
the Corporation upon its request expressed in a resolution of
its Board of Directors, after which repayment, the holders of
the shares so called for redemption shall look only to the
Corporation for the payment thereof.
F. Conversion Rights. The 7% Convertible Preferred
Stock shall be convertible into Common Stock at the option of
the holder thereof at any time after June 30, 1977 as
hereinafter in this Section F provided. Each share of 7%
Convertible Preferred Stock shall be convertible into
the number of whole shares of Common Stock obtained by dividing
the sum of $100 by the market value of the Common Stock of
the Corporation as hereinafter defined. Upon conversion no
payment or adjustment on account of dividends accrued for the
then current semi-annual dividend period on 7% Convertible Preferred
Stock surrendered for conversion shall be made, but the
Corporation shall make a cash payment equal to all dividends
accrued but unpaid for all past dividend periods.
The market value of the Common Stock of the
Corporation shall be determined as follows, whichever is
applicable: (a) If the Common Stock of the Corporation
shall be listed upon a stock exchange registered under the
Securities Exchange Act of 1934, the market value shall equal
the average of the closing price on that exchange for the
ten business days preceding the date on which the notice of
election to convert is given; (b) If the Common Stock of
the Corporation is not listed on such an exchange but is
traded in the over-the-counter market, the market value shall be
the average of the high closing bid quotation on the ten business
days preceding the date on which notice of election to convert is
given, as reported by the National Quotations Bureau, Incorporated
or by any other source agreeable to the Corporation and the
holder of the 7% Convertible Preferred Stock to be converted;
(c) If the Common Stock of the Corporation is not listed on such
an exchange or traded in the over-the-counter market, the market
value shall be the book value of the Common Stock of the Corporation
determined as of the last day of the month preceding the month in which the
notice of election to convert shall be given.
Any holder of 7% Convertible Preferred Stock desiring to
convert the same into Common Stock shall given written
notice to the Corporation at its principal office stating
the number of shares of 7% Convertible Preferred Stock which he
elects to convert accompanied by a certificate or
certificates representing the number of shares to be
converted duly endorsed to the Corporation or in blank or
accompanied by proper instruments of transfer. Subject to the
Corporation's right to redeem the 7% Convertible Preferred
Stock so surrendered, the Corporation shall within not less than
one month and not more than three months thereafter
issue and deliver certificates for the number of whole shares of
Common Stock into which the 7% Convertible Preferred Stock has
been converted to the person for whose account the 7%
Convertible Preferred Stock was surrendered, together with cash
in lieu of any fraction of a share of Common Stock otherwise
issuable upon such conversion on the basis of the market value
of the Common Stock determined for such conversion.
Upon surrender of any 7% Convertible Preferred Stock for
conversion, the Corporation shall have the right, in lieu of
issuing Common Stock as herein provided, to redeem the 7%
Convertible Preferred Stock so surrendered for conversion
in accordance with Section E of this Article FOURTH except
that no notice of redemption need be given. Payment of the
redemption price shall be made within not less than one month
nor more than three months of the date of giving notice of
election to convert the 7% Convertible Preferred Stock.
COMMON STOCK
G. Rights and Restrictions of Common Stock. The
powers, preferences, rights, qualifications and limitations
or restrictions thereof in respect to the Common Stock are as
follows:
(1) Subject to provisions of this Article
FOURTH with respect to the 7% Convertible Preferred
Stock and to the provisions of a resolution or
resolutions of the Board of Directors establishing a
series of Preferred Stock, dividends may be declared by the
Board of Directors and paid from time to time out of any
funds legally available therefor upon the then outstanding
shares of Common Stock, and holders of 7% Convertible Preferred
Stock and Preferred Stock shall not be entitled to participate
in any such dividends.
(2) In the event of any dissolution,
liquidation or winding up of the affairs of the Corporation,
all assets and funds of the Corporation remaining after
paying all amounts payable to the holders of 7% Convertible
Preferred Stock and the holders of Preferred Stock shall be
distributed to the holders of Common Stock ratably according to
the number of shares of Common Stock held.
(3) The holders of Common Stock shall be
entitled to one vote per share.
OTHER PROVISIONS
H. Limitation on Distributions to Stockholders. No
dividend shall be declared or paid which shall impair the
capital of the Corporation nor shall any distribution
of assets be made to any stockholder unless the value of
the assets of the Corporation remaining after such payment
or distribution is at least equal to the aggregate of
its debts and liabilities, including capital.
I. Preemptive Rights. No holders of shares of any
class or series of this Corporation shall have any
preemptive rights to subscribe for any shares of any class or
series of stock of the Corporation, whether now or hereafter
authorized, or for any obligations convertible into shares of
any class or series of stock of this Corporation, whether now
or hereafter authorized.
J. Voting by Classes. All matters shall be voted upon
without distinction as to classes or series of stock.
FIFTH: Reserved.
SIXTH: Reserved.
SEVENTH: (a) Any person who was or is a part or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an
action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified by the Corporation, unless
similar indemnification is provided by such other corporation,
partnership, joint venture, trust or other enterprise (any funds
received by any person as a result of the provisions of this
Article being deemed an advance against his receipt of
any such other indemnification from any such other corporation,
partnership, joint venture, trust or other enterprise),
against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful; provided however, that,
except as provided in paragraph (k) of this Article, the
Corporation shall not be required to indemnify any such
person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person unless the
initiation of such proceeding (or part thereof) by such person
was authorized by the Board of Directors of the
Corporation. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall be
indemnified by the Corporation, unless similar indemnification is
provided by such other corporation, partnership, joint venture,
trust or other enterprise (any funds received by any person as a
result of the provisions of this Article being deemed an advance
against his receipt of any such other indemnification from any such
other corporation, partnership, joint venture, trust or
other enterprise), against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and except
that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged
to be liable to the Corporation unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
The termination of any action or suit by judgment, order or
settlement shall not, of itself, create a presumption that the
person seeking indemnification did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation. Entry of a judgment by
consent as part of a settlement shall not be deemed a final
adjudication of liability nor of any other issue or matter.
(c) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in paragraphs (a) or (b), or in defense of any
claim, issue or matter therein, he shall be indemnified by the
Corporation against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith
without the necessity of any action being taken by the
Corporation other than the determination, in good faith, that
such defense has been successful.
(d) Except as set forth in paragraph (c) of this Article, any
indemnification under paragraphs (a) and (b) of this Article
(unless ordered by the court), shall be made by the Corporation
only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (a) and (b) of
this Article. Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the holders of a majority
of the shares of Common Stock outstanding.
(e) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Corporation.
(f) The indemnification and advancement of expenses
provided by this Article shall not be deemed exclusive of any
other rights to which those seeking indemnification or seeking
advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as
to action in another capacity while holding such office.
(g) By action of the Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may
purchase and maintain insurance, in such amounts as the Board of
Directors deems appropriate, on behalf of any person who is
or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation shall have the
power to indemnify him against such liability under the
provisions of this Article.
(h) For purposes of this Article, references to "the
Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers,
employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this
Article with respect to the resulting or
surviving corporation as he would have with respect to such
constituent corporation if its separate existence had
continued.
(i) For purposes of this Article, references to "other
enterprises" shall include employee benefit plans and any
exchange, board of trade, clearing corporation or similar
institution on which the Corporation or any other
corporation a majority of the stock of which is owned
directly or indirectly by the Corporation had membership
privileges at the relevant time during which any such
position was held; references to "fines" shall include any
excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation
which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries or with
respect to any exchange, board of trade, clearing
corporation or similar institution on which the Corporation or
any other corporation a majority of the stock of which is owned
directly or indirectly by the Corporation had membership
privileges at the relevant time during which any such position
was held; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article.
(j) The indemnification and advancement of expenses
hereby provided shall be a contract right and shall continue as
to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
(k) If a claim under paragraph (a), (b) or (c) of this
Article is not paid in full by the Corporation within thirty days
after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses pursuant to
paragraph (c) where the required undertaking has been
tendered to the Corporation) that the claimant has not met the
standards of conduct set forth in paragraphs (a) and (b), but
the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the
circumstances because he has met the applicable standard of
conduct, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or
its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met
the applicable standard of conduct.
EIGHTH: In furtherance, and not in limitation of the
powers conferred by statute, the Board of Directors is
expressly authorized:
(a) To fix, determine and vary from time to time the amount to
be maintained as surplus and the amount or amounts to be set
apart as working capital.
(b) To make, amend, alter, change, add to or repeal by-
laws of this Corporation, without any action on the part of the
stockholders. The by-laws made by the directors may be
amended, altered, changed, added to or repealed by the
stockholders.
(c) By resolution passed by a majority of the whole
board, to designate two or more directors to constitute an
Executive Committee, which committee shall have and exercise
(except when the Board of Directors shall be in session) such
powers and rights of the Board of Directors in the management
of the business and affairs of this Corporation as may be
provided in the by-laws or in said resolution, and shall
have power to authorize the seal of this Corporation to be
affixed to all papers which may require it.
(d) To authorize and cause to be executed mortgages and
liens, without limit as to amount, upon the real and personal
property of this Corporation.
(e) From time to time to determine whether and to what
extent, at what time and place, and under what conditions and
regulations the accounts and books of this Corporation, or any
of them, shall be open to the inspection of any stockholder; and
no stockholder shall have any right to inspect any account
or book or document of this Corporation except as conferred
by statute or the by-laws, or as authorized by a
resolution of the stockholders or Board of Directors.
(f) To sell, assign, convey or otherwise dispose of a
part of the property, assets and effects of this
Corporation less than the whole or less than
substantially the whole thereof, on such terms and
conditions as they shall deem advisable, without the assent of
the stockholders in writing or otherwise; and also to sell,
assign, transfer, convey and otherwise
dispose of the whole or substantially the whole of the property,
assets, effects, franchises and good will of this Corporation
on such terms and conditions as they will deem advisable, but
only with the written consent or pursuant to the affirmative
vote of the holders of at least a majority in amount of the
stock then having voting power at the time issued and
outstanding, but in any event not less than the amount required
by law.
(g) By resolution passed by a majority of the whole
board, to designate a committee, to consist of two or more
persons who may, but need not, be directors of the Corporation,
which shall have such power and authority as the Board of
Directors may authorize to administer any or all employee stock
option, purchase and bonus plans which may from time to time
be adopted by the Corporation. Without limiting the
generality of the foregoing, such committee may be authorized
to select the employees to receive options, determine the number
of shares to be covered by each option, determine the option
price, determine the form of option and the other terms
thereof and issue the options.
(h) All of the powers of this Corporation, insofar as the
same lawfully may be vested by this Certificate in the Board of
Directors, are hereby conferred upon the Board of Directors of
this Corporation.
NINTH: No contract or transaction between the Corporation and
one or more of its directors or officers, or between the
Corporation and any other corporation, partnership,
association, or other organization in which one or more of its
directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present
at or participates in the meeting of the board of committee
thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such
purpose if, (a) the material facts as to his relationship or
interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or the committee in good
faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less
than a quorum, or (b) the material facts as to his relationship
or interest and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in good
faith by vote of the stockholders, or (c) the contract or
transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
TENTH: This Corporation may in its by-laws make any other
provisions or requirements for the management or conduct of the
business of this Corporation, provided the same not be
inconsistent with the provisions of this Certificate or
contrary to the laws of the State of Delaware or of the
United States.
ELEVENTH: This Corporation reserves the right to amend,
alter, change, add to or repeal any provision contained in this
Certificate of Incorporation in the manner now or
hereafter prescribed by the statute, and all rights
conferred upon officers, directors and stockholders herein are
granted subject to this reservation.
TWELFTH: A director of this Corporation shall have no
personal liability to this Corporation or its stockholders for
monetary damages for breach of his fiduciary duty as a
director; provided, however, that this Article shall not
eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to this Corporation or
its stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law; (iii) for the unlawful payment of dividends or
unlawful stock repurchases under Section 174 of the General
Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal
benefit. This Article shall not eliminate or limit the liability
of a director for any act or omission occurring prior to the
effective date of this Article.
THIRTEENTH: The Board of Directors of the Corporation, when
evaluating any offer of another party to (a) make a tender
offer or exchange offer for any equity security of the
Corporation, (b) merge or consolidate the Corporation with
another corporation, or (c) purchase or otherwise acquire
all or substantially all of the properties and assets of
the Corporation, shall, in connection with the exercise of
its judgment in determining what is in the best interests of the
Corporation and its stockholders, give due consideration to all
relevant factors, including without limitation the social and
economic effects on the employees, customers, suppliers and
other constituents of the Corporation and its subsidiaries
and on the communities in which the Corporation and its
subsidiaries operate or are located.
FOURTEENTH: SECTION 1. Special Vote Required for Certain
Business Combinations. In addition to any affirmative vote
required by law or this Certificate of Incorporation or the
Bylaws of the Corporation, and except as otherwise expressly
provided in SECTION 2 of this Article FOURTEENTH, a Business
Combination (as hereinafter defined) with, or proposed by or
on behalf of, any Interested Stockholder (as hereinafter
defined) or any Affiliate or Associate (as hereinafter
defined) of any Interested Stockholder or any person who
after such Business Combination would be an Affiliate or
Associate of such Interested Stockholder shall require the
affirmative vote of not less than two-thirds of the votes
entitled to be cast by the holders of all of the then
outstanding shares of Voting Stock (as hereinafter defined),
voting together as a single class, excluding Voting Stock
beneficially owned by such Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage or separate
class vote may be specified, by law, by any other provision of
this Certificate of Incorporation or the Bylaws of the
Corporation, by any agreement with any national securities
exchange or otherwise.
SECTION 2. When Special Vote Not Required. The
provisions of SECTION 1 of this Article FOURTEENTH shall not be
applicable to any particular Business Combination, and such
Business Combination shall require only such
affirmative vote, if any, as is required by law, by any
other provision of this Certificate of Incorporation or the
Bylaws of the Corporation, by any agreement with any
national securities exchange or otherwise, if, in the case of
a Business Combination involving the receipt of
consideration by the holders of the Corporation's
outstanding Capital Stock (as hereinafter defined), the
condition specified in paragraph (a) below is met or all of
the conditions specified in paragraph (b) below are met or if,
in the case of a Business Combination not involving the receipt
of consideration by the holders of the Corporation's
outstanding Capital Stock, the condition specified in
paragraph (a) below is met:
(a) Approval by Continuing Directors. The Business
Combination (either specifically or as a transaction which is
within an approved category of transactions) shall have been
approved by a majority of the Continuing Directors (as
hereinafter defined).
(b) Minimum Price and Other Requirements. All of the
following conditions shall have been met:
(1) Minimum Price Requirements. With respect to
every class or series of outstanding Capital Stock of the
Corporation, whether or not the Interested Stockholder has
previously acquired beneficial ownership of any shares of such
class or series of Capital Stock:
(A) The aggregate amount of cash plus the Fair
Market Value (as hereinafter defined), as of the date of the
consummation of the Business Combination, of consideration
other than cash to be received per share by holders of Common
Stock in such Business Combination shall be at least equal to
the higher of the amounts determined pursuant to clauses (i)
and (ii) below:
(i) the highest per share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder of beneficial ownership of shares of
Common Stock in connection with the acquisition by the
Interested Stockholder of beneficial ownership of shares of
Common Stock (x) within the two-year period immediately prior
to the Announcement Date (as hereinafter defined) or (y)
in the transaction or series of related transactions in
which it became an Interested Stockholder, whichever is
higher, in either case as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to Common Stock; and
(ii) the Fair Market Value per share of
Common Stock (x) on the Announcement Date or
(y) on the Determination Date (as hereinafter defined),
whichever is higher, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to Common Stock.
(B) The aggregate amount of cash plus the Fair
Market Value, as of the date of the
consummation of the Business Combination, of consideration other
than cash to be received per share by holders of
shares of any class or series of outstanding Capital Stock, other
than Common Stock, shall be at least equal to the highest of
the amounts determined pursuant to clauses (i), (ii) and
(iii) below:
(i) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or series of
Capital Stock in connection with the acquisition by the Interested
Stockholder of beneficial ownership of shares of such class or series of
Capital Stock (x) within the two-year period immediately prior
to the Announcement Date or (y) in the transaction or
series of related transactions in which it became an
Interested Stockholder, whichever is higher, in either case
as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to such
class or series of Capital Stock;
(ii) the Fair Market Value per share of
such class or series of Capital Stock (x) on
the Announcement Date or (y) on the Determination Date,
whichever is higher, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to such class or series of Capital Stock; and
(iii) the highest preferential amount per
share, if any, to which the holders of shares
of such class or series of Capital Stock would be entitled
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
Corporation regardless of whether the Business Combination
to be consummated constitutes such an event.
(2) Other Requirements.
(A) The consideration to be received by
holders of a particular class or series of outstanding Capital
Stock shall be in cash or in the same form as previously has been paid
by or on behalf of the Interested Stockholder in connection with its
direct or indirect acquisition of beneficial ownership of shares of such
class or series of Capital Stock. If the consideration so paid for
shares of any class or series of Capital Stock varies as to form, the
form of consideration for such class or series of Capital Stock shall
be either cash or the form paid by or on behalf of the Interested
Stockholder in connection with its direct or indirect acquisition of
beneficial ownership of the largest number of shares of such
class or series of Capital Stock.
(B) After the Determination Date and prior to
the consummation of such Business Combination:
(i) there shall have been no failure to
declare and pay at the regular date therefor
any full regular dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding
Capital Stock, other than the Common Stock, except as
approved by a majority of the Continuing Directors;
(ii) there shall have been no
reduction in the amount, or change in the
frequency of payment, of any dividends regularly paid on
the Common Stock (except as necessary to
reflect any stock split, stock dividend, subdivision or
reclassification of the Common Stock), except as approved by a
majority of the Continuing Directors;
(iii) there shall have been an
increase in the amount of any dividends regularly paid on the
Common Stock as necessary to reflect any reverse stock split
or reclassification of the Common Stock, or any split,
recapitalization, reorganization or any similar
transaction that has the effect of reducing the number
of outstanding shares of Common Stock, unless the failure
so to increase the amount of such dividends is approved by a
majority of the Continuing Directors; and
(iv) such Interested Stockholder shall
not have become the beneficial owner of
any additional shares of Capital Stock except as part of
or otherwise in connection with the transaction or
series of related transactions that resulted in such
Interested Stockholder becoming an Interested Stockholder
(including the exercise of any right to purchase
additional shares of Capital Stock granted to any
Interested Stockholder by the Corporation in connection with
such transaction or series of related transactions) and
except in a transaction or series of related transactions
that, after giving effect thereto, would
not result in any increase in the Interested Stockholder's
percentage beneficial ownership of any class or series of
Capital Stock.
(C) After the Determination Date, such
Interested Stockholder shall not have
received the benefit, directly or indirectly, (except
proportionately as a stockholder of the Corporation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or
in connection with such Business Combinations or otherwise.
(D) A proxy or information statement
describing the proposed Business Combination and complying with
the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Act")
(or any subsequent provisions replacing such
Act), shall be mailed to all stockholders of the Corporation
at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such
Act or subsequent provisions). Such proxy or information
statement shall contain, in a prominent place, any
statement as to the advisability (or inadvisability) of the
Business Combination that the Continuing Directors, or any of
them, may choose to make and, if deemed advisable by a
majority of the Continuing Directors, the
opinion of an investment banking firm selected by a
majority of the Continuing Directors as to the fairness (or
not) of the terms of the Business Combination from a
financial point of view to the holders of the outstanding
shares of Capital Stock other than the Interested
Stockholder and its Affiliates or Associates, such investment
banking firm to be paid a reasonable fee for its services by
the Corporation.
(E) After the Determination Date, such
Interested Stockholder shall not have made any major change
in the Corporation's business or capital structure without
the approval of a majority of the Continuing
Directors.
SECTION 3. Certain Definitions. The following
definitions shall apply with respect to this Article
FOURTEENTH:
(a) The term "Business Combination" shall mean:
(1) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter defined) with
(A) any Interested Stockholder or (B) any other company
(whether or not itself an Interested Stockholder) that is or
after such merger or consolidation would be an Affiliate or
Associate of an Interested Stockholder; or
(2) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition, or any security
arrangement, investment, loan, advance, guarantee agreement to
purchase, agreement to pay, extension of credit, joint venture
participation or other arrangement, in one transaction or in a
series of transactions, with or for the benefit of any Interested
Stockholder of any Affiliate or Associate of any Interested
Stockholder involving any assets, securities or commitments
of the Corporation, any Subsidiary, any Interested
Stockholder or any Affiliate or Associate or any Interested
Stockholder that, together with all other such arrangements,
has an aggregate Fair Market Value and/or involves aggregate
commitments
equal to 10% or more of the book value of the total assets
(in the case of transactions involving assets or
commitments other than capital stock) or 10% or more of the
stockholders' equity (in the case of transactions in capital
stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated
balance sheet of such entity existing at the time the
stockholders of the Corporation would be required to approve
or authorize the Business Combination involving the
assets, securities and/or commitments constituting any
Substantial Part; or
(3) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation which any
Interested Stockholder votes for or consents to; or
(4) any issuance or reclassification of
securities (including any stock dividend, split or reverse split
or any other distribution of securities in respect
of stock), any recapitalization of the
Corporation, any merger or consolidation of the Corporation
with any of its Subsidiaries or any other transaction (whether
or not with or otherwise involving an Interested
Stockholder) that has the effect, directly or indirectly, of
increasing the proportionate share of any class or series of
Capital Stock, or any securities convertible into or rights,
options or warrants to acquire Capital Stock or equity
securities of any Subsidiary, that is beneficially owned by
any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
(5) any agreement, arrangement or other
understanding providing for any one or more of the actions
specified in the foregoing clauses (1) to (4).
(b) The term "Capital Stock" shall mean all capital
stock of the Corporation authorized to be issued from time to
time under Article FOURTH of this Certificate of Incorporation,
and the term "Voting Stock" shall mean all Capital Stock
which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
(c) The term "person" shall mean any individual,
firm, company or other entity and shall include any group
comprised of any person and any other person with whom such
person or any Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or
disposing of Capital Stock.
(d) The term "Interested Stockholder" shall mean any
person (other than the Corporation or any Subsidiary and
other than any profit-sharing, employee stock ownership or
other employee benefit plan of the Corporation or any
Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity) who (1) is, or has
publicly disclosed a plan or intention to become, the
beneficial owner of Voting Stock representing 10% or more of
the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock or (2) is an
Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in
question was the beneficial owner of Voting Stock representing
10% or more of the votes entitled to be cast by the holders of
all then outstanding shares of Voting Stock.
(e) A person shall be a "beneficial owner" of, shall
"beneficially own" and shall have "beneficial
ownership" of any Capital Stock (1) that such person or any of
its Affiliates or Associates owns, directly or indirectly; (2)
that such person or any of its Affiliates or Associates
has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject
only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options,
or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding; or (3) which is
beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of Capital Stock. For the purposes of determining
whether a person is an Interested Stockholder pursuant to
paragraph (d) of this SECTION 3, the number of shares of
Capital Stock deemed to be outstanding shall include shares
deemed beneficially owned by such person through application of
this paragraph (e) of SECTION 3, but shall not include any
other shares of Capital Stock that may be issuable pursuant to
any agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise.
(f) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Act as in effect on the date that this Article FOURTEENTH
is approved by the Board of Directors of the Corporation
(the term "registrant" in Rule 12b-2 meaning in this case the
Corporation).
(g) The term "Subsidiary" means any company of which a
majority of any class of equity securities are
beneficially owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in paragraph
(d) of this SECTION 3, the term "Subsidiary" shall mean
only a company of which a majority of each class of
equity security is beneficially owned by the Corporation.
(h) The term "Continuing Director," with respect to any
particular Business Combination with, or proposed by or on
behalf of, any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder or any person who
thereafter would be an Affiliate or Associate of any
Interested Stockholder, means any member of the Board of
Directors of the Corporation (the "Board of Directors"),
while such person is a member of the Board of Directors,
who is not an Affiliate, Associate or representative of
such Interested Stockholder and was a member of the Board of
Directors prior to the time such Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing
Director while such successor is a member of the Board of
Directors, who is not an Affiliate or Associate or
representative of such Interested Stockholder and is
recommended or elected to succeed the Continuing Director by
a majority of Continuing Directors.
(i) The term "Fair Market Value" means (1) in the case
of cash, the amount of such cash; (2) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange
registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest
closing sale price with respect to a share of such stock
during the 30-day period preceding the date in question as
reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or any similar system
then in use, or if no such sale prices are available, the
highest of the means between the last reported bid and asked
price with respect to a share of such stock on each day during
the 30-day period preceding the date in question as reported by
the National Association of Securities Dealers, Inc. Automated
Quotation System, or if not so reported, as determined by a
member firm of the National Association of Securities Dealers,
Inc. selected by the Continuing Directors, or if no such bid and
asked prices are available, the fair market value on the
date in question of a share of such stock as determined in
good faith by a majority of the Continuing Directors; and
(3) in the case of property other than cash or stock, the fair
market value of such property on the date in question as
determined in good faith by a majority of the Continuing
Directors.
(j) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than
cash to be received" as used in paragraphs (b) (1) (A) and (b)
(1) (B) of SECTION 2 of this Article FOURTEENTH shall
include the shares of Common Stock and/or the shares of any
other class or series of Capital Stock retained by the holders of
such shares.
(k) The term "Announcement Date" means the date on
which the proposed Business Combination is first publicly
announced, disclosed or reported.
(l) The term "Determination Date" means with respect to
any Interested Stockholder the later of the date that this
Article FOURTEENTH is approved by the Board of Directors of the
Corporation or the date on which such Interested Stockholder
became an Interested Stockholder.
SECTION 4. Powers of Directors. For the purpose of this
Article FOURTEENTH, a majority of the Continuing Directors
shall have the power and duty to determine in good faith, on the
basis of information known to them after reasonable inquiry,
all questions arising under this Article FOURTEENTH,
including, without limitation, (a) whether a person is an
Interested Stockholder, (b) the number of shares of Capital
Stock beneficially owned by any person, (c) whether a person
is an Affiliate or Associate of another, (d) whether a
Business Combination or any proposal to amend, repeal or adopt
any provision of this Certificate of Incorporation inconsistent
with this Article FOURTEENTH (collectively, a "Proposed
Action") is with, or proposed by or on behalf of, an Interested
Stockholder or an Affiliate or Associate of an Interested
Stockholder or a person who thereafter would be an
Interested Stockholder or an Affiliate or Associate of an
Interested Stockholder, and (e) whether any transaction
specified in paragraph (a) (2) of SECTION 3 of this Article
FOURTEENTH meets the Substantial Part test set forth therein;
except that a majority of the entire Board of Directors shall
have the power and duty to determine in good faith, on the
basis of information known to them after reasonable
investigation, whether a director is a "Continuing Director" as
defined in paragraph (h) of SECTION 3 of this Article
FOURTEENTH. Any such determination made in good faith
shall be binding and conclusive on all parties.
SECTION 5. No Effect on Fiduciary Obligations.
(a) Nothing contained in this Article FOURTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
(b) The fact that any Business Combination complies with the
provisions of SECTION 2 of this Article FOURTEENTH shall not be
construed to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or any member
thereof, to approve such Business Combination or recommend its
adoption or approval to the stockholders of the
Corporation, nor shall such compliance limit, prohibit or
otherwise restrict in any manner the Board of Directors, or any
member thereof, with respect to evaluations of or actions
and responses taken with respect to such Business Combination.
SECTION 6. Amendment, Repeal, etc. Notwithstanding any
other provisions of this Certificate of Incorporation or the
Bylaws of the Corporation (and notwithstanding the fact that
a lesser percentage or separate class vote may be specified by
law, this Certificate of Incorporation or the Bylaws of the
Corporation), any proposal to amend, repeal or adopt any
provision of this Certificate of Incorporation inconsistent with
this Article FOURTEENTH which is proposed by or on behalf of
an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder or any person who
would thereafter be an Interested Stockholder or Affiliate or
Associate of an Interested Stockholder shall require the
affirmative vote of the holders of not less than two-thirds of
the votes entitles to be cast by the holders of all of the
then outstanding shares of Voting Stock, voting together as a
single class, excluding Voting Stock beneficially owned by such
Interested Stockholder, unless such amendment, repeal or
adoption is declared advisable by the affirmative vote of (a)
two-thirds of the entire Board of Directors and (b) a majority of
the Continuing Directors.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTER-REGIONAL FINANCIAL GROUP, INC.
The undersigned, the Senior Vice President, General
Counsel and Secretary of Inter-Regional Financial Group, Inc.
(the "Corporation") does hereby certify that in accordance
with the requirements of Section 242 of the Delaware General
Corporation Law, the stockholders of the Corporation adopted the
following resolution on May 1, 1996, amending Article Fourth,
Section 1 of the Restated Certificate of Incorporation as
follows:
RESOLVED, that Article Fourth of the Restated Certificate
of Incorporation be amended to increase the number of shares of
Common Stock of the Company from 20,000,000 shares to 30,000,000
shares, so that the first paragraph of Section 1 of Article
Fourth, as amended, will read as follows:
FOURTH: Section 1. Shares, Classes and Series
Authorized. The total number of shares of stock which this
Corporation has the authority to issue is 32,501,940 shares of
stock, of which
30,000,000 shares of the par value of $.125 per share are
designated Common Stock, and 2,000,000 shares of the par value of
$1.00 per share are designated $1 Par Value Preferred Stock,
1,940 shares of the par value of $100 per share are designated 7%
Convertible Preferred Stock and 500,000 shares of the par value
of $16.00 per share are designated as $16 Par Value Preferred
Stock. The $1 Par Value Preferred Stock, the 7% Convertible
Preferred Stock and the
$16 Par Value Preferred Stock are herein collectively referred to
as the "Preferred Stock."
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be executed by Carla J. Smith, its Senior Vice
President, General Counsel and Secretary, and attested by
Bentley J. Anderson, its Assistant Secretary, this 2nd day of
May, 1996.
Carla J. Smith
---------------------------
Carla J. Smith
Senior Vice President, General
Counsel and Secretary
Attest:
Bentley J. Anderson
- ----------------------
Bentley J. Anderson
Assistant Secretary
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
INTERRA FINANCIAL INCORPORATED
The undersigned hereby certifies that the Board of Directors
of Interra Financial Incorporated (the "Corporation"), a
corporation organized and existing under the Delaware General
Corporation Law, duly adopted the following resolution on April
30, 1997:
RESOLVED, that a series of preferred stock of the
Corporation is hereby created, and the designation and
amount thereof and the relative rights and preferences of
the shares of such series, are as set forth in Annex 1
appended hereto.
IN WITNESS WHEREOF, I have subscribed my name this 30th day
of April, 1997.
INTERRA FINANCIAL INCORPORATED
By Carla J. Smith
-------------------------------------
Carla J. Smith
Its Senior Vice President, Secretary and
General Counsel
Annex 1
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" (the "Preferred Shares") and the number of
shares constituting the Preferred Shares shall be 200,000. Such
number of shares may be increased or decreased by resolution of
the Board of Directors and any necessary stockholder approval;
provided, however, that no decrease shall reduce the number of
shares of Preferred Shares to a number less than the number of
shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Preferred Shares.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares
of any series of preferred stock (or any similar stock) ranking
prior and superior to the Preferred Shares with respect to
dividends, the holders of Preferred Shares, in preference to the
holders of Common Stock, par value $.125 (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Preferred
Shares, in an amount per share (rounded to the nearest cent)
equal to the greater of (i) $1.00 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Preferred Shares. In the event
the Corporation shall at any time after April 30, 1997, declare
or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to
which holders of shares of Preferred Shares were entitled
immediately prior to such event under clause (ii) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or
distribution on the Preferred Shares as provided in paragraph (a)
of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding
Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative
on outstanding shares of Preferred Shares from their date of
issue. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Preferred Shares in an amount
less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the
determination of holders of Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which
record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights.
(a) Subject to the provision for adjustment
hereinafter set forth, each Preferred Share shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the
Corporation shall at any time after April 30, 1997, declare or
pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to
which holders of shares of Preferred Shares were entitled
immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein or by law, the
holders of Preferred Shares and the holders of Common Stock and
any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(c) Except as set forth herein or required by law,
holders of Preferred Shares shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Preferred Shares as provided in
Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Preferred Shares outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Preferred Shares;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Preferred Shares, except dividends paid
ratably on the Preferred Shares and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Preferred Shares; provided, however, that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for
consideration any Preferred Shares, or any stock ranking on
a parity with the Preferred Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any Preferred Shares
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of preferred
stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any
other certificate of designation creating a series of preferred
stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares
unless, prior thereto, the holders of Preferred Shares shall have
received the greater of (i) $100 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Shares, except distributions made ratably on
the Preferred Shares and all such parity stock in proportion to
the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after April 30, 1997,
declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Preferred Shares were
entitled immediately prior to such event under clause (1)(ii) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
each share of Preferred Shares shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after
April 30, 1997, declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the
exchange or change of shares of Preferred Shares shall be
adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The Preferred Shares shall
not be redeemable.
Section 9. Rank. The Preferred Shares shall rank,
with respect to the payment of dividends and the distribution of
assets, junior to all other series of the Corporation's $1 Par
Value Preferred Stock and any other class of the Corporation's
Preferred Stock.
Section 10. Fractional Shares. Preferred Shares may
be issued in fractions of a share which are integral multiples of
one one-hundredth of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Preferred Shares.
Section 11. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or rights of the Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Preferred Shares,
voting together as a single class.
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
INTERRA FINANCIAL INCORPORATED
INTO
INTER-REGIONAL FINANCIAL GROUP, INC.
Pursuant to Section 253 of the Delaware General Corporation
Law, INTER-
REGIONAL FINANCIAL GROUP, INC., a corporation organized and
existing under the laws of the State of Delaware, does hereby
certify:
FIRST, that this Corporation owns all of the outstanding
shares of stock of INTERRA FINANCIAL INCORPORATED, a corporation
incorporated on this 4th day of February, 1997, pursuant to the
laws of the State of Delaware.
SECOND, that this Corporation by the following resolutions
duly adopted by it's Board of Directors at a meeting held on this
4th day of February, 1997 determined to and did merge into itself
INTERRA FINANCIAL INCORPORATED:
RESOLVED, that INTER-REGIONAL FINANCIAL GROUP, INC.
does hereby merge into itself it's wholly owned subsidiary,
INTERRA FINANCIAL INCORPORATED, and does hereby assumes all
of the liabilities and obligations of such subsidiary.
FURTHER RESOLVED, that said merger shall become
affective upon the filing of a Certification of Ownership
and Merger with the Secretary of State of the State of
Delaware.
FURTHER RESOLVED, that upon the effectiveness of said
merger all of the outstanding shares of stock of INTERRA
FINANCIAL INCORPORATED owned by this Corporation shall be
canceled, and no securities of this Corporation or any other
Corporation nor any money or other property shall be issued
to this Corporation in exchange therefor.
FURTHER RESOLVED, that upon effectiveness of said
merger, the name of this Corporation shall be "INTERRA
FINANCIAL INCORPORATED."
FURTHER RESOLVED, that the proper officers of this
Corporation be, and they are hereby, directed to make and
execute a Certificate of Ownership and Merger setting forth
a copy of these resolutions and the date of their adoption
to cause the same to be filed with the Secretary of State of
the State of Delaware and a certified copy to be recorded in
the office of the Recorder of Deeds of New Castle County and
to do all acts and things whatsoever, whether within or
without the State of Delaware, which may be necessary or
proper to effect said merger and change of name.
IN WITNESS WHEREOF, this Corporation has caused this Certificate
to be signed by its Chairman and Chief Executive Officer and
attested by its Secretary this 4th day of February, 1997.
INTER-REGIONAL FINANCIAL GROUP, INC.
By Irving Weiser
-----------------------------------
Irving Weiser
Chairman and Chief Executive Officer
Carla J. Smith
- -------------------------------
Carla J. Smith, Secretary
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
DAIN RAUSCHER CORPORATION
The undersigned, the Senior Vice President, General Counsel
and Secretary of Dain Rauscher Corporation (the "Corporation")
does hereby certify that in accordance with the requirements of
Section 242 of the Delaware General Corporation Law, the
stockholders of the Corporation adopted the following resolution
on May 6, 1998, amending Article Fourth, Section 1 of the
Restated Certificate of Incorporation as follows:
RESOLVED, that Article Fourth of the Restated
Certificate of Incorporation be amended to increase the
number of shares of Common Stock of the Company from
30,000,000 shares to 60,000,000 shares, so that the
first paragraph of Section 1 of Article Fourth, as
amended, will read as follows:
FOURTH: Section 1. Shares, Classes and Series
Authorized. The total number of shares of stock which
this Corporation has the authority to issue is
62,501,940 shares of stock, of which 60,000,000 shares
of the par value of $.125 per share are designated
Common Stock, and 2,000,000 shares of the par value of
$1.00 per share are designated $1 Par Value Preferred
Stock, 1,940 shares of the par value of $100 per share
are designated 7% Convertible Preferred Stock and
500,000 shares of the par value of $16.00 per share are
designated as $16 Par Value Preferred Stock. The $1
Par Value Preferred Stock, the 7% Convertible Preferred
Stock and the $16 Par Value Preferred Stock are herein
collectively referred to as the "Preferred Stock."
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be executed by Carla J. Smith, its Senior Vice
President, General Counsel and Secretary, and attested by Bentley
J. Anderson, its Assistant Secretary, this 20th day of May, 1998.
Carla J. Smith
_____________________________
Carla J. Smith
Senior Vice President, General
Counsel and Secretary
Attest:
Bentley J. Anderson
____________________________
Bentley J. Anderson
Assistant Secretary
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<F1>Included in receivables
<F2>Included in payables
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</TABLE>
57
EXHIBIT 99
DAIN RAUSCHER CORPORATION
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and
is filing this cautionary statement in connection with such safe
harbor legislation. This filing, the Company's Annual Report to
Shareholders, any Form 10-K, Form 10-Q or Form 8-K of the Company or
any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the
Company's current views with respect to future events and financial
performance. The words "believe," "expect," "anticipate," "intends,"
"estimate," "forecast," "project," "should" and similar expressions
are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The Company wishes to caution investors that any forward-looking
statements made by or on behalf of the Company are subject to
uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties and other
factors include, but are not limited to, the "Risk Factors" listed
below. Though the Company has attempted to list comprehensively these
important factors, the Company wishes to caution investors that other
factors may in the future prove to be important in affecting the
Company's results of operations. New factors emerge from time to time
and it is not possible for management to predict all such factors, nor
can it assess the impact of each such factor on the business or the
extent to which any factor, or a combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
Investors are further cautioned not to place undue reliance on
such forward-looking statements as they speak only to the Company's
views as of the date the statement is made. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Volatile Nature of the Securities Business
The Company's principal business activities, securities broker-
dealer and investment banking operations, as well as its investment
advisory, clearing and other services, are highly competitive and
subject to various risks, including volatile or illiquid trading
markets, fluctuations in the volume of market activity, counterparty
or customer failure to meet commitments and losses and expenses
resulting from litigation and regulatory proceedings. The securities
business is directly affected by a variety of factors beyond the
Company's control. Such factors include market conditions and
psychology, the availability and cost of short-term or long-term
funding and capital, the credit capacity or perceived creditworthiness
of the Company and the securities industry in the marketplace, the
level and volatility of interest rates, inflation and deflation
economic and political conditions, broad trends in business and
finance, and legislation and regulation affecting the national and
international business and financial communities and the securities
markets. These and other factors can result in significant
fluctuations in the Company's revenues and operating results from
quarter to quarter and from year to year.
Since approximately 1990, the securities markets have enjoyed a
sustained bull market that is virtually unprecedented. This, in turn,
has fueled tremendous growth in revenues and income for securities
firms generally, including the Company. Particularly in comparison to
these favorable conditions, volatile or illiquid trading markets could
expose the Company to the risk of trading losses and losses resulting
from the ownership or underwriting of securities. Reductions in the
volume of market activity or in securities prices generally can
result in reduced commission and principal transaction revenues and
reduced investment banking and asset management fees as fewer
transactions are effected and the value of the securities being sold
and assets under management declines. In periods of low transaction
volume, results of operations can be further adversely affected
because certain expenses remain relatively fixed. Sudden sharp
declines in market values of securities can result in illiquid
markets, which, in turn, may result in the Company having difficulty
selling securities, hedging its securities positions and investing
funds under its management and can increase the frequency and size of
credit extensions and counterparty and customer failures to meet
commitments. Such unfavorable market conditions may further reduce
demand for the Company's investment banking and other services.
Competition
All aspects of the Company's business are highly competitive.
The Company competes directly and indirectly for customers with
national and regional full-service broker-dealers, discount broker-
dealers, investment banking firms, investment advisors, commercial
banks, insurance companies, mutual fund companies, money managers,
financial planners and others.
The Company also competes with others in the financial services
industry with respect to the recruiting and retention of revenue
producing employees. The financial services industry has become more
concentrated recently as numerous securities firms have either ceased
operations, eliminated certain business lines or have merged with or
been acquired by other firms. International financial services firms
have also moved aggressively into the U.S. securities, banking and
other financial sectors. Industry consolidation has increased
competition from firms having significantly greater equity capital,
financial and other resources than the Company. The Company expects
competition from domestic and international commercial banks to
continue to increase in light of recent loosening of Federal Reserve
Board rules limiting the underwriting and other activities of
securities subsidiaries of bank holding companies. Acquisitions of
securities firms by banks have brought entirely new sources of capital
into the securities industry, resulting in more competition for the
Company's businesses. Legislative proposals currently under
consideration would eliminate the remaining limit on securities
activities of banks and would permit commercial banks and their
affiliates to offer additional services which have traditionally been
provided only by securities and money management firms.
Dependence on Personnel
Most aspects of the Company's business are highly dependent on
the services of skilled professional employees. The Company devotes
considerable resources to recruiting, training, retaining and
compensating such individuals. The level of competition for
experienced revenue-producing personnel is extremely intense and
levels of compensation for skilled employees has risen accordingly.
The loss of key personnel or the inability to recruit and retain key
personnel in the future could materially and adversely affect the
Company's results of operations. In addition, a key component of the
Company's growth strategy is to increase penetration of existing
markets, enter into new markets and expand the kinds of products or
services it provides. The Company's ability to succeed in pursuit of
such strategy is highly dependent on its ability to recruit and retain
experienced revenue-producing and other personnel.
Implementation of the Company's Strategies
The Company's business strategy is to gain a competitive edge in
the marketplace by coupling the regional and industry expertise,
knowledge, brand names, capital and customer relationships of its
former broker-dealer subsidiaries into a single, more powerful brand
name that will enable it to simplify its management structure gain
economies of scale and critical mass and become more responsive to
competitive changes. In order to remain competitive, the Company must
grow its revenues through further penetration of existing markets,
entry into new markets and expansion of the products and services it
provides, including possible expansion into related lines or business.
There can be no assurance that the Company will be able to identify
and capitalize on service, product or market opportunities that will
further the Company's strategy and enhance its business, results of
operations or financial condition. While the Company has grown
successfully through strategic acquisitions in the past, there can be
no assurance that the Company in the future will be able to
successfully identify, compete for or acquire on favorable terms or
integrate the business and operations of any acquired business or
entity with the Company's existing operations.
Dependence on Systems
The Company's business is highly dependent on communications,
trading, information and data processing systems. As with other
areas, the Company's technology demands have grown considerably in
recent years and are anticipated to continue to grow dramatically in
the years ahead. Investor interest and competitive forces in areas
such as electronic order entry and access to customer statements
(including through the Internet) could strain the Company's technology
resources or force it to incur substantial expenses in expanding these
resources. New regulations imposing additional audit trail and other
data capture and retention requirements will cause the Company to
incur further significant expenses. The Company has outsourced
certain of its communications and quotations and trading systems
services and currently maintains its own back-office processing
system. Although the Company and its vendors have in place tested
disaster recovery systems, any failure or interruption of the
Company's or a vendor's systems could cause delays in the Company's
securities trading and processing activities and an inability to
execute client transactions, which could have a material adverse
effect on the Company's operating results. There can be no assurance
that the Company or a vendor will not suffer any such systems failure
or interruption or that the Company's or a vendor's backup procedures
and disaster recovery capabilities will be adequate. As technology
develops and industry practices and regulations change, the Company
must update or replace various of its key systems, including, in
particular, its back-office data processing system, in order to remain
competitive. The Company has, in fact, committed to upgrade its
current back-office processing system via an internal development
process between 1998 and 2002 at an expected cost of approximately $17
million. There can be no assurance that the Company, during the
process of upgrading its current back-office processing system, will
not encounter technological difficulties, cost overruns, problems
obtaining the necessary quantity and quality of development personnel,
or difficulties in purchasing necessary components of such a system
from outside vendors. Further, there can be no assurance that the
back-office processing system, upon completion, will be state-of-the-
art and that the system upgrade or implementation process will not
result in interruption of the Company's business or delivery of its
products and services to customers.
It has become widely known that certain technological problems
may arise in connection with reaching the Year 2000. Beginning with
the Company's consolidation of the back-office brokerage operations of
Dain Bosworth and Rauscher Pierce Refsnes in 1993, the Company has
upgraded and/or replaced the bulk of its mission-critical data
processing systems. Such upgrade and replacement projects were
performed primarily for competitive reasons, though they included the
added benefit of making such systems Year 2000 compliant. Upgrades or
replacements necessary to achieve Year 2000 compliance for the
Company's remaining mission-critical systems are expected to be
completed in 1998 and the costs related to such upgrades or
replacements are not expected to have a material effect on the
Company's consolidated financial statements. During 1999, the
Company, along with the rest of the securities industry, expects to
test systems interdependencies with outside parties. While there can
be no assurance, the Company believes that its internal systems will
not experience significant disruption in connection with the Year
2000. There can be no assurance that another entity's failure to
ensure Year 2000 readiness would not have an adverse effect on the
Company. In particular, if the Company's internal systems or if the
Company's vendors and other information providers or the securities
exchanges, clearing agencies and other securities firms or financial
institutions with which the Company transacts business experience any
significant disruption in connection with the Year 2000, such
disruption may have a material adverse effect on the Company's results
of operations.
Dependence on Sources of Financing
The Company, like others in the securities industry, relies on
external sources to finance a significant portion of its day-to-day
operations, principally customer margin account balances, securities
inventory and underwriting positions and certain other transactions.
The principal sources of the Company's cash and liquidity are retained
earnings, cash balances held on behalf of customers pending
investment, collateralized repurchase agreements, collateralized bank
loans and securities lending activities. The Company also has a
$50 million unsecured committed revolving credit facility available.
The Company maintains uncommitted credit lines with a number of
banks aggregating approximately $414 million, of which $600 million
had been drawn down as of February 28, 1998. The Company will also
be dependent upon an $80 million subordinated debt commitment it has
with a bank in order to finance the pending March 31, 1998 acquisition
of Wessels, Arnold & Henderson, LLC. Finally, because a substantial
portion of the Company's capital resources could be used for
acquisitions, including the acquisition of Wessels, Arnold & Henderson,
LLC, the Company may require additional debt or equity financing for
its operations, which financing may not be available on terms
favorable to the Company, if at all. Availability of financing to
the Company can vary depending on market conditions, the volume of
certain trading activities, credit ratings, credit capacity and the
overall availability of credit to the financial services industry. See
"Liquidity and Capital Resources."
Use of Derivative Financial Instruments
The Company enters into certain financial futures contracts and
option contracts in the ordinary course of its business to hedge or
modify exposures to interest rate fluctuations related to interest-
rate-sensitive securities in its trading inventories. While the use
of these derivatives is intended to allow the Company to better manage
certain risks, it is possible that, over time, mis-matches may arise
with respect to the derivatives and the cash market instruments they
are intended to hedge. Discrepancies can also arise between the
derivative and cash markets. Derivatives also have risks that are
similar in type to the risks of the cash market instruments on which
their values are based. For example, in times of market stress, sharp
price movements or reductions in liquidity in the cash markets may be
related to comparable or even greater price movements and reductions
in liquidity in the derivative markets. Further, the risks associated
with derivatives are potentially greater than those associated with
the related cash market instruments because of the additional
complexity and potential for leverage. In addition, derivatives may
create credit risk (the risk that a counterparty on a derivative
transaction will not fulfill its contractual obligations), as well as
legal, operational and other risks beyond those associated with the
underlying cash market instruments on which their values are based.
Federal and State Regulation; Net Capital Requirements
The Company's business is, and the securities and commodities
industries are, subject to extensive regulation in the United States,
at both the federal and state level, as well as by industry self-
regulatory organizations. As a matter of public policy, regulatory
bodies are charged with safeguarding the integrity of the securities
and other financial markets and with protecting the interests of
customers participating in those markets and not with protecting the
interests of the Company's stockholders and creditors. In addition,
self-regulatory organizations and other regulatory bodies in the
United States, such as the Commission, the New York Stock Exchange,
Inc. (the "NYSE"), the National Association of Securities Dealers,
Inc. and the Municipal Securities Rulemaking Board, require strict
compliance with their rules and regulations. Failure to comply with
any of these laws, rules or regulations, many of which are quite
complex and subject to interpretation, could result in a variety of
adverse consequences including censure, fines, suspension, revocation
or reduction of the right to do business of key persons associated
with the Company or the Company itself, and private rights of action
for damages, which could have a material adverse effect upon the
Company's consolidated financial condition or results of operations.
The laws and regulations, as well as governmental policies and
accounting principles, governing the financial services and banking
industries have changed significantly over recent years and are
expected to continue to do so. During the last several years Congress
has considered numerous proposals that would significantly alter the
structure and regulation of such industries. Certain of such changes,
if adopted, could materially and adversely affect the business and
operations of the Company. The Company's businesses may also be
materially affected by regulations of general application, such as
existing and proposed tax legislation, antitrust policy and other
governmental regulations and policies (including the interest rate and
other monetary policies of the Federal Reserve Board).
The Commission, the NYSE, and various other exchanges and
regulatory bodies in the United States have rules with respect to net
capital requirements which affect the Company. These rules have the
effect of requiring that at least a substantial portion of a broker-
dealer's assets be kept in cash or highly liquid investments.
Compliance with the net capital requirements by Dain Rauscher could
limit operations that require extensive use of capital, such as
underwriting or trading activities and constrain the ability of the
Company to grow its business, either through internal expansion or by
acquisitions. A significant operating loss or any unusually large
charge against net capital could have a material adverse effect on the
Company's ability to operate its business. The net capital rules
could also restrict the ability of the Company to withdraw capital
from Dain Rauscher, even in circumstances in which it has more than
the minimum amount of required capital. Such restrictions, in turn,
could limit the ability of the Company to pay dividends, implement its
strategies, pay interest on and repay the principal of its debt and
redeem or repurchase shares of outstanding capital stock.
Litigation
Many aspects of the securities brokerage and investment banking
businesses involve substantial risks of liability. In recent years,
there has been an increasing incidence of litigation and regulatory
enforcement proceedings involving the securities industry. Such
actions include class action suits that generally seek substantial
damages, other suits seeking punitive and/or treble damages and
administrative and court proceedings brought by regulatory agencies
seeking fines, injunctions, suspensions and bars from future
participation in the business against securities firms and, in some
cases, their employees and officers. Underwriters are subject to
substantial potential liability for material misstatements and
omissions in prospectuses and other communications with respect to
underwritten offerings of securities. Like other securities brokerage
firms, the Company and certain of its personnel have been named or
threatened to be named as defendants in legal and regulatory
proceedings which cause the Company to expend substantial financial
and managerial resources in order to defend itself. The outcome of
any legal or regulatory proceeding is uncertain. The settlement of
any such proceeding under adverse circumstances or an adverse judgment
in connection with any such proceeding may have a material adverse
effect on the Company's consolidated financial condition or results of
operations.
