<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORM S-3
---------------
DAIN RAUSCHER CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 41-1228350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
DAIN RAUSCHER PLAZA
60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-4422
(612) 371-7750
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------
CARLA J. SMITH, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
DAIN RAUSCHER CORPORATION
DAIN RAUSCHER PLAZA
60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-4422
(612) 371-7858
(Name, address, including zip code, and telephone number, including area code,
of agent for service of process)
COPY TO:
ROBERT A. ROSENBAUM, ESQ.
DORSEY & WHITNEY LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
(612) 340-2600
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED DISTRIBUTION: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Debt Securities(3)(4), Preferred Stock(5), Common
Stock, par value $.125 per share(5)(6) and
Securities Warrants(7).......................... $200,000,000(3) 100% $200,000,000(3) $59,000
</TABLE>
(FOOTNOTES ON NEXT PAGE)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(FOOTNOTES FROM PREVIOUS PAGE)
- ------------------------
(1) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3. Securities registered hereby may be
offered for U.S. dollars or the equivalent thereof in foreign currencies,
currency units or composite currencies. Securities registered hereby may be
sold separately or together with other securities registered hereby.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o).
(3) In the case of Debt Securities issued at an original issue discount, such
greater principal amount as shall result in an aggregate offering price of
the amount set forth above or, in the case of Debt Securities denominated in
a currency other than U.S. dollars or in a composite currency, such U.S.
dollar amount as shall result from converting the aggregate public offering
price of such Debt Securities into U.S. dollars at the spot exchange rate in
effect on the date such Debt Securities are initially offered to the public.
(4) The Debt Securities to be offered hereunder will consist of one or more
series of Senior Notes or Subordinated Notes, or both, as more fully
described herein.
(5) Such indeterminate number of shares of Preferred Stock and Common Stock, as
may be issued from time to time at indeterminate prices.
(6) The aggregate amount of Common Stock registered hereunder is limited, solely
for purposes of any at-the-market offerings, to that which is permissible
under Rule 415(a)(4) of the Securities Act of 1933, as amended.
(7) Securities Warrants will represent rights to purchase Debt Securities,
Preferred Stock or Common Stock registered hereby. Because the Securities
Warrants will provide a right only to purchase the Debt Securities,
Preferred Stock and Common Stock offered hereunder, no additional
registration fee is required.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 28, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
$200,000,000
DAIN RAUSCHER CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND SECURITIES WARRANTS
------------------
Dain Rauscher Corporation (the "Company") may offer from time to time in one
or more series: (i) its unsecured debt securities, which may be either senior
debt securities (the "Senior Notes") or subordinated debt securities (the
"Subordinated Notes" and, together with the Senior Notes, the "Debt
Securities"); (ii) shares of its preferred stock, $1.00 par value per share (the
"Preferred Stock"), in one or more series; (iii) shares of its common stock, par
value $.125 per share (the "Common Stock"); and (iv) warrants (collectively, the
"Securities Warrants") to purchase Debt Securities (the "Debt Securities
Warrants"), Preferred Stock (the "Preferred Stock Warrants") or shares of Common
Stock (the "Common Stock Warrants"), for an aggregate initial public offering
price of up to $200,000,000 or the equivalent in foreign currencies, currency
units or composite currencies (each, a "Currency"). The Debt Securities,
Preferred Stock, Common Stock and Securities Warrants (collectively, the
"Securities") will be offered for sale directly to purchasers or through
dealers, underwriters or agents to be designated. The Securities will be offered
to the public at prices and on terms determined at the time of offering. The
Securities may be sold for U.S. dollars or other Currencies and any amounts
payable by the Company in respect of the Securities may likewise be payable in
U.S. dollars or other Currencies.
The Senior Notes, when issued, will rank PARI PASSU in right of payment with
all unsecured and unsubordinated indebtedness of the Company. The Subordinated
Notes when issued will be subordinated as described herein under "Description of
Debt Securities--Subordination of Subordinated Notes."
The specific terms, with respect to the series or issue of Securities such
as: (i) the terms of any Debt Securities offered, including, where applicable,
their title, ranking, aggregate principal amount, maturity, rate of interest (or
method of calculation) and time of payment thereof, any redemption or repayment
terms, any restrictive covenants, the Currency or Currencies in which such Debt
Securities will be denominated or payable, any index, formula or other method
pursuant to which principal, premium, if any, or interest, if any, may be
determined, any conversion or exchange provisions, and other specific terms not
described in this Prospectus; (ii) the terms of any Preferred Stock offered,
including, where applicable, the specific designation, number of shares,
dividend rate (or method of calculation) and time of payment thereof,
liquidation preference, any redemption or repayment terms, any conversion or
exchange provisions, any voting rights, and other specific terms not described
in this Prospectus; (iii) the terms of any Securities Warrants offered,
including where applicable, the exercise price, detachability, duration and
other specific terms not described in this Prospectus; and (iv) the initial
public offering price and the net proceeds to the Company and other specific
terms related to the offered Securities, will be set forth in one or more
supplements to this Prospectus (each a "Prospectus Supplement").
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 8 HEREIN.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Securities may be sold to or through underwriters, dealers or agents for
public offering or directly to other purchasers pursuant to the terms of the
offering at the time of sale. See "Plan of Distribution." Any underwriters,
dealers or agents participating in an offering of Securities will be named in
the accompanying Prospectus Supplement or Prospectus Supplements. Such
underwriters, dealers or agents may be deemed "underwriters" within the meaning
of the Securities Act of 1933.
------------------------
THE DATE OF THIS PROSPECTUS IS 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN OFFERINGS OF THE SECURITIES MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES OFFERED. SUCH TRANSACTIONS MAY INCLUDE STABILIZING ACTIVITIES,
PURCHASING SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND IMPOSING PENALTY
BIDS.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, at 450 Fifth Street N.W, Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th floor, New York, New York 10048, and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of such materials can be
obtained from the Public Reference Branch of the Commission at 450 Fifth Street
N.W, Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web
site (http://www.sec.gov) that contains reports, proxy and other information
statements and other information regarding registrants that file electronically
with the Commission. Reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus:
(i) Annual Report on Form 10-K for the year ended December 31, 1997;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, as
amended by a Form 10-Q/A filed May 27, 1998
(iii) Current Reports on Form 8-K dated February 9, 1998 and March 31, 1998, as
amended on May 14, 1998; and
(iv) Description of the Company's Common Stock contained in any Registration
Statement filed under the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference other
than exhibits to such documents for which the Company may impose a copying
charge. Requests for such copies should be directed to: Secretary, Dain Rauscher
Corporation, Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota
55402-4422. Telephone requests may be directed to (612) 371-7750.
3
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY
Dain Rauscher Corporation (the "Company'), a Minneapolis, Minnesota-based
holding company formed in 1973, provides investment advice and services to
individual investors primarily in the western half of the United States and
investment banking, research and institutional sales and trading services to
corporate and governmental clients nationwide through its principal subsidiary,
Dain Rauscher Incorporated ("Dain Rauscher"). Dain Rauscher also clears and
settles securities trades on a fully disclosed basis for 173 correspondent
brokerage firms through its RPR Correspondent Clearing division ("RPR
Clearing"), which is based in St. Louis, Missouri. Another subsidiary, Insight
Investment Management, Inc. ("Insight Management"), serves as the investment
advisor to the Great Hall Investment Funds (four open-end money market mutual
funds) and provides fixed income portfolio management services to a variety of
private accounts. Dain Rauscher Lending Services Inc. ("DRL") was formed in 1997
to make certain types of loans to customers that are collateralized by
customers' control and restricted securities. At March 31, 1998, the Company had
approximately 3,600 employees located in 26 states.
Effective January 2, 1998, the Company's name was changed to Dain Rauscher
Corporation from Interra Financial Incorporated and, during the first quarter of
1998, the Company's three broker-dealer subsidiaries, Dain Bosworth Incorporated
("Dain Bosworth"), a full service regional securities firm based in Minneapolis,
Minnesota, Rauscher Pierce Refsnes, Inc. ("Rauscher Pierce Refsnes"), a full
service regional securities firm based in Dallas, Texas, and Interra Clearing
Services, Inc., a clearing and operations broker-dealer based in Minneapolis,
Minnesota, were merged together and renamed Dain Rauscher Incorporated. Between
the time of its formation in 1973 and February 1997, the Company was known as
Inter-Regional Financial Group, Inc.
On March 31, 1998, the Company acquired Wessels, Arnold & Henderson, LLC
("WAH"), a privately held investment banking and institutional equity sales and
trading firm based in Minneapolis, Minnesota. On April 6, 1998, WAH was merged
into Dain Rauscher and the combined equity capital markets business of Dain
Rauscher and WAH became known as the Dain Rauscher Wessels equity capital
markets division of Dain Rauscher. The transaction is expected to increase
significantly Dain Rauscher's equity capital markets capabilities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The Company is a Delaware corporation with its executive offices located at
Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422.
Its telephone number is (612) 371-2711.
4
<PAGE>
The following map indicates the Company's operating office locations as of
March 31, 1998.
OPERATING OFFICE LOCATIONS (AS OF MARCH 31, 1998)
ARIZONA
Phoenix
Sedona
Sun City
Tucson
CALIFORNIA
Palo Alto
San Francisco
COLORADO
Boulder
Colorado Springs
Fort Collins
Denver
Denver Tech
Pueblo
FLORIDA
Miami
Sarasota
ILLIONOIS
Chicago
Hoffman Estates
Oak Brook
Rockford
Vernon Hills
IOWA
Cedar Rapids
Davenport
Des Moines
Dubuque
Iowa City
Sioux City
Waterloo
KANSAS
Overland Park
LOUISIANA
New Orleans
MASSACHUSETTS
Boston
MINNESOTA
Brainerd
Duluth
Edina
Minneapolis
Minnetonka
Rochester
St. Cloud
St. Paul
Shoreview
Wayzata
MISSOURI
Kansas City
St. Joseph
MONTANA
Billings
Great Falls
NEBRASKA
Lincoln
Omaha
NEVADA
Las Vegas
Reno
NEW MEXICO
Albuquerque
NEW YORK
New York
NORTH DAKOTA
Fargo
OKLAHOMA
Oklahoma City
Tulsa
OREGON
Bend
Eugene
Medord
Portland
Salem
SOUTH DAKOTA
Rapid City
Sioux Falls
TENNESSEE
Memphis
TEXAS
Abilene
Austin
Corpus Christi
Dallas Lincoln Centre
Dallas Cityplace
Fort Worth
Houston Center
Houston Post Oak
Kerrville
Longview
Lubbock
Midland
Plano
San Antonio
Tyler
UTAH
Midvale
Salt Lake City
WASHINGTON
Bellevue
Bellingham
Everett
Gig Harbor
Kirkland
Seattle
Silverdale
Spokane
Yakima
WISCONSIN
Appleton
Brookfield
Eau Claire
Madison
Mequon
Milwaukee
Racine
WYOMING
Casper
Cheyenne
RPR Correspondent
Clearing Headquarters
St. Louis, Missouri
5
<PAGE>
SUMMARY FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
("UNAUDITED")
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues...................... $ 188,014 $ 180,072 $ 750,675 $ 683,316 $ 606,747 $ 496,280 $ 511,615
Interest expense.............. (15,567) (14,110) (58,573) (57,560) (64,777) (38,938) (28,655)
--------- --------- --------- --------- --------- --------- ---------
Net revenues.................. 172,447 165,962 692,102 625,756 541,970 457,351 482,960
Expenses excluding interest
and merger and restructuring
charges..................... 155,610 141,573 600,347 538,354 485,699 417,556 405,607
Merger and restructuring
charges..................... 20,000 -- 15,000 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Earnings before income
taxes....................... (3,163) 24,389 76,755 87,402 56,271 39,795 77,353
Income tax (expense) credit... 1,139 (8,634) (27,480) (30,591) (20,398) (14,342) (29,704)
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)........... $ (2,024) $ 15,755 $ 49,275 $ 56,811 $ 35,873 $ 25,453 $ 47,649
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
FINANCIAL RATIOS/MEASURES
Diluted earnings (loss) per
share....................... $ (0.16) $ 1.22 $ 3.77 $ 4.49 $ 2.85 $ 2.03 $ 3.78
Pretax margin on net
revenues.................... NM 14.7% 11.1% 14.0% 10.4% 8.7% 16.0%
Annualized net return on
average equity.............. NM 20.6% 16.5% 22.8% 17.3% 13.5% 31.0%
FINANCIAL RATIOS/MEASURES
EXCLUDING MERGER AND
RESTRUCTURING CHARGES
Diluted earnings per share.... $ 0.82 $ 1.22 $ 4.51 $ 4.49 $ 2.85 $ 2.03 $ 3.78
Pretax margin on net
revenues.................... 9.8% 14.7% 13.3% 14.0% 10.4% 8.7% 16.0%
Annualized net return on
average equity.............. 13.0% 20.6% 19.4% 22.8% 17.3% 13.5% 31.0%
OTHER DATA
Weighted average common and
common equivalent shares
used in diluted
calculations................ 12,316 12,952 13,060 12,665 12,585 12,542 12,619
Cash dividends per common
share....................... $ 0.22 $ 0.18 $ 0.72 $ 0.56 $ 0.43 $ 0.37 $ 0.19
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
("UNAUDITED")
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents..... $ 51,815 $ 41,043 $ 35,909 $ 34,387 $ 26,167 $ 22,764 $ 14,047
Total assets.................. 2,528,342 2,172,110 2,304,401 1,827,425 2,021,908 1,952,611 1,786,022
Long-term debt................ 108,316 23,855 15,659 27,290 41,410 47,023 22,166
Total liabilities............. 2,208,457 1,879,313 1,985,310 1,551,539 1,799,414 1,757,191 1,608,339
Total shareholders' equity.... 319,885 292,798 319,091 275,886 222,494 195,420 177,683
Equity per common share....... 25.89 23.88 26.00 22.66 18.44 16.20 14.57
Long-term debt/equity ratio... 33.9% 8.1% 4.9% 9.9% 18.6% 24.1% 12.5%
</TABLE>
6
<PAGE>
PROFORMA SUMMARY FINANCIAL INFORMATION
REFLECTING THE ACQUISITION OF WESSELS, ARNOLD & HENDERSON BY THE COMPANY
The following unaudited pro forma information has been prepared assuming
that the acquisition of WAH had occurred at the beginning of the periods
presented after including the impact of certain adjustments including
amortization of goodwill, increased interest expense on acquisition debt and the
related income tax effects. The pro forma financial information below does not
include the effect of the $20.0 million charge recorded by the Company in the
quarter ended March 31, 1998 that was directly related to the acquisition of
WAH.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
---------------------- DECEMBER 31,
1998 1997 1997
---------- ---------- ------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.......................................... $ 205,487 $ 194,843 $ 828,796
Interest expense.................................. (17,895) (16,194) (67,171)
---------- ---------- ------------
Net revenues...................................... 187,592 178,649 761,625
Expenses excluding interest and restructuring
charge.......................................... 170,815 152,726 663,533
Restructuring charge.............................. -- -- 15,000
---------- ---------- ------------
Earnings before income taxes...................... 16,777 25,923 83,092
Income tax expense................................ (5,916) (9,186) (29,761)
---------- ---------- ------------
Net earnings...................................... $ 10,861 $ 16,737 $ 53,331
---------- ---------- ------------
---------- ---------- ------------
FINANCIAL RATIOS/MEASURES
Diluted earnings per share........................ $ 0.82 $ 1.29 $ 4.08
Pretax margin on net revenues..................... 8.9% 14.5% 10.0%
Annualized net return on average equity........... 13.7% 23.5% 17.8%
</TABLE>
The pro forma financial information above is presented for informational
purposes only and is not necessarily indicative of the actual results that would
have been achieved had the merger been consummated prior to the dates or periods
indicated, nor are they necessarily indicative of future operating results.
7
<PAGE>
RISK FACTORS
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING MATTERS IN CONNECTION WITH
AN INVESTMENT IN THE SECURITIES IN ADDITION TO THE OTHER INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT, INCLUDING 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 SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL SUCH FORWARD-LOOKING STATEMENTS
INVOLVE INHERENT RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, THOSE
DISCUSSED BELOW. ALL SUCH FORWARD-LOOKING STATEMENTS AND THE DESCRIPTION OF THE
RISKS AND UNCERTAINTIES INHERENT IN SUCH FORWARD-LOOKING STATEMENTS ARE MADE
BASED ON INFORMATION AVAILABLE TO THE COMPANY AS OF THE DATE HEREOF. THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS OR THE
DESCRIPTION OF ANY RISKS AND UNCERTAINTIES INHERENT THEREIN. THE COMPANY'S
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS AND UNCERTAINTIES
DISCUSSED BELOW.
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, many of which are 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 reduced levels
of demand for the products and services offered by the Company, as well as 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 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
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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. See "--Dependence on
Personnel." 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 the loosening of Federal Reserve Board rules limiting the underwriting
and other activities of securities subsidiaries of bank holding companies which
took effect in early 1997. 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 have 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 retain and recruit
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 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 of 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, 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
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Company has outsourced certain 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 periodically 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 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 system. 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 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 and 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. In
addition, the Company maintains uncommitted credit lines with a number of banks
aggregating approximately $575 million, of which $142 million were used as of
March 31, 1998. The Company also borrowed $80 million in subordinated debt from
a group of banks and used $40 million of available funds in order to finance the
acquisition of WAH. Because a substantial portion of the Company's capital
resources have been used for the acquisition of WAH or could in the future be
used in additional acquisitions, 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
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conditions, the volume of certain trading activities, credit ratings, credit
capacity and the overall availability of credit to the financial services
industry. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--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. (the "NASD") and the Municipal
Securities Rulemaking Board (the "MSRB"), 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). See "The Company--Securities Business-- Regulation."
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
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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. See "The
Company--Securities Business--Uniform Net Capital Rule."
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 class action and other 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 judgement in connection with any such
proceeding may have a material adverse effect on the Company's consolidated
financial condition or results of operations. See "The Company--Legal
Proceedings."
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION
The Debt Securities and Securities Warrants are obligations exclusively of
the Company and the Preferred Stock and Common Stock are equity interests
exclusively in the Company. The Company is a holding company, substantially all
of the consolidated assets of which are held by its regulated broker-dealer
subsidiary, Dain Rauscher. Accordingly, the cash flow of the Company and the
consequent ability to service its debt, including the Debt Securities, and
maintain or increase the level of its Stockholders' equity, including the
Preferred Stock and the Common Stock, are dependent upon the earnings of such
subsidiary and the ability of the Company to withdraw capital from such
subsidiary. Because the Company is a holding company, the Debt Securities will
be effectively subordinated to all existing and future indebtedness, trade
payables, guarantees, lease obligations and letter of credit obligations of Dain
Rauscher and the Company's other subsidiaries. Therefore, the Company's rights
and the rights of its creditors, including the holders of the Debt Securities,
and stockholders, including the holders of the Preferred Stock and Common Stock,
to participate in any distribution of the assets of any subsidiary upon the
latter's liquidation or reorganization will be subject to the prior claims of
such subsidiaries' creditors and customers. As of March 31, 1998 the Company's
subsidiaries had approximately $2.2 billion of indebtedness and other
liabilities. The Indenture does not limit the amount of Indebtedness the Company
and its subsidiaries may incur. See "Description of Debt Securities" and
"Description of Capital Stock."
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THE COMPANY
The Company, a Minneapolis, Minnesota based holding company formed in 1973,
provides investment advice and services to individual investors primarily in the
western half of the United States and investment banking, research and
institutional sales and trading services to corporate and governmental clients
nationwide through its principal subsidiary, Dain Rauscher. Dain Rauscher also
clears and settles securities trades on a fully disclosed basis for 173
correspondent brokerage firms through the Company's RPR Clearing division, which
is based in St. Louis, Missouri. Another subsidiary, Insight Management, serves
as the investment advisor to the Great Hall Investment Funds (four open-end
money market mutual funds) and provides fixed income portfolio management
services to a variety of private accounts. DRL was formed in 1997 to make
certain types of loans to customers that are collateralized by customers'
control and restricted securities. At March 31, 1998, the Company had
approximately 3,600 employees located in 26 states.
Effective January 2, 1998, the Company's name was changed to Dain Rauscher
Corporation from Interra Financial Incorporated and during the first quarter of
1998 the Company's three broker-dealer subsidiaries, Dain Bosworth Incorporated
("Dain Bosworth"), a full service regional securities firm based in Minneapolis,
Minnesota, Rauscher Pierce Refsnes, Inc. ("Rauscher Pierce Refsnes"), a full
service regional securities firm based in Dallas, Texas, and Interra Clearing
Services, Inc., a clearing and operations broker-dealer based in Minneapolis,
Minnesota, were merged together and renamed Dain Rauscher Incorporated. Between
the time of its formation in 1973 and February 1997, the Company was known as
Inter-Regional Financial Group, Inc.
On March 31, 1998, the Company acquired Wessels, Arnold & Henderson, LLC
("WAH"), a privately held investment banking and institutional equity sales and
trading firm based in Minneapolis, Minnesota. On April 6, 1998, WAH was merged
into Dain Rauscher and the combined equity capital markets business of Dain
Rauscher and WAH became known as the Dain Rauscher Wessels equity capital
markets division of Dain Rauscher. The transaction is expected to significantly
increase Dain Rauscher equity capital markets capabilities. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Company is a Delaware corporation with its executive offices located at
Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422.
Its telephone number is (612) 371-7750.
SECURITIES BUSINESS
GENERAL. The securities broker-dealer and investment banking activities of
the Company are conducted through Dain Rauscher. Dain Rauscher deals in
securities of and is a market-maker for entities based throughout the United
States. In general, research and investment banking activities are concentrated
on entities based in regions where the Company does business, though equity
research and investment banking activities, in the past two years, have been
increasingly industry, rather than geographically, focused. With the completion
of the Company's March 31, 1998 acquisition of WAH, the Company expects this
trend to continue and expects its equity capital markets activities to expand.
At March 31, 1998, Dain Rauscher had 1,160 retail sales representatives and 108
fixed income and equity institutional sales representatives in 96 offices
located in 26 states. The firm is a member firm of the NYSE and is registered in
the NASDAQ system as a market maker. Following the WAH acquisition, the Company
expects the total institutional sales force to consist of approximately 110
sales representatives and Dain Rauscher and WAH combined to be registered as a
market maker for approximately 425 equity issuers.
Dain Rauscher operating results are sensitive to many factors outside the
control of the Company, including the general volatility of securities prices
and interest rates, trading volume of securities, income and capital gains tax
legislation and demand for investment banking services. Economic conditions in
the regions in which Dain Rauscher operates also affect operating results.
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COMMISSIONS. As a securities broker, Dain Rauscher acts as an agent in the
purchase and sale of securities, options, commodities and futures contracts
traded on various securities and commodities exchanges or in the
over-the-counter ("OTC") market. Dain Rauscher charges a brokerage commission
when acting as an agent for the purchaser or seller of a security. If the
security is listed on an exchange, the transaction is generally effected through
Dain Rauscher's own floor brokers. If the security is traded in the OTC market,
transactions are generally effected with a market maker in the security. In
addition, Dain Rauscher also earns commissions from transactions involving many
other financial products including mutual funds. Dain Rauscher's commissions are
derived primarily from individual investors. However, commission revenues from
institutional investors have increased in recent years.
PRINCIPAL TRANSACTIONS. Dain Rauscher is a dealer in corporate, tax-exempt
and governmental fixed income securities and equity securities and recognizes
profits or losses on transactions in, or fluctuations in the value of, such
securities held in inventory. While most of the Company's principal transactions
are executed to facilitate retail and institutional customer trades, Dain
Rauscher also maintains certain inventory positions for its own account. These
positions typically include U. S. government or U. S. government agency
securities and are usually hedged with a combination of short sales of similar
securities, financial futures or option contracts in order to mitigate market
and interest rate risk.
These inventories require the commitment of substantial capital and expose
the Company to the risk of a loss if market prices of the securities held in
inventory decrease. General market conditions, interest rates and the financial
prospects for issuers of such securities may affect the market prices of
securities held in inventory. Internal guidelines intended to limit the size and
risk of inventories maintained have been established and are reviewed
periodically.
INVESTMENT BANKING AND UNDERWRITING ACTIVITIES. Dain Rauscher earns
investment banking revenues by assisting clients in planning to meet their
financial needs and advising them on the most advantageous means of raising
capital. Such plans are sometimes implemented by managing or co-managing public
offerings of securities or by arranging private placements of securities with
institutional or individual investors. The syndicate department coordinates the
distribution of managed and co-managed corporate equity underwritings, accepts
invitations to participate in competitive or negotiated equity underwritings
managed by other investment banking firms, and allocates and merchandises Dain
Rauscher selling allotments to its branch office system, to institutional
clients and to other broker-dealers. The Company is also among the leaders in
its geographic regions in the origination, syndication and distribution of
securities of municipalities, state and local agencies, health care
organizations and financial institutions. Participation in underwritings can
expose the Company to material risk, since the possibility exists that
securities it has committed to purchase cannot be sold at the initial offering
price. Federal and state securities laws and regulations also affect the
activities of underwriters and impose substantial potential liabilities for
violations in connection with sales of securities by underwriters to the public.
In addition to public offerings and private placements, Dain Rauscher provides
other consulting services, including providing valuations of securities and
companies, arranging and evaluating mergers and acquisitions and advising
clients with respect to financing plans and related matters.
CUSTOMER FINANCING. A significant portion of Dain Rauscher's profitability
is derived from net interest income, the major portion of which relates to
customer balances. Customer transactions are effected on either a cash or margin
basis. Purchases on a cash basis require full payment by the designated
settlement date, generally the third business day following the transaction
date. Dain Rauscher is at risk in the event a customer fails to settle a trade
and the value of the securities declines subsequent to the transaction date.
When a purchase is made on a margin basis, Dain Rauscher extends credit to the
customer for a portion of the purchase price. The amount of the loan is subject
to margin regulations of the Federal Reserve Board, the NYSE and the internal
policies of Dain Rauscher, which are generally more stringent than applicable
rules and regulations. In permitting customers to purchase on margin, Dain
Rauscher takes the risk that a market decline could reduce the value of the
collateral securing the margin
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loan below the amount of the customer's indebtedness and that the customer might
be unable to repay. Interest is charged at a floating rate based on amounts
borrowed by customers to finance purchases on margin. The rate charged is
dependent on the average net debit balance in the customer's accounts, the
activity level in the accounts and the applicable cost of funds. The Company may
at times make loans to customers that are collateralized by customers' control
and restricted securities through DRL.
Customers will at times accumulate credit balances in their accounts. Such
balances result from payment of dividends, interest or principal on securities
held for such customers, from funds received in connection with sales of a
customer's securities and from cash deposits made by customers pending
investment. Pending investment of such funds or reimbursement upon the
customer's request, Dain Rauscher pays interest on those credit balances.
Available credit balances are used to lend funds to Dain Rauscher customers
purchasing securities on margin. Excess customer credit balances are invested in
short-term securities in accordance with applicable regulations and are
segregated for the exclusive benefit of customers. Dain Rauscher generates net
interest income from the positive interest rate spread between the rate earned
from margin lending and alternative short-term investments and the rate paid on
customer credit balances.
Dain Rauscher is a member of the Securities Investor Protection Corporation
("SIPC"), which insures customer accounts up to specified limits in the event of
liquidation. Also, the Company maintains additional coverage in order to protect
customer accounts to specified amounts in excess of SIPC coverage.
SECURITY REPURCHASE ACTIVITIES. Dain Rauscher acts as principal in the
purchase and sale to its customers of securities of the United States government
and its agencies, including repurchase agreements in such securities and certain
other money market instruments. Dain Rauscher may match purchases and sales of
these securities and is at risk to the extent that it does not properly match
the contracts or its customers are unable to meet their obligations, especially
during periods of rapidly changing interest rates and fluctuations in market
conditions. All positions are collateralized. Dain Rauscher generally takes
legal possession of securities purchased under agreements to resell. Such
agreements provide Dain Rauscher with the right to maintain the relationship
between the market value of the collateral and the receivable. Typically, these
contracts are entered into only with clients of substantial size and who are
believed to be credit-worthy. Dain Rauscher also utilizes securities sold under
repurchase agreements as a means of financing portions of its trading
inventories.
SECURITIES LENDING AND BORROWING ACTIVITIES. Securities brokers and
dealers, including Dain Rauscher, borrow securities from and lend securities to
other brokers and dealers to facilitate short sales and clearance and delivery
of securities sold by customers when such customers fail to deliver securities
prior to settlement date. Dain Rauscher also will act as a conduit by arranging
securities lending transactions between brokers and utilize available securities
as collateral for short-term loans. When such transactions occur, the lending
broker provides excess customer margin securities to the borrowing broker in
return for a cash deposit that is generally equivalent to 102 percent of the
market value of the securities loaned. Both the lending and borrowing brokers
have the right to mark the securities to market in order to maintain the
relationship between the market value of the securities loaned and the cash
collateral deposited. When the securities are no longer needed by the borrowing
firm, they are returned to the lending broker, which returns the cash deposit
held, plus interest, to the borrowing broker. When engaging in such securities
lending and borrowing activities, Dain Rauscher collects cash deposits from
brokers that collateralize the securities loaned, invests the cash deposit and
profits from the spread between the interest rate paid to the borrowing broker
on the cash deposit and the rate earned by Dain Rauscher. In all securities
lending transactions, Dain Rauscher is at risk to the extent that it does not
maintain the relationship between the market value of securities loaned and the
value of the cash deposit held. Dain Rauscher is also at risk to the extent that
securities it borrows decline in value and the lending broker fails to return to
Dain Rauscher the cash deposit.
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RESEARCH ACTIVITIES. Dain Rauscher has a research department which provides
analysis, investment recommendations and market information with an emphasis on
select industries as well as companies located in its regions. At March 31,
1998, Dain Rauscher and WAH combined had 45 securities analysts. Following the
acquisition, the Company's total securities analysts is expected to be
approximately 35, in order to improve the Company's focus on issues affecting
selected industries. The Company also purchases certain research products from
independent research organizations to supplement its internal research
activities.
REGULATION. The securities industry is subject to comprehensive regulation
by federal and state governments, the various securities and commodities
exchanges and other self-regulatory bodies. The regulations cover all aspects of
the securities business including sales practices, registration and distribution
of securities, trade practices among broker-dealers, transactions with
affiliates, conflicts of interest, uses and safekeeping of customers' funds and
securities, capital levels of securities firms, record keeping and the conduct
of employees. Violations of these rules and regulations can result in censure,
fines, suspensions, revocation of the right to do business and private rights of
action for damages. Dain Rauscher believes it has operated in compliance with
applicable rules and regulations in all material respects.
UNIFORM NET CAPITAL RULE. As a broker-dealer and member firm of the NYSE,
Dain Rauscher is subject to the Uniform Net Capital Rule (the "Rule")
promulgated by the Commission. The Rule is designed to measure the general
financial integrity and liquidity of a broker-dealer and the minimum net capital
deemed necessary to meet the broker-dealer's continuing commitments to its
customers. The Rule provides for two methods of computing net capital. Dain
Rauscher currently uses what is generally referred to as the alternative method.
Minimum net capital is defined under this method to be equal to 2 percent of
customer debit balances, as defined. The NYSE may also require a member
organization to reduce its business if net capital is less than 4 percent of
such aggregate debit items and may prohibit a member firm from expanding its
business and declaring cash dividends if its regulatory net capital is less than
5 percent of such aggregate debit items. In computing net capital, various
adjustments are made to exclude assets which are not readily convertible into
cash and to provide a conservative valuation of other assets such as trading
securities. Failure to maintain the required net capital may subject a firm to
suspension or expulsion by the NYSE, the Commission and other regulatory bodies
and may ultimately require its liquidation. At all times, Dain Rauscher has
maintained its net capital above the required levels. See Note K to
"Consolidated Financial Statements."
CLEARING SERVICES
RPR Correspondent Clearing is in the business of marketing correspondent
clearing services provided on a fully disclosed basis by Dain Rauscher. As of
March 31, 1998, the Company provided clearing services to 177 correspondent
firms introduced through RPR Correspondent Clearing and one correspondent firm
introduced through Dain Rauscher. Correspondent firms are charged fees based on
their use of services.
MONEY MANAGEMENT AND OTHER SERVICES
Insight Management is a registered investment advisor that was restructured
in January 1998 to provide solely fixed income portfolio management services to
the Great Hall Investment Funds, Inc. ("Great Hall") and to individual and
institutional clients. Great Hall is an open-end investment company that
currently offers shares in four series, each of which is, in essence, a separate
money market mutual fund.
COMPETITION
Dain Rauscher encounters intense competition in its business and competes
directly with numerous firms, many of which have substantially greater capital
and other resources. The Company also encounters competition from banks,
insurance companies and financial institutions in many elements of its business.
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For example, with the prior approval of the Federal Reserve Board, securities
subsidiaries of bank holding companies may now underwrite and deal in corporate
debt and equity securities, provided that they comply with certain "firewalls"
and that the revenues from such activities do not exceed 25 percent of the
securities subsidiary's total revenues. Legislative proposals also under
consideration would eliminate this limit on such activities and would permit
commercial banks, bank holding companies and their subsidiaries and affiliates
to offer additional services which have traditionally been provided only by
securities and money management firms.
During 1997 and 1998, a number of banks acquired securities firms and, in so
doing, gained unprecedented entry into the securities industry. While the effect
of such acquisitions cannot yet be determined, they have brought entirely new
sources of capital into the securities industry, resulting in more formidable
competitors for the Company.
Additionally, competition among securities firms and other competitors for
successful sales representatives, securities traders, securities analysts and
investment bankers is intense and continuous.
Dain Rauscher competes with other securities firms and with banks, insurance
companies and other financial institutions principally on the basis of service,
product selection, price, location and reputation in local markets. Dain
Rauscher operates at a price disadvantage to discount brokerage firms that do
not offer equivalent services.
RPR Correspondent Clearing competes for the business of introducing
correspondent brokers on the basis of service, price, technology, product
selection and reputation.
Insight Management competes with other fixed income portfolio managers
principally on the basis of portfolio performance, price and service.
EMPLOYEES
At March 31, 1998, the Company had approximately 3,600 full-time employees.
None of the Company's employees is represented by a collective bargaining unit.
LEGAL PROCEEDINGS
The Company and/or its securities subsidiaries are or have been threatened
to be made defendants in various actions, suits and proceedings before a court
or arbitrator or by a governmental agency. Such matters involve alleged
violations of federal and state securities laws and other laws. Certain of these
actions, including certain of the actions described in more detail below, claim
substantial damages and, if resolved adversely to the Company and/or its
subsidiaries, could have a material adverse effect on the consolidated financial
condition or results of operations of the Company. While the outcome of any
legal or regulatory proceeding is uncertain, management, based in part upon
consultation with legal counsel as to certain of the aforementioned actions
pending against the Company and/or its subsidiaries, believes that the
resolution of all matters pending or threatened against the Company and its
subsidiaries will not have a material adverse effect on the consolidated
financial condition or results of operations of the Company as set forth in the
consolidated financial statements contained herein.
MIDWEST LIFE INSURANCE LITIGATION
The Company and Dain Bosworth have been named as defendants in eleven
actions brought in connection with losses suffered under single premium
deferred annuities issued by Midwest Life Insurance Company ("MWL"), a
former subsidiary acquired by the Company in 1980 and sold by it in early
1986. Such annuities were sold primarily through the private client sales
force of Dain Bosworth. MWL, which was sold two times subsequent to its sale
by the Company in 1986 and was relocated from Nebraska to Louisiana by the
final owners, Southshore Holding Corp., was declared insolvent and ordered
liquidated by the State of Louisiana in August 1991. Generally, MWL
policyholders have
17
<PAGE>
been reimbursed for their losses up to $100,000 per holder by the state
guaranty associations, and the policyholders and state guaranty
associations, between them, have received approximately $.30 for each $1.00
of loss in liquidation payments from the liquidator of MWL's estate.
The plaintiffs (or real parties in interest) in the first ten of these
cases are the Life and Health Guaranty Associations of each of Colorado,
Iowa, Minnesota, Montana, Nebraska, North Dakota, Oregon, South Dakota,
Washington and Wyoming, which claim to have succeeded to the rights of
policyholders they reimbursed for MWL losses, and/or certain individual
policyholders. The plaintiff in the eleventh action is the liquidator of
MWL's estate. The plaintiff guaranty associations and individuals seek to
recover in excess of $64 million in compensatory damages, as well as
punitive damages, interest, costs, attorneys' fees and other relief. The
liquidator of MWL's estate also seeks to recover treble damages.
COLORADO ACTION
The first of these actions, KARSIAN, ET AL. V. INTER-REGIONAL FINANCIAL
GROUP, INC., AND DAIN BOSWORTH INCORPORATED, is pending in the United States
District Court for the District of Colorado. This action was initially
brought in August 1993 as a purported class action, but the court has since
held that there are no proper class claims. The 232 individual plaintiffs in
this action seek approximately $10.7 million in compensatory damages, as
well as punitive damages, damages for emotional distress, costs, prejudgment
interest and attorneys' fees. In Colorado, unlike other states, no guaranty
association coverage was in place at the time MWL became insolvent. Although
such coverage was adopted in 1994 as a result of Dain Bosworth's lobbying
efforts and each of the policyholders was reimbursed for his or her losses
up to $100,000 plus accrued interest, many of the policyholders had already
filed suit. The plaintiffs in this case allege common law fraud, breach of
fiduciary duty, negligence and negligent misrepresentation.
In July 1997, a Colorado jury returned a verdict awarding 12 of the 232
plaintiffs damages of $4.75 million, including $1.3 million in compensatory
damages, $1.65 million in emotional distress damages and $1.8 million in
punitive damages, for breach of fiduciary duty, negligent performance of an
assumed duty to monitor and advise as to the safety of their MWL annuity
contracts, negligent misrepresentation, deceit based on fraudulent
misrepresentation and fraudulent concealment. In addition, the court entered
judgment for prejudgment interest of approximately $1.5 million.
The Company and Dain Bosworth filed post-trial motions seeking to have
the verdict in favor of these plaintiffs set aside; such motions were
denied. The Company and Dain Bosworth have appealed. The Company believes
that the trial court erred by, among other things, withholding key evidence
from the jury, including evidence concerning Dain Bosworth's efforts to
obtain guaranty association coverage for plaintiffs' losses and evidence
concerning the reimbursements plaintiffs received for the losses.
WASHINGTON ACTION
A second of these actions, WASHINGTON LIFE AND HEALTH INSURANCE GUARANTY
ASS'N V. INTER-REGIONAL FINANCIAL GROUP, INC. AND DAIN BOSWORTH
INCORPORATED, brought in April 1995, was tried in the Washington Superior
Court for King County in October and November 1997 and again in April and
May of 1998. Plaintiffs in this action allege similar claims to the Colorado
action. A mistrial was declared in the 1997 trial when the jury was unable
to reach a verdict. In the retrial in May, 1998, the jury returned a verdict
in the amount of approximately $1.5 million against the defendants for
negligent nondisclosure and violations of the Washington Consumer Protection
Act ("WCPA"). The jury returned a verdict in favor of defendants on the
claim of fraudulent nondisclosure and plaintiff withdrew the claim of breach
of fiduciary duty before the case was submitted to the jury. The plaintiff
will also seek prejudgment interest, costs and, under the WCPA, attorney's
fees.
18
<PAGE>
The Company and Dain Rauscher, as successor to Dain Bosworth, intend to
file post-trial motions to have the verdict in favor of plaintiff set aside
and, if such motions are unsuccessful, to appeal. The Company believes the
trial court made significant errors of law and that there are strong grounds
for reversal. The Company anticipates that plaintiffs in other jurisdictions
will seek to obtain collateral estoppel based on the Washington jury's
verdict. The Company intends to vigorously oppose such requests.
OTHER GUARANTEE ASSOCIATION CASES
The other eight guarantee association and individual actions were also
brought in April and May of 1995 and allege similar claims to the Colorado
action. In certain states, the plaintiffs also allege intentional infliction
of economic harm, interference with contractual relations and/or aiding and
abetting the breaches of duty by the final sets of owners of MWL. Seven of
such actions are captioned and pending as follows, and the plaintiffs in
each action seek the amount of compensatory damages indicated in
parentheses:
IOWA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED (Iowa Dist. Ct., Polk
County) ($5.7 million)
C. RANDOLPH, L. SCHNOBRICH, V. TROUMBLY, P. DUMKE, E. DAVIS AND
MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED (Hennepin County,
Minnesota Dist. Ct.) ($23.4 million)
MONTANA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED, (Montana First
Judicial Court, Lewis & Clark County) ($3.4 million)
NEBRASKA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED, (Nebraska Dist. Ct.,
Lancaster County) ($2.8 million)
NORTH DAKOTA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED, (District Court, Cass
County, North Dakota) ($2.1 million)
SOUTH DAKOTA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED, (South Dakota Second
Judicial Circuit, Minnehaha County) ($1.5 million)
WYOMING LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC. AND DAIN BOSWORTH INCORPORATED, (Wyoming District
Court for Laramie County) ($2.7 million)
The eighth such guarantee association action, OREGON LIFE AND HEALTH
INSURANCE GUARANTY ASS'N V. INTER-REGIONAL FINANCIAL GROUP, INC. AND DAIN
BOSWORTH INCORPORATED, was filed in the Oregon Circuit Court of Multnomah
County and sought approximately $500,000 in damages. Such action was
dismissed in October 1996 following a partial summary judgment ruling in
favor of the Company on statute of limitations grounds. Plaintiff has
appealed such ruling.
MWL LIQUIDATOR ACTION
The eleventh action, captioned JOHN A. DIXON, JR., AS COMMISSIONER OF
INSURANCE AD HOC. FOR THE STATE OF LOUISIANA V. THE MIDWEST LIFE INSURANCE
COMPANY/MIDWEST LIFE INSURANCE COMPANY, IN LIQUIDATION V. INTERRA FINANCIAL
INCORPORATED, DAIN BOSWORTH INCORPORATED AND THE CENTRAL NATIONAL LIFE
INSURANCE COMPANY OF OMAHA, was brought in June 1997 in the Nineteenth
Judicial District Court of the State of Louisiana. The case has since been
removed to the United States District Court for the Middle District of
Louisiana. In this action, the liquidator of the MWL estate alleges RICO
violations, breach of fiduciary duty and conspiracy to breach fiduciary
duty, and is seeking to recover in excess of $59 million in compensatory
damages, treble damages, interest, costs, attorneys' fees and other relief.
The plaintiff challenges certain coinsurance transactions entered into by
MWL and Central National
19
<PAGE>
Life Insurance Company beginning in 1980. By Louisiana statute, the
compensatory damages sought in this case would in large part be distributed
to the insurance guaranty associations and individual policyholders who are
plaintiffs or real parties in interest in the ten actions described above.
The Company and Dain Rauscher, as successor to Dain Bosworth, believe that
they have substantial and meritorious defenses available in all of the foregoing
actions and they are defending themselves vigorously in such actions.
FEDERAL DEPOSIT INSURANCE CORPORATION LITIGATION
Rauscher Pierce Refsnes and one of its executives were named as defendants
in an action captioned FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR
WESTERN SAVINGS & LOAN ASSOCIATION, F.A. V. EXPRESS AMERICA HOLDINGS
CORPORATION, SMITH BARNEY HARRIS UPHAM & CO.; RAUSCHER PIERCE REFSNES, INC., ET
AL. This action was brought in the U.S. District Court in Phoenix, Arizona in
December 1995 by The Resolution Trust Corporation (the "RTC") and arose out of
the RTC's sale through an auction process conducted in the fall of 1990 of the
stock of WESAV Mortgage Corporation ("WESAV"), a subsidiary of Western Savings &
Loan Association, F.A. Rauscher Pierce Refsnes acted as broker for the sale and
Smith Barney Harris Upham & Co. ("Smith Barney") acted as the RTC's financial
advisor. WESAV was eventually sold to First Western Partners, the predecessor to
Express America Holdings Corporation ("Express America"), in May 1991 for a
gross acquisition price of approximately $45 million, including the assumption
of approximately $19 million in liabilities. The RTC alleged that Rauscher
Pierce Refsnes, as broker, improperly favored Express America over other
allegedly higher bidders, and that Rauscher Pierce Refsnes and Smith Barney
committed fraud in connection with the auction and sale, were negligent in their
analysis and communication of bids to the RTC, and breached their contracts with
and fiduciary duties to the RTC. The RTC also named as defendants in the action
Express America's chief executive officer and chief financial officer, the
former chief executive officer and former chief financial officer of WESAV, and
certain other individuals. It alleged such officers of Express America and WESAV
were guilty of mismanagement between the conclusion of the auction process and
closing of the sale. The Federal Deposit Insurance Corporation ("FDIC"), which
became the plaintiff in this action when the RTC was merged into it effective
January 1, 1996, has settled with Smith Barney and the Express America and WESAV
defendants. The FDIC seeks compensatory damages of approximately $15 million and
punitive damages of $60 million, along with interest, costs and other relief.
Defendants' motions to dismiss the case on the face of the complaint were denied
in August 1996. Dain Rauscher, as successor to Rauscher Pierce Refsnes, believes
that it has substantial and meritorious defenses available, and is defending
itself vigorously in this action.
ORANGE COUNTY RELATED CLAIMS
ORANGE COUNTY BANKRUPTCY LITIGATION
Dain Rauscher, as successor to Rauscher Pierce Refsnes, is a defendant
in an action captioned COUNTY OF ORANGE, A POLITICAL SUBDIVISION OF THE
STATE OF CALIFORNIA V. RAUSCHER PIERCE REFSNES, INC., A CORPORATION,
originally filed in June 1996 in the Chapter 9 proceeding entitled IN RE:
COUNTY OF ORANGE, A POLITICAL SUBDIVISION OF THE STATE OF CALIFORNIA in
United States Bankruptcy Court but now pending in the United States District
Court for the Central District of California. The case was consolidated for
discovery purposes with actions by the County against Merrill Lynch & Co.,
Inc., KPMG Peat Marwick LLP, Morgan Stanley & Co., Inc., Student Loan
Marketing Association ("Sallie Mae"), Federal National Mortgage Association
("Fannie Mae"), LeBouef, Lamb, Greene & MacRae, McGraw-Hill Companies, Inc.
d/b/a Standard & Poors, Fuji Securities Inc., and twelve Federal Home Loan
Banks. The County filed proceedings against 16 other parties, which are
subject to a stay. The County reportedly has reached settlements with KPMG
Peat Marwick LLP, LeBouef, Lamb, Greene & MacRae, and Credit Suisse First
Boston Corporation (one of the parties to the stayed proceedings).
20
<PAGE>
The County seeks in excess of $500 million in losses allegedly incurred in
the Orange County Investment Pool ("OCIP").
The County alleges that Rauscher Pierce Refsnes was a financial advisor
on five note offerings by the County that took place in June through August
of 1994, for an aggregate of $975 million, including an offering of $600
million in taxable one-year notes in July 1994. The County alleges that by
failing to apprise the County of the risks involved in the OCIP and in the
County's 1994 note offering program, and by failing to prevent the issuance
of allegedly inaccurate official statements, Rauscher Pierce Refsnes became
liable for breach of contract, professional negligence, breach of fiduciary
duty and aiding and abetting breaches of fiduciary duty committed by the
County Treasurer and Assistant Treasurer. Dain Rauscher, as successor to
Rauscher Pierce Refsnes, denies these allegations, including those relating
to Rauscher Pierce Refsnes' role in connection with these transactions. In
each of the five transactions in question, Rauscher Pierce Refsnes was
retained solely to determine whether the underwriter's spread (including the
portion to be received by the financial and marketing specialist) and
proposed interest rate were appropriate. Dain Rauscher, as successor to
Rauscher Pierce Refsnes, believes it has substantial and meritorious
defenses available and is defending itself vigorously in this action.
THREATENED SEC PROCEEDING
During second quarter 1997, the SEC authorized an action against
Rauscher Pierce Refsnes and one current and one former employee for alleged
violation of certain anti-fraud provisions under the Securities Act of 1933
and the Securities Exchange Act of 1934 in connection with an additional 12
taxable one-year note offerings for an aggregate of $580 million and one
pooled Tax and Revenue Anticipation Note offering for $300 million. The
offerings were made by certain school districts and cities during 1993 and
1994 and the proceeds were invested in the OCIP. Rauscher Pierce Refsnes
acted either as underwriter or financial advisor in connection with each of
these transactions. The SEC has indicated that it intends to file this
action in the United States District Court for the Central District of
California and to seek injunctive and other ancillary relief. It is not
clear at this time when the SEC will file this threatened action. Dain
Rauscher, as successor to Rauscher Pierce Refsnes, has been engaged in
discussions with the SEC in an effort to resolve this matter on satisfactory
terms prior to or in lieu of the filing of a federal complaint. If an action
is brought, Dain Rauscher believes that it has substantial and meritorious
defenses available and intends to defend itself vigorously in such action.
SEC PROCEEDING CONCERNING STATE OF ARIZONA REFUNDING TRANSACTION
In January 1998, the SEC filed a proceeding captioned, SECURITIES AND
EXCHANGE COMMISSION V. RAUSCHER PIERCE REFSNES, INC. AND JAMES FELTHAM, in
United States District Court in Phoenix, Arizona, against Rauscher Pierce
Refsnes and a former employee seeking injunctive and other ancillary relief. The
complaint alleges violation of the anti-fraud provisions under the Securities
Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisors Act
of 1940 in connection with a $130 million refunding issue by the State of
Arizona in 1992, on which Rauscher Pierce Refsnes served as financial advisor.
Rauscher Pierce Refsnes purchased government securities and sold them to the
escrow trustee in the transaction at a markup of approximately 0.55 percent of
their cost to Rauscher Pierce Refsnes. The SEC alleges that Rauscher Pierce
Refsnes had an obligation to disclose, but failed to disclose, that it purchased
and sold the government securities as a principal, that it expected to make a
profit, and the amount of the profit. The SEC also alleges that the markup was
excessive and that Rauscher Pierce Refsnes falsely represented that the
securities were sold to the trustee at fair market value. Dain Rauscher, as
successor to Rauscher Pierce Refsnes, believes that it has substantial and
meritorious defenses available and intends to defend itself vigorously in this
action.
21
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock is listed on the NYSE under the symbol "DRC." Prior to
January 1, 1998, the Company's NYSE trading symbol was "IFI" and prior to
February 10, 1997, the Company's NYSE trading symbol was "IFG." The following
table sets forth for the periods indicated the high and low sales prices per
share of the Common Stock on the NYSE composite tape as reported by the National
Quotation Bureau, Inc.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1996
First Quarter............................................................... $ 25 1/4 $ 20 1/2
Second Quarter.............................................................. 26 7/8 20 3/4
Third Quarter............................................................... 33 1/2 22
Fourth Quarter.............................................................. 36 7/8 31 1/4
1997
First Quarter............................................................... 42 5/8 34 3/4
Second Quarter.............................................................. 45 5/8 41 15/16
Third Quarter............................................................... 60 1/16 43 1/2
Fourth Quarter.............................................................. 69 3/16 56 15/16
1998
First Quarter............................................................... 69 53 1/2
</TABLE>
DIVIDENDS
Cash dividends per common share paid by the Company by quarter for the last
two years were as follows:
<TABLE>
<CAPTION>
QUARTER 1998 1997 1996
- ------------------------------------------------------------------------ --------- --------- ---------
<S> <C> <C> <C>
First................................................................... $ .22 $ .18 $ .11
Second.................................................................. $ .22 $ .18 .15
Third................................................................... $ .18 .15
Fourth.................................................................. $ .18 .15
</TABLE>
The Company increased its regular quarterly cash dividend to $.22 per share
in February 1998. The regular first quarter dividend was paid in March 1998, and
the regular second quarter dividend will be paid in June 1998. The determination
of the amount of future cash dividends, if any, to be declared and paid will
depend on the Company's future financial condition, earnings and available
funds.
22
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1998 (in thousands).
<TABLE>
<CAPTION>
<S> <C>
Long-term debt:
Subordinated debt............................................................... $ 101,657
Capital lease obligations and Other............................................. 6,659
----------
Total long-term debt.......................................................... 108,316
----------
Shareholders' equity
Common stock, par value $.125 per share, authorized 30,000,000 shares (issued
12,448,595 shares and outstanding
12,355,852 shares).......................................................... 1,556
Additional paid-in capital...................................................... 94,859
Retained earnings............................................................... 228,665
Treasury stock at cost.......................................................... (5,195)
----------
Total shareholders' equity.................................................... 319,885
----------
Total capitalization........................................................ $ 428,201
----------
----------
</TABLE>
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
This summary is qualified in its entirety by more detailed information and
financial statements included in this Prospectus and in the documents
incorporated by reference in this Prospectus. See "Index to Consolidated
Financial Statements" and "Index to Consolidated Financial Statements." The
following consolidated financial data of the Company, as of and for the five
years ended December 31, 1997, are derived from the Company's consolidated
financial statements which have been audited by KPMG Peat Marwick LLP,
independent auditors. The financial data for the three months ended March 31,
1998 have been derived from the Company's unaudited financial statements which,
in the opinion of management, include all adjustments necessary for a fair
presentation of the results of operations and financial position for the periods
and as of the dates presented. The results of operations for the three months
ended March 31, 1998 are not necessarily indicative of the results to be
anticipated for the entire fiscal year. The table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the notes thereto contained
elsewhere in this Prospectus.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE MOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
("UNAUDITED")
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net revenues (A)......................... $ 172,447 $ 165,962 $ 692,102 $ 625,756 $ 541,970 $ 457,351 $ 482,960
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Revenues................................. $ 188,014 $ 180,072 $ 750,675 $ 683,316 $ 606,747 $ 496,289 $ 511,615
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Operating earnings before income taxes... $ 16,837 $ 24,389 $ 76,755 $ 87,402 $ 56,271 $ 39,795 $ 77,353
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Operating earnings (net of tax).......... $ 10,776 $ 15,755 $ 58,905 $ 56,811 $ 35,873 $ 25,453 $ 47,649
Merger and restructuring charges (net of
tax)................................... (12,800) -- (9,630) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)...................... $ (2,024) $ 15,755 $ 49,275 $ 56,811 $ 35,873 $ 25,453 $ 47,649
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
FINANCIAL RATIOS/MEASURES
Diluted earnings per share............... $ (0.16) $ 1.22 $ 3.77 $ 4.49 $ 2.85 $ 2.03 $ 3.78
Pretax margin on net revenues............ NM 14.7% 11.1% 14.0% 10.4% 8.7% 16.0%
Annualized net return on average
equity................................. NM 20.6% 16.5% 22.8% 17.3% 13.5% 31.0%
FINANCIAL RATIOS/MEASURES EXCLUDING
MERGER AND RESTRUCTURING CHARGES
Diluted earnings per share............... $ 0.82 $ 1.22 $ 4.51 $ 4.49 $ 2.85 $ 2.03 $ 3.78
Pretax margin on net revenues............ 9.8% 14.7% 8.5% 9.1% 6.6% 5.6% 9.9%
Net return on average equity............. 13.0% 20.6% 19.4% 22.8% 17.3% 13.5% 31.0%
</TABLE>
24
<PAGE>
SELECTED FINANCIAL DATA
(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE MOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA
Total assets.................. 2,528,342 2,172,110 2,304,401 1,827,425 2,021,908 1,952,611 1,786,022
Long-term debt................ 108,316 23,855 15,659 27,290 41,410 47,023 22,166
Shareholder's equity.......... 319,885 292,798 319,091 275,886 222,494 195,420 177,683
Equity per common share....... $ 25.89 $ 23.88 $ 26.00 $ 22.66 $ 18.44 $ 16.20 $ 14.57
Common shares outstanding..... 12,356 12,261 12,275 12,175 12,065 12,062 12,197
Cash dividends per common
share....................... $ 0.22 $ 0.18 $ 0.72 $ 0.56 $ 0.43 $ 0.37 $ 0.19
Long-term debt/equity ratio... 33.9% 8.1% 4.9% 9.9% 18.6% 24.1% 12.5%
Average number of employees... 3,565 3,460 3,525 3,379 3,285 3,133 2,806
Average number of investment
executives.................. 1,271 1,264 1,267 1,263 1,271 1,205 1,084
Number of office locations.... 96 91 96 91 91 95 81
</TABLE>
- ------------------------------
(A) Net revenues equal total revenues less interest expense.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis is intended to provide greater details
of the results of operations and financial condition of the Company. The
following discussion should be read in conjunction with the information under
"Selected Financial Data" and the Company's consolidated financial statements,
including the notes, thereto, and other financial data appearing elsewhere in
this Prospectus. Certain statements included in the following discussion
constitute "forward-looking statements" which involve various risks and
uncertainties. The Company's actual results may differ from those anticipated in
such forward looking statements. For additional information concerning such
risks see "Risk Factors."
BUSINESS ENVIRONMENT
The Company is primarily engaged in securities brokerage, investment banking
and trading as a principal in equity and fixed income securities. All of these
activities are highly competitive and sensitive to many factors outside the
control of the Company, including volatility of securities prices and interest
rates; trading volume of securities; economic conditions, including economic
conditions in the regions where the Company does business; income tax
legislation; and demand for investment banking and securities brokerage
services. While revenues are dependent upon the level of trading and
underwriting volume, which may fluctuate significantly, a large portion of the
Company's expenses remain fixed. Consequently, net earnings can vary
significantly from period to period.
THREE MONTHS ENDED MARCH 31, 1997
SUMMARY OF OPERATING RESULTS
The following is a consolidated summary of the Company's results of
operations for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues.............................................................. $ 188,014 $ 180,072
Interest expense...................................................... (15,567) (14,110)
---------- ----------
Net revenues.......................................................... 172,447 165,962
Expenses excluding interest and merger-related expenses............... 155,610 141,573
---------- ----------
Operating earnings before income taxes................................ 16,837 24,389
Income tax expense from operations.................................... (6,061) (8,634)
---------- ----------
Net operating earnings................................................ 10,776 15,755
Merger-related expenses (net of tax).................................. (12,800) --
---------- ----------
Net earnings (loss)................................................... $ (2,024) $ 15,755
---------- ----------
---------- ----------
Earnings per share:
From net operating earnings:
Basic............................................................. $ 0.87 $ 1.29
Diluted........................................................... 0.82 1.22
Net:
Basic............................................................. $ (0.16) $ 1.29
Diluted........................................................... (0.16) 1.22
</TABLE>
26
<PAGE>
Consolidated net operating earnings were $10.8 million, or $.82 per share
diluted, during the first quarter of 1998 compared with $15.8 million, or $1.22
per share, for the first quarter of 1997. During the quarter, the Company's
Private Client Group posted a 26 percent increase in pretax profitability,
primarily due to strong sales of investment products to individual investors,
and the Fixed Income Capital Markets Group posted a 17 percent increase in
pretax profitability, principally the result of higher fees earned underwriting
securities for municipal and governmental clients. These increases, however,
were more than offset by a decline in the profitability of the Dain Rauscher
Wessels equity capital markets division of Dain Rausher ("ECM") from the first
quarter of 1997. A significant portion of this decline resulted from uncertainty
surrounding the Company's February 9, 1998 announcement that it would purchase
WAH. This announcement, coupled with the disruption brought about by the October
1997 announcement of the merger of the Company's former broker-dealer
subsidiaries into a single company, effectively was the second reorganization of
ECM within a four-month period that included, among other things, job
eliminations, managerial changes and changes in assignments of customer
accounts, research coverage and trading coverage.
In conjunction with the acquisition of WAH, the Company recorded a $20.0
million merger-related charge in the 1998 first quarter to cover severance,
space consolidation, systems/operations expenses and other costs of integration.
As a result of the charge, the Company incurred a net loss of $2.0 million, or
$.16 cents per share diluted, for the quarter ended March 31, 1998. The $20.0
million charge exceeded management's previous estimate of up to $15.0 million
due to strategic decisions to focus on certain industry sectors within ECM's
business. As a result, approximately 150 jobs were eliminated, more than
originally anticipated. Excluding the merger-related charge, the Company expects
the acquisition to have minimal impact on earnings in 1998, and to be accretive
to earnings in the first full year of operations.
RESULTS OF OPERATIONS
Commission revenues increased $9.3 million or 15 percent during the 1998
first quarter over the first quarter of 1997 as a result of higher sales of
listed securities, mutual funds and insurance and annuity products. Contributing
also to the increase were higher securities prices, particularly during February
and March of 1998, and higher volumes of securities trades including an 11
percent rise in the NYSE's average daily trading volume in the 1998 first
quarter.
Revenues from principal transactions declined $5.2 million or 12 percent
primarily due to lower trading revenues in over-the-counter equity securities.
The decline was primarily related to lower spreads earned trading OTC equity
securities resulting from management's decision to provide increased liquidity
in order to facilitate institutional trading as well as smaller fractions used
in share price posting. Also contributing was the impact of the merger of the
Company's broker-dealer subsidiaries and the WAH acquisition (see "Summary of
Operating Results" above), as well as lower sales and trading of tax-exempt
fixed income securities. These declines were partially offset by increases in
sales and trading of taxable fixed income securities.
Similarly, investment banking and underwriting revenues declined $3.6
million or 14 percent during the first quarter from the same quarter of 1997 due
primarily to lower underwriting transaction levels for ECM. Management believes
the lower revenue production was due largely to the restructuring changes made
as a result of the merger of Dain Bosworth and Rauscher Pierce Refsnes,
effective on January 2, 1998, and the acquisition of WAH (see "Summary of
Operating Results" above). Offsetting some of this decline, however, were
increases in fees earned from underwriting securities for municipal and
governmental clients.
Net interest income increased $1.6 million or 11 percent during the quarter,
primarily due to a 17 percent increase in average margin loan balances. The
margin loan increase can be attributed to favorable market conditions coupled
with comparatively low interest rates. The resulting increase in net interest
income was partially offset by the effects of a 50 percent decline in customer
credit balances in the
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<PAGE>
1998 first quarter versus the 1997 first quarter, due primarily to transfers of
certain customers' credit balances to Company-sponsored money market funds.
Asset management revenues increased $2.8 million or 27 percent in the first
quarter over the prior year due to increased levels of assets in fee-based,
managed account programs at Dain Rauscher and, to a lesser degree, a 33 percent
increase in assets under management at the Company's money management
subsidiary, Insight Management.
Other revenues increased $1.6 million or 32 percent over the 1997 quarter
primarily due to gains related to the sale of securities previously obtained in
connection with corporate underwriting activities.
During the 1998 first quarter, compensation and benefits increased $9.5
million or 9 percent due principally to increased commissions associated with
higher levels of operating revenues and higher incentive compensation. Also
contributing to the increase were higher salary levels and a 3 percent rise in
the average number of employees.
Expenses other than compensation and benefits increased $4.5 million or 11
percent over the 1997 first quarter principally due to : (1) increased occupancy
costs associated with office expansions and office operating costs, including
real estate taxes; (2) volume-driven increases in communications market-data and
clearing services; (3) travel and promotional costs associated with the
generation of new business; (4) increased information system contractor and
development costs; and (5) increased litigation related expenses.
THREE YEARS ENDED DECEMBER 31, 1997
SUMMARY OF OPERATING RESULTS
During 1997, net earnings totaled $49.3 million, a decrease of $7.5 million
or 13 percent from 1996. Excluding the effect of the $15.0 million pretax
restructuring charge in the 1997 third quarter ($9.6 million after-tax or $.74
per share diluted), net earnings for 1997 would have been a Company record (see
"October 1997 Restructuring Announcement" below). The Company's Private Client
Group was the primary driver of the Company's strong operating results for 1997
as this business unit took advantage of market conditions that were favorable to
individual investors and sold increased quantities of mutual funds, listed
securities, and insurance and annuity products. The Company generated increased
net interest income during 1997, primarily due to higher levels of margin
borrowing by individual investors, and also benefitted from increased account
and transaction fees from individual investors. The Company's Equity Capital
Markets Group generated similar revenue levels in 1997 as in 1996 as increases
in corporate underwriting and institutional equity sales activity were offset by
declines in over-the-counter equity trading, mergers and acquisitions and
syndicate activity. Profitability of the Equity Capital Markets Group dropped
sharply in 1997 from 1996 due to increased expenses incurred in attempting to
grow this business. The Company believes that its acquisition of WAH will
increase the productivity and market share of this business unit. See "--1998
Acquisition of Wessels, Arnold & Henderson." Finally, the Company's Fixed Income
Group posted improved revenues and profits in 1997 versus 1996 due, in part, to
the downsizing performed in this business unit during 1996 as well as from
increased tax-exempt fixed income sales, trading and underwriting revenues.
In 1996 net earnings totaled $56.8 million, a Company record and an increase
of $21.0 million or 58 percent over 1995. Net revenues (revenues less interest
expense) also reached a record $625.8 million, $83.8 million or 15 percent more
than the prior year. The Company, along with the rest of the securities
industry, benefitted from relatively low interest rates, as well as steadily
increasing security prices and trade volumes. While 1996 growth in the size of
the Company's business units was modest compared with 1995 and 1994, the Company
was prepared to take advantage of favorable equity securities market conditions
with a larger, more productive organization. Additionally, the Company
contracted the size of its fixed income business amid difficult fixed income
market conditions. Accordingly, in 1996 the Company was able
28
<PAGE>
to increase its revenues at a greater rate than its expenses and to better
concentrate its resources in its higher-margin businesses, primarily corporate
investment banking and institutional equity sales.
OCTOBER 1997 RESTRUCTURING ANNOUNCEMENT
On October 14, 1997, the Company announced that it would combine Dain
Bosworth, Rauscher Pierce Refsnes and its operations subsidiary into a new firm,
Dain Rauscher Incorporated, during the first quarter of 1998. The Company
changed its name to Dain Rauscher Corporation on January 2, 1998, and the
Company's trading symbol on the New York Stock Exchange changed to "DRC" on that
date. Upon completion of the combination on March 2, 1998, Dain Rauscher became
the largest regional brokerage firm in the western half of the United States
with more than 1,200 private client and institutional investment executives and
1997 net revenues of almost $700 million.
The restructuring represents a strategic change made necessary by the
dramatic changes in the competitive environment in which the Company operates.
These changes were triggered in February 1997 by Federal Reserve Board rulings
that affectively permitted bank holding companies to acquire investment banks.
Such acquisitions and mergers by commercial banks increased the price of
securities firms in 1997 such that acquisitions of major additional firms as
contemplated by the Company under its previous strategy no longer appeared to be
possible. The restructuring, management believes, allows the Company to combine
its two regional firms into a single, more powerful brand and will enable it to
simplify its management structure and become more responsive to competitive
changes. The Company may continue to acquire smaller securities firms in or near
its current markets and to expand its correspondent clearing business, and
expects to continue to explore new business opportunities in other
securities-related businesses.
The Company, which employs 3,600 people, eliminated approximately 120
management, business-line and staff positions, in connection with the
restructuring. The Company does not expect that such job eliminations will
materially affect future revenues. Overall, the restructuring is expected to
reduce non-interest expense levels by approximately $10 million annually.
The Company recorded a one-time, after-tax charge of $9.6 million ($15.0
million before taxes), or 74 cents per share diluted, against third-quarter 1997
earnings to cover severance and other restructuring costs. Substantially all of
the $15.0 million of the restructuring costs resulted in cash outflows,
primarily during the fourth quarter of 1997 and first quarter of 1998. The
composition of the $15.0 million charge was as follows: $12.0 million for
severance and short-term retention payments to terminated employees; $0.7
million for space consolidation expenditures; and the remaining $2.2 million for
other expenditures including costs of changing the Company's name, relocation,
outplacement services and professional fees related to the restructuring. The
Company believes that the $15.0 million charge will be adequate to cover the
costs of the restructuring.
1998 ACQUISITION OF WESSELS, ARNOLD & HENDERSON
On March 31, 1998, the Company acquired WAH. The approximate purchase price
of $150 million includes $120 million in cash, up to $30 million face amount in
five-year, subordinated debentures and other direct costs of the acquisition.
The cash portion of the purchase price was paid from available cash and a new
subordinated credit facility. The transaction is expected to significantly
increase Dain Rauscher equity capital markets capabilities. The acquisition is
expected to slightly dilute 1998 earnings before consideration of a
restructuring charge of $20 million recorded in the first quarter of 1998.
Management expects the acquisition to be accretive to earnings in the first full
calendar year of operation.
29
<PAGE>
COMPARATIVE NET REVENUES AND EXPENSES SUMMARY. The following is a summary
of the year-to-year increases (decreases) in categories of net revenues and
operating expenses:
<TABLE>
<CAPTION>
1997 V. 1996 1996 V. 1995
----------------------- -----------------------
AMOUNT PERCENT AMOUNT PERCENT
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Net Revenues:
Commissions...................................................... $ 51,763 23% $ 47,097 27%
Principal transactions........................................... (16,890) (10) (10,140) (6)
Investment banking and underwriting.............................. (111) -- 21,628 24
Net interest..................................................... 10,928 21 8,375 19
Asset management................................................. 10,414 29 8,802 32
Correspondent clearing........................................... 4,021 25 3,322 27
Other............................................................ 6,221 35 4,702 37
---------- ----- ---------- -----
66,346 11 83,786 15
---------- ----- ---------- -----
Expenses excluding interest:
Compensation and benefits........................................ 41,694 11 40,071 12
Communications................................................... 3,149 7 2,677 7
Occupancy and equipment rental................................... 5,642 16 2,851 9
Travel and promotional........................................... 5,997 25 3,631 18
Floor brokerage and clearing fees................................ 2,057 20 557 6
Other............................................................ 3,454 9 2,868 8
Restructuring charge............................................. 15,000 -- -- --
---------- ----- ---------- -----
76,993 14 52,655 11
---------- ----- ---------- -----
Earnings before income taxes....................................... $ (10,647) (12)% $ 31,131 55%
---------- ----- ---------- -----
---------- ----- ---------- -----
</TABLE>
COMMISSIONS
Commission revenues increased $51.8 million or 23 percent from 1996 to 1997,
principally as a result of higher sales to individual and institutional
investors of: (1) mutual funds; (2) listed equity securities; and (3) insurance
and annuity products. While the average number of investment executives remained
constant in 1997 relative to 1996, Private Client Group investment executive
productivity (commissions per investment executive) improved approximately 13
percent. A 25 percent rise in the NYSE's average daily trading volume also
contributed to the productivity increase.
The $47.1 million or 27 percent increase in commission revenues during 1996
was due principally to increased sales to individual and institutional investors
of: (1) mutual funds; (2) over-the-counter equity securities sold on an agency
basis; (3) listed equity securities; and (4) insurance and annuity products.
While the average number of investment executives declined slightly in 1996 from
1995, investment executive productivity improved approximately 15 percent, aided
by a 19 percent rise in the NYSE's average daily trading volume.
PRINCIPAL TRANSACTIONS
Principal transactions revenues declined $16.9 million or 10 percent from
1996 to 1997. The largest component of the revenue decrease was lower sales and
trading results in over-the-counter equity securities, which became less popular
investments for individual and institutional investors beginning with the
Federal Reserve Board's increase in short-term interest rates in March 1997.
This action led to lower volumes, prices and spreads earned trading such
securities. Spreads earned trading over-the-counter equity securities were also
negatively impacted in 1997 by new order-handling regulations, increased
liquidity
30
<PAGE>
provided to facilitate institutional trading and smaller fractions used in share
price posting. Also contributing to the decline in principal transactions
revenues were declines in sales and trading results of taxable fixed income
securities. Partially offsetting this decline were increases in sales and
trading of tax-exempt fixed income securities.
Principal transaction revenues declined $10.1 million or 6 percent from 1995
to 1996. The decline resulted from reduced trading revenues on taxable and
tax-exempt fixed income products and was partially offset by increases in
over-the-counter equity trading revenues. The reductions in fixed income trading
revenues were due primarily to the existence of a difficult 1996 fixed income
trading environment and the relatively low level of individual investor demand
for fixed income products due to the comparatively larger returns experienced by
investors in equity instruments in 1996.
INVESTMENT BANKING AND UNDERWRITING
Investment banking and underwriting revenue levels were flat in 1997 to 1996
as increases in corporate underwriting activity were roughly offset by declines
in corporate mergers and acquisitions and municipal underwriting activity.
Investment banking and underwriting revenues increased $21.6 million or 24
percent during 1996 primarily due to increased corporate underwriting activity.
In addition to the strong corporate underwriting markets that existed in 1996,
management believes that the 1995 reorganization and refocusing of its Equity
Capital Markets groups around specialized industry segments enabled Dain
Bosworth and Rauscher Pierce Refsnes to attract and underwrite higher levels of
corporate securities. Additionally, financial advisory service fees earned from
corporate clients increased in 1996 relative to 1995.
Beginning in 1995 and continuing into 1996 and 1997, regulatory requirements
and scrutiny related to municipal underwriting activities throughout the
securities industry increased. Uncertainty caused by such heightened regulation
and scrutiny could negatively impact future levels of municipal
underwriting-related activities and could also increase costs related to such
activities for both the Company and the securities industry as a whole.
NET INTEREST INCOME
The major sources of interest revenues and expenses for the past three years
are:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues:
Customer margin accounts................................................... $ 78,945 $ 66,770 $ 55,603
Trading inventories and other.............................................. 28,705 28,250 30,596
Deposits and short-term investments........................................ 14,842 15,531 23,194
---------- ---------- ----------
$ 122,492 $ 110,551 $ 109,393
---------- ---------- ----------
Expenses:
Customer funds on deposit.................................................. 23,577 29,067 35,922
Short-term bank loans and other............................................ 32,943 25,526 25,154
Subordinated and other long-term debt...................................... 2,053 2,967 3,701
---------- ---------- ----------
58,573 57,560 64,777
---------- ---------- ----------
Net interest income........................................................ $ 63,919 $ 52,991 $ 44,616
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Margin loans to customers, financed by credit balances in customer accounts,
short-term bank borrowings and securities lending activities, comprise the
majority of the Company's interest-earning
31
<PAGE>
assets. Fixed income trading inventories, which are generally financed with
short-term bank borrowings, repurchase agreements or deposits from securities
loaned, also generated significant net interest income. The Company's net
interest income is dependent upon the level of customer balances and trading
inventories, as well as the spread between the rate it earns on those assets
compared with its cost of funds.
Beginning in 1996 and continuing through 1997, a growing proportion of the
Company's net interest income was earned from customer margin loans as favorable
market conditions coupled with comparatively low interest rates made margin
borrowing popular.
Net interest income accounted for approximately 9 percent of the Company's
net revenues in 1997 versus 8 percent in 1996 and 1995. In 1997 the 21 percent
increase in net interest income resulted primarily from the 16 percent increase
in average margin loan balances as well as a third-quarter increase in margin
interest rates charged to certain customers. In 1996 the 19 percent increase in
net interest income resulted primarily from the 29 percent rise in average
margin loan balances. The 1996 margin loan increase was due principally to the
transfer of several large customer accounts from competitors during the 1996
third quarter. The resulting increase in net interest income was partially
offset by the effects of a 10 percent decline in customer credit balances from
1995, along with the corresponding decline in short-term investments segregated
for regulatory purposes precipitated by the 1996 second-half transfer of
approximately $340 million of customer credit balances to Company-sponsored
money market funds. The transfers occurred as a result of the Company offering
new cash management products to certain segments of its customers.
As long as favorable interest-rate spreads are maintained and the level of
interest-bearing accounts remains stable, the Company expects net interest
income to continue to be a significant component of its earnings. Management
believes that the 1996 introduction of new cash management products and services
resulted in increased asset management revenues, but was offset by lower net
interest income derived from customer balances and, accordingly, did not have a
material effect on net earnings.
Average balances and interest rates for 1995 through 1997 are:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Interest Revenues:
Margin loans to customers
Average balance............................................................ $ 934,833 $ 810,693 $ 628,392
Average interest rate...................................................... 8.4% 8.2% 8.8%
---------- ---------- ----------
$ 78,945 $ 66,770 $ 55,603
---------- ---------- ----------
---------- ---------- ----------
Deposits and short-term investments:
Average balance............................................................ $ 279,888 $ 293,081 $ 398,027
Average interest rate...................................................... 5.3% 5.3% 5.8%
---------- ---------- ----------
$ 14,842 $ 15,531 $ 23,194
---------- ---------- ----------
---------- ---------- ----------
Interest expense:
Interest-bearing customer funds on deposit
Average balance............................................................ $ 524,201 $ 649,443 $ 723,803
Average interest rate...................................................... 4.5% 4.5% 5.0%
---------- ---------- ----------
$ 23,577 $ 29,067 $ 35,922
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
32
<PAGE>
ASSET MANAGEMENT
Asset management revenues increased 29 percent from 1996 to 1997 and 32
percent in 1996 from 1995 due to increased revenues from larger volumes of
assets in fee-based, managed account programs at Dain Rauscher and, to a lesser
degree, 17 and 41 percent increases in assets under management at Insight
Management.
CORRESPONDENT CLEARING
Revenues from correspondent clearing rose $4.0 million or 25 percent in 1997
from 1996 as RPR Clearing, the Dain Rauscher unit that markets and coordinates
correspondent clearing services, benefitted from a 33 percent increase in
correspondent firm trade volumes. The positive effects of such increased trade
volumes, however, were partially offset by a 9 percent reduction in per-trade
revenues caused primarily by competitive pricing pressures.
Correspondent clearing revenues increased $3.3 million or 27 percent in 1996
from the previous year as RPR Clearing benefitted from a 49 percent increase in
correspondent firm trade volumes. Additionally, RPR Clearing benefitted from a 5
percent increase to 178 in the number of correspondent brokerage firms for which
it does business.
OTHER REVENUES
Other revenues increased by approximately $6.2 million or 35 percent in 1997
and $4.7 million or 37 percent in 1996 versus previous years principally due to
increased transaction and account fee revenues. The increased transaction fees
resulted from larger trade volumes in 1997 versus 1996, and the increased
account fees stem from increased numbers of Individual Retirement Accounts, cash
management accounts, account transfer fees and the like. Additionally, in each
of 1997 and 1995, other revenues included approximately $1.8 million in gains
related to the sale of securities previously obtained as a portion of
compensation for certain corporate underwriting activity. In 1996 other revenues
include approximately $1.1 million in gains associated with the fourth-quarter
sale of two tax-exempt mutual funds.
COMPENSATION AND BENEFITS
Compensation and benefits expense is generally affected by the level of
operating revenues, earnings and the number of employees. During 1997 and 1996
compensation and benefits expense increased 11 percent and 12 percent,
respectively, from the previous years. The 1997 increase was primarily the
result of: (1) increased commissions and benefits paid to revenue-producing
employees generating higher levels of operating revenues; (2) the effects of a 4
percent increase in the average number of employees; (3) increased incentive
compensation accruals; and (4) general salary increases. The 1996 increase was
largely the result of increased commissions, incentive compensation and related
benefits that rose in conjunction with operating revenues and earnings. Also
contributing to the 1996 increase was a 3 percent increase in the average number
of employees and general salary increases.
OTHER EXPENSES
Expenses other than compensation and benefits and the restructuring charge
increased $20.3 million or 13 percent from 1996 to 1997 principally due to: (1)
increased travel and promotional costs associated with the generation of new
business and the upcoming merger of the Company's broker-dealer subsidiaries in
January 1998; (2) increased occupancy costs associated with office expansions
and office operating costs, including real estate taxes, and equipment upgrades;
(3) costs associated with information system upgrades; (4) volume-driven
increases in communications, market-data and clearing services; and (5) bad debt
expenses.
33
<PAGE>
During 1996, expenses other than compensation and benefits increased $12.5
million or 9 percent primarily due to: (1) increased travel and promotional
costs associated with the generation of new business; (2) increased occupancy
costs stemming from expansion of several operating office locations, including
operating costs and real estate taxes associated with such locations; (3)
increased communications costs resulting from the 1996 rollout of improved
investment executive workstations; and (4) increased professional services fees.
EFFECT OF RECENT ACCOUNTING STANDARDS
RECENT ACCOUNTING PRONOUNCEMENTS: In June 1996 the Financial Accounting
Standards Board issued SFAS 125 ("SFAS 125"), "Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." The Company adopted the
provisions of SFAS 125 on January 1, 1998. The adoption of SFAS 125 did not have
a material effect on the Company's consolidated financial statements.
INFLATION
Since the Company's assets are primarily liquid in nature and experience a
high rate of turnover, they are not significantly affected by inflation.
However, the rate of inflation does affect many of the Company's operating
costs, which may not be readily recoverable through price increases on services
offered by the Company.
YEAR 2000 ISSUE & TECHNOLOGY
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 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 periodically 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 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
34
<PAGE>
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 could
affect the Company's ability to conduct business and may have a material adverse
effect on the Company's results of operations.
Though the Company currently maintains its own back-office processing
system, it has made a commitment to internally develop an upgraded system
between 1998 and 2002. This project is expected to cost approximately $17
million and yield increased productivity and technological competitiveness by
improving investment executives' and correspondents' ability to serve clients,
and enhance investment executive and correspondent recruiting and retention.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are substantially liquid in nature and consist mainly
of cash or assets readily convertible into cash. These assets are financed
primarily by interest-bearing and non-interest-bearing customer credit balances,
repurchase agreements, deposits for securities loaned, other payables,
short-term and subordinated bank borrowings and equity capital. Changes in the
amount of trading and underwriting securities owned by the Company, customer and
broker receivables and securities purchased under agreements to resell directly
affect the amount of the Company's financing requirements.
The Company has various sources of capital for operations and growth. In
addition to capital provided by earnings, Dain Rauscher maintains uncommitted
lines of credit from a number of banks to finance transactions (principally
trading and underwriting positions) when internally generated capital is not
sufficient. The majority of these uncommitted lines of credit are collateralized
by trading securities and customers' margin securities. On March 31, 1998,
approximately $575 million of a total of $433 million in uncommitted lines of
credit was unused. Also, the Company has a $50 million, committed, unsecured
revolving credit facility that is used for advances to its subsidiaries,
irrevocable letters of credit and general corporate purposes. The revolving
credit facility contains certain financial covenants standard for revolving
credit facilities of this type, including minimum net worth, net capital and a
limitation on indebtedness. The maximum indebtedness permitted thereunder,
excluding debt incurred under said facility and certain corporate guarantees,
but including the subordinated debentures issued to former WAH shareholders, may
not exceed $125 million in aggregate, unless terminated or amended. On March 31,
1998, all of this revolving credit facility was unused. On March 31, 1998, the
Company also issued $30 million (face amount) in 5-year zero coupon subordinated
debentures related to the acquisition of WAH. The debentures were recorded at a
discounted present value of $21.7 million.
Dain Rauscher borrowed $80 million from a bank on a subordinated basis over
four years in order to fund a portion of the purchase price for the acquisition
of WAH. See "--1998 Acquisition of Wessels, Arnold & Henderson, LLC."
Dain Rauscher is subject to the Commission's Net Capital Rule measuring
capitalization and liquidity and restricting amounts of capital that may be
transferred to affiliates. During 1997 and the first quarter of
35
<PAGE>
1998, Dain Rauscher and its predecessor broker-dealers all operated above
minimum net capital standards. At March 31, 1998, regulatory net capital was
$114.8 million, which was 9.5 percent of aggregate debit balances and $54.5
million in excess of the 5 percent requirement.
Dain Rauscher is a dealer in corporate, tax-exempt and governmental fixed
income securities. While many of the Company's principal transactions are
executed to facilitate customer trades, Dain Rauscher also maintains certain
inventory positions for its own account. These positions typically include U.S.
government or U.S. government agency securities and are usually hedged with a
combination of short sales of similar securities, financial futures contracts or
option contracts in order to mitigate market and interest rate risk. Holdings of
high-yield securities are not material. Dain Rauscher maintains comprehensive
risk management policies including position limits, aging, duration and credit
requirements. These policies are intended to limit the size of and risk in the
Company's trading inventories.
The Company periodically hedges its fixed income trading inventories with
financial futures or option contracts. At March 31, 1998, the Company had open
commitments to sell under financial futures contracts with notional amounts of
$15.5 million. At March 31, 1998, the Company also had open commitments to
purchase $6.0 million and to sell $6.0 million of treasury securities under
option contracts. Additionally, the Company had open commitments to sell under
interest rate option contracts of $1.0 million on March 31, 1998. The fair
market values of these contracts was not material at March 31, 1998. In
addition, the average fair market value and trading revenues associated with
these contracts during 1997 and the first quarter of 1998 was not material. Such
option and financial futures contracts expose the Company to off-balance-sheet
market risk in the event that the changes in interest rates do not closely
correlate with the change in the security price. Transactions in futures
contracts are conducted through regulated exchanges which guarantee performance
of counterparties and are settled in cash on a daily basis, thereby minimizing
credit risk. Maintaining futures contracts typically requires the Company to
deposit cash or securities with an exchange or other financial intermediary as
security for its obligations. Additional cash or securities may be required to
be deposited thereafter due to fluctuations in the market value of the futures
contract. In writing option contracts, the Company receives a premium from the
purchaser in exchange for incurring an obligation to purchase or sell securities
upon exercise of the option. These obligations may require the Company to
purchase securities at prices higher than prevailing market prices or sell
securities at prices below prevailing market prices in order to fulfill its
obligations under the contracts. Other than as described, the Company does not
enter into other derivative financial instruments with off-balance-sheet risk.
Derivative financial instruments held or issued for trading purposes were
immaterial to the consolidated financial statements. The Company's exposure to
credit risk is represented by the fair value of trading securities owned.
In December 1997 and August 1996, respectively, the Company's Board of
Directors authorized additional programs to repurchase up to 600,000 and 100,000
shares of the Company's common stock. Purchases of the common stock may be made
from time to time at prevailing prices in the open market, by block purchases,
or in privately negotiated transactions. The repurchased shares will be held as
treasury stock and used for the Company's employee stock option and other
benefit plans, or for other corporate purposes. No shares were repurchased
during the first quarter of 1998. In 1997, the Company repurchased 87,568 shares
of common stock at a total cost of $4.8 million pursuant to the 100,000 share
program and no shares pursuant to the 600,000 share program. In 1996, the
Company completed the repurchase of 600,000 shares of common stock at a total
cost of $11.8 million under a program that was initiated in 1994. During 1996,
no shares were repurchased pursuant to the 100,000 share program.
In conjunction with the acquisition of WAH, the Company issued options for
approximately 509,554 shares of the Company's stock. The options were priced at
fair market value and will vest over a three-year period.
The Company paid a regular quarterly cash dividend of $.18 per share in each
quarter of 1997. The Company increased its regular quarterly cash dividend to
$.22 per share in February 1998. During the 1998
36
<PAGE>
first quarter, the Company declared and paid a regular quarterly dividend on its
common stock of $.22 per share, an increase of $.04 per share over the previous
rate of $.18 per share. The determination of the amount of future cash
dividends, if any, to be declared and paid will depend on the Company's future
financial condition, earnings and available funds.
On April 30, 1997, the Company's Board of Directors adopted a Shareholder
Rights Plan ("the Plan"). Under the Plan, the Board declared a dividend of one
preferred share purchase right ("Right") for each outstanding share of common
stock of the Company. The dividend was payable to the shareholders of record as
of May 12, 1997. The Rights are attached to and automatically trade with the
outstanding shares of the Company's common stock until they are distributed and
become exercisable under the terms of the Plan.
37
<PAGE>
MANAGEMENT
The following table provides certain information about each of the Company's
current directors and executive officers.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR THE PAST FIVE
NAME AGE YEARS
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Irving Weiser.......................... 50 Chairman of the Board, President, Chief Executive Officer and
Director of the Company; Chairman of the Board and Chief
Executive Officer, Dain Rauscher; member of the Company's
Executive Committee
John C. Appel.......................... 49 Vice Chairman and Chief Financial Officer of the Company; Vice
Chairman and Chief Financial Officer, Dain Rauscher; member of
the Company's Executive Committee
Nelson D. Civello...................... 52 Senior Executive Vice President of the Company; Senior Executive
Vice President, Fixed Income Capital Markets, Dain Rauscher;
member of the Company's Executive Committee
J. Scott Spiker........................ 42 Senior Executive Vice President of the Company; Senior Executive
Vice President, Business Services Group, Dain Rauscher; Chairman
of the Board and Chief Executive Officer, Insight Management;
member of the Company's Executive Committee
Kenneth J. Wessels..................... 55 Senior Executive President of the Company; Senior Executive Vice
President, Dain Rauscher Wessels division; member of the
Company's Executive Committee
Ronald A. Tschetter.................... 56 Senior Executive Vice President of the Company; Senior Executive
Vice President, Private Client Group, Dain Rauscher; member of
the Company's Executive Committee
David J. Parrin........................ 43 Senior Vice President and Controller of the Company
Douglas J. Strachan.................... 52 Senior Vice President, Senior Vice President and Director,
Information Systems, and Chief Information Officer of the
Company
Carla J. Smith......................... 40 Senior Vice President, General Counsel and Secretary of the
Company; Senior Vice President, General Counsel and Secretary,
Dain Rauscher
B. J. French........................... 62 Senior Vice President and Director of Corporate and Investor
Communications of the Company; Senior Vice President, Dain
Rauscher
J. Evans Attwell....................... 67 Director
Susan S. Boren......................... 51 Director
F. Gregory Fitz-Gerald................. 56 Director
Walter F. Mondale...................... 70 Director
C. A. Rundell, Jr...................... 66 Director
Robert L. Ryan......................... 55 Director
Arthur R. Schulze, Jr.................. 67 Director
</TABLE>
38
<PAGE>
Mr. Weiser has been Chairman of the Board of the Company, since 1995; Chief
Executive Officer of the Company since, 1990; President and Director of the
Company, since 1985; Chairman of the Board and Chief Executive Officer, Dain
Rauscher, since January 1998; Chairman of the Board, Dain Bosworth, 1990 to
December 1997; and Chairman of the Board, Rauscher Pierce Refsnes, 1995 to
December 1997. Mr. Weiser also served as President, Dain Bosworth, from 1990 to
1994; and Acting President and Chief Executive Officer, Rauscher Pierce Refsnes,
from 1995 to June 1996. Mr. Weiser is a member of the of the Company's Executive
Committee.
Mr. Appel has been Vice Chairman and Chief Financial Officer of the Company,
since October 1997; Vice Chairman and Chief Financial Officer, Dain Rauscher,
since January 1998; Chief Executive Officer, Dain Bosworth, February 1997 to
December 1997; President, Dain Bosworth, since 1994; Executive Vice President of
the Company, 1990 to December 1997; and Director of the Company, since 1995. Mr.
Appel also served as Executive Vice President and Chief Financial Officer, Dain
Bosworth, from 1990 to 1994; Senior Vice President of the Company, 1986 to 1990
and Chief Financial Officer of the Company, from 1986 to 1994. Mr Appel is a
member of the Company's Executive Committee.
Mr. Civello has been Senior Executive Vice President, Fixed Income Capital
Markets, Dain Rauscher, since October 1997; Senior Executive Vice President of
the Company, since October 1997; and Executive Vice President, Fixed Income
Group, Dain Bosworth, 1990 to December 1997. Prior to 1990, Mr Civello was
Executive Vice President, Capital Markets Group, US Bancorp. Mr. Civello is a
member of the Company's Executive Committee.
Mr. Spiker has been Senior Executive Vice President, Business Services
Group, Dain Rauscher, since January 1998; Senior Executive Vice President of the
Company, since October 1997; Chairman of the Board and Chief Executive Officer,
Insight Management, since January 1998; President and Chief Executive Officer,
Interra Advisory Services, 1995 to December 1997; Executive Vice President of
the Company, May 1996 to October 1997; and Senior Vice President and Director of
Strategic Planning and Corporate Development of the Company, 1994 to 1995. Mr.
Spiker was Senior Vice President and Manager Employee Benefit Services, Norwest
Bank Minnesota, N.A., from 1989 to 1994. Mr. Spiker is a member of the Company's
Executive Committee.
Mr. Wessels has been Senior Executive Vice President of the Company, since
March 1998; Senior Executive Vice President of Dain Rauscher, since March 1998;
and Director of the Company, since March 1998. Mr. Wessels was Chief Executive
Officer and a Managing Director of WAH, since 1986, and Chief Executive Officer
and a Managing Director of Wessels, Arnold and Henderson Group L.L.C., since
1995. Mr. Wessels is a member of the Company's Executive Committee.
Mr. Tschetter has been Senior Executive Vice President, Private Client
Group, Dain Rauscher, since October 1997; Senior Executive Vice President of the
Company, since October 1997; and Executive Vice President, Private Client Group,
Dain Bosworth, 1991 to December 1997. Mr. Tschetter is a member of the Company's
Executive Committee.
Mr. Parrin has been Senior Vice President and Controller of the Company,
since April 1998. Mr. Parrin was Senior Vice President and Controller, U.S.
Bancorp, from 1994 to 1998. Prior to 1994, Mr. Parrin was a partner at Ernst &
Young LLP.
Mr. Strachan has been Senior Vice President of the Company, since 1997;
Chief Information Officer of the Company, since 1996; Senior Vice President and
Director, Information Systems of the Company, since 1993. Mr. Strachan was
Senior Vice President and Director of the Business Technology Center, First Bank
System, Inc., from June 1988 to March 1993.
Ms. Smith has been Senior Vice President of the Company, since 1994; General
Counsel and Secretary of the Company, since 1991; Senior Vice President General
Counsel and Secretary, Dain Rauscher, since January 1998.
39
<PAGE>
Ms. French has been Senior Vice President of the Company, since May 1996;
Senior Vice President, Dain Rauscher, since January 1998; Director of Corporate
and Investor Communications of the Company, since 1991; and Vice President of
the Company, from 1991 to May 1996.
Mr. Attwell has been a director of the Company since 1996. Mr. Attwell is Of
Counsel, Vinson & Elkins LLP, a Houston-based law firm. Mr. Attwell was a
partner, Vinson & Elkins LLP, from 1965 through 1995 and Managing Partner from
1981 through 1991. Mr. Attwell also serves as a director of American General
Corporation and Seagull Energy Corporation.
Ms. Boren has been a director of the Company since 1993. Ms. Boren is
President, Trillium Advisors, Inc., a firm she founded in 1996 to advise
executives and boards on the strategic integration of leadership, governance and
organization values. Ms. Boren was an executive with Dayton Hudson Corporation
in financial, human resources and operating roles from 1981 through 1995. Ms.
Boren also serves as a director of Valspar Corporation.
Mr. Fitz-Gerald has been a director of the Company since 1987. Mr.
Fitz-Gerald is President, The ANSR Company, LLC, a private company engaged in
investment research using genetic algorithms and evolutionary computation. Mr.
Fitz-Gerald was a private investor and financial consultant from 1991 to 1995.
Previously, Mr. Fitz-Gerald held senior executive positions with Commercial
Credit Company and Primerica Corporation, American Express Company, American
Express Credit Corporation, and Merrill Lynch & Co., Inc.
Mr. Mondale has been a director of the Company since May 1997. Mr. Mondale
is a partner, Dorsey & Whitney LLP, a Minneapolis-based law firm. Mr. Mondale
was the U.S. Ambassador to Japan, from 1993 through 1996. Mr. Mondale was also
the Democratic Party's nominee for President in 1984, Vice President of the
United States from 1976 to 1980, a U.S. Senator from 1964 to 1976, and Attorney
General for the State of Minnesota from 1960 to 1964. Mr. Mondale also serves as
a director of the Mayo Foundation; CNA Financial Corp; University of Minnesota
Foundation; United HealthCare Corp.; St. Jude Medical, Inc.; and 23 Blackrock
Funds.
Mr. Rundell has been a director of the Company since 1994. Mr. Rundell has
been a private investor and financial consultant, doing business as Rundell
Enterprises, since he retired as the Chairman of the Board, President and Chief
Executive Officer, Cronus Industries, in 1988, positions that he had held since
1977. Mr. Rundell also serves as chairman of NCI Building Systems, Inc., as
chairman of Tyler corporation and as a director of Tandy Brands Accessories,
Inc.
Mr. Ryan has been a director of the Company since 1994. Mr. Ryan has been
Senior Vice President and Chief Financial Officer, Medtronic, Inc., since 1993.
Mr. Ryan had been Vice President, Finance, and Chief Financial Officer, Union
Texas Petroleum Corp., from 1984 to 1993. Mr. Ryan also is a director of TECO
Energy, Inc., Tampa Electric Company and United HealthCare Corporation.
Mr. Schulze has been a director of the Company since 1987. Mr. Schulze
retired from his position as Vice Chairman of the Board of General Mills, Inc.
in 1993, a position he had held since 1989. He previously served as Executive
Vice President of General Mills, Inc. and President of its Grocery Products Food
Group. Mr. Schulze is also a director of Sealright Co., Inc.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used for general
corporate purposes, including, without limitation, repayment of outstanding
indebtedness of the Company, investments in, or extensions of credit to, the
Company's subsidiaries and possible acquisitions and other general corporate
purposes. Specific allocations of the proceeds to such purposes may not have
been made at the date of the applicable Prospectus Supplement, although
management of the Company will have determined that funds should be obtained at
that time in anticipation of future funding requirements. The precise amount and
timing of the application of such proceeds will depend upon the funding
requirements of the Company and
40
<PAGE>
the availability and cost of other funds. Pending such application, such net
proceeds may be temporarily invested or applied to the reduction of short-term
indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED, DOLLARS IN THOUSANDS)
The following are the consolidated ratios of earnings to fixed charges for
the periods presented.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED MARCH
31, FISCAL YEAR ENDED DECEMBER 31,
----------- ---------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Computation of earnings:
Earnings (loss ) before income taxes*... $ (3,163) $ 76,755 $ 87,402 $ 56,271 $ 39,795 $ 77,353
Fixed charges........................... 17,833 67,799 66,079 73,367 46,409 35,017
----------- ---------- ---------- ---------- --------- ----------
EARNINGS FOR COMPUTATION.................. $ 14,670 $ 144,554 $ 153,481 $ 129,638 $ 86,204 $ 112,370
----------- ---------- ---------- ---------- --------- ----------
----------- ---------- ---------- ---------- --------- ----------
COMPUTATION OF FIXED CHARGES:
Net rental expense........................ $ 6,797 $ 27,679 $ 25,558 $ 25,771 $ 22,414 $ 19,085
----------- ---------- ---------- ---------- --------- ----------
----------- ---------- ---------- ---------- --------- ----------
Portion of rentals deemed representative
of interest............................. $ 2,266 $ 9,226 8,519 $ 8,590 $ 7,471 $ 6,362
Interest expense:
Customer funds on deposit............... 3,264 23,577 29,067 35,922 22,125 16,249
Short-term bank loans and other......... 12,154 32,943 25,526 25,154 14,946 10,850
Subordinated and other long-term debt... 149 2,053 2,967 3,701 1,867 1,556
----------- ---------- ---------- ---------- --------- ----------
Total interest expense.................. 15,567 58,573 57,560 64,777 38,938 28,655
----------- ---------- ---------- ---------- --------- ----------
TOTAL FIXED CHARGES FOR COMPUTATION....... $ 17,833 $ 67,799 $ 66,079 $ 73,367 $ 46,409 $ 35,017
----------- ---------- ---------- ---------- --------- ----------
----------- ---------- ---------- ---------- --------- ----------
RATIO OF EARNINGS TO FIXED CHARGES*....... .82x 2.13x 2.32x 1.77x 1.86x 3.21x
----------- ---------- ---------- ---------- --------- ----------
----------- ---------- ---------- ---------- --------- ----------
</TABLE>
- ------------------------
* For the three months ended March 31, 1998, the ratio of earnings to fixed
charges is less than 1.0 due to a $20 million merger-related charge.
Excluding the merger-related charge, the ratio is 1.94.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. Particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general and specific provisions may apply to the Debt Securities so offered will
be described in the Prospectus Supplement relating to such Debt Securities. If
so incorporated in the Prospectus Supplement, the terms of the Debt Securities
may differ from the terms set forth below. The Debt Securities may be issued
either separately, or together.
The Senior Notes will be issued under an Indenture dated as of May 15, 1998
(the "Senior Note Indenture") between the Company and Norwest Bank Minnesota,
National Association, as Trustee (the "Senior Note Trustee"), and the
Subordinated Notes will be issued under an Indenture dated as of May 15, 1998
(the "Subordinated Note Indenture" and, together with the Senior Note Indenture,
the "Indentures") between the Company and Norwest Bank Minnesota, National
Association, as Trustee (the "Subordinated Note Trustee"). Copies of the
Indentures have been filed as exhibits to the Registration
41
<PAGE>
Statement of which this Prospectus is a part. The following brief summary of
certain provisions of the Indentures does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Indentures, and is further qualified by any description
contained in the applicable Prospectus Supplement or Prospectus Supplements.
Certain terms capitalized and not otherwise defined herein are defined in the
Indentures. Wherever particular sections or defined terms of the Indentures are
referred to, such sections or defined terms are incorporated herein by
reference. The Debt Securities may be issued from time to time in one or more
series. The terms of each series of Debt Securities, including, without
limitation, any restrictive covenants with respect thereto, will be established
by or pursuant to a resolution of the Board of Directors of the Company and set
forth or determined in the manner provided in an Officers' Certificate or by a
supplemental indenture. The particular terms of the Debt Securities offered
pursuant to any Prospectus Supplement or Prospectus Supplements will be
described in such Prospectus Supplement or Prospectus Supplements.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder nor the amount of other debt which may
be issued by the Company. The Debt Securities will be unsecured obligations of
the Company and those issued under the Senior Note Indenture will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company,
while those issued under the Subordinated Note Indenture will be subordinated as
hereinafter described under "SUBORDINATION OF SUBORDINATED NOTES."
Unless otherwise indicated in the applicable Prospectus Supplement or
Prospectus Supplements, the Debt Securities of any series will be issued only in
fully registered form in denominations of $1,000 or any amount in excess thereof
which is an integral multiple of $1,000. (Section 302) Debt Securities may be
issuable in the form of one or more Global Securities, as described below under
"GLOBAL SECURITIES." A Global Security will be issued in a denomination equal to
the aggregate principal amount of outstanding Debt Securities of the series
represented by such Global Security. The Debt Securities (other than those
issued in the form of a Global Security) are exchangeable or transferable
without charge therefor, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
and require the holders to furnish appropriate endorsements and transfer
documents. (Section 305)
Debt Securities may be issued as Original Issue Discount Debt Securities to
be sold at a substantial discount below their principal amount. Special Federal
income tax and other considerations applicable thereto and special Federal tax
and other considerations applicable to any Debt Securities which are denominated
in a currency or currency unit other than United States dollars will be
described in the Prospectus Supplement or Prospectus Supplements relating
thereto.
Unless otherwise indicated in the applicable Prospectus Supplement or
Prospectus Supplements, principal of and any premium and interest on the Debt
Securities will be payable, and the transfer of the Debt Securities will be
registrable, at the principal corporate trust office of the applicable Trustee.
In addition, unless otherwise provided in the applicable Prospectus Supplement
or Prospectus Supplements, payment of interest may be made at the option of the
Company by check mailed to the address of the person entitled thereto as it
appears on the Security Register. (Sections 301, 305, 1001 and 1002)
The applicable Prospectus Supplement or Prospectus Supplements will describe
the terms of the Debt Securities offered thereby, including the following: (1)
the title of the offered Debt Securities; (2) whether the offered Debt
Securities are Senior Notes or Subordinated Notes; (3) any limit on the
aggregate principal amount of the offered Debt Securities; (4) the price or
prices (expressed as a percentage of the aggregate principal amount thereof) at
which the offered Debt Securities will be issued; (5) the date or dates on which
the offered Debt Securities will mature and any rights of extension; (6) the
rate or rates, if any (which may be fixed or variable), per annum at which the
offered Debt Securities will bear interest, if
42
<PAGE>
any, or the formula pursuant to which such rate or rates shall be determined,
and the date from which any such interest will accrue; (7) the dates on which
any such interest on the offered Debt Securities will be payable and the regular
record dates therefor; (8) any mandatory or optional sinking fund or analogous
provisions; (9) the period or periods, if any, within which and the price or
prices at which the offered Debt Securities may be redeemed, pursuant to any
redemption provisions, at the option of the Company or of the holder thereof and
other detailed terms of any such optional redemption provision; (10) the
currency or currency units, including European Currency Units ("ECUs") or other
composite currencies, for the payment of principal of and any premium and
interest payable on the offered Debt Securities, if other than United States
dollars; (11) the place or places where the principal of and any premium and
interest on the offered Debt Securities will be payable; (12) any other event or
events of default applicable with respect to the offered Debt Securities in
addition to or in lieu of those described under "EVENTS OF DEFAULT"; (13) the
denominations in which any offered Debt Securities will be issuable, if other
than denominations of $l,000 or any amount in excess thereof which is an
integral multiple of 1,000; (14) whether such Debt Securities are to be issued
in whole or in part in the form of one or more Global Securities and, if so, the
identity of the Depositary for such Global Security or Securities and the
circumstance under which any such Global Security may be exchanged for
Securities registered in the name of, and any transfer of such Global Security
may be registered to, a Person other than such Depositary or its nominee; and
(15) any other terms of the offered Debt Securities not inconsistent with the
provisions of the Indenture.
The Debt Securities are obligations exclusively of the Company. The Company
is a holding company substantially all of whose consolidated assets are held by
its subsidiaries. Accordingly, the cash flow of the Company and the consequent
ability to service its debt, including the Debt Securities, are largely
dependent upon the earnings of such subsidiaries and the ability of the Company
to withdraw capital from such subsidiaries. Because the Company is a holding
company, the Debt Securities will be effectively subordinated to all existing
and future indebtedness, trade payables, guarantees, lease obligations and
letter of credit obligations of the Company's subsidiaries. See "Risk
Factors--Holding Company Structure; Effective Subordination."
GLOBAL SECURITIES
Unless otherwise provided in the Prospectus Supplement relating thereto, the
following description will apply to any series of Debt Securities issued, in
whole or in part, in the form of a Global Security or Global Securities
deposited with, or on behalf of, Depository Trust Company ("DTC") (each such
Debt Security represented by a Global Security being referred to herein as a
"Book-Entry Security"). Unless otherwise indicated in the applicable Prospectus
Supplement or Prospectus Supplements, Global Securities will be issued in
registered form. (Section 305)
Upon initial issuance, all Book-Entry Securities of the same series and
bearing interest, if any, at the same rate or pursuant to the same formula and
having the same date of issuance, redemption provisions, if any, repayment
provisions, if any, stated maturity and other terms will be represented by a
single Global Security. Each Global Security representing Book-Entry Securities
will be deposited with, or on behalf of, DTC and will be registered in the name
of DTC or a nominee of DTC. Unless otherwise specified in the applicable
Prospectus Supplement or Prospectus Supplements, all Book-Entry Securities will
be denominated in U. S. dollars.
Upon the issuance of a Global Security, DTC will credit accounts held with
it with the respective principal or face amounts of the Book-Entry Securities
represented by such Global Security. The accounts to be credited shall be
designated initially by the Agent through which the Debt Security was sold or,
to the extent that such Debt Securities are offered and sold directly, by the
Company. Ownership of beneficial interests in a Global Security will be limited
to institutions that have accounts with DTC ("participants") and to persons that
may hold interests through such participants. Ownership of beneficial interests
by participants in a Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by DTC for
such Global Security. Ownership of beneficial
43
<PAGE>
interests in such Global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest by such participant
will be effected only through, records maintained by such participant.
Payment of principal of, premium, if any, and interest, if any, on
Book-Entry Securities represented by any such Global Security will be made to
DTC or its nominee, as the case may be, as the sole registered holder of the
Book-Entry Securities represented thereby for all purposes under the Indentures.
None of the Company, the Trustee, the Paying Agent or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of DTC's
records relating to or payments made on account of beneficial ownership
interests in a Global Security representing any Book-Entry Securities or any
other aspect of the relationship between DTC and its participants or the
relationship between such participants and the owner of beneficial interests in
a Global Security owning through such participants or for maintaining,
supervising or reviewing any of DTC's records relating to such beneficial
ownership interests.
The Company has been advised by DTC that, upon receipt of any payment of
principal of, premium, if any, or interest, if any, on any such Global Security,
DTC will immediately credit, on its book-entry registration and transfer system,
the accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of DTC. Payments by participants to owners of beneficial
interests in a Global Security held through such participants will be governed
by standing instructions and customary practices, as is now the case with
securities held by such participants for customer accounts registered in "street
name," and will be the sole responsibility of such participants.
No Global Security may be transferred except as a whole by a nominee of DTC
to DTC or to another nominee of DTC, or by DTC or any such nominee to a
successor of DTC or a nominee of such successor.
Unless otherwise specified in the applicable Prospectus Supplement or
Prospectus Supplements, a Global Security representing Book-Entry Securities is
exchangeable for certificated Debt Securities of the same series and bearing
interest, if any, at the same rate or pursuant to the same formula, having the
same date of issuance, redemption provisions, if any, repayment provisions, if
any, stated maturity and other terms and of differing authorized denominations
aggregating a like amount, if any, if (x) DTC notifies the Company that it is
unwilling or unable to continue as depositary for such Global Security or if at
any time DTC ceases to be a clearing agency registered under the Exchange Act,
(y) the Company in its sole discretion determines that such Global Security
shall be exchangeable for certificated Debt Securities or (z) there shall have
occurred and be continuing an Event of Default with respect to the Book-Entry
Securities. Such certificated Debt Securities shall be registered in the names
of the owners of the beneficial interests in such Global Security as provided by
DTC's relevant participants (as identified by DTC).
Owners of beneficial interests in a Global Security will not be considered
the registered holders thereof for any purpose under the applicable Indenture,
and no Global Security representing Book-Entry Securities shall be exchangeable
or transferrable. Accordingly, each person owning a beneficial interest in such
a Global Security must rely on the procedures of DTC and, if such person is not
a participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a registered holder under the
applicable Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
DTC, as the registered holder of each Global Security, may appoint agents
and otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a
registered holder is entitled to give or take under the applicable Indenture.
The Company understands that, under existing industry practices, in the event
that the Company requests any action of registered holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
which a registered holder is entitled to give or take under such Indenture, DTC
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants
44
<PAGE>
would authorize beneficial owners owning through such participants to give or
take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered under the Exchange
Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks (which may include the Trustee), trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
SUBORDINATION OF SUBORDINATED NOTES
The payment of the principal of and interest on the Subordinated Notes will,
to the extent set forth in the Subordinated Note Indenture, be subordinate in
right of payment to the prior payment in full of all Senior Debt of the Company.
(Section 1301) In certain events of insolvency, the payment of the principal of
and interest on the Subordinated Notes will, to the extent set forth in the
Subordinated Note Indenture, also be effectively subordinated in right of
payment to the prior payment in full of all General Obligations. No payment
pursuant to the Subordinated Notes may be made and no Holder of the Subordinated
Notes shall be entitled to demand or receive any such payment unless all amounts
of principal of, premium, if any, and interest then due on all Senior Debt of
the Company shall have been paid in full or duly provided for and, at the time
of such payment or immediately after giving effect thereto, there shall not
exist with respect to any such Senior Debt any Event of Default permitting the
holders thereof to accelerate the maturity thereof or any event which, with
notice or lapse of time or both, would become such an event of default. (Section
1302) Upon any payment or distribution of the assets of the Company in
connection with dissolution, winding-up, liquidation or reorganization, the
holders of Senior Debt of the Company will be entitled to receive payment in
full of principal, premium, if any, and interest in accordance with the terms of
such Senior Debt before any payment is made on the Subordinated Notes. (Section
1303) If upon any such payment or distribution of assets to creditors, there
remains, after giving effect to such subordination provisions in favor of the
holders of Senior Debt, any amount of cash, property or securities available for
payment or distribution in respect of Subordinated Notes (as defined in the
Subordinated Note Indenture, "Excess Proceeds"), and if, at such time, any
creditors in respect of General Obligations have not received payment in full of
all amounts due or to become due on or in respect of such General Obligations,
then such Excess Proceeds shall first be applied to pay or provide for the
payment in full of such General Obligations before any payment or distribution
may be made in respect of the Subordinated Notes. (Section 1314)
"Senior Debt" of the Company is defined in the Subordinated Note Indenture
to mean the principal of, premium, if any, and interest on (1) all indebtedness
of the Company for money borrowed, whether outstanding on the date of execution
of the Subordinated Note Indenture or thereafter created, assumed or incurred
(including, without limitation, any Senior Notes issued pursuant to the Senior
Note Indenture), except (a) such indebtedness as is by its terms expressly
stated to rank junior in the right of payment to the Subordinated Notes or to
rank PARI PASSU with the Subordinated Notes and (b) Senior Debt, and (2) any
deferrals, renewals or extensions of any such Senior Debt. "General Obligations"
of the Company are defined in the Subordinated Note Indenture to mean all
obligations of the Company to make payment on account of claims of general
creditors, other than (1) obligations on account of Senior Debt and (2)
obligations on account of the Subordinated Notes and indebtedness of the Company
for money borrowed ranking PARI PASSU with or subordinate to the Subordinated
Notes. The term "claim" as used in
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the foregoing definition has the meaning assigned thereto in Section 101(5) of
the Bankruptcy Code of 1978, as amended to April 1, 1993. The term "indebtedness
of the Company for money borrowed" is defined to mean any obligation of, or any
obligation guaranteed by, the Company for the repayment of money borrowed,
whether or not evidenced by bonds, debenture notes or other written instruments,
and any deferred obligation for the payment of the purchase price of property or
assets. (Section 101)
By reason of the subordination described above, in the event of the
bankruptcy, insolvency or reorganization of the Company, holders of Senior Debt
of the Company may receive more, ratably, and Holders of the Subordinated Notes
may receive less, ratably, than creditors of the Company who are not holders of
Senior Debt or of the Subordinated Notes. Such subordination will not prevent
the occurrence of any Event of Default in respect of the Subordinated Notes.
The subordination provisions of the Subordinated Note Indenture described
herein are provided for the benefit of the holders of Senior Debt and are not
intended for the benefit of creditors in respect of General Obligations. The
Company and the Subordinated Note Trustee may amend the Subordinated Note
Indenture to reduce or eliminate the rights of creditors in respect of General
Obligations without the consent of such creditors or the Holders of the
Subordinated Notes. (Section 1315)
EVENTS OF DEFAULT
The following events are defined in the Indentures as "Events of Default"
with respect to any series of Debt Securities, unless otherwise provided with
respect to such series: (1) failure to pay any interest on any Debt Security of
that series when due and payable, continued for 30 days; (2) failure to pay
principal of or any premium on any Debt Security of that series when due and
payable; (3) failure to deposit any sinking fund payment, when due, in respect
of any Debt Security of that series; (4) failure to perform any other covenant
of the Company in the Indentures (other than a covenant included in the
Indentures solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice as provided in the
Indentures; (5) certain events in bankruptcy, insolvency or reorganization
involving the Company; and (6) any other Event of Default provided with respect
to Debt Securities of that series.
If an Event of Default with respect to any series of Debt Securities
Outstanding under either Indenture occurs and is continuing, then either the
applicable Trustee or the Holders of at least 25% in aggregate principal amount
of the Outstanding Debt Securities of that series by notice as provided in the
applicable Indenture may declare the principal amount (or, if any of the Debt
Securities of that series are Original Issue Discount Debt Securities, such
lesser portion of the principal amount of such Debt Securities as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately. At any time after a declaration of acceleration
with respect to Debt Securities of any series has been made, but before a
judgment or decree for payment of money has been obtained by the applicable
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502)
Each Indenture provides that, subject to the duty of the applicable Trustee
during default to act with the required standard of care, such Trustee will be
under no obligation to exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to such Trustee reasonable indemnity. (Sections 601, 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee, or
exercising any trust or power conferred on such Trustee, with respect to the
Debt Securities of that series. (Section 512)
The Company is required to furnish to each Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
applicable Indenture and as to any default in such performance. (Section 704)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the applicable Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected by such modification or amendment; PROVIDED HOWEVER, that
no such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby; (1) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any Debt
Security; (2) reduce the principal amount of, or premium or interest on, any
Debt Security; (3) change any obligation of the Company to pay additional
amounts; (4) reduce the amount of principal of an Original Issue Discount Debt
Security due and payable upon acceleration of the Maturity thereof; (5) change
the place of payment where or coin or currency in which the principal of, or any
premium or interest on, any Debt Security is payable; (6) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security; (7) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of the Holders which is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the applicable Indenture or for waiver of certain
defaults; (8) modify the provisions of the Subordinated Note Indenture with
respect to the subordination of any Subordinated Notes in a manner adverse to
the Holders thereof; or (9) modify any of the above provisions. (Section 902)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of each series may, on behalf of the Holders of all
Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the applicable
Indenture. (Section 1009) The Holders of not less than a majority in aggregate
principal amount of the Outstanding Debt Securities of each series may, on
behalf of the Holders of all Debt Securities of that series, waive any past
default under the applicable Indenture with respect to Debt Securities of that
series, except a default (1) in the payment of principal of, or any premium or
interest on, any Senior Notes, or (2) in respect of a covenant or provision of
the applicable Indenture which cannot be modified or amended without the consent
of the Holders of each Outstanding Debt Security of such series affected.
(Section 513)
Each Indenture provides that, in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or whether a quorum is present at a meeting of Holders of Debt Securities, (1)
the principal amount of an Original Issue Discount Debt Security that will be
deemed to be Outstanding will be the amount of the principal thereof that would
be due and payable as of the date of such determination upon acceleration of the
Maturity thereof to such date, and (2) the principal amount of a Debt Security
denominated in a foreign currency or currency unit that will be deemed to be
Outstanding will be the United States dollar equivalent, determined as of the
date of original issuance of such Debt Security, of the principal amount of such
Debt Security (or, in the case of an Original Issue Discount Debt Security, the
United States dollar equivalent, determined as of the date of original issuance
of such Debt Security, of the amount determined as provided in (1) above).
(Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under either Indenture, may consolidate or merge with or into,
or convey, transfer or lease its properties and assets substantially as an
entirety to, any Person which is a corporation, partnership or trust organized
and validly existing under the laws of any domestic jurisdiction, provided that
any successor Person assumes the Company's obligations on the Debt Securities
and under such Indenture, that after giving effect to the transaction no Event
of Default, and no event which, after notice or lapse of time, would become an
Event of Default, shall have occurred and be continuing under such Indenture and
that certain other conditions are met. (Section 801)
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CONVERTIBILITY
Unless otherwise indicated in the applicable Prospectus Supplement or
Prospectus Supplements, no series of Debt Securities offered hereby will be
convertible into, or exchangeable for, other securities or property.
REGARDING THE TRUSTEE
Norwest Bank Minnesota, National Association, is trustee under the Indenture
pursuant to which the Debt Securities are to be issued. The Trustee also
participates in an uncommitted line of credit with the Company, serves as the
transfer agent for the Company's Common Stock, the trustee and administrator for
the Company's Retirement Plan and Executive Deferred Compensation Plan and the
Rights Agent under the Company's Shareholder Rights Plan. The Trustee also
provides other banking and advisory services for the Company and purchases
products and services from the Company in the ordinary course of business.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with the laws of Delaware, without giving effect to the conflicts of
law principles thereof.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 60,000,000 shares of
Common Stock, par value $.125 per share, and 2,501,940 shares of Preferred
Stock, designated as follows: 2,000,000 shares of $1 per share par value,
designated as $1 Par Value Preferred Stock, 1,940 shares of $100 per share par
value, designated as 7% Convertible Preferred Stock, and 500,000 shares of $16
per share par value, designated as $16 Par Value Preferred Stock. The holders of
shares of Common Stock are entitled to one vote for each share held. Subject to
payment of dividends on outstanding shares of Preferred Stock, each share of
Common Stock is entitled to participate equally in dividends out of funds
legally available therefor, as and when declared by the Board of Directors.
After payment of the liquidation preferences on the outstanding shares of
Preferred Stock, the holders of shares of Common Stock are entitled to
participate equally in the distribution of assets in the event of liquidation.
The shares of Common Stock have no preemptive or conversion rights, redemption
provisions or sinking fund provisions. The outstanding shares of Common Stock
are duly and validly issued, fully paid and nonassessable.
On April 30, 1997, the Board of Directors of the Company adopted a
Shareholder Rights Plan (the "Plan"). Under the Plan, the Board declared a
dividend of one preferred share purchase right ("Right") for each outstanding
share of Common Stock of the Company. The Rights are attached to and
automatically trade with the outstanding shares of the Company's Common Stock.
The Plan provides that, if any person or group becomes a holder of 15% or more
of the outstanding shares of the Company's Common Stock, each Right not owned by
such person or group will entitle its holder to purchase, at the Right's
then-current purchase price ($140 per Right as of April 30, 1997), shares of
Common Stock of the Company having a value of twice the Right's purchase price.
The Rights would not be triggered, however, if the acquisition of 15% or more of
the Company's outstanding Common Stock is pursuant to a tender offer or exchange
for all outstanding shares of the Company's Common Stock which is determined by
the Board of Directors to be in the best interests of the Company and its
stockholders. The Rights are redeemable at a price of $0.01 per Right at any
time prior to the time they become exercisable. The Rights will expire on April
30, 2007, if not previously redeemed or exercised.
The Company's Certificate of Incorporation requires that certain "Business
Combinations" (as defined in the Certificate of Incorporation), including
mergers, consolidations and sales of a substantial amount of assets, between the
Company or a majority-owned subsidiary of the Company and an "Interested
Stockholder" (as defined in the Certificate of Incorporation) or its affiliates
or associates, be approved by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of voting stock of the Company (excluding
any shares of voting stock held by such Interested Stockholder), unless such
Business Combination shall have been approved by a majority of "Continuing
Directors" (as defined in the Certificate of Incorporation) or shall satisfy
certain fair price and other conditions. In such event, a Business Combination,
in order to be approved, requires only such affirmative vote as may be required
by law, any other provision of the Certificate of Incorporation or the terms of
any other securities of the Company.
COMMON STOCK
As of May 6, 1998, 12,383,313 shares of Common Stock were outstanding. An
aggregate of 47,523,944 shares, $.125 par value, remain authorized and unissued.
As of May 6, 1998, an aggregate of 6,985,996 of such authorized, unissued shares
have been reserved for issuance to stock incentive and deferred compensation
plans. Subject to any prior rights of any Preferred Stock then outstanding,
holders of the Common Stock are entitled to receive such dividends as are
declared by the Board of Directors of the Company out of funds legally available
therefor. Subject to the rights, if any, of any Preferred Stock then
outstanding, all voting rights are vested in the holders of Common Stock, each
share being entitled to one vote. Subject to any prior rights of any such
Preferred Stock, in the event of liquidation, dissolution or winding up of the
Company, holders of shares of Common Stock are entitled to receive pro rata any
assets distributable to stockholders in respect of shares held by them. Holders
of shares of Common Stock do not
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have any preemptive right to subscribe for any additional securities which may
be issued by the Company. The outstanding shares of Common Stock are fully paid
and nonassessable. The transfer agent and registrar for the Common Stock is
Norwest Bank Minnesota, National Association, Minneapolis, Minnesota.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Stock. If so
indicated in the Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The description of certain provisions of the
Preferred Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Certificate of Designation relating to each series of the
Preferred Stock. Certain terms capitalized and not otherwise defined herein are
defined in the Certificate of Designation relating to each series of the
Preferred Stock.
GENERAL. Pursuant to the Company's Restated Certificate of Incorporation,
as amended, the Board of Directors of the Company has the authority, without
further stockholder action, to issue from time to time a maximum of 2,501,940
shares of preferred stock ("Preferred Stock"), including shares issued or
reserved for issuance, in one or more series and with such terms and at such
times and for such consideration as the Board of Directors of the Company may
determine. The authority of the Board of Directors of the Company includes the
determination or fixing of the following with respect to shares of any series
thereof: (i) the number of shares and designation or title thereof; (ii) rights
as to dividends; (iii) whether and upon what terms the shares are to be
redeemable; (iv) whether and upon what terms the shares shall have a purchase,
retirement or sinking fund; (v) whether and upon what terms the shares are to be
convertible; (vi) the voting rights, if any, which shall apply; (vii)
restrictions, if any, on the issue or reissue of any Preferred Stock; (viii) the
rights of the holders upon the dissolution, or upon the distribution of assets,
of the Company; and (ix) any other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of such series. At March 31, 1998, no shares of Preferred Stock
were outstanding.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the title,
stated value and liquidation preferences of such Preferred Stock and the number
of shares offered; (ii) the initial public offering price at which such
Preferred Stock will be issued; (iii) the dividend rate or rates (or method of
calculation), the dividend periods, the dates on which dividends shall be
payable and whether such dividends shall be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to cumulate; (iv) any
redemption or sinking fund provisions; (v) any additional dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity in all respects with the outstanding shares of the Company's Preferred
Stock described below and each other series of the Preferred Stock. The
Preferred Stock will have no preemptive rights to subscribe for any additional
securities which may be issued by the Company. Unless otherwise specified in the
applicable Prospectus Supplements, Norwest Bank Minnesota, National Association,
South St. Paul, Minnesota will be the transfer agent and registrar for the
Preferred Stock.
DIVIDENDS. The holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company or a duly authorized committee thereof, out of funds
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legally available therefor, cash dividends at such rates and on such dates as
will be set forth in the Prospectus Supplement relating to such series. Such
rates may be fixed or variable or both. If variable, the formula used for
determining the dividend rate for each dividend period will be set forth in the
Prospectus Supplement. Dividends will be payable to the holders of record as
they appear on the stock books of the Company on such record dates as will be
fixed by the Board of Directors of the Company or a duly authorized committee
thereof.
Dividends on any series of the Preferred Stock will be cumulative as
provided in, or except as otherwise specified in, the applicable Prospectus
Supplement. No full dividends will be declared or paid or set apart for payment
on any stock of the Company ranking, as to dividends, on a parity with or junior
to the Preferred Stock for any period unless full dividends on the Preferred
Stock of each series (including any accumulated dividends) have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment. When dividends are not paid in full
upon any series of Preferred Stock and any other Preferred Stock ranking on a
parity as to dividends with the Preferred Stock, all dividends declared or made
upon Preferred Stock of each series and any other Preferred Stock ranking on a
parity as to dividends with the Preferred Stock shall be declared pro rata so
that the amount of dividends declared per share on Preferred Stock of each
series and such other Preferred Stock shall in all cases bear to each other the
same ratio that accrued dividends per share on shares of each series of the
Preferred Stock and such other Preferred Stock bear to each other. Except as
provided in the preceding sentence, no dividend (other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Common Stock or any other stock of the Company ranking
junior to the Preferred Stock as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution declared or made
upon the Common Stock or any other stock of the Company ranking junior to or on
a parity with the Preferred Stock as to dividends or upon liquidation, nor shall
any Common Stock nor any other stock of the Company ranking junior to or on a
parity with the Preferred Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any share of any such
stock) by the Company (except by conversion into or exchange for stock of the
Company ranking junior to the Preferred Stock as to dividends and upon
liquidation) unless, in each case, the full dividends on each series of the
Preferred Stock shall have been paid or declared and set aside for payment. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on any series of the Preferred Stock which may
be in arrears.
VOTING RIGHTS. If, at the time of any annual meeting of shareholders for
the election of directors, the amount of accrued but unpaid dividends on any
preferred stock of the Company is equal to at least six quarterly dividends on
such series of preferred stock of the Company, the number of the directors of
the Company will be increased by two and the holders of all outstanding series
of preferred stock of the Company, voting as a single class without regard to
series, will be entitled to elect such additional two directors until all
dividends in default on all preferred stock of the Company have been paid or
declared and set apart for payment.
The affirmative vote or consent of the holders of at least two-thirds of the
outstanding shares of any series of the preferred stock of the Company, voting
as a class, will be required for any amendment of the Company's Certificate of
Incorporation (including any certificate of designation or any similar document
relating to any series of preferred stock of the Company) which will adversely
affect the powers, preferences, privileges or rights of such series of preferred
stock. The affirmative vote or consent of the holders of at least two-thirds of
the outstanding shares of any series of preferred stock of the Company, voting
as a single class without regard to series, will be required to issue,
authorize, or increase the authorized amount of, or issue or authorize any
obligation or security convertible into or evidencing a right to purchase, any
additional class or series of stock ranking prior to such series of preferred
stock as to dividends or upon liquidation.
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REDEMPTION. A series of the Preferred Stock may be redeemable, in whole or
in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Preferred Stock redeemed by the Company will be
restored to the status of authorized but unissued shares of Preferred Stock.
The Prospectus Supplement relating to a series of the Preferred Stock which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Stock which shall be redeemed by the Company in each
year commencing after a date to be specified, at a redemption price per share to
be specified, together with an amount equal to all accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in cash
or other property, as specified in the Prospectus Supplement relating to such
series of the Preferred Stock. If the redemption price is payable only from the
net proceeds of the issuance of capital stock of the Company, the terms of such
series may provide that, if no such capital stock shall have been issued or to
the extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, the applicable shares of such series of
the Preferred Stock shall automatically and mandatorily be converted into shares
of the applicable capital stock of the Company pursuant to conversion provisions
specified in the Prospectus Supplement relating to such series of the Preferred
Stock.
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, the number of shares to be redeemed will be determined
by the Board of Directors of the Company and such shares shall be redeemed pro
rata from the holders of record of such shares in proportion to the number of
such shares held by such holders (with adjustments to avoid redemption of
fractional share).
Notwithstanding the foregoing, if any dividends, including any accumulation,
on Preferred Stock of any series are in arrears, no Preferred Stock of such
series shall be redeemed unless all outstanding Preferred Stock of such series
are simultaneously redeemed, and the Company shall not purchase or otherwise
acquire any Preferred Stock of such series; PROVIDED, HOWEVER, that the
foregoing shall not prevent the purchase or acquisition of Preferred Stock of
such series pursuant to a purchase or exchange offer provided such offer is made
on the same terms to all holders of such series of the Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear on the stock books of the Company. Each
such notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such Preferred Stock are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date. If fewer
than all shares of any series of the Preferred Stock held by any holder are to
be redeemed, the notice mailed to such holder shall also specify the number of
shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of the Preferred Stock called for redemption
(unless default shall be made by the Company in providing money for the payment
of the redemption price of the shares so called for redemption), dividends on
the Preferred Stock so called for redemption shall cease to accrue and such
shares shall no longer be deemed to be outstanding and all rights of the holders
thereof as stockholders of the Company (except the right to receive the
redemption price) shall cease. Upon surrender in accordance with such notice of
the certificates representing any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state), the redemption price set forth above shall be
paid out of funds provided by the Company. If fewer than all of the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
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CONVERSION. Unless otherwise specified in the applicable Prospectus
Supplement, the Preferred Stock will not be convertible into any other class or
series of capital stock of the Company.
RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of shares of
each series of the Preferred Stock and any other stock ranking on a parity with
such series of Preferred Stock upon liquidation will be entitled to receive out
of the assets of the Company available for distribution to stockholders, before
any distribution of assets is made to holders of the Common Stock or any other
class or series of stock of the Company ranking junior to such series of the
Preferred Stock upon liquidation, liquidation distributions in the amount set
forth in the Prospectus Supplement relating to such series of the Preferred
Stock plus an amount equal to the sum of all accrued and unpaid dividends
(whether or not earned or declared) for the then-current dividend period and, if
such series of the Preferred Stock is cumulative, for all dividend periods prior
thereto. Neither the sale of all or any part of the property and business of the
Company, nor the merger or consolidation of the Company into or with any other
corporation nor the merger or consolidation of any other corporation into or
with the Company, shall be deemed to be a dissolution, liquidation or winding
up. If, upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, the assets of the Company available for distribution to the
holders of the Preferred Stock of any series and any other shares of stock of
the Company ranking as to any such distribution on a parity with such series of
the Preferred Stock shall be insufficient to pay in full all amounts to which
such holders are entitled, no such distribution shall be made on account of any
shares of any other series of the Preferred Stock or other securities of the
Company ranking as to any such distribution on a parity with the Preferred Stock
of such series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the Preferred
Stock of such series, ratably, in proportion to the full distributive amounts
for which holders of all such parity shares are respectively entitled upon such
dissolution, liquidation or winding up. After payment of the full amount of the
liquidation distribution to which they are entitled, the holders of such series
of the Preferred Stock will have no right or claim to any of the remaining
assets of the Company.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Common Shares. Securities Warrants may be issued
independently or together with other Securities offered by any Prospectus
Supplement and may be attached to or separate from such other Securities. Each
series of Securities Warrants will be issued under a separate warrant agreement
(a "Securities Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Securities Warrant Agent, all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrant Certificates and will not
assume any obligation or relationship of agency or trust for or with any holders
of Securities Warrant Certificates or beneficial owners of Securities Warrants.
Copies of the forms of Securities Warrant Agreements, including the forms of
Securities Warrant Certificates representing the Securities Warrants, will be
filed or incorporated by reference as exhibits to the Registration Statement to
which this Prospectus pertains. The following summaries of certain provisions of
the forms of Securities Warrant Agreements and Securities Warrant Certificates
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Securities Warrant
Agreements and the Securities Warrant Certificates. Certain terms capitalized
and not otherwise defined herein are defined in the Securities Warrant
Agreements.
GENERAL
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, without
limitation, in the case of Securities Warrants for the purchase of Debt
Securities, the following where applicable: (i) the offering price; (ii) the
Currencies in which such
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Securities Warrants are being offered; (iii) the designation, aggregate
principal amount, Currencies, denominations and terms of the series of Debt
Securities purchasable upon exercise of such Securities Warrants; (iv) the
designation and terms of any series of Securities with which such Securities
Warrants are being offered and the number of such Securities Warrants being
offered with each such Security; (v) the date on and after which such Securities
Warrants and the related series of Securities will be transferable separately;
(vi) the principal amount of the series of Debt Securities purchasable upon
exercise of each such Securities Warrant and the price at which and currencies
in which such principal amount of Debt Securities of such series may be
purchased upon such exercise; (vii) the date on which the right to exercise such
Securities Warrants shall commence and the date (the "Expiration Date") on which
such right shall expire; (viii) whether the Securities Warrants will be issued
in registered or bearer form; (ix) a discussion of any material United States
federal income tax consequences; and (x) any other terms of such Securities
Warrants.
In the case of Securities Warrants for the purchase of Preferred Stock or
Common Stock, the applicable Prospectus Supplement will describe the terms of
such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise of
such Securities Warrants and, in the case of Securities Warrants for Preferred
Stock, the designation, aggregate number and terms of the series of Preferred
Stock purchasable upon exercise of such Securities Warrants; (iii) the
designation and terms of the series of Securities with which such Securities
Warrants are being offered and the number of such Securities Warrants being
offered with each such Security; (iv) the date on and after which such
Securities Warrants and the related series of Securities will be transferable
separately; (v) the number of Preferred Stock or shares of Common Stock
purchasable upon exercise of each such Securities Warrant and the price at which
such number of Preferred Stock or shares of Common Stock may be purchased upon
each exercise; (vi) the date on which the right to exercise such Securities
Warrants shall commence and the expiration date thereof; (vii) a discussion of
any material United States federal income tax consequences; and (viii) any other
terms of such Securities Warrants. Securities Warrants for the purchase of
Preferred Stock or Common Stock will be offered and exercisable for U.S. dollars
only and will be in registered form only.
Securities Warrant Certificates may be exchanged for new Securities Warrant
Certificates of different denominations, may (if in registered form) be
presented for registration or transfer and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of, premium,
if any, or interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the applicable indenture. Prior to the
exercise of any Securities Warrants to purchase Preferred Stock or Common Stock,
holders of such Securities Warrants will not have any rights of holders of the
Preferred Stock or Common Stock purchasable upon such exercise, including the
right to receive payments of dividends, if any, on the Preferred Stock or Common
Stock purchasable upon such exercise or to exercise any applicable right to
vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of Preferred Stock or shares of
Common Stock, as the case may be, at such exercise price as shall in each case
be set forth in, or calculable from, the Prospectus Supplement relating to the
offered Securities Warrants. After the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities Warrant
Agent payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Debt Securities,
54
<PAGE>
Preferred Stock or Common Stock, as the case may be, purchasable upon such
exercise together with certain information set forth on the reverse side of the
Securities Warrant Certificate. Securities Warrants will be deemed to have been
exercised upon receipt of payment of the exercise price, subject to the receipt
of the Securities Warrant Certificate evidencing such Securities Warrants. Upon
receipt of such payment and the Securities Warrant Certificate properly
completed and duly executed at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable Prospectus
Supplement, the Company will, as soon as practicable, issue and deliver the Debt
Securities, Preferred Stock or Common Stock, as the case may be, purchasable
upon exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant Certificate are exercised, a new Securities Warrant
Certificate will be issued for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
The Securities Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities Warrants
and that do not adversely affect the interests of the holders of the Securities
Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a Common
Stock Warrant are subject to adjustment in certain events, including: (i) the
issuance of capital stock as a dividend or distribution on the Common Stock;
(ii) subdivisions and combinations of the Common Stock; (iii) the issuance to
all holders of Common Stock of certain rights or warrants entitling them to
subscribe for or purchase Common Stock within 45 days after the date fixed for
the determination of the stockholders entitled to receive such rights or
warrants, at less than the current market price (as defined in the Warrant
Agreement for such series of Common Stock Warrants); or (iv) the distribution to
all holders of Common Stock of evidences of indebtedness or assets of the
Company (excluding certain cash dividends and distributions described below) or
rights or warrants (excluding those referred to above). In the event that the
Company shall distribute any rights or warrants to acquire capital stock
pursuant to clause (iv) above (the "Capital Stock Rights"), pursuant to which
separate certificates representing such Capital Stock Rights will be distributed
subsequent to the initial distribution of such Capital Stock Rights (whether or
not such distribution shall have occurred prior to the date of the issuance of a
series of Common Stock Warrants), such subsequent distribution shall be deemed
to be the distribution of such Capital Stock Rights; PROVIDED, HOWEVER, that the
Company may, in lieu of making any adjustment in the exercise price of and the
number of shares of Common Stock covered by a Common Stock Warrant upon a
distribution of separate certificates representing such Capital Stock Rights,
make proper provision so that each holder of such a Common Stock Warrant who
exercises such Common Stock Warrant (or any portion thereof) (a) before the
record date for such distribution of separate certificates shall be entitled to
receive upon such exercise shares of Common Stock issued with Capital Stock
Rights and (b) after such record date and prior to the expiration, redemption or
termination of such Capital Stock Rights shall be entitled to receive upon such
exercise, in addition to the shares of Common Stock issuable upon such exercise,
the same number of such Capital Stock Rights as would a holder of the number of
shares of Common Stock that such Common Stock Warrant so exercised would have
entitled the holder thereof to acquire in accordance with the terms and
provisions applicable to the Capital Stock Rights if such Common Stock Warrant
was exercised immediately prior to the record date for such distribution. Common
Stock owned by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any adjustment.
No adjustment in the exercise price of and the number of shares of Common
Stock covered by a Common Stock Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or
55
<PAGE>
distributions or for cash dividends or distributions to the extent paid from
retained earnings. No adjustment will be required unless such adjustment would
require a change of at least 1% in the exercise price then in effect; PROVIDED,
HOWEVER, that any such adjustment not so made will be carried forward and taken
into account in any subsequent adjustment; and PROVIDED FURTHER that any such
adjustment not so made shall be made no later than three years after the
occurrence of the event requiring such adjustment to be made or carried forward.
Except as stated above, the exercise price of and the number of shares of Common
Stock covered by a Common Stock Warrant will not be adjusted for the issuance of
Common Stock or any securities convertible into or exchangeable for Common
Stock, or securities carrying the right to purchase any of the foregoing.
In the case of (i) a reclassification of or change to the Common Stock,
other than changes in par value, (ii) a consolidation or merger involving the
Company, other than where the Company is the continuing corporation and
reclassification or change, as described in (i) above, is involved, or (iii) a
sale or conveyance to another corporation of the property and assets of the
Company as an entirety or substantially as an entirety, the holders of the
Common Stock Warrants then outstanding will be entitled thereafter to convert
such Common Stock Warrants into the kind and amount of shares of stock and other
securities or property which they would have received upon such
reclassification, change, consolidation, merger, sale or conveyance had such
Common Stock Warrants been exercised immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance.
FOREIGN CURRENCY RISKS
GENERAL
The Securities of a series may be denominated in and the principal of, and
any interest or premium on, such Securities may be payable in such foreign
currencies or currency units as may be designated by the Company at the time of
offering (the "Foreign Currency Securities").
THIS PROSPECTUS DOES NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN FOREIGN
CURRENCY SECURITIES THAT RESULT FROM SUCH SECURITIES BEING DENOMINATED OR
PAYABLE IN A FOREIGN CURRENCY OR CURRENCY UNIT, EITHER AS SUCH RISKS EXIST AT
THE DATE OF THIS PROSPECTUS OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR FINANCIAL AND LEGAL ADVISORS AS TO
THE RISKS ENTAILED BY AN INVESTMENT IN FOREIGN CURRENCY SECURITIES. FOREIGN
CURRENCY SECURITIES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth below is by necessity incomplete. Prospective
purchasers of Foreign Currency securities should consult their own financial and
legal advisors with respect to any matters that may affect the purchase or
holding of a Foreign Currency Security or the receipt of payments of principal
of and any premium and interest on a Foreign Currency Security in a Specified
Currency (as defined below).
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Securities entails significant risks that
are not associated with a similar investment in a security denominated in United
States dollars. Such risks include, without limitation, the possibility of
significant changes in the rate of exchange between the United States dollar and
the currency or currency unit designated in the applicable Prospectus Supplement
(the "Specified Currency") the inconvertibility of the foreign currency or
currencies due to act of war, natural disaster, adverse foreign governmental
legislation or executive action or other cause, and the possibility of the
imposition or modification of foreign exchange controls by either the United
States or foreign governments. Such risks generally depend on economic and
political events over which the Company has no
56
<PAGE>
control. In recent years, rates of exchange between the United States dollar and
certain foreign currencies have been highly volatile and such volatility may be
expected in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations in
the rate that may occur during the term of any Foreign Currency Security.
Depreciation of the Specified Currency applicable to a Foreign Currency Security
against the United States dollar would result in a decrease in the United States
dollar-equivalent yield of such Security (or the Debt Security purchasable upon
exercise of any Debt Warrant), in the United States dollar-equivalent value of
the principal repayable at maturity of such Security (or the Security
purchasable upon exercise of such Debt Warrant) and, generally, in the United
States dollar-equivalent market value of such Security.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Security's maturity (or the maturity of the Debt Security issuable upon exercise
of a Debt Warrant). Even if there are no exchange controls, it is possible that
the Specified Currency for any particular Foreign Currency Security would not be
available at such Debt Security maturity (or the maturity of the Debt Security
issuable upon exercise of a Debt Warrant) due to other circumstances beyond the
control of the Company.
JUDGMENTS
If an action based on Foreign Currency Securities were commenced in a court
of the United States, it is likely that such court would grant judgment relating
to such Securities only in United States dollars. It is not clear, however,
whether, in granting such judgment, the rate of conversion into United States
dollars would be determined with reference to the date of default, the date
judgment is rendered or some other date. Under current New York law, a state
court in the state of New York rendering a judgment on a Foreign Currency
Security would be required to render such judgment in the Specified Currency in
which such Foreign Currency Security is denominated, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment. Holders of Foreign Currency Securities would bear the
risk of exchange rate fluctuations between the time the amount of the judgment
is calculated and the time the applicable Trustee converts United States dollars
to the Specified Currency for payment of the judgment.
LIMITED FACILITIES FOR CONVERSION
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks
generally do not offer non-U.S. dollar denominated checking or savings account
facilities in the United States. Accordingly, payments on Foreign Currency
Securities will, unless otherwise specified in the applicable Prospectus
Supplement or Prospectus Supplements, be made from an account with a bank
located in the country issuing the Specified Currency (or, with respect to
Foreign Currency Securities denominated in ECUs, Brussels).
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities in any combination of three
ways: (i) through agents; (ii) through underwriters or dealers; or (iii)
directly to one or more purchasers. The Prospectus Supplement or Prospectus
Supplements with respect to any of the Securities offered thereby will set forth
the terms of the offering of such Securities, including the name or names of any
underwriters or agents, the purchase price of such Securities, the proceeds to
the Company from such sale, any underwriting discounts or agency fees and other
items constituting underwriters' or agents' compensation, the initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, and any securities exchanges on which such Securities may be listed.
Accordingly, if so indicated in the Prospectus Supplement or Prospectus
Supplements, the term of the distribution may differ from the terms set forth
below.
57
<PAGE>
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
If so indicated in the Prospectus Supplement relating to any Securities
offered thereby, the Company will authorize underwriters, dealers and agents to
solicit offers by certain specified institutions to purchase such Securities
from the Company at the public offering price set forth in such Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject only
to those conditions set forth in such Prospectus Supplement, and such Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Any underwriter, dealer or agent participating in the distribution of an
offering of Securities may be deemed to be an underwriter, and any discounts or
commissions received by it on the sale or resale of Securities may be deemed to
be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contributions
with respect to payments which the underwriters or agents may be required to
make in respect thereof. Underwriters and agents, and affiliates thereof, may be
customers of, engage in transactions with, or perform services for the Company
and its affiliates in the ordinary course of business.
Any underwriter, dealer or agent participating in the distribution of an
offering of Common Stock may engage in "passive market-making" in the Common
Stock on the Nasdaq in accordance with Rule 10b-6A under the Exchange Act. Rule
10b-6A permits, upon the satisfaction of certain conditions, underwriters and
selling group members participating in a distribution that are also Nasdaq
market-makers in the security being distributed to engage in limited
market-making transactions during the period when Rule 10b-6 under the Exchange
Act would otherwise prohibit such activity. Rule 10b-6A prohibits underwriters
and selling group members engaged in passive market-making generally from
entering a bid or effecting a purchase at a price that exceeds the highest bid
for those securities displayed on Nasdaq by a market-marker that is not
participating in the distribution. Under Rule 10b-6A, each underwriter or
selling group member engaged in passive market-making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of the filing of the registration statement under the Securities Act pertaining
to the security to be distributed.
Unless otherwise indicated in the applicable Prospectus Supplement, all
Securities (other than the Common Stock) will be new issues of securities with
no established trading market. Any underwriters to whom Securities are sold by
the Company for public offering and sale may make a market in such Securities,
but such underwriters will not be obligated to do so and may discontinue any
market-making at any time without notice. No assurance can be given concerning
the liquidity of the trading market for any Securities.
In connection with the offering of the Securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Securities during and after the offering. Specifically, the Underwriters may
over-allot or otherwise create a short position in the Securities for their own
account by selling more Securities than have been sold to them by the Company.
The Underwriters may elect to cover any such short position by purchasing
Securities in the open market. In addition, the Underwriters may stabilize or
maintain the price of the Securities by bidding for or purchasing Securities in
the open market and may impose penalty bids, under which selling concessions
allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Securities previously distributed in the offering are
repurchased in connection with stabilization transactions or otherwise. The
effect of these transactions may be to stabilize or maintain the market price of
the Securities at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the
Securities to the extent that it discourages resales thereof. No representation
is made as to the magnitude
58
<PAGE>
or effect of any stabilization or other transactions. Such transactions, if
commenced, may be discontinued at any time.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by Dorsey
& Whitney LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements included in this Prospectus and
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by KPMG Peat Marwick LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are included or incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
59
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996, AND FOR EACH OF
THE YEARS IN THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-1
Consolidated Financial Statements:
Consolidated Statements of Operations.................................................................... F-2
Consolidated Balance Sheets.............................................................................. F-3
Consolidated Statements of Shareholders' Equity.......................................................... F-4
Consolidated Statements of Cash Flows.................................................................... F-5
Notes to Consolidated Financial Statements............................................................... F-6
Quarterly Financial Information (unaudited)................................................................ F-20
AS OF MARCH 31, 1998 AND FOR THE THREE-MONTH
PERIODS ENDED MARCH 31, 1998 AND 1997
Consolidated Financial Statements:
Consolidated Balance Sheets.............................................................................. F-21
Consolidated Statements of Operations.................................................................... F-22
Consolidated Statements of Cash Flows.................................................................... F-23
Notes to Consolidated Financial Statements............................................................... F-24
</TABLE>
60
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Dain Rauscher Corporation:
We have audited the accompanying consolidated balance sheets of Dain
Rauscher Corporation (formerly Interra Financial Incorporated) as of December
31, 1997 and 1996 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dain
Rauscher Corporation as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 5, 1998, except for Note N,
which is as of February 9, 1998
F-1
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Commissions................................................................ $ 274,847 $ 223,084 $ 175,987
Principal transactions..................................................... 152,150 169,040 179,180
Investment banking and underwriting........................................ 111,280 111,391 89,763
Interest................................................................... 122,492 110,551 109,393
Asset management........................................................... 46,304 35,890 27,088
Correspondent clearing..................................................... 19,827 15,806 12,484
Other...................................................................... 23,775 17,554 12,852
---------- ---------- ----------
Total revenues............................................................... 750,675 683,316 606,747
Interest expense............................................................. (58,573) (57,560) (64,777)
---------- ---------- ----------
Net revenues................................................................. 692,102 625,756 541,970
---------- ---------- ----------
Expenses excluding interest:
Compensation and benefits.................................................. 427,599 385,905 345,834
Communications............................................................. 46,450 43,301 40,624
Occupancy and equipment rental............................................. 41,512 35,870 33,019
Travel and promotional..................................................... 30,293 24,296 20,665
Floor brokerage and clearing fees.......................................... 12,328 10,271 9,714
Other...................................................................... 42,165 38,711 35,843
Restructuring charge....................................................... 15,000 -- --
---------- ---------- ----------
Total expenses excluding interest............................................ 615,347 538,354 485,699
---------- ---------- ----------
Earnings:
Earnings before income taxes............................................... 76,755 87,402 56,271
Income tax expense......................................................... (27,480) (30,591) (20,398)
---------- ---------- ----------
Net earnings................................................................. $ 49,275 $ 56,811 $ 35,873
---------- ---------- ----------
---------- ---------- ----------
Earnings per share:
Basic...................................................................... $ 4.01 $ 4.68 $ 2.96
---------- ---------- ----------
---------- ---------- ----------
Diluted.................................................................... $ 3.77 $ 4.49 $ 2.85
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Assets:
Cash and cash equivalents........................................................... $ 35,909 $ 34,387
Cash and short-term investments segregated for regulatory purposes.................. -- 15,000
Receivable from customers........................................................... 1,170,160 1,035,847
Receivable from brokers and dealers................................................. 229,421 202,040
Securities purchased under agreements to resell..................................... 135,777 81,631
Trading securities owned............................................................ 541,511 288,824
Equipment, leasehold improvements and buildings, at cost, less accumulated
depreciation of $42,800 and $31,330, respectively................................. 42,376 32,946
Other receivables................................................................... 80,867 75,685
Deferred income taxes............................................................... 44,868 39,704
Other assets........................................................................ 23,512 21,361
------------ ------------
$ 2,304,401 $ 1,827,425
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings............................................................... $ 179,000 $ 25,000
Drafts payable...................................................................... 83,499 69,989
Payable to customers................................................................ 601,949 869,641
Payable to brokers and dealers...................................................... 580,970 229,852
Securities sold under repurchase agreements......................................... 170,906 57,967
Trading securities sold, but not yet purchased...................................... 127,364 58,805
Accrued compensation................................................................ 128,463 119,244
Other accrued expenses and accounts payable......................................... 97,500 93,751
Subordinated and other debt......................................................... 15,659 27,290
------------ ------------
1,985,310 1,551,539
------------ ------------
------------ ------------
Shareholders' equity:
Common stock (1997: issued 12,367,447 and outstanding 12,275,104 shares; 1996:
issued and outstanding 12,174,968 shares)......................................... 1,546 1,522
Additional paid-in capital.......................................................... 89,321 81,316
Retained earnings................................................................... 233,419 193,048
Treasury stock, at cost............................................................. (5,195) --
------------ ------------
319,091 275,886
------------ ------------
$ 2,304,401 $ 1,827,425
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL
SHARES PAID-IN RETAINED TREASURY SHAREHOLDERS'
OUTSTANDING AMOUNT CAPITAL EARNINGS STOCK EQUITY
----------- --------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994......................... 12,062 $ 1,508 $ 73,434 $ 120,478 $ -- $ 195,420
----------- --------- ----------- ---------- --------- -------------
Net earnings.......................................... -- -- -- 35,873 -- 35,873
Repurchase of common stock............................ (297) (38) -- (6,811) -- (6,849)
Common stock issued upon exercise of stock options.... 280 36 2,277 -- -- 2,313
Restricted common stock issued and amortized.......... 20 2 53 -- -- 55
Stock credited to deferred compensation plan
participants........................................ -- -- 859 -- -- 859
Cash dividends on common stock
($.42 2/3 per share)................................ -- -- -- (5,177) -- (5,177)
----------- --------- ----------- ---------- --------- -------------
Balances at December 31, 1995......................... 12,065 1,508 76,623 144,363 -- 222,494
----------- --------- ----------- ---------- --------- -------------
Net earnings.......................................... -- -- -- 56,811 -- 56,811
Repurchase of common stock............................ (59) (7) -- (1,334) -- (1,341)
Common stock issued upon exercise of stock options.... 136 17 1,217 -- -- 1,234
Restricted common stock issued and amortized.......... 33 4 342 -- -- 346
Stock credited to deferred compensation plan
participants........................................ -- -- 3,134 -- -- 3,134
Cash dividends on common stock
($.56 per share).................................... -- -- -- (6,792) -- (6,792)
----------- --------- ----------- ---------- --------- -------------
Balances at December 31, 1996......................... 12,175 1,522 81,316 193,048 -- 275,886
----------- --------- ----------- ---------- --------- -------------
Net earnings.......................................... -- -- -- 49,275 -- 49,275
Treasury stock purchased.............................. (92) -- -- -- (5,195) (5,195)
Common stock issued upon exercise of stock options.... 146 18 1,761 -- -- 1,779
Restricted common stock issued and amortized.......... 46 6 393 -- -- 399
Stock credited to deferred compensation plan
participants........................................ -- -- 4,941 -- -- 4,941
Cash dividends on common stock
($.72 per share).................................... -- -- -- (8,904) -- (8,904)
Tax benefits from stock incentive plans............... -- -- 910 -- -- 910
----------- --------- ----------- ---------- --------- -------------
Balances at December 31, 1997......................... 12,275 $ 1,546 $ 89,321 $ 233,419 $ (5,195) $ 319,091
----------- --------- ----------- ---------- --------- -------------
----------- --------- ----------- ---------- --------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings................................................................. $ 49,275 $ 56,811 $ 35,873
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation and amortization.............................................. 11,764 9,563 8,973
Deferred income taxes...................................................... (5,164) (7,711) (2,992)
Other non-cash items....................................................... 16,200 8,626 10,486
Cash and short-term investments segregated for regulatory purposes......... 15,000 396,000 (73,000)
Securities purchased under agreements to resell............................ (54,146) (1,398) 118,328
Net trading securities owned and trading securities sold, but not yet
purchased................................................................ (184,128) 31,823 (59,503)
Other receivables.......................................................... (5,182) 5,153 (2,051)
Drafts payable and short-term borrowings of securities companies........... 117,510 (52,442) (22,783)
Net receivable from/payable to customers................................... (402,005) (384,511) 60,411
Net receivable from/payable to brokers and dealers......................... 323,737 30,987 (8,617)
Securities sold under repurchase agreements................................ 112,939 (62,841) (53,164)
Accrued compensation....................................................... 9,219 23,256 27,233
Other...................................................................... (8,331) (9,809) 3,412
---------- ---------- ---------
Cash provided (used) by operating activities................................... (3,312) 43,507 42,606
---------- ---------- ---------
Cash flows from financing activities:
Proceeds from:
Revolving credit agreement, net............................................ 50,000 -- --
Issuance of common stock................................................... 1,779 1,580 2,368
Payments for:
Subordinated and other debt................................................ (11,631) (14,120) (5,613)
Dividends on common stock.................................................. (8,904) (6,792) (5,177)
Purchase of common stock................................................... (5,195) (1,341) (6,849)
Revolving credit agreement, net............................................ -- -- (15,000)
---------- ---------- ---------
Cash provided (used) by financing activities................................... 26,049 (20,673) (30,271)
---------- ---------- ---------
Cash flows from investing activities:
Proceeds from investment dividends and sales................................. 1,768 1,227 1,826
Payments for equipment, leasehold improvements and other..................... (22,983) (15,841) (10,758)
---------- ---------- ---------
Cash (used) by investing activities............................................ (21,215) (14,614) (8,932)
---------- ---------- ---------
Increase in cash and cash equivalents.......................................... 1,522 8,220 3,403
Cash and cash equivalents:
At beginning of year..................................................... 34,387 26,167 22,764
---------- ---------- ---------
At end of year........................................................... $ 35,909 $ 34,387 $ 26,167
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Cash income tax payments totaled $32,110,000 in 1997, $32,841,000 in 1996,
and $18,884,000 in 1995. Cash interest payments totaled $57,396,000,
$56,901,000, and $64,592,000 in 1997, 1996 and 1995, respectively.
During the years ended December 31, 1997, 1996 and 1995, respectively, the
Company had non-cash financing activity of $4,941,000, $3,134,000 and $859,000
associated with the crediting of common stock to deferred compensation plan
participants.
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
DAIN RAUSCHER CORPORATION
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: Dain Rauscher Corporation (the "Company") is a
Minneapolis, Minnesota-based holding company that provides advice and services
to individual investors in the western United States and investment banking
services to corporate and governmental clients nationwide through its principal
subsidiary, Dain Rauscher Incorporated ("Dain Rauscher"). The Company is also
parent to Insight Investment Management, Inc., which manages the Great Hall
money market funds and institutional fixed income accounts, and Dain Rauscher
Lending Services Inc., which was formed in 1997 to make certain types of loans
that are collateralized by customers' control and restricted securities. On
January 2, 1998, the Company's name was changed to Dain Rauscher Corporation
from Interra Financial Incorporated, and two of the Company's broker-dealer
subsidiaries, Dain Bosworth Incorporated ("Dain Bosworth") and Rauscher Pierce
Refsnes, Inc. ("Rauscher Pierce Refsnes"), were merged and renamed Dain
Rauscher. The Company's third broker-dealer, Interra Clearing Services Inc.
("Clearing"), will be merged with Dain Rauscher on March 2, 1998.
BASIS OF PRESENTATION: The consolidated financial statements include the
Company and its subsidiaries as of December 31, 1997: Dain Bosworth, Rauscher
Pierce Refsnes, Clearing, Interra Advisory Services Inc. and Interra Lending
Services Inc. All subsidiaries are wholly owned and all inter-company balances
and transactions have been eliminated in consolidation. Certain prior-year
amounts in the consolidated financial statements have been reclassified to
conform to the 1997 presentation.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include cash on hand,
cash in depository accounts with other financial institutions and money market
investments with original maturities of 90 days or less.
SECURITIES: Securities transactions and the related commission revenues and
expenses are recorded on settlement date, which is not materially different than
if transactions were recorded on trade date.
Trading securities owned, trading securities sold, but not yet purchased,
and derivative financial instruments are stated at market value. Unrealized
gains and losses on such securities are recognized currently in revenues from
principal transactions. Market value is determined by using public market
quotations, quoted prices from dealers or recent market transactions, depending
upon the underlying security.
The Company may, from time to time, receive equity instruments as a portion
of its compensation for certain underwriting activity. Such instruments are
accounted for as investments and are recorded at the lower of cost or market,
which is generally zero. The Company also owns certain non-marketable
investments accounted for at lower of cost or market, which are included in
other assets.
REPURCHASE TRANSACTIONS: Securities purchased under agreements to resell
(reverse repurchase agreements) and securities sold under repurchase agreements
are accounted for as financing transactions and are recorded at the contract
amount at which the securities will subsequently be resold or reacquired, plus
accrued interest. Generally, these transactions may be terminated on short
notice by the Company or its counterparties.
OTHER RECEIVABLES: Included in other receivables are forgivable loans made
to investment executives and other revenue-producing employees, typically in
connection with their recruitment. Such loans are forgivable based on continued
employment and are amortized over the life of the loan, which is generally three
to five years, using the straight-line method.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TREASURY STOCK: Treasury stock is recorded at cost and includes common
shares repurchased by the Company subsequent to December 31, 1996, as well as
shares purchased from stock incentive plan participants.
DEPRECIATION AND AMORTIZATION: Equipment is depreciated using the
straight-line method over estimated useful lives of two to eight years.
Leasehold improvements are amortized over the lesser of the estimated useful
life of the improvement or the term of the lease.
INCOME TAXES: The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under this method, deferred tax liabilities and assets and the
resultant provision for income taxes are determined based on the differences
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse.
FAIR VALUES OF FINANCIAL INSTRUMENTS: Substantially all of the Company's
financial assets and liabilities are carried at market value or at amounts
which, because of their short-term nature, approximate current fair value. The
fair value of the Company's borrowings, if recalculated based on current
interest rates, would not differ significantly from the amounts recorded at
December 31, 1997.
STOCK-BASED COMPENSATION: The Company accounts for stock option grants
under APB Opinion No. 25 (APB 25) and, accordingly, does not recognize
compensation expense related to option grants. The Company applies the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." For grants of restricted stock, the Company amortizes the value
of such shares as determined on grant date to compensation expense and equity
over the vesting period.
RECENT ACCOUNTING PRONOUNCEMENTS: In June 1996, the Financial Accounting
Standards Board issued SFAS 125, "Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities." The Company adopted the provisions of SFAS
125 on January 1, 1998. The adoption of SFAS 125 did not have a material effect
on the Company's consolidated financial statements.
USE OF ESTIMATES: Management of the Company has made certain estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities in preparing these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
EARNINGS PER SHARE: The Company adopted SFAS 128, "Earnings per Share,"
during the fourth quarter of 1997 and has restated prior-year amounts. SFAS 128
requires the reporting of basic and diluted earnings per share amounts. Basic
earnings per share are based upon the weighted average number of common shares
outstanding during the reporting period. Diluted earnings per share take into
account the dilutive effect, if any, of stock options and other dilutive
potential common shares outstanding during the period.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following reconciliation illustrates the computation of basic and
diluted earnings per share as prescribed under SFAS 128:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER-SHARE
DATA)
<S> <C> <C> <C>
Net earnings.............................................. $ 49,275 $ 56,811 $ 35,873
--------- --------- ---------
--------- --------- ---------
Weighted average common shares outstanding................ 12,277 12,132 12,115
Dilutive effect of stock options (net of tax benefits).... 579 435 470
Shares credited to deferred compensation plan
participants............................................ 204 98 --
--------- --------- ---------
13,060 12,665 12,585
--------- --------- ---------
--------- --------- ---------
Basic earnings per share.................................. $ 4.01 $ 4.68 $ 2.96
--------- --------- ---------
--------- --------- ---------
Diluted earnings per share................................ $ 3.77 $ 4.49 $ 2.85
--------- --------- ---------
--------- --------- ---------
</TABLE>
Options to purchase 186,400, 50,500, and 0 shares for 1997, 1996, and 1995,
respectively, were not included in the computation of diluted earnings per share
because options' exercise prices were greater than the average market price of
the common shares for the period.
B. RESTRUCTURING RESERVE
In conjunction with the adoption of a formal restructuring plan to combine
Dain Bosworth, Rauscher Pierce Refsnes and Clearing into a single broker-dealer
during the first quarter of 1998, the Company recorded a one-time, after-tax
charge of $9.6 million ($15.0 million before taxes), or 74 cents per share
diluted, against third-quarter 1997 earnings to cover severance and other
restructuring costs. Substantially all of the $15.0 million of the restructuring
costs will result in cash outflows, primarily during the fourth quarter of 1997
and first quarter of 1998. The Company expects that the restructuring will
result in the elimination of approximately 120 positions, of which 87 had been
eliminated by December 31, 1997. The composition of the $15.0 million charge was
as follows: $12.0 million for severance and short-term retention payments to
terminated employees; $0.8 million for space consolidation expenditures, and the
remaining $2.2 million for other expenditures including costs of changing the
Company's name, relocation, outplacement services and professional fees related
to the restructuring. As of December 31, 1997, $4.1 million in expenditures had
been charged to the reserve, with approximately $3.1 million relating to
severance costs and the remaining $1.0 million relating to the name change,
relocation, outplacement services and professional fees. The Company believes
this charge will be adequate to cover all restructuring expenditures.
C. RECEIVABLE FROM AND PAYABLE TO CUSTOMERS
The amounts receivable from customers primarily represent margin balances.
Other customer receivables and payables result from cash transactions.
Securities owned by customers and held as collateral for receivables and
securities sold short by customers are not reflected in the consolidated
financial statements.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
D. RECEIVABLE FROM AND PAYABLE TO BROKERS AND DEALERS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Receivable from brokers and dealers:
Deposits for securities borrowed.................................... $ 164,917 $ 158,246
Securities failed to deliver........................................ 58,673 35,570
Clearing organizations, correspondent brokers and other............. 5,831 8,224
---------- ----------
$ 229,421 $ 202,040
---------- ----------
---------- ----------
Payable to brokers and dealers:
Deposits for securities loaned...................................... $ 538,588 $ 178,900
Securities failed to receive........................................ 34,627 34,384
Clearing organizations, correspondent brokers and other............. 7,755 16,568
---------- ----------
$ 580,970 $ 229,852
---------- ----------
---------- ----------
</TABLE>
Securities failed to deliver and receive represent the contract value of
securities which have not been delivered or received subsequent to settlement
date. Securities borrowed and securities loaned are recorded at the amount of
cash collateral advanced or received in connection with the transaction.
Generally, these transactions may be terminated on short notice by the Company
or its counterparties. Securities borrowed transactions require the Company to
deposit cash or other collateral with the lender. With respect to securities
loaned, the Company receives cash or other collateral. The initial collateral
advanced or received has a market value equal to or greater than the market
value of the securities borrowed or loaned. The Company monitors the market
value of the securities borrowed and loaned on a daily basis and requests
additional collateral or returns excess collateral, as appropriate.
E. TRADING SECURITIES
The market values of trading securities are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Owned:
U. S. government and government agency securities................... $ 320,646 $ 154,801
Municipal securities................................................ 157,336 67,474
Corporate fixed income and other securities......................... 42,957 53,597
Equity securities................................................... 20,572 12,952
---------- ----------
$ 541,511 $ 288,824
---------- ----------
---------- ----------
Sold, but not yet purchased:
U. S. government, government agency and municipal securities........ $ 122,265 $ 52,328
Corporate and other securities...................................... 5,099 6,477
---------- ----------
$ 127,364 $ 58,805
---------- ----------
---------- ----------
</TABLE>
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
F. SHORT-TERM BORROWINGS
Short-term borrowings of the securities subsidiaries at December 31, 1997
and 1996, consist of $129.0 million and $25.0 million, respectively, in bank
loans on uncommitted lines of credit. The majority of these borrowings are
collateralized by trading securities owned and customers' margin securities, and
have a floating rate of interest approximately 50 basis points above the Federal
Funds rate which was 6.5 percent at December 31, 1997. The market value of
trading securities pledged as collateral at December 31, 1997, was $151.4
million. At December 31, 1997, approximately $396 million of additional credit
was available under uncommitted credit lines.
Revolving credit loan borrowings and irrevocable letters of credit are
available under a commitment totaling $50 million. The facility expires June 25,
1998, and may be extended for up to three additional one-year periods. Loans
under this facility are unsecured and bear interest at a floating rate of
Federal Funds plus 85 basis points. Amounts outstanding under the revolving
credit facility at December 31, 1997, were $50.0 million and the applicable
interest rate was 7.0 percent. No amounts were outstanding as of December 31,
1996. The Company must maintain certain levels of net worth and regulatory net
capital under the agreement.
The Company also has a $50 million uncommitted credit facility available to
finance loans made to customers through Dain Rauscher Lending Services Inc. Such
customer loans are collateralized by customers' securities. The facility bears
interest at a floating rate approximating 75 basis points over the Federal Funds
rate. No amounts related to this facility were outstanding at December 31, 1997.
G. SUBORDINATED AND OTHER DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Subordinated debt of securities subsidiaries............................ $ 9,000 $ 20,667
Other debt:
Capital lease obligations (Note I).................................... 6,659 5,794
Other................................................................. -- 829
--------- ---------
$ 15,659 $ 27,290
--------- ---------
--------- ---------
</TABLE>
The four-year subordinated bank loans of the securities subsidiaries qualify
as regulatory capital. The loans require monthly, interest-only payments
throughout the four-year terms, with equal quarterly principal payments during
years two through four. The outstanding subordinated debt bears a floating rate
of interest of approximately 2.5 percent to 2.75 percent above the London
Interbank Offered Rates. At December 31, 1997, the weighted average interest
rate on all of the Company's subordinated debt was 8.4 percent.
The subordinated bank loans and other debt are payable in 1998.
H. SHAREHOLDERS' EQUITY
COMMON STOCK: The common stock has a par value of $.125 per share;
30,000,000 shares are authorized. In 1996 the Company completed the repurchase
of 600,000 shares of common stock at a total cost of $11.8 million under a
program that was initiated in 1994. Under this program the Company
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
H. SHAREHOLDERS' EQUITY (CONTINUED)
repurchased and subsequently retired 59,000 and 297,000 shares in 1996 and 1995,
respectively. In August 1996 and December 1997, respectively, the Company's
Board of Directors authorized additional programs to repurchase up to 100,000
and 600,000 shares of the Company's common stock. Purchases of the common stock
may be made from time to time at prevailing prices in the open market, by block
purchases, or in privately negotiated transactions. The repurchased shares will
be held as treasury stock and used for the Company's employee stock option and
other benefit plans, or for other corporate purposes. During 1996 no shares were
repurchased pursuant to the 100,000 share program. During 1997, the Company
repurchased 87,568 shares at a total cost of $4.8 million pursuant to the
100,000 share program and no shares pursuant to the 600,000 share program.
On October 31, 1995, the Company's Board of Directors declared a
three-for-two stock split effected in the form of a 50 percent stock dividend
payable on December 20, 1995, to shareholders of record at the close of business
on December 6. All references in the consolidated financial statements to
numbers of shares outstanding and related prices and per-share amounts have been
restated to reflect the split.
At December 31, 1997, 2,924,000 shares of the Company's common stock were
reserved for issuance under the 1996 Stock Incentive Plan; 1,930,212 shares were
reserved for issuance under the 1986 Stock Option Plan; and 159,000 shares were
reserved for issuance to the Company's retirement plan.
STOCK COMPENSATION PLANS: The Company maintains two fixed stock
compensation plans, the 1986 Stock Option Plan (1986 Plan) and the 1996 Stock
Incentive Plan (1996 Plan), which are used to provide stock incentives to key
employees and outside directors. Each plan authorizes the grant of incentive and
non-qualified options and the 1996 Plan also authorizes the grant of restricted
and other stock awards. The Company made its final grants under the 1986 Plan in
February 1996. The 1996 Plan requires and the Company under the 1986 Plan made,
but did not require, all option grants at 100 percent of the fair market value
of the shares at the date of grant. Options generally become exercisable at
rates of 20, 50 and 100 percent as of two, three and four years, respectively,
after the date of grant and expire 10 years from date of grant. Options granted
to outside directors become exercisable six months after grant date and expire
five years after grant date. At December 31, 1997, 2,523,100 shares of common
stock were available for grant under the 1996 Plan.
The Company applies APB 25 and its interpretations in accounting for its
stock incentive plans. Accordingly, no compensation expense has been recognized
in the consolidated financial statements for stock option grants. Had
compensation expense been determined based on the fair value of the options at
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
H. SHAREHOLDERS' EQUITY (CONTINUED)
the grant date for 1997, 1996 and 1995 awards consistent with SFAS 123, the
Company's net earnings and earnings per share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER-SHARE
AMOUNTS)
<S> <C> <C> <C>
Net earnings:
As reported................................................ $ 49,275 $ 56,811 $ 35,873
Pro forma.................................................. 47,914 56,392 35,681
Earnings per share:
Basic:
As reported................................................ $ 4.01 $ 4.68 $ 2.96
Pro forma.................................................. 3.90 4.65 2.95
Diluted:
As reported................................................ 3.77 4.49 2.85
Pro forma.................................................. 3.67 4.45 2.84
</TABLE>
The weighted average per-share fair value of options granted during 1997,
1996 and 1995, was $17.55, $7.96 and $4.51, respectively. The fair value of each
option granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions used for
grants in 1997, 1996 and 1995, respectively: dividend yields of 1.5 percent, 2.3
percent and 2.7 percent; expected volatility of 36.6 percent in 1997 and 30.2
percent for 1996 and 1995; risk-free interest rates of 4.8 percent, 5.0 percent
and 5.9 percent; and expected lives of five years. Pro forma amounts may not be
indicative of future results.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
H. SHAREHOLDERS' EQUITY (CONTINUED)
The following table summarizes the activity related to the Company's stock
option plans for each of the last three years:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------- --------------------------- ---------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning
of year........................ 1,304,045 $ 17.14 1,243,987 $ 14.71 1,303,500 $ 13.11
Granted.......................... 419,800 49.90 260,600 24.86 357,900 16.38
Exercised........................ (155,955) 12.90 (140,492) 9.66 (298,493) 8.73
Canceled......................... (98,565) 24.87 (60,050) 17.86 (118,920) 17.19
-------------- ----------- -------------- ----------- -------------- -----------
Options outstanding at end of
year........................... 1,469,325 $ 26.51 1,304,045 $ 17.14 1,243,987 $ 14.71
-------------- ----------- -------------- ----------- -------------- -----------
-------------- ----------- -------------- ----------- -------------- -----------
Options exercisable at end of
year........................... 551,700 405,980 268,837
-------------- -------------- --------------
-------------- -------------- --------------
Price range of outstanding
options........................ $ 4.58-$59.44 $ 4.58-$33.38 $ 4.58-$20.83
Price range of exercised
options........................ $ 4.67-$20.83 $ 4.58-$20.83 $ 4.33-$20.83
Weighted-average fair value of
options granted during the
year........................... $ 17.55 $ 7.96 $ 4.51
</TABLE>
The following table summarizes currently outstanding and exercisable options
at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
------------------------ OPTIONS EXERCISABLE
WEIGHTED ------------------------
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICES AT 12/31/97 LIFE PRICE AT 12/31/97 PRICE
- --------------- ----------- ----------- ----------- ----------- -----------
<C> <C> <S> <C> <C> <C>
$ 4.58-$ 4.67 69,250 2.6 years $ 4.61 69,250 $ 4.63
$ 10.00-$15.83 489,125 5.9 14.33 319,525 13.53
$ 16.83-$22.38 446,050 6.9 21.23 162,925 20.50
$ 25.38-$33.38 68,000 8.7 30.44 -- --
$ 42.75-$59.44 396,900 9.4 50.59 -- --
----------- ----------- ----------- ----------- -----------
1,469,325 $ 26.51 551,700 $ 14.47
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The Company's closing stock price on December 31, 1997, was $69.00.
Net of cancellations, the Company issued 42,770, 33,131 and 19,743 shares of
common stock to key employees and outside directors in 1997, 1996 and 1995,
respectively, which are restricted in that such shares are subject to certain
vesting provisions. The restricted shares awarded had weighted average per-share
fair values at grant date of $58.80, $25.07 and $20.18 in 1997, 1996 and 1995,
respectively, and resulted in compensation expense of $399,000, $355,000 and
$20,000 being recorded in the consolidated financial statements in 1997, 1996
and 1995, respectively.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
I. COMMITMENTS AND CONTINGENT LIABILITIES
LEASES: The Company and its subsidiaries lease office space, furniture and
communications and data processing equipment under several noncancelable leases.
Most office space leases are subject to escalation and provide for the payment
of real estate taxes, insurance and other expenses of occupancy, in addition to
rent.
Aggregate minimum rental commitments as of December 31, 1997, are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
1998.................................................................... $ 7,052 $ 19,000
1999.................................................................... -- 16,725
2000.................................................................... -- 13,370
2001.................................................................... -- 11,272
2002.................................................................... -- 9,720
Thereafter.............................................................. -- 50,550
--------- ----------
Total minimum lease payments............................................ 7,052 $ 120,637
----------
----------
Less amount representing interest....................................... (393)
---------
Present value of minimum lease payments................................. $ 6,659
---------
---------
</TABLE>
Rental expense for operating leases was $27,679,000, $25,558,000, and
$25,771,000, for the years ended December 31, 1997, 1996 and 1995, respectively.
Included in net equipment, leasehold improvements and buildings at December 31,
1997 and 1996, is $2,230,000 and $3,837,000, respectively, for leases which have
been capitalized.
LITIGATION: The Company and/or its securities subsidiaries are defendants
in various actions, suits and proceedings before a court or arbitrator or by a
governmental agency. Such matters involve alleged violations of federal and
state securities laws and other laws. Certain of these actions, including
certain of the actions described in more detail below, claim substantial damages
and, if determined adversely to the Company and/or its subsidiaries, could have
a material adverse effect on the consolidated financial condition or results of
operations of the Company.
The Company and Dain Bosworth have been named as defendants in eleven
actions brought in connection with losses suffered under single premium deferred
annuities issued by Midwest Life Insurance Company ("MWL"), a former subsidiary
acquired by the Company in 1980 and sold by it in early 1986. Such annuities
were sold primarily through the private client sales force of Dain Bosworth.
MWL, which was sold by the Company in 1986 and was sold twice thereafter, was
declared insolvent and ordered liquidated in August 1991 by the State of
Louisiana, the jurisdiction to which its final owners relocated it. Generally,
MWL policyholders have been reimbursed for their losses up to $100,000 per
holder by the state guaranty associations, and the policyholders and state
guaranty associations, between them, have received approximately $.30 for each
$1.00 of loss in liquidation payments from the liquidator of MWL's estate. The
plaintiffs (or real parties in interest) in the first ten of these cases are the
Life and Health Guaranty Associations of each of Colorado, Iowa, Minnesota,
Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington and Wyoming,
which claim to have succeeded to the rights of policyholders they reimbursed for
MWL losses, and/or certain individual policyholders. They allege common law
fraud, breach of fiduciary duty, negligence and negligent misrepresentation. The
plaintiff in the eleventh action is
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
I. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
the liquidator of MWL's estate. It alleges RICO violations, breach of fiduciary
duty and conspiracy to breach fiduciary duty. The plaintiff guaranty
associations and individuals seek to recover in excess of $64 million in
compensatory damages, as well as punitive damages, interest, costs, attorneys'
fees and other relief. The liquidator of MWL's estate also seeks to recover
treble damages. By Louisiana statute, the compensatory damages sought by the
liquidator would in large part be distributed to the insurance guaranty
association and individual policyholders who are plaintiffs in the first ten
actions. The Company and Dain Rauscher, as successor to Dain Bosworth, believe
they have substantial and meritorious defenses available and are defending
themselves vigorously in these actions.
Rauscher Pierce Refsnes and one of its officers are named as defendants in
an action by the Federal Deposit Insurance Corporation ("FDIC"), as successor to
The Resolution Trust Corporation ("RTC"), alleging negligence, breach of
contract, breach of fiduciary duty and fraud in connection with the May 1991
sale by the RTC of the stock of WESAV Mortgage Corporation ("WESAV"). Rauscher
Pierce Refsnes acted as the broker for the sale. Smith Barney, which acted as
the RTC's financial advisor, Express America Holdings Corporation, the successor
to the winning bidder and certain individual officers of Express America and
WESAV were also named as defendants in this action but have since reached
settlement agreements with the FDIC. The plaintiff seeks alleged compensatory
damages of approximately $15 million and punitive damages of $60 million. Dain
Rauscher, as successor to Rauscher Pierce Refsnes, and its officer believe they
have substantial and meritorious defenses available and are defending themselves
vigorously in this action.
Rauscher Pierce Refsnes has also been named as a defendant in an action
brought by Orange County, California, in connection with five note offerings for
an aggregate of $975 million by the County in June through August of 1994. The
County alleges that Rauscher Pierce Refsnes acted as its financial advisor in
connection with these offerings and that, by failing to apprise it of the
alleged risks involved in the Orange County Investment Pool (the "OCIP") and
prevent the issuance of allegedly inaccurate official statements, Rauscher
Pierce Refsnes became liable for breach of contract, professional negligence,
breach of fiduciary duty and aiding and abetting breaches of fiduciary duty
committed by the County's Treasurer and Assistant Treasurer. Rauscher Pierce
Refsnes denies the County's allegations, including those relating to Rauscher's
role in connection with these transactions. The County seeks to recover at least
$500 million in damages for losses it allegedly suffered in the OCIP from
Rauscher Pierce Refsnes and defendants in other actions. Dain Rauscher, as the
successor of Rauscher Pierce Refsnes, believes it has substantial and
meritorious defenses available and is defending itself vigorously in this
action.
While the outcome of any litigation is uncertain, management, based in part
upon consultation with legal counsel as to certain of the actions pending
against the Company and/or its subsidiaries, believes that the resolution of all
such matters will not have a material adverse effect on the Company's
consolidated financial condition or results of operations of the Company as set
forth in the consolidated financial statements contained herein.
J. TRADING ACTIVITIES AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Dain Rauscher is a dealer in corporate, tax-exempt and governmental fixed
income securities and corporate equity securities and may recognize profits or
losses on transactions in, or fluctuations in the value of, such securities held
in inventory. Internal guidelines intended to limit the size and risk of
inventories maintained have been established and are periodically reviewed.
These inventories are held primarily for distribution to Dain Rauscher's
individual and institutional clients in order to meet those
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
J. TRADING ACTIVITIES AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
(CONTINUED)
clients' needs. Revenues from principal transactions for the two years ended
December 31, 1997, originate from the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Equity securities..................................................... $ 75,699 $ 89,251
Municipal securities.................................................. 32,100 29,451
Government securities................................................. 19,289 20,826
Corporate fixed income securities..................................... 15,483 20,371
Mortgage-backed and other securities.................................. 9,579 9,141
---------- ----------
$ 152,150 $ 169,040
---------- ----------
---------- ----------
</TABLE>
Dain Rauscher sells securities not yet purchased (short sales) for its own
account, primarily to hedge its fixed income trading securities. The
establishment of short positions exposes the Company to off-balance-sheet market
risk in the event prices increase, as the Company may be obligated to acquire
the securities at prevailing market prices.
The Company periodically hedges its fixed income trading inventories with
financial futures or option contracts. At December 31, 1997 and 1996,
respectively, the Company had open commitments to sell under financial futures
contracts with notional amounts of $20.6 million and $6.9 million. The Company
had no written option contracts at December 31, 1997 or 1996. The fair market
values of these contracts was not material at December 31, 1997 or 1996. In
addition, the average fair market values of these contracts during 1997 and 1996
were not material. Such option and financial futures contracts expose the
Company to off-balance-sheet market risk in the event that the changes in
interest rates do not closely correlate with the change in the security price.
Transactions in futures contracts are conducted through regulated exchanges
which guarantee performance of counterparties and are settled in cash on a daily
basis, thereby minimizing credit risk. Maintaining futures contracts typically
requires the Company to deposit cash or securities with an exchange or other
financial intermediary as security for its obligations. Additional cash or
securities may be required to be deposited thereafter due to fluctuations in the
market value of the futures contract. In writing option contracts, the Company
receives a premium from the purchaser in exchange for incurring an obligation to
purchase or sell securities upon exercise of the option. These obligations may
require the Company to purchase securities at prices higher than prevailing
market prices or sell securities at prices below prevailing market prices in
order to fulfill its obligations under the contracts. Other than as described,
the Company does not enter into other derivative financial instruments with
off-balance-sheet risk. Derivative financial instruments held or issued for
trading purposes were immaterial to the consolidated financial statements. The
Company's exposure to credit risk is represented by the fair value of trading
securities owned.
In the normal course of business, the Company's activities involve the
execution, settlement and financing of various securities transactions. These
activities may expose the Company to off-balance-sheet credit and market risks
in the event the customer or counterparty is unable to fulfill its contractual
obligations. Such risks may be increased by volatile trading markets.
In the normal course of business, the Company enters into when-issued
underwriting and purchase commitments. Transactions relating to such commitments
open at year end and subsequently settled had no material effect on the
consolidated financial statements.
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
J. TRADING ACTIVITIES AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
(CONTINUED)
The Company seeks to control the risks associated with its customer
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. The Company monitors required
margin levels daily and, pursuant to such guidelines, requires customers to
deposit additional collateral or to reduce positions when necessary. Market
declines could, however, reduce the value of collateral below the amount loaned,
plus accrued interest, before the collateral could be sold.
A portion of the Company's customer activity involves the sale of securities
not yet purchased (short sales) and the writing of option contracts. Such
transactions may require the Company to purchase or sell financial instruments
at prevailing market prices in order to fulfill the customer's obligations.
The Company lends money subject to reverse repurchase agreements. All
positions are collateralized, primarily with U.S. government or U.S. government
agency securities. The Company generally takes physical possession of securities
purchased under agreements to resell. Such transactions may expose the Company
to risk in the event such borrowers do not repay the loans and the value of
collateral held is less than that of the underlying receivable. These agreements
provide the Company with the right to maintain the relationship between market
value of the collateral and the receivable.
The Company may pledge firm or customer margin securities for bank loans,
repurchase agreements, securities loaned or to satisfy margin deposits of
clearing organizations. All repurchase agreements are collateralized by cash or
securities delivered by the Company. In the event the counterparty is unable to
return such securities pledged, the Company may be exposed to the risks of
acquiring the securities at prevailing market prices or holding collateral
possessing a market value less than that of the related pledged securities. The
Company seeks to control these risks by monitoring the market value of
securities pledged and requiring adjustments of collateral levels where
necessary. At December 31, 1997, the market value of such securities pledged
approximated the borrowings outstanding.
K. REGULATORY REQUIREMENTS
The Company's securities subsidiaries are subject to the Securities and
Exchange Commission's Uniform Net Capital Rule. Clearing, the Company's
operations subsidiary until February 28, 1998, cleared and settled trades for
Dain Rauscher. Clearing carried all customer accounts, extended margin credit to
customers, paid interest on credit balances of customers and invested any excess
customer balances. As a result, Clearing was subject to the Uniform Net Capital
Rule whereby net capital of not less than 2 percent of aggregate debit items
must be maintained. The New York Stock Exchange, Inc. also may require a member
organization to reduce its business if regulatory net capital is less than 4
percent of such aggregate debit items, and may prohibit a member firm from
expanding its business and declaring cash dividends if its regulatory net
capital is less than 5 percent of such aggregate debit items. At December 31,
1997, net capital was $89.4 million at Clearing, which was 7.2 percent of
aggregate debit balances and $27.1 million in excess of the 5-percent
requirement. At December 31, 1997, Dain Bosworth and Rauscher Pierce Refsnes had
net capital requirements of $1.0 million each as neither firm carried customer
balances on its balance sheet. At December 31, 1997, Dain Bosworth and Rauscher
Pierce Refsnes had net capital of $33.9 million and $23.3 million, respectively,
in excess of their minimum requirements. Beginning in March 1998, only Dain
Rauscher, the Company's single remaining broker-dealer, is subject to the
Uniform Net Capital Rule and, accordingly, must maintain net capital of at least
2 percent of aggregate debit items.
Rule 15c3-3 of the Securities Exchange Act of 1934 specifies certain
conditions under which brokers and dealers carrying customer accounts may be
required to maintain cash or qualified securities in a special reserve account
for the exclusive benefit of customers. Amounts to be maintained are computed in
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
K. REGULATORY REQUIREMENTS (CONTINUED)
accordance with a formula defined in the Rule. At December 31, 1997, the Company
was not required to have any amounts segregated in special reserve accounts.
L. EMPLOYEE BENEFIT PLANS
The Company sponsors a retirement plan which covers substantially all
full-time employees who are at least 21 years of age and have been employed for
at least six months. Participants may contribute on a pretax basis up to 12
percent of eligible compensation to the plan subject to certain aggregate
limitations; the Company then matches up to 5 percent of eligible compensation
at a 40-percent rate. Matching contributions are limited to $3,000 per employee
annually and are paid to the stock fund within the plan. Also, at the end of
each year, a profitability-based contribution, as determined by the Company's
Board of Directors, is made to the plan. The minimum required contribution is 3
percent of eligible compensation.
The Company's policy is to fund plan costs currently. Earnings have been
charged for contributions, net of forfeitures, to the plan as follows:
$15,759,000, $18,901,000 and $16,880,000 for 1997, 1996 and 1995, respectively.
M. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.................................................... $ 27,561 $ 32,896 $ 20,183
State...................................................... 5,083 5,534 3,207
Deferred:
Federal.................................................... (4,360) (6,710) (2,410)
State...................................................... (804) (1,129) (582)
--------- --------- ---------
$ 27,480 $ 30,591 $ 20,398
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of ordinary federal income taxes (based on a rate of 35
percent) with the actual tax expense provided on earnings is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Ordinary federal income tax expense.......................... $ 26,864 $ 30,590 $ 19,695
State income taxes, net of federal tax benefit............... 3,229 3,249 1,599
Tax-exempt interest, net of related interest expense......... (1,428) (872) (1,324)
Other........................................................ (1,185) (2,376) 428
--------- --------- ---------
$ 27,480 $ 30,591 $ 20,398
--------- --------- ---------
--------- --------- ---------
Effective tax rate........................................... 35.8% 35.0% 36.3%
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
M. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilities are:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accruals not currently deductible..................................... $ 40,873 $ 36,025
Tax attributes acquired............................................... 1,120 1,632
Fixed assets.......................................................... 2,506 1,573
Other................................................................. 597 514
--------- ---------
45,096 39,744
--------- ---------
Deferred tax liabilities:
Other................................................................. (228) (40)
--------- ---------
$ 44,868 $ 39,704
--------- ---------
--------- ---------
</TABLE>
The Company has determined that it is not required to establish a valuation
allowance for the deferred tax asset since it is more likely than not that the
deferred tax asset will be realized principally through carryback to taxable
income in prior years, future reversals of existing taxable temporary
differences, and, to a lesser extent, future taxable income. The Company's
conclusion that it is more likely than not that the deferred tax asset will be
realized is based on federal taxable income of over $184 million in the
carryback period, substantial state taxable income in the carryback period, as
well as prospects for continued earnings.
N. SUBSEQUENT EVENT
On February 9, 1998, the Company announced that it had entered into an
agreement to acquire Wessels, Arnold & Henderson, LLC, a privately held
investment banking and institutional equity sales and trading firm based in
Minneapolis. The approximate purchase price of $150 million includes $120
million in cash, up to $30 million face amount in five-year, subordinated
debentures and other direct costs of the acquisition. The cash portion of the
purchase price is expected to be paid from available cash and a new subordinated
credit facility. The transaction will be accounted for as a purchase and is
expected to be completed on March 31, 1998, pending regulatory approval.
F-19
<PAGE>
DAIN RAUSCHER CORPORATION
QUARTERLY FINANCIAL INFORMATION
(UNAUDITED, IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1998
Net revenues..................................................... $ 172,447
----------
----------
Earnings before income taxes..................................... $ (3,163)
----------
----------
Net earnings (loss).............................................. $ (2,024)
----------
----------
Per-share data:
Basic net earnings (loss)...................................... $ (.16)
----------
----------
Diluted net earnings (loss).................................... $ (.16)
----------
----------
Dividends...................................................... $ .22
----------
----------
1997
Net revenues..................................................... $ 165,962 $ 156,131 $ 181,368 $ 188,641
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings before income taxes..................................... $ 24,389 $ 17,499 $ 10,991 $ 23,876
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings..................................................... $ 15,755 $ 11,137 $ 7,056 $ 15,327
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per-share data:
Base net earnings.............................................. $ 1.29 $ .91 $ .57 $ 1.24
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted net earnings........................................... $ 1.22 $ .86 $ .54 $ 1.16
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Dividends...................................................... $ .18 $ .18 $ .18 $ .18
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
1996
Net revenues..................................................... $ 156,034 $ 153,843 $ 151,035 $ 164,844
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings before income taxes..................................... $ 23,289 $ 19,954 $ 19,984 $ 24,175
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earnings..................................................... $ 15,080 $ 13,028 $ 12,990 $ 15,713
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per-share data:
Basic net earnings............................................. $ 1.25 $ 1.07 $ 1.07 $ 1.29
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted net earnings........................................... $ 1.21 $ 1.04 $ 1.02 $ 1.23
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Dividends...................................................... $ .11 $ .15 $ .15 $ .15
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
F-20
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1997
MARCH 31, ------------
1998
------------
(UNAUDITED)
<S> <C> <C>
Assets:
Cash and cash equivalents.......................................................... $ 51,815 $ 35,909
Receivable from customers.......................................................... 1,124,283 1,170,160
Receivable from brokers and dealers................................................ 274,901 229,421
Securities purchased under agreements to resell.................................... 327,822 135,777
Trading securities owned, at market................................................ 436,554 541,511
Equipment, leasehold improvements and buildings, at cost, net...................... 45,161 42,376
Other receivables.................................................................. 76,353 80,867
Deferred income taxes.............................................................. 44,922 44,868
Other assets....................................................................... 146,531 23,512
------------ ------------
$ 2,528,342 $2,304,401
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings.............................................................. $ 142,415 $ 179,000
Drafts payable..................................................................... 98,173 83,499
Payable to customers............................................................... 597,128 601,949
Payable to brokers and dealers..................................................... 557,887 580,970
Securities sold under repurchase agreements........................................ 158,756 170,906
Trading securities sold, but not yet purchased, at market.......................... 344,738 127,364
Accrued compensation............................................................... 71,732 128,463
Other accrued expenses and accounts payable........................................ 129,312 97,500
Subordinated and other debt........................................................ 108,316 15,659
------------ ------------
2,208,457 1,985,310
------------ ------------
Shareholders' equity:
Common stock....................................................................... 1,556 1,546
Additional paid-in capital......................................................... 94,859 89,321
Retained earnings.................................................................. 228,665 233,419
Treasury stock, at cost............................................................ (5,195) (5,195)
------------ ------------
319,885 319,091
------------ ------------
$ 2,528,342 $2,304,401
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1997
---------- ----------
<S> <C> <C>
Revenues:
Commissions............................................................................. $ 72,924 $ 63,627
Principal transactions.................................................................. 36,795 42,024
Investment banking and underwriting..................................................... 22,229 25,868
Interest................................................................................ 31,797 28,734
Asset management........................................................................ 13,330 10,500
Correspondent clearing.................................................................. 4,466 4,428
Other................................................................................... 6,473 4,891
---------- ----------
Total revenues.......................................................................... 188,014 180,072
Interest expense.......................................................................... (15,567) (14,110)
---------- ----------
Net revenues.............................................................................. 172,447 165,962
---------- ----------
Expenses excluding interest:
Compensation and benefits............................................................... 110,960 101,484
Communications.......................................................................... 12,187 11,309
Occupancy and equipment................................................................. 11,519 9,763
Travel and promotional.................................................................. 7,213 6,577
Floor brokerage and clearing fees....................................................... 2,827 2,927
Other................................................................................... 10,904 9,513
Merger-related charge................................................................... 20,000 --
---------- ----------
Total expenses excluding interest......................................................... 175,610 141,573
---------- ----------
Earnings:
Earnings (loss) before income taxes..................................................... (3,163) 24,389
Income tax benefit (expense)............................................................ 1,139 (8,634)
---------- ----------
Net earnings (loss)....................................................................... $ (2,024) $ 15,755
---------- ----------
---------- ----------
Earnings (loss) per share:
Basic................................................................................... $ (0.16) $ 1.29
---------- ----------
---------- ----------
Diluted................................................................................. $ (0.16) $ 1.22
---------- ----------
---------- ----------
Dividends per share....................................................................... $ 0.22 $ 0.18
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)................................................................... $ (2,024) $ 15,755
Adjustments to reconcile earnings to cash provided (used) by operating activities, net
of effect of acquisition:
Depreciation and amortization....................................................... 3,453 2,639
Deferred income taxes............................................................... (54) (1,060)
Other non-cash items................................................................ 2,106 1,872
Cash and short-term investments segregated for regulatory purposes.................. -- (51,000)
Net payable to brokers and dealers.................................................. (58,247) 46,162
Securities purchased under agreements to resell..................................... (192,044) (189,956)
Net trading securities owned and securities sold, but not yet purchased............. 328,404 36,782
Short-term borrowings and drafts payable of securities companies.................... 28,090 176,276
Net receivable from customers....................................................... 41,055 (6,643)
Securities sold under repurchase agreements......................................... (12,150) 10,594
Accrued compensation................................................................ (56,908) (50,987)
Other............................................................................... 12,653 24,332
----------- -----------
Cash provided by operating activities................................................... 94,334 14,766
----------- -----------
Cash flows from financing activities:
Proceeds from:
Issuance of common stock............................................................ 1,215 1,037
Subordinated and other debt......................................................... 80,000 --
Payments for:
Revolving credit agreement, net..................................................... (50,000) --
Subordinated and other debt......................................................... (9,000) (3,435)
Dividends on common stock........................................................... (2,713) (2,203)
----------- -----------
Cash provided (used) by financing activities............................................ 19,502 (4,601)
----------- -----------
Cash flows from investing activities:
Proceeds from investment dividends and sales.......................................... 1,532 --
Payments for:
Equipment, leasehold improvements and other......................................... (3,874) (3,509)
Acquisition, net of cash acquired................................................... (95,588) --
----------- -----------
Cash used by financing activities....................................................... (97,930) (3,509)
----------- -----------
Increase in cash and cash equivalents................................................... 15,906 6,656
Cash and cash equivalents:
At beginning of period.............................................................. 35,909 34,387
----------- -----------
At end of period.................................................................... $ 51,815 $ 41,043
----------- -----------
----------- -----------
</TABLE>
Income tax payments totaled $2,651,000 and $6,453,000 and interest payments
totaled $11,489,000 and $12,430,000 during the three months ended March 31, 1998
and 1997, respectively.
During the three months ended March 31, 1998, the Company had non-cash
financing activity of $21,657,000 representing subordinated debentures issued as
a portion of the consideration paid for an acquisition. Also for the three
months ended March 31, 1998 and 1997, respectively, the Company had non-cash
financing activity of $4,149,000 and $2,323,000 associated with the crediting of
common stock to deferred compensation plan participants.
See accompanying notes to consolidated financial statements.
F-23
<PAGE>
DAIN RAUSCHER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with the instructions for Form 10-Q and do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997. In the opinion of management, all adjustments necessary for a fair
presentation of such interim consolidated financial statements have been
included. All such adjustments are of a normal recurring nature. The results of
operations for the three-month period ended March 31, 1998, are not necessarily
indicative of results for subsequent periods.
Certain prior year amounts in the financial statements have been
reclassified to conform to the 1998 presentation.
B. ACQUISITION
On March 31, 1998, the Company acquired Wessels, Arnold & Henderson, LLC
("WAH"), a privately held investment banking, institutional equity sales and
trading firm based in Minneapolis. The transaction was accounted for as a
purchase and, accordingly, the revenues and operating results of WAH are not
included in the consolidated statements of operations for the three months ended
March 31, 1998.
The consideration paid for the acquisition was $120 million of cash and
five-year subordinated debentures with a discounted value of $21.7 million ($30
million face amount). Goodwill of approximately $115 million was recorded and
will be amortized over an estimated life of 25 years.
The Company recorded a $20.0 million pretax charge ($12.8 million after tax)
during the 1998 first quarter for costs related to the merger. Substantially all
of the $20.0 million charge will result in cash outflows, primarily during the
second quarter of 1998. As a result of the merger, approximately 150 jobs were
eliminated. These non-recurring costs include the following: $16.0 million for
severance; $2.5 million for space consolidation; and the remaining $1.5 million
for other integration costs. As of March 31, 1998, approximately $2.8 million in
expenditures, primarily severance, had been incurred.
The following unaudited pro forma information has been prepared assuming
that the acquisition of WAH had occurred at the beginning of the periods
presented after including the impact of certain adjustments including
amortization of goodwill, increased interest expense on acquisition debt and the
related income tax effects. The pro forma financial information below does not
include the effect of the
F-24
<PAGE>
DAIN RAUSCHER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
$20.0 million charge recorded by the Company in the quarter ended March 31, 1998
that was directly related to the acquisition of WAH.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Statement of Operations Data:
Revenues............................................................ $ 205,487 $ 194,843
Interest expense.................................................... (17,895) (16,194)
---------- ----------
Net revenues........................................................ 187,592 178,649
Expenses excluding interest......................................... 170,815 152,726
---------- ----------
Earnings before income taxes........................................ 16,777 25,923
Income tax expense.................................................. (5,916) (9,186)
---------- ----------
Net earnings........................................................ $ 10,861 $ 16,737
---------- ----------
---------- ----------
Basic earnings per share............................................ $ 0.88 $ 1.37
---------- ----------
---------- ----------
Diluted earnings per share.......................................... $ 0.82 $ 1.29
---------- ----------
---------- ----------
</TABLE>
The pro forma financial information above is presented for informational
purposes only and is not necessarily indicative of the actual results that would
have been achieved had the merger been consummated prior to the dates or periods
indicated, nor are they necessarily indicative of future operating results.
C. SHORT-TERM BORROWINGS
On March 20, 1998, the Company entered into a $50 million committed,
revolving credit agreement to replace a similar facility dated June 27, 1997.
The facility expires March 19, 1999 and contains a one-year renewal option.
Loans under the facility are unsecured and bear interest at a floating rate of
the London Interbank Offering Rate (LIBOR) plus 61 basis points. No amounts were
outstanding under the facility at March 31, 1998. The Company must comply with
provisions in the agreement regarding net worth, regulatory net capital and
indebtedness.
D. SUBORDINATED AND OTHER DEBT
On March 31, 1998, the Company's broker-dealer subsidiary entered into an
$80 million subordinated term loan agreement with a group of banks in connection
with the acquisition of WAH. Proceeds from the loan qualify as regulatory
capital. Term loans under this agreement are unsecured, and consist of advances
bearing interest at either the current Eurodollar Interbank Rate plus 160 basis
points, or the lead bank's published Reference Rate, at the discretion of the
Company. Principal payments under the agreement consist of $5.0 million per
quarter beginning April 1, 1999 with the final payment due on December 31, 2002.
The Company must comply with provisions in the agreement regarding net worth and
regulatory net capital.
On March 31, 1998, the Company also issued $30 million (face amount) in
5-year zero coupon subordinated debentures in connection with the acquisition of
WAH. The debentures were recorded at a discounted present value of $21.7
million.
F-25
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR A PROSPECTUS
SUPPLEMENT OR PROSPECTUS SUPPLEMENTS IN CONNECTION WITH THE OFFERING DESCRIBED
HEREIN AND THEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN
OR THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS
MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT OR PROSPECTUS SUPPLEMENTS. THE DELIVERY OF THIS PROSPECTUS
AND A PROSPECTUS SUPPLEMENT OR PROSPECTUS SUPPLEMENTS RELATING TO PARTICULAR
SECURITIES SHALL NOT CONSTITUTE AN OFFER OF ANY OF THE OTHER SECURITIES COVERED
BY THIS PROSPECTUS. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
OR PROSPECTUS SUPPLEMENTS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 8
The Company............................................................... 13
Price Range of Common Stock............................................... 22
Dividends................................................................. 22
Capitalization............................................................ 23
Selected Consolidated Financial Data...................................... 24
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 26
Management................................................................ 38
Use of Proceeds........................................................... 40
Ratios of Earnings to Fixed Charges....................................... 41
Description of Debt Securities............................................ 41
Description of Capital Stock.............................................. 49
Description of Securities Warrants........................................ 53
Foreign Currency Risks.................................................... 56
Plan of Distribution...................................................... 57
Validity of Securities.................................................... 59
Experts................................................................... 59
Index to Consolidated Financial Statements................................ 60
</TABLE>
DAIN RAUSCHER
CORPORATION
DEBT SECURITIES,
PREFERRED STOCK,
COMMON STOCK AND
SECURITIES WARRANTS
---------------------
PROSPECTUS
---------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The table below sets forth estimated expenses in connection with the
issuance and distribution of the Common Stock being offered:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee.............................................................. $ 59,000
Legal fees and expenses*.......................................................... 100,000
Trustee's and Depositary's fees and expenses*..................................... 30,000
Accounting fees and expenses*..................................................... 50,000
Printing expenses*................................................................ 75,000
Rating agency fees*............................................................... 250,000
Blue Sky and legal investment fees and related expenses*.......................... 35,000
Miscellaneous (including listing fees, if applicable)*............................ 101,000
----------
Total........................................................................... $ 700,000
----------
----------
</TABLE>
- ------------------------
* Estimated pursuant to Item 5 of Regulations S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
that, under certain circumstances, a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason for the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at its
request in such capacity in another corporation or business association, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she 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 or her conduct was unlawful.
Article SEVENTH of the Company's Certification of Incorporation, as amended,
provides, in effect, that persons serving as officers and directors of a
corporation at the request of the Company shall be entitled to be indemnified by
the Company to the extent permitted by Section 145 of the Delaware General
Corporation Law, as amended.
The Company has purchased directors' and officers' liability insurance,
including a Company reimbursement policy. Subject to the policy conditions, the
insurance provides coverage for amounts payable by the Company to its directors
and officers pursuant to the Company's charter documents. In addition, the
Company has entered into indemnification agreements with its directors and
executive officers contractually obligating the Company to, among other things,
maintain the same level of such insurance coverage as was being provided at the
time of execution of such agreements.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
1.1 Form of Underwriting Agreement.*
4.1 Amended and Restated Certificate of Incorporation (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended
March 31, 1998 as amended May 27, 1998).
4.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q dated September 30, 1996).
4.3 Indenture dated as of May 15, 1998 between the Company and Norwest Bank Minnesota,
N.A., as Senior Note Trustee.*
4.4 Indenture dated as of May 15, 1998 between the Company and Norwest Bank Minnesota,
N.A., as Subordinated Note Trustee.*
4.5 Form of Senior Note (included as part of Exhibit 4.3).*
4.6 Form of Subordinated Note (included as part of Exhibit 4.4).*
4.7 Form of Common Stock Warrant Agreement.*
4.8 Form of Common Stock Warrant Certificate (included as part of Exhibit 4.7).*
4.9 Form of Preferred Stock Warrant Agreement.*
4.10 Form of Preferred Stock Warrant Certificate (included as part of Exhibit 4.9).*
4.11 Form of Debt Securities Warrant Agreement.*
4.12 Form of Debt Securities Warrant Certificate (included as part of Exhibit 4.11).*
4.13 Form of Certificate of Designations.*
4.14 Form of Certificate of Designations--convertible*
5.1 Opinion and consent of Dorsey & Whitney LLP regarding the legality of the Securities.*
12 Computation of ratio of earnings to fixed charges and to Combined Fixed Charges and
Preferred Stock Dividends.*
23.1 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1).*
23.2 Consent of KPMG Peat Marwick LLP.*
24 Power of Attorney.*
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 Norwest Bank Minnesota, N.A.*
</TABLE>
- ------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
II-2
<PAGE>
(a) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933.
(b) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
PROVIDED, HOWEVER, that paragraphs (a) and (b) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on May 28, 1998.
<TABLE>
<S> <C> <C>
DAIN RAUSCHER CORPORATION
By: /s/ JOHN C. APPEL
-----------------------------------------
John C. Appel
VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board,
/s/ IRVING WEISER* President, Chief
- ------------------------------ Executive Officer and May 6, 1998
Irving Weiser Director (Principal
executive officer)
Vice Chairman, Chief
/s/ JOHN C. APPEL* Financial Officer and
- ------------------------------ Director (Principal May 6, 1998
John C. Appel Financial Officer)
/s/ DAVID J. PARRIN* Senior Vice President,
- ------------------------------ Controller (Principal May 6, 1998
David J. Parrin Accounting Officer)
/s/ KENNETH J. WESSELS*
- ------------------------------ Senior Executive Vice May 6, 1998
Kenneth J. Wessels President and Director
/s/ J. EVANS ATTWELL*
- ------------------------------ Director May 6, 1998
J. Evans Attwell
/s/ SUSAN S. BOREN*
- ------------------------------ Director May 6, 1998
Susan S. Boren
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ F. GREGORY FITZ-GERALD*
- ------------------------------ Director May 6, 1998
F. Gregory Fitz-Gerald
/s/ WALTER F. MONDALE*
- ------------------------------ Director May 6, 1998
Walter F. Mondale
/s/ C.A. RUNDELL, JR.*
- ------------------------------ Director May 6, 1998
C.A. Rundell, Jr.
/s/ ROBERT L. RYAN*
- ------------------------------ Director May 6, 1998
Robert L. Ryan
/s/ ARTHUR R. SCHULZE, JR.*
- ------------------------------ Director May 6, 1998
Arthur R. Schulze, Jr.
/s/ JOHN C. APPEL
- ------------------------------
John C. Appel
*ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBIT 1.1
DAIN RAUSCHER CORPORATION
UNDERWRITING AGREEMENT
INTRODUCTORY. Dain Rauscher Corporation, a corporation incorporated
under the laws of the State of Delaware (the "Company"), proposes to issue and
sell from time to certain of its unsecured debt securities, preferred stock and
common stock of the Company (par value $.125 per share) ("Common Stock")
registered under the registration statement referred to in Section 2(a)
("Registered Securities"). The Registered Securities constituting debt
securities will be issued under a [SENIOR/SUBORDINATED] indenture, dated as of
______, 19 ("Indenture"), between the Company and _______., as Trustee, in one
or more series, which series may vary as to interest rates, maturities,
redemption provisions, selling prices and other terms. The Registered Securities
constituting preferred stock may be issued in one or more series, which series
may vary as to dividend rates, redemption provisions, selling prices and other
terms. Particular series or offerings of Registered Securities will be sold
pursuant to a Terms Agreement referred to in Section 3, for resale in accordance
with terms of offering determined at the time of sale.
The Registered Securities involved in any such offering are hereinafter
referred to as the "Offered Securities". The firm or firms which agree to
purchase the Offered Securities are hereinafter referred to as the
"Underwriters" of such securities, and the representative or representatives of
the Underwriters, if any, specified in a Terms Agreement referred to in Section
3 are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the Underwriters,
the term "Representatives", as used in this Agreement (other than in Sections
2(b), 5(c) and 6 and the second sentence of Section 3), shall mean the
Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company, as of
the date of each Terms Agreement referred to in Section 3, represents and
warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 333- ), including a
prospectus, relating to the Registered Securities has been filed with
the Securities and Exchange Commission ("Commission") and has become
effective. Such registration statement, as amended at the time of any
Terms Agreement referred to in Section 3, is hereinafter referred to as
the "Registration Statement", and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 3 to
reflect the terms of the Offered Securities (if they are debt securities
or preferred stock) and the terms of the offering of the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act of
1933 ("Act"), including all material incorporated by reference therein,
is hereinafter referred to as the "Prospectus". No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
respects to the requirements of the Act, the Trust Indenture Act of 1939
("Trust Indenture Act") and the rules and regulations of the Commission
("Rules and Regulations") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
on the date of each Terms Agreement referred to in Section 3, the
Registration Statement and the
1
<PAGE>
Prospectus will conform in all respects to the requirements of the Act,
the Trust Indenture Act and the Rules and Regulations, and neither of
such documents will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that the
foregoing does not apply to statements in or omissions from any of such
documents based upon written information furnished to the Company by any
Underwriter through the Representatives, if any, specifically for use
therein.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification.
(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation or limited liability company in good standing
under the laws of the jurisdiction of its incorporation or formation,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; and each subsidiary
of the Company is duly qualified to do business as a foreign corporation
or limited liability company in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its
business requires such qualification; all of the issued and outstanding
capital stock or interest of each subsidiary of the Company has been
duly authorized and validly issued and is fully paid and nonassessable;
and the capital stock or interest of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(e) [IF THE OFFERED SECURITIES ARE DEBT SECURITIES:] The Indenture has
been duly authorized and has been duly qualified under the Trust
Indenture Act; the Offered Securities have been duly authorized; and
when the Offered Securities are delivered and paid for pursuant to the
Terms Agreement on the Closing Date (as defined below) or pursuant to
Delayed Delivery Contracts (as hereinafter defined), the Indenture will
have been duly executed and delivered, such Offered Securities will have
been duly executed, authenticated, issued and delivered and will conform
to the description thereof contained in the Prospectus and the Indenture
and such Offered Securities will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e)[IF THE OFFERED SECURITIES ARE PREFERRED STOCK:] The Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with the Terms Agreement
on the Closing Date (as defined below), such Offered Securities will
have been validly issued, fully paid and nonassessable and will conform
to the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(e) [IF THE OFFERED SECURITIES ARE COMMON STOCK:] The Offered
Securities and all other outstanding shares of capital stock of the
Company have been duly authorized; all outstanding shares of capital
stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with the Terms Agreement on the
Closing Date (as defined below), such Offered Securities will have been,
validly
2
<PAGE>
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the stockholders of
the Company have no preemptive rights with respect to the Offered
Securities.
(f) [IF THE OFFERED SECURITIES ARE CONVERTIBLE:] When the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date, such Offered Securities will be convertible into
Common Stock of the Company in accordance with their terms [IF THE
OFFERED SECURITIES ARE PREFERRED STOCK] or the Indenture [IF THE OFFERED
SECURITIES ARE DEBT SECURITIES]; the shares of Common Stock initially
issuable upon conversion of such Offered Securities have been duly
authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be validly issued, fully paid and
nonassessable; the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and
conform to the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
the Common Stock.
(g) [IF THE OFFERED SECURITIES ARE COMMON STOCK OR ARE CONVERTIBLE
INTO COMMON STOCK:] Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment.
(h) [IF THE OFFERED SECURITIES ARE COMMON STOCK OR ARE CONVERTIBLE
INTO COMMON STOCK:] There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(i) [IF THE OFFERED SECURITIES CONSTITUTE COMMON STOCK OR ARE
CONVERTIBLE INTO COMMON STOCK] [IF THEY ARE COMMON STOCK] The
outstanding shares of Common Stock [If they are convertible] or the
Common Stock into which the Offered Securities are convertible are
listed on the New York Stock Exchange (the "Stock Exchange") and the
Offered Securities have been approved for listing on the Stock Exchange,
subject to notice of issuance. [IF THE OFFERED SECURITIES ARE DEBT
SECURITIES OR PREFERRED STOCK] The Offered Securities have been approved
for listing on the stock exchange indicated in the Terms Agreement,
subject to notice of issuance.
(j) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act [AND, IF THE OFFERED
SECURITIES ARE DEBT SECURITIES], the Trust Indenture Act and such as may
be required under state securities laws.
(k) [IF THE OFFERED SECURITIES ARE DEBT SECURITIES] The execution,
delivery and performance of the Indenture, the Terms Agreement
(including the provisions of this Agreement) and any Delayed Delivery
Contracts and the issuance and sale of the Offered Securities [AND, IF
THE OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED STOCK,]
compliance with the terms and provisions thereof will not result in a
breach or
3
<PAGE>
violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction
over the Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company or any
such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or
any such subsidiary is subject, or the charter, by-laws or operating
agreement of the Company or any such subsidiary, and the Company has
full power and authority to authorize, issue and sell the Offered
Securities as contemplated by the Terms Agreement (including the
provisions of this Agreement).
(l) The Terms Agreement (including the provisions of this Agreement)
[AND, IF THE OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED STOCK,]
any Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company.
(m) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(n) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(p) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of
its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, or
would materially and adversely affect the ability of the Company to
perform its obligations under [IF THE OFFERED SECURITIES ARE DEBT
SECURITIES] the Indenture, the Terms Agreement (including the provisions
of this Agreement) or any Delayed Delivery Contracts, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(q) The financial statements included in the Registration Statement
and Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and, except as
otherwise disclosed in the Prospectus such financial statements have
been prepared in conformity with the generally accepted accounting
principles in
4
<PAGE>
the United States applied on a consistent basis; any schedules included
in the Registration Statement present fairly the information required to
be stated therein; and if pro forma financial statements are included in
the Registration Statement and Prospectus: the assumptions used in
preparing the pro forma financial statements included in the
Registration Statement and the Prospectus provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
(r) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving
a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and
its subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(s) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(t) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
3. PURCHASE AND OFFERING OF OFFERED SECURITIES. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at the
time the Company determines to sell the Offered Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount or number
of shares to be purchased by each Underwriter, the purchase price to be paid by
the Underwriters and [IF THE OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED
STOCK] the terms of the Offered Securities not already specified [IN THE
INDENTURE, IN THE CASE OF OFFERED SECURITIES THAT ARE DEBT SECURITIES],
including, but not limited to, interest rate [IF DEBT SECURITIES], dividend rate
[IF PREFERRED STOCK], maturity [IF DEBT SECURITIES], any redemption provisions
and any sinking fund requirements and whether any of the Offered Securities may
be sold to institutional investors pursuant to Delayed Delivery Contracts (as
defined below). The Terms Agreement will also specify the time and date of
delivery and payment (such time and date, or such other time not later than
seven full business days thereafter as the Underwriter first named in the Terms
Agreement (the "Lead Underwriter") and the Company agree as the time for payment
and delivery, being herein and in the Terms Agreement referred to as the
"Closing Date"), the place of delivery and payment and any details of the terms
of offering that should be reflected in the prospectus supplement relating to
the offering of the Offered Securities. For purposes of Rule 15c6-1 under the
Securities Exchange Act of 1934, the Closing Date (if later than the otherwise
applicable settlement date) shall be the date for payment of funds and delivery
of securities for all the Offered Securities sold pursuant to the offering,
other than Contract Securities for which payment of funds and delivery of
securities shall be as hereinafter provided. The obligations of the
Underwriters to purchase the Offered Securities will be several and not joint.
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It is understood that the Underwriters propose to offer the Offered Securities
for sale as set forth in the Prospectus.
If the Terms Agreement provides for sales of Offered Securities
pursuant to delayed delivery contracts, the Company authorizes the Underwriters
to solicit offers to purchase Offered Securities pursuant to delayed delivery
contracts substantially in the form of Annex I attached hereto ("Delayed
Delivery Contracts") with such changes therein as the Company may authorize or
approve. Delayed Delivery Contracts are to be with institutional investors,
including commercial and savings banks, insurance companies, pension funds,
investment companies and educational and charitable institutions. On the
Closing Date the Company will pay, as compensation, to the Representatives for
the accounts of the Underwriters, the fee set forth in such Terms Agreement in
respect of the principal amount or number of shares of Offered Securities to be
sold pursuant to Delayed Delivery Contracts ("Contract Securities"). The
Underwriters will not have any responsibility in respect of the validity or the
performance of Delayed Delivery Contracts. If the Company executes and delivers
Delayed Delivery Contracts, the Contract Securities will be deducted from the
Offered Securities to be purchased by the several Underwriters and the aggregate
principal amount or number of shares of Offered Securities to be purchased by
each Underwriter will be reduced pro rata in proportion to the principal amount
or number of shares of Offered Securities set forth opposite each Underwriter's
name in such Terms Agreement, except to the extent that the Lead Underwriter
determines that such reduction shall be otherwise than pro rata and so advise
the Company. The Company will advise the Lead Underwriter not later than the
business day prior to the Closing Date of the principal amount or number of
shares of Contract Securities.
[IF THE OFFERED SECURITIES ARE DEBT SECURITIES AND THE TERMS AGREEMENT
SPECIFIES "BOOK-ENTRY ONLY" SETTLEMENT OR OTHERWISE STATES THAT THE PROVISIONS
OF THIS PARAGRAPH SHALL APPLY] The Company will deliver against payment of the
purchase price the Offered Securities in the form of one or more permanent
global securities in definitive form (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and registered
in the name of Cede & Co., as nominee for DTC. Interests in any permanent global
securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Offered
Securities shall be made by the Underwriters (if the Terms Agreement specifies
that the Offered Securities will not trade in DTC's Same Day Funds Settlement
System) by certified or official bank check or checks in New York Clearing House
(next day) funds or (if the Terms Agreement specifies that the Offered
Securities will trade in DTC's Same Day Funds Settlement System) in Federal
(same day) funds by official check or checks or wire transfer to an account in
New York previously designated to the Lead Underwriter by the Company at a
bank acceptable to the Lead Underwriter, in each case drawn to the order of
at the place of payment specified in the Terms Agreement on the Closing
Date, against delivery to the Trustee as custodian for DTC of the Global
Securities representing all of the Offered Securities.
4. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters that it will furnish to counsel for the Underwriters, one
signed copy of the registration statement relating to the Registered Securities,
including all exhibits, in the form it became effective and of all amendments
thereto and that, in connection with each offering of Offered Securities:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b)(2) (or, if applicable and if
consented to by the Lead Underwriter, subparagraph (5)) not later than
the second business day following the execution and delivery of the
Terms Agreement.
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(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable opportunity
to comment on any such proposed amendment or supplement; and the Company
will also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of
any part thereof and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company promptly will notify the Lead Underwriter of such event and
will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance. Neither the Lead
Underwriter's consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 5.
(d) As soon as practicable, but not later than 16 months, after the
date of each Terms Agreement, the Company will make generally available
to its securityholders an earnings statement covering a period of at
least 12 months beginning after the later of (i) the effective date of
the registration statement relating to the Registered Securities, (ii)
the effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such
Terms Agreement and (iii) the date of the Company's most recent Annual
Report on Form 10-K filed with the Commission prior to the date of such
Terms Agreement, which will satisfy the provisions of Section 11(a) of
the Act.
(e) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, the
Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as the Lead Underwriter
reasonably requests. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale and [IF THE OFFERED SECURITIES ARE DEBT SECURITIES
OR PREFERRED STOCK] the determination of their eligibility for
investment under the laws of such jurisdictions as the Lead Underwriter
designates and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of five years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to
the Representatives (i) as soon as available, a copy of each report and
any definitive proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934 or mailed to stockholders, and
(ii) from time to time, such other information concerning the Company as
the Lead Underwriter may reasonably request.
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(h) The Company will pay all expenses incident to the performance of
its obligations under the Terms Agreement (including the provisions of
this Agreement), for any filing fees or other expenses (including fees
and disbursements of counsel) in connection with qualification of the
Registered Securities for sale [IF THE OFFERED SECURITIES ARE DEBT
SECURITIES OR PREFERRED STOCK] any determination of their eligibility
for investment under the laws of such jurisdictions as the Lead
Underwriter may designate and the printing of memoranda relating thereto
[IF THEY ARE DEBT SECURITIES OR PREFERRED STOCK], for any applicable
filing fee incident to, and the reasonable fees and disbursements of
counsel for the Underwriters in connection with, the review by the
National Association of Securities Dealers, Inc. of the Registered
Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of Registered
Securities and for expenses incurred in distributing the Prospectus, any
preliminary prospectuses, any preliminary prospectus supplements or any
other amendments or supplements to the Prospectus to the Underwriters.
(i) [IF THE OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED STOCK]
The Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares
of its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of the Lead Underwriter for a period
beginning at the time of execution of the Terms Agreement and ending the
number of days after the Closing Date specified under "Blackout" in the
Terms Agreement except issuances of Common Stock pursuant to the
conversion or exchange of convertible or exchangeable securities or the
exercise of warrants or options, in each case outstanding on the date of
the Terms Agreement, grants of employee stock options pursuant to the
terms of a plan in effect on the date of the Terms Agreement, issuances
of Common Stock pursuant to the exercise of such options or issuances of
Common Stock pursuant to the Company's dividend reinvestment plan.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters to purchase and pay for the Offered Securities will
be subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of delivery
thereof, of KPMG Peat Marwick LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect
that:
(i) in their opinion the financial statements and any
schedules and any summary of earnings examined by them and
included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on any
unaudited financial statements included in the Registration
Statement;
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<PAGE>
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting matters and
other specified procedures, nothing came to their attention that
caused them to believe that:
(A) the unaudited financial statements, if any, and any
summary of earnings included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should
be made to such unaudited financial statements and summary
of earnings for them to be in conformity with generally
accepted accounting principles;
(B) if any unaudited "capsule" information is contained
in the Prospectus, the unaudited consolidated net sales, net
operating income, net income and net income per share
amounts or other amounts constituting such "capsule"
information and described in such letter do not agree with
the corresponding amounts set forth in the unaudited
consolidated financial statements or were not determined on
a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of the
Terms Agreement, there was any change in the capital stock
or any increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or, at the
date of the latest available balance sheet read by such
accountants, there was any decrease in consolidated net
current assets or net assets, as compared with amounts shown
on the latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the
period of corresponding length ended the date of the latest
income statement included in the Prospectus, in consolidated
net sales, net operating income in the total or [IF THE
OFFERED SECURITIES ARE COMMON STOCK OR ARE CONVERTIBLE INTO
COMMON STOCK] per share amounts of consolidated income
before extraordinary items or net income [IF THE OFFERED
SECURITIES ARE DEBT SECURITIES] in the ratio of earnings to
fixed charges or [IF THE OFFERED SECURITIES ARE PREFERRED
STOCK] in the ratio of earnings to fixed charges and
preferred stock dividends combined;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Prospectus (in each case to the
extent that such dollar amounts, percentages
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<PAGE>
and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject to
the internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results,
except as otherwise specified in such letter.
All financial statements and schedules included in material incorporated
by reference into the Prospectus shall be deemed included in the
Prospectus for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been issued and
no proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or any Underwriter, shall be contemplated by
the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change, or any development or event involving
a prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or its subsidiaries
which, in the judgment of a majority in interest of the Underwriters
including any Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that
any such organization has under surveillance or review its rating of any
debt securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (iv) any banking moratorium declared
by U.S. Federal or Minnesota authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved,
any declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including any Representatives, the effect
of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated the
Closing Date, of counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its
business requires such qualification;
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(ii) [IF THE OFFERED SECURITIES ARE DEBT SECURITIES] The
Indenture has been duly authorized, executed and delivered by the
Company and has been duly qualified under the Trust Indenture
Act; the Offered Securities have been duly authorized; the
Offered Securities other than any Contract Securities have been
duly executed, authenticated, issued and delivered; the Indenture
and the Offered Securities other than any Contract Securities
constitute, and any Contract Securities, when executed,
authenticated, issued and delivered in the manner provided in the
Indenture and sold pursuant to Delayed Delivery Contracts, will
constitute, valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
and the Offered Securities other than any Contract Securities
conform, and any Contract Securities, when so issued and
delivered and sold will conform, to the description thereof
contained in the Prospectus;
(ii) [IF THE OFFERED SECURITIES ARE PREFERRED STOCK] The
Offered Securities have been duly authorized; the Offered
Securities other than any Contract Securities have been validly
issued and are fully paid and nonassessable; any Contract
Securities, when issued, delivered and sold pursuant to Delayed
Delivery Contracts, will be validly issued, fully paid and
non-assessable; and the Offered Securities other than any
Contract Securities conform, and any Contract Securities, when so
issued, delivered and sold, will conform, to the description
thereof contained in the Prospectus; and the stockholders of the
Company have no preemptive rights with respect to the Offered
Securities;
(ii) [IF THE OFFERED SECURITIES ARE COMMON STOCK] The
Offered Securities and all other outstanding shares of the Common
Stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with
respect to the Offered Securities;
(iii) [IF THE OFFERED SECURITIES ARE CONVERTIBLE:] The
Offered Securities other than any Contract Securities are, and
any Contract Securities, when (if the Offered Securities are debt
securities) executed, authenticated, issued and delivered in the
manner provided in the Indenture and sold pursuant to Delayed
Delivery Contracts or (if the Offered Securities are preferred
stock) when issued, delivered and sold pursuant to Delayed
Delivery Contracts, will be convertible into Common Stock of the
Company in accordance with (if they are debt securities) the
Indenture or (if they are preferred stock) their terms]; the
shares of Common Stock initially issuable upon conversion of the
Offered Securities have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable;
the outstanding shares of Common Stock have been duly authorized
and validly issued, are fully paid and nonassessable and conform
to the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with
respect to the Common Stock;
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<PAGE>
(iv) [IF THE OFFERED SECURITIES ARE COMMON STOCK OR ARE
CONVERTIBLE INTO COMMON STOCK:] There are no contracts,
agreements or understandings known to such counsel between the
Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Act;
(v) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by
the Terms Agreement (including the provisions of this Agreement)
in connection with the issuance or sale of the Offered Securities
by the Company, except such as have been obtained and made under
the Act and, [IF THE OFFERED SECURITIES ARE DEBT SECURITIES] the
Trust Indenture Act and such as may be required under state
securities laws;
(vi) The execution, delivery and performance of [IF THE
OFFERED SECURITIES ARE DEBT SECURITIES] the Indenture, the Terms
Agreement (including the provisions of this Agreement) and, [IF
THE OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED STOCK]
any Delayed Delivery Contracts and the issuance and sale of the
Offered Securities and, [IF THE OFFERED SECURITIES ARE DEBT
SECURITIES OR PREFERRED STOCK] compliance with the terms and
provisions thereof will not result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction over
the Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or
by-laws of the Company or any such subsidiary, and the Company
has full power and authority to authorize, issue and sell the
Offered Securities as contemplated by the Terms Agreement
(including the provisions of this Agreement);
(vii) The Registration Statement has become effective under
the Act, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated under the Act, and the registration statement
relating to the Registered Securities, as of its effective date,
the Registration Statement and the Prospectus, as of the date of
the Terms Agreement, and any amendment or supplement thereto, as
of its date, complied as to form in all material respects with
the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations; such counsel have no reason to believe
that such registration statement, as of its effective date, the
Registration Statement, as of the date of the Terms Agreement or
as of the Closing Date, or any amendment
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<PAGE>
thereto, as of its date or as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as
of the date of the Terms Agreement or as of such Closing Date, or
any amendment or supplement thereto, as of its date or as of the
Closing Date, contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; the descriptions in the
Registration Statement and Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be shown;
and such counsel do not know of any legal or governmental
proceedings required to be described in the Prospectus which are
not described as required or of any contracts or documents of a
character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus; and
(viii) The Terms Agreement (including the provisions of this
Agreement) and, [IF THE OFFERED SECURITIES ARE DEBT SECURITIES OR
PREFERRED STOCK] any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company;
(e) The Representatives shall have received from _________,
counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may require,
and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
In rendering such opinion, ______________________ may rely as to the
incorporation of the Company and all other matters governed by
___________________ law upon the opinion of ____________________
referred to above.
(f) The Representatives shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers,
to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Company in this
Agreement are true and correct, that the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement or of any
part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission and that,
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except
as set forth in or contemplated by the Prospectus or as described in
such certificate.
(g) The Representatives shall have received a letter, dated the
Closing Date, of which meets the requirements of subsection (a) of this
Section, except that the
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specified date referred to in such subsection will be a date not more
than three business days prior to the Closing Date for the purposes of
this subsection.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Lead Underwriter may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters under this Agreement and the Terms Agreement.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives, if any,
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in the Terms Agreement.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives, if any, specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
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satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
15
<PAGE>
7. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities under the Terms Agreement
and [IF DEBT SECURITIES] the aggregate principal amount or [IF PREFERRED STOCK
OR COMMON STOCK] number of shares of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total [IF DEBT SECURITIES] principal amount or [IF PREFERRED STOCK OR
COMMON STOCK] number of shares of Offered Securities, the Lead Underwriter may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments under the
Terms Agreement (including the provisions of this Agreement), to purchase the
Offered Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate [IF
DEBT SECURITIES] principal amount or [IF PREFERRED STOCK OR COMMON STOCK] number
of shares of Offered Securities with respect to which such default or defaults
occur exceeds 10% of the total [IF DEBT SECURITIES] principal amount or [IF
PREFERRED STOCK OR COMMON STOCK] number of shares of Offered Securities and
arrangements satisfactory to the Lead Underwriter and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, the Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default. [IF THE
OFFERED SECURITIES ARE DEBT SECURITIES OR PREFERRED STOCK] The respective
commitments of the several Underwriters for the purposes of this Section shall
be determined without regard to reduction in the respective Underwriters'
obligations to purchase the [IF DEBT SECURITIES] principal amounts or [IF
PREFERRED STOCK] numbers of shares of the Offered Securities set forth opposite
their names in the Terms Agreement as a result of Delayed Delivery Contracts
entered into by the Company.
8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of the Terms
Agreement pursuant to Section 7 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
9. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to them at their address furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at Dain Rauscher Corporation, Dain Rauscher
Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422, Attention:
Secretary.
10. SUCCESSORS. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified
16
<PAGE>
in the Terms Agreement and their respective successors and the officers and
directors and controlling persons referred to in Section 6, and no other person
will have any right or obligation hereunder.
11. REPRESENTATION OF UNDERWRITERS. Any Representatives will act for
the several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. COUNTERPARTS. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. APPLICABLE LAW. THIS AGREEMENT AND THE TERMS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF _______,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of _______ in The City of _________ in
any suit or proceeding arising out of or relating to the Terms Agreement
(including the provisions of this Agreement) or the transactions contemplated
thereby. As its authorized agent in the Borough of _____________ in The City of
_____________ upon which process may be served in any such suit or proceeding,
and agrees that service of process upon such agent, and written notice of said
service to the Company by the person serving the same to the address provided in
Section 9, shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. The Company further agrees to take
any and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for a period of seven years
from the date of the Terms Agreement.
DAIN RAUSCHER CORPORATION
By: ______________________
Its: ________________
[UNDERWRITER/S]
By: ______________________
Its: ________________
17
<PAGE>
ANNEX I
DELAYED DELIVERY CONTRACT
[INSERT DATE OF INITIAL PUBLIC OFFERING]
Dain Rauscher Corporation
c/o [LEAD UNDERWRITER]
[Address of Lead Underwriter]
Attention:
Gentlemen:
The undersigned hereby agrees to purchase from Dain Rauscher Corporation, a
Delaware corporation ("Company"), and the Company agrees to sell to the
undersigned, [IF ONE DELAYED CLOSING, INSERT--as of the date hereof, for
delivery on , [YEAR] ("Delivery Date"),]
[$]..............[shares]
- --principal amount--of the Company's [INSERT TITLE OF SECURITIES]
("Securities"), offered by the Company's Prospectus dated , 19 and a
Prospectus Supplement dated , 19 relating thereto,
receipt of copies of which is hereby acknowledged, at-- % of the principal
amount thereof plus accrued interest, if any,--$ per share plus accrued
dividends, if any,--and on the further terms and conditions set forth in this
Delayed Delivery Contract ("Contract").
[IF TWO OR MORE DELAYED CLOSINGS, INSERT THE FOLLOWING:
The undersigned will purchase from the Company as of the date hereof, for
delivery on the dates set forth below, Securities in the--principal--amounts set
forth below:
PRINCIPAL AMOUNT
NUMBER
DELIVERY DATE OF SHARES
____________________________ ________
____________________________ ________
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase for
delivery on--the--each--Delivery Date shall be made to the Company or its order
by certified or official bank check in New York Clearing House (next day) funds
at the office of at .M. on--the--such--Delivery Date
upon delivery to the undersigned of the Securities to be purchased by the
undersigned--for delivery on such Delivery Date--in definitive [IF DEBT ISSUE,
INSERT--fully registered] form and in such denominations and registered in such
names as the undersigned may designate by written or telegraphic communication
addressed to the Company not less than five full business days prior
to--the--such--Delivery Date.
18
<PAGE>
It is expressly agreed that the provisions for delayed delivery and payment are
for the sole convenience of the undersigned; that the purchase hereunder of
Securities is to be regarded in all respects as a purchase as of the date of
this Contract; that the obligation of the Company to make delivery of and accept
payment for, and the obligation of the undersigned to take delivery of and make
payment for, Securities on--the--each--Delivery Date shall be subject only to
the conditions that (1) investment in the Securities shall not
at--the--such--Delivery Date be prohibited under the laws of any jurisdiction in
the United States to which the undersigned is subject and (2) the Company shall
have sold to the Underwriters the total--principal amount--number of shares--of
the Securities less the--principal amount---number of shares--thereof covered by
this and other similar Contracts. The undersigned represents that its
investment in the Securities is not, as of the date hereof, prohibited under the
laws of any jurisdiction to which the undersigned is subject and which governs
such investment.
Promptly after completion of the sale to the Underwriters the Company will
mail or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by--a copy--copies--of the opinion[s] of counsel for the
Company delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
___________________________________________
(NAME OF PURCHASER)
BY ________________________________________
___________________________________________
(TITLE OF SIGNATORY)
___________________________________________
___________________________________________
(ADDRESS OF PURCHASER)
Accepted, as of the above date.
Dain Rauscher Corporation
By __________________________________
[INSERT TITLE]
19
<PAGE>
DAIN RAUSCHER
CORPORATION
("COMPANY")
DEBT SECURITIES
TERMS AGREEMENT
, ____________
To: The [Representative[s] of the] Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement on Form S-3 (No. 333- ) ("Underwriting
Agreement"), the following securities ("Offered Securities") on the following
terms:
TITLE: [ %] [Floating Rate]--Notes--Debentures--Bonds--Due .
PRINCIPAL AMOUNT: $ .
INTEREST: [ % per annum, from ,[YEAR], payable
semiannually on and , commencing ,[YEAR], to
holders of record on the preceding or , as the case may
be.] [Zero coupon.]
MATURITY: , [YEAR].
OPTIONAL REDEMPTION:
SINKING FUND:
LISTING: [None.] [ Stock Exchange.] [The Nasdaq Stock Market Inc.'s
National Market.]
DELAYED DELIVERY CONTRACTS: [None.] [Delivery Date[s] shall be
,[YEAR]. Underwriters' fee is % of the principal amount of the Contract
Securities.]
PURCHASE PRICE: % of principal amount, plus accrued interest
[,if any,] from ,[YEAR].
20
<PAGE>
EXPECTED REOFFERING PRICE: % of principal amount, subject to
change by the [Representative[s] [Underwriters].
CLOSING: A.M. on ,[YEAR], at ,
in Federal (same day) funds.
SETTLEMENT AND TRADING: [Physical certificated form.] [Book-Entry
Only via DTC. The Offered Securities will trade in DTC's Same Day Funds
Settlement System.]
BLACKOUT: Until days after the Closing Date.
[NAME[S] AND ADDRESS[ES] OF [REPRESENTATIVE[S]] [UNDERWRITER[S]]:]
The respective principal amounts of the Offered Securities to be
purchased by each of the Underwriters are set forth opposite their names in
Schedule A hereto.
The provisions of the Underwriting Agreement are incorporated herein
by reference.
The Offered Securities will be made available for checking and
packaging at the office of at least 24 hours prior to
the Closing Date.
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments--and--, --stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement--and--, --the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [IF
PARAGRAPH REGARDING PASSIVE MARKET MAKING IS INCLUDED, INSERT--and the
information contained in the paragraph under the caption "Underwriting" in the
prospectus supplement] [IF APPLICABLE, INSERT--; and (ii) the following
information in the prospectus supplement furnished on behalf of [INSERT NAME OF
UNDERWRITER]: [INSERT DESCRIPTION OF INFORMATION, SUCH AS MATERIAL RELATIONSHIP
DISCLOSURE UNDER THE CAPTION "UNDERWRITING" IN THE PROSPECTUS SUPPLEMENT].
If the Offered Securities are denominated in a currency other than
United States dollars, make appropriate modifications to provisions of the Terms
Agreement (e.g., type of funds specified under "Closing") and consider including
in the Terms Agreement such changes and additions to the Underwriting Agreement
as may be appropriate in the circumstances, e.g., expanding the blackout
provision in Section 4 to cover debt securities denominated in the currency in
which the Offered Securities are denominated, expanding Section 5(c)(iv) to
cover a banking moratorium declared by authorities in the country of such
currency, expanding Section 5(c)(v) to cover a change or prospective change in,
or governmental action affecting, exchange controls applicable to such currency,
and modifying Section 5(d) to permit a statement to the effect that enforcement
of the Indenture and the Offered Securities is subject to provisions of law
which may require that a judgment for money damages rendered by a court in the
United States be expressed only in United States dollars and appropriate
exceptions as to any provisions requiring payment of additional amounts. Also
consider requiring an opinion of counsel for the Company confirming information
as to United States tax matters in the Prospectus and an opinion of foreign
counsel for the Company regarding such matters as foreign consents, approvals,
authorizations, licenses, waivers, withholding taxes, transfer or stamp taxes
and any information as to foreign laws in the Prospectus.
21
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
DAIN RAUSCHER CORPORATION
By_________________________________
[INSERT TITLE]
The foregoing Terms Agreement is hereby
confirmed and accepted as of the date
first above written.
[IF NO CO-REPRESENTATIVE, USE FIRST
CONFIRMATION FORM. IF
CO-REPRESENTATIVE, USE SECOND.]
[LEAD UNDERWRITER]
By________________________________
[INSERT TITLE]
[Acting on behalf of itself and as
the Representative of the several
Underwriters.]
[LEAD UNDERWRITER]
_________________________________
_________________________________
[Acting on behalf of themselves and
as the Representatives of the
several Underwriters.]
By: [LEAD UNDERWRITER]
By______________________________
[INSERT TITLE]
22
<PAGE>
SCHEDULE A
UNDERWRITER PRINCIPAL
----------- AMOUNT
------
$
Total
23
<PAGE>
DAIN RAUSCHER CORPORATION
("COMPANY")
PREFERRED--COMMON--STOCK
TERMS AGREEMENT
, 19
To: The [Representative[s] of the] Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in Schedule
A hereto] [below] for their respective accounts, on and subject to the terms and
conditions of the Underwriting Agreement filed as an exhibit to the Company's
registration statement on Form S-3 (No. 333- ) ("Underwriting Agreement"),
the following securities ("Offered Securities") on the following terms:
TITLE:
NUMBER OF SHARES:
( DIVIDEND RATE:
(1) OPTIONAL REDEMPTION:
(1) SINKING FUND:
(1) LISTING: [None.] [ Stock Exchange.] [The Nasdaq Stock Market.]
(1) DELAYED DELIVERY CONTRACTS: [None.] [Delivery Date[s] shall be
, 19 . Underwriters' fee is $ per share of the Contract
Securities.]
PURCHASE PRICE: $ per share [IF PREFERRED STOCK ISSUE,
INSERT--plus accrued dividends[, if any,] from , 19 ].
EXPECTED REOFFERING PRICE: $ per share, subject to change by the
[Representative[s]] [Underwriters].
24
<PAGE>
CLOSING: A.M. on , 19 , at
, in New York Clearing House (next day) funds.
UNDERWRITER[S']['S] COMPENSATION: $ payable to the
[Representative[s] for the proportionate accounts of the] Underwriter[s] on the
Closing Date.
BLACKOUT: Until days after the Closing Date.
[NAME[S] AND ADDRESS[ES] OF [REPRESENTATIVE[S]] [UNDERWRITER[S]]:]
The respective numbers of shares of the Offered Securities to be
purchased by each of the Underwriters are set forth opposite their names in
Schedule A hereto.
The provisions of the Underwriting Agreement are incorporated herein
by reference.
The Offered Securities will be made available for checking and
packaging at the office of at least 24 hours prior to the Closing
Date.
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments--and--, --stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement--and--, --the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [IF
PARAGRAPH REGARDING PASSIVE MARKET MAKING IS INCLUDED, INSERT--and the
information contained in the paragraph under the caption "Underwriting" in the
prospectus supplement] [IF APPLICABLE, INSERT--; and (ii) the following
information in the prospectus supplement furnished on behalf of [INSERT NAME OF
UNDERWRITER]: [INSERT DESCRIPTION OF INFORMATION, SUCH AS MATERIAL RELATIONSHIP
DISCLOSURE UNDER THE CAPTION "UNDERWRITING" IN THE PROSPECTUS SUPPLEMENT].(1/)
______________________
(1) () SPECIAL CARE SHOULD BE TAKEN TO ENSURE THAT THE DESCRIPTION OF THE
INFORMATION, INCLUDING CAPTION REFERENCES AND ANY REFERENCES TO PARTICULAR
PARAGRAPHS OR SENTENCES, MATCHES THE FINAL PROSPECTUS.
25
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
DAIN RAUSCHER CORPORATION
BY__________________________________
[INSERT TITLE]
THE FOREGOING TERMS AGREEMENT IS HEREBY CONFIRMED AND ACCEPTED AS OF THE DATE
FIRST ABOVE WRITTEN.
[IF NO CO-REPRESENTATIVE, USE FIRST CONFIRMATION FORM. IF
CO-REPRESENTATIVE, USE SECOND.]
[LEAD UNDERWRITER]
By______________________________
[INSERT TITLE]
[Acting on behalf of itself and as the
Representative of the several
Underwriters.]
[LEAD UNDERWRITER]
______________________________________
______________________________________
[Acting on behalf of themselves and as
the Representatives of the several
Underwriters.]
By: [LEAD UNDERWRITER]
By______________________________
[INSERT TITLE]
26
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF
----------- SHARES
------
<S> <C>
--------
--------
--------
</TABLE>
<PAGE>
EXHIBIT 4.3
- -------------------------------------------------------------------------------
DAIN RAUSCHER CORPORATION
TO
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
TRUSTEE
-----------------------
SENIOR SECURITIES
-----------------------
INDENTURE
DATED AS OF MAY 15, 1998
---------------
<PAGE>
DAIN RAUSCHER CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of _____________
<TABLE>
<CAPTION>
Trust Indenture
ACT Section Indenture Section
- --------------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . 702(c)
Section 313 . . . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . 508
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . 107
</TABLE>
- --------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . 1
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Global Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . 5
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Periodic Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register" and "Security Registrar . . . . . . . . . . . . . . . . 7
Special Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
i
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Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act" or "TIA . . . . . . . . . . . . . . . . . . . . . . . 8
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . 8
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . 8
SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 105. Notices, Etc., to Trustee and Company. . . . . . . . . . . . 10
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . 11
SECTION 107. Compliance with Trust Indenture Act. . . . . . . . . . . . . 11
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . 11
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . 11
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . 12
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . 12
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . 13
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . 16
SECTION 204. Form of Trustee's Certificate of Authentication. . . . . . . 20
SECTION 205. Form of Legend for Global Securities . . . . . . . . . . . . 20
ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . 21
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . 24
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . 27
SECTION 305. Registration, Registration of Transfer and Exchange. . . . . 27
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . 29
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . 30
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 31
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . 32
SECTION 311. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 312. Payment to be in Proper Currency . . . . . . . . . . . . . . 32
ARTICLE FOUR SATISFACTION AND DISCHARGE. . . . . . . . . . . . . . . . . . . 33
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . 33
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . 34
ARTICLE FIVE REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . 34
SECTION 502. Acceleration of Maturity; Rescission and Annulment 36
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 38
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<PAGE>
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . 39
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . 40
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . 40
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 41
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 41
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 41
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . 41
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 42
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . 42
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . 43
ARTICLE SIX THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . 43
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 43
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . 44
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . 45
SECTION 605. May Hold Securities. . . . . . . . . . . . . . . . . . . . . 46
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . 46
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . 46
SECTION 608. Disqualification; Conflicting Interests. . . . . . . . . . . 47
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . 47
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . 48
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . 50
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 613. Preferential Collection of Claims Against Company. . . . . . 51
SECTION 614. Appointment of Authenticating Agent. . . . . . . . . . . . . 52
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . . . . . 53
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 702. Preservation of Information; Communications to Holder. . . . 54
SECTION 703. Reports by Trusttee. . . . . . . . . . . . . . . . . . . . . 54
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . 56
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . 56
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . . 56
ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . 57
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . 57
iii
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SECTION 902. Supplemental Indentures with Consent of Holders. . . . . . . 58
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . 59
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . 60
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . 60
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . 60
SECTION 907. Notice of Supplemental Indentures. . . . . . . . . . . . . . 61
ARTICLE TEN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1001. Payment of Principal, Premium and Interest. . . . . . . . . 61
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . 61
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . 62
SECTION 1004. Existence . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1005. Maintenance of Properties . . . . . . . . . . . . . . . . . 63
SECTION 1006. Payment of Taxes and Other Claims . . . . . . . . . . . . . 64
SECTION 1007. Compliance Certificate. . . . . . . . . . . . . . . . . . . 64
SECTION 1008. Waiver of Certain Covenants . . . . . . . . . . . . . . . . 65
ARTICLE ELEVEN REDEMPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . 65
SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . . 65
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . 65
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . 66
SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . 66
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . 67
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . 67
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . 68
ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . . 68
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . 69
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . 69
</TABLE>
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<PAGE>
INDENTURE, dated as of May 15, 1998, between DAIN RAUSCHER CORPORATION,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at Dain
Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422, and
Norwest Bank Minnesota, National Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities
or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein; the following TIA terms used in
this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
<PAGE>
(3) any gender used in this Indenture shall be deemed and
construed to include correlative words of the masculine, feminine or
neuter gender;
(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United
States of America at the date of such computation; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any specified Person,
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee appointed by that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification. Where any provision of this Indenture
refers to action to be taken pursuant to a Board Resolution (including
establishment of any series of the Securities and the forms and terms
thereof), such action may be taken by any committee, officer or employee
of the Company authorized to take such action by a Board Resolution.
-2-
<PAGE>
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions generally in that Place of Payment are
authorized or obligated by law or executive order to close, unless
otherwise specified in a form of Security.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing
such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the
Trustee.
"Corporate Trust Office" means the office of the Trustee in The City of
Minneapolis, Minnesota, at which at any particular time its corporate trust
business shall be principally administered.
"Corporation" includes corporations, associations, limited liability
companies, joint stock companies and business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the clearing agency registered under the Exchange Act,
specified for that purpose as contemplated by Section 301 or any successor
clearing agency registered under the Exchange Act as contemplated by
Section 305, and if at any time there is more than one such Person,
"Depositary" as used with respect to the Securities of any series shall
mean the Depositary with respect to the Securities of such series.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-3-
<PAGE>
"Global Security" means a Security bearing the legend specified in
Section 205 evidencing all or part of a series of Securities, issued to
the Depositary for such series or its nominee, and registered in the name
of such Depositary or nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof and shall include the terms of particular series of Securities
established as contemplated by Section 301; provided, however, that, if at
any time more than one Person is acting as Trustee under this instrument
due to the appointment of one or more separate Trustees for any one or
more separate series of Securities pursuant to Section 610(e), "Indenture"
shall mean, with respect to such series of Securities for which any such
Person is Trustee, this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof and shall include the terms of particular series of Securities for
which such Person is Trustee established as contemplated by Section 301,
exclusive, however, of any provisions or terms which relate solely to
other series of Securities for which such Person is not Trustee,
regardless of when such terms or provisions were adopted, and exclusive of
any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become
such Trustee but to which such Person, as such Trustee, was not a party.
"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President, a Vice President or an Assistant Vice President
of the Company, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
-4-
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder or whether a quorum is present at a meeting of Holders of
Securities, (i) the principal amount of an Original Issue Discount
Security that shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof pursuant to
Section 502, (ii) the principal amount of a Security denominated in one or
more foreign currencies or currency units that shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined in the manner
provided as contemplated by Section 301 as of the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined
as of the date of original issuance of such Security, of the amount
determined as provided in (i) above) of such Security as determined by the
Company pursuant to
-5-
<PAGE>
Section 301, and (iii) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) and/or interest on any Securities on
behalf of the Company.
"Periodic Offering" means an offering of Securities of a series from
time to time the specific terms of which Securities, including without
limitation the rate or rates of interest (or formula for determining the
rate or rates of interest), if any, thereon, the Stated Maturity or
Maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Company or its agents upon the
issuance of such Securities.
"Person" means any individual, limited liability company,
Corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if
any) and/or interest on the Securities of that series are payable, where
Securities of that series may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served
as specified in Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security, and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this
Indenture.
-6-
<PAGE>
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for
that purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee assigned by it to administer its corporate
trust matters.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; PROVIDED, HOWEVER, that if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is
Trustee shall have the meaning stated in the first recital of this
Indenture and shall more particularly mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of
such Security or such installment of principal or interest is due and
payable.
"Subsidiary" means any Corporation of which securities (excluding
securities entitled to vote for directors only by reason of the happening
of a contingency) entitled to elect at least a majority of the
corporation's directors shall at the time be owned, directly or
indirectly, by the Company, or one or more Subsidiaries, or by the Company
and one or more Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a
Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean
the Trustee with respect to Securities of that series.
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"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date as of which this instrument was executed, except
as provided in Section 905.
"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion whether such covenant or
condition has been complied with; and
(4) a statement whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so
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certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of any officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which such
officer's certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an
agent duly appointed in writing, and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject
to Section 601) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than such signer's individual capacity, such
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certificate or affidavit shall also constitute sufficient proof of such
signer's authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) The Company may fix any day as the record date for the purpose
of determining the Holders of Securities of any series entitled to give or
take any request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or permitted
to be given or taken by Holders of Securities of such series, but the
Company shall have no obligation to do so. If not set by the Company prior
to the first solicitation of a Holder of Securities of such series made by
any Person in respect of any such action, or, in the case of any such
vote, prior to such vote, the record date for any such action or vote
shall be the 30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record
date for action to be taken by the Holders of one or more series of
Securities, only the Holders of Securities of such series on such date (or
their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with a Responsible Officer of the Trustee at
its Corporate Trust Office, Attention: Corporate Trust Services, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this
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instrument (Attention: Secretary) or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at such Holder's address as it appears in
the Security Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made by or with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 107. Compliance with Trust Indenture Act.
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of this
Indenture. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be
a part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company or the
Trustee shall bind its successors and assigns, whether so expressed or
not.
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SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any
Authenticating Agent, any Paying Agent, any Securities Registrar, and
their successors hereunder and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of Minnesota.
SECTION 113. Legal Holidays.
Except as may be otherwise specified with respect to any particular
Securities, in any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and
premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution and set forth in an Officers' Certificate
or established by one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and
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such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently
herewith, be determined by the officers executing such Securities, as
evidenced by their execution of the Securities. If the form of Securities
of any series is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in
substantially the form set forth in this Article with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture.
The definitive Securities may be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
SECTION 202. Form of Face of Security.
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]
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<PAGE>
DAIN RAUSCHER CORPORATION
__________________________________________________________
No. _________________ [$]_______________________
Dain Rausher Corporation, a corporation duly organized and existing
under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ____________________,
or registered assigns, the principal sum of ______________________________
[Dollars] on ________________________________ [IF THE SECURITY IS TO BEAR
INTEREST PRIOR TO MATURITY, INSERT --, and to pay interest thereon from
________________ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, [semi-annually in arrears on
___________________ and __________________________ in each year] [annually
in arrears on _________________________], commencing ____________________,
at the rate of _________% per annum, until the principal hereof is paid or
made available for payment [IF APPLICABLE INSERT --, and (to the extent
that the payment of such interest shall be legally enforceable) at the
rate of ______% per annum on any overdue principal and premium and on any
overdue installment of interest]. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the
________________________________ or _______________________________
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture]. [IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY,
INSERT --. The principal of this Security shall not bear interest except
in the case of a default in payment of principal upon acceleration, upon
redemption or at Stated Maturity and in such case the overdue principal of
this Security shall bear interest at the rate of ______% per annum (to the
extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such default in payment to the date
payment of such principal has been made or duly provided for. Interest on
any overdue principal shall be payable on demand. Any such interest on
any overdue principal that is not so paid on demand shall bear interest at
the rate of _________% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue
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<PAGE>
from the date of such demand for payment to the date payment of such
interest has been made or duly provided for, and such interest shall also
be payable on demand.]
Payment of the principal of (and premium, if any) and [If applicable,
insert -- any such] interest on this Security will be made at the office
or agency of the Company maintained for that purpose in _________________,
in such coin or currency [of the United States of America] as at the time
of payment is legal tender for payment of public and private debts [IF
APPLICABLE, INSERT --; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register].
[IF APPLICABLE, INSERT -- [The Securities of this series are/This
Security is] subject to redemption prior to the Stated Maturity as
described on the reverse hereof.]
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
DAIN RAUSCHER CORPORATION
By ___________________________
Attest:
_______________________________________
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<PAGE>
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of __________, (herein called
the "Indenture"), between the Company and ____________________, as Trustee
(herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which
the Securities are, and are to be authenticated and delivered. This
Security is one of the series designated on the face hereof [, limited in
aggregate principal amount to [$ __________________]. By the terms of the
Indenture, additional Securities [IF APPLICABLE, INSERT -- of this series
and] of other separate series, which may vary as to date, amount, Stated
Maturity, interest rate or method of calculating the interest rate and in
other respects as therein provided, may be issued in an unlimited
principal amount.
[IF APPLICABLE, INSERT -- [The Securities of this series are/This
Security is] subject to redemption prior to the Stated Maturity hereof
upon not less than 30 days' notice by mail to the Person[s] in whose
name[s] [the Securities to be redeemed are/this Security is] registered at
the address specified in the Security Register, [IF APPLICABLE, INSERT --
(1) on ____________ in any year commencing with the
year ______________ and ending with the year _____________ through
operation of the sinking fund for this series at a Redemption Price equal
to 100% of the principal amount, and (2)] at any time [on or after
_____________], as a whole or in part, at the election of the Company, at
the following Redemption Prices (expressed as percentages of the principal
amount): if redeemed [on or before ________________, ________%, and if
redeemed] during the 12-month period beginning _____________ of the years
indicated,
Redemption Redemption
Year Price Year Price
---- ------------------ ---- -------------------
and thereafter at a Redemption Price equal to _______% of the principal
amount, [If APPLICABLE, INSERT -- together in the case of any such
redemption [IF APPLICABLE, INSERT -- (whether through operation of the
sinking fund or otherwise)] with accrued interest to the Redemption Date,
provided, however, that installments of interest whose Stated Maturity is
on or prior to such Redemption Date will be payable to the [Holders of
such Securities/Holder of this Security] (or one or more Predecessor
Securities) of record at the close of business on the relevant Record
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Dates referred to on the face hereof, all as provided in the Indenture].
[IF THERE IS NO SINKING FUND, INSERT -- [The Securities of this series
are/This Security is] not subject to any sinking fund.]
[IF APPLICABLE, INSERT -- [The Securities of this series are/This
Security is] subject to redemption prior to the Stated Maturity hereof
upon not less than 30 days' notice by mail to the Person[s] in whose
name[s] [the Securities to be redeemed are/this Security is] registered at
the address specified in the Security Register, (1) on ______________ in
any year commencing with the year _______ and ending with the
year ______________ through operation of the sinking fund for this series
at the Redemption Prices for redemption through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the
table below, and (2) at any time [on or after ______________________], as
a whole or in part, at the election of the Company, at the Redemption
Prices for redemption otherwise than through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below: If redeemed during the 12-month period beginning _________________
of the years indicated,
Redemption Price
for Redemption Redemption Price for
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund Of the Sinking Fund
---- ----------------- ----------------------
and thereafter at a Redemption Price equal to _____% of the principal
amount [IF APPLICABLE, INSERT --, together in the case of any such
redemption (whether through operation of the sinking fund or otherwise)
with accrued interest to the Redemption Date, provided, however, that
installments of interest whose Stated Maturity is on or prior to such
Redemption Date will be payable to the [Holders of such Securities/Holder
of this Security] (or one or more Predecessor Securities) of record at the
close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture].]
[Notwithstanding the foregoing, the Company may not, prior to _____,
redeem any Securities of this series as contemplated by [Clause (2) of]
the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed
having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than _____% per annum.]
[The sinking fund for this series provides for the redemption on
___________________ in each year beginning with the year _____ and ending
with the year _____ of [not less than]
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[$] _____________________ [("mandatory sinking fund") and not more than
[$] ___________] aggregate principal amount of Securities of this series.
[Securities of this series acquired or redeemed by the Company otherwise
than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made
- -- in the inverse order in which they become due.]]
[In the event of redemption of this Security in part only, a new
Security or Securities of this series and of like tenor or an authorized
denomination for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof, and, in the event of
transfer or exchange, a new Security or Securities of this series and of
like tenor and for a like aggregate principal amount will be issued to the
Holder, in the case of exchange, or the designated transferee or
transferees, in the case of transfer.]
[If the Security is not an Original Issue Discount Security, -- If an
Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may (subject
to the conditions set forth in the Indenture) be declared due and payable
in the manner and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- If an
Event of Default with respect to Securities of this series shall occur and
be continuing, a lesser amount than the principal amount due at the Stated
Maturity of the Securities of this series may (subject to the conditions
set forth in the Indenture) be declared due and payable in the manner and
with the effect provided in the Indenture. The amount due and payable on
this Security in the event that this Security is declared due and payable
prior to the Stated Maturity hereof shall be -- INSERT FORMULA FOR
DETERMINING THE AMOUNT -- or in the event that this Security is redeemed
shall be the specified percentage -- INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal and overdue interest
(in each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company's obligations in respect of the
payment of the principal of and interest, if any, on the Securities of
this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the Securities of each
series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding of
each series to be affected and, for certain purposes, without the consent
of the Holders of any Securities at the time Outstanding. The Indenture
also contains provisions permitting the Holders of specified percentages
in aggregate principal amount of the Securities of each series at
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the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- In
determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or whether a
quorum is present at a meeting of Holders of Securities, the principal
amount of any Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon the acceleration of
the Maturity thereof.]
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of (and premium, if any) and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Securities of this
series and of like tenor of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of [$1,000] and any amount in excess
thereof which is an integral multiple of [$1,000]. As provided in the
Indenture and subject to certain limitations therein set forth, Securities
of this series are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection
therewith.
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Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered in
the Security Register as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
The Securities shall be governed by and construed in accordance with
the laws of the State of [________________].
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities of the series designated therein and
issued pursuant to the within-mentioned Indenture.
Norwest Bank Minnesota, National Association,
as Trustee
By ___________________________________
Authorized Signatory
SECTION 205. Form of Legend for Global Securities.
Any Global Security authenticated and delivered hereunder shall, in
addition to the provisions contained in Sections 202 and 203, bear a
legend in substantially the following form or such similar form as may be
required by the Depositary:
"Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York, New York) to the issuer or to its agent for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of
The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities shall rank equally and pari passu and may be issued in
one or more series. There shall be established by or pursuant to a Board
Resolution and, subject to Section 303, set forth or determined in the
manner provided in an Officers' Certificate or established in one or more
indentures supplemental hereto, prior to the initial issuance of
Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906, 1107
and except for any Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal or installments of
principal of the Securities of the series is or are payable and any
rights to extend such date or dates;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, or the formula pursuant to which such
rate or rates shall be determined, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date for the
interest payable on any Interest Payment Date;
(6) the place or places where the principal of (and premium, if
any) and interest on Securities of the series shall be payable, any
Securities of the series may be surrendered for registration of
transfer or exchange and notices
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and demands to or upon the Company with respect to the Securities of
the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the
Company;
(8) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) whether the Securities of the series will be convertible
into shares of Common Stock and/or exchangeable for other securities,
and if so, the terms and conditions upon which such Securities will
be so convertible or exchangeable, and any deletions from or
modifications or additions to this Indenture to permit or to
facilitate the issuance of such convertible or exchangeable
Securities or the administration thereof;
(10) the identity of each Security Registrar and Paying Agent,
if other than or in addition to the Trustee;
(11) if the amount of principal of, or any premium or interest
on, any Securities of the series may be determined by reference to an
index or pursuant to a formula, the manner in which such amounts
shall be determined;
(12) the applicability of, and any addition to or change in, the
covenants and definitions currently set forth in this Indenture;
(13) if other than denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000, the
denominations in which Securities of the series shall be issuable;
(14) if other than the currency of the United States of America,
the currency, currencies or currency units in which the Securities of
such series shall be denominated and in which payment of the principal
of and any premium and interest on any Securities of the series shall
be payable if other than the currency of the United States of America,
provided however, that prior to the issuance of any such Securities, the
Company shall have obtained the written consent of the Trustee, which
consent may be withheld in the sole discretion of the Trustee, to the
currency, currencies or currency units so established; the manner of
determining the U.S. dollar equivalent of the principal amount thereof
for purposes of the definition of "Outstanding" in Section 101, and,
if the principal of or any premium or interest on any Securities of the
series is to be payable, at the election of the Company or a Holder
thereof, in one or more
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currencies or currency units other than that or those in which the
Securities are stated to be payable; the currency, currencies or
currency units in which payment of the principal of and any premium
and interest on Securities of such series as to which such election
is made shall be payable; and the periods within which and the terms
and conditions upon which such election is to be made;
(15) any other event or events of default applicable with
respect to Securities of the series in addition to or in lieu of
those provided in Section 501(1)-(7);
(16) if less than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502;
(17) whether the Securities of the series shall be issued in
whole or in part in the form of one or more Global Securities and, if
so, (a) the Depositary with respect to such Global Security or
Securities and (b) the circumstances under which any such Global
Security may be exchanged for Securities registered in the name of,
and any transfer of such Global Security may be registered to, a
Person other than such Depositary or its nominee, if other than as
set forth in Section 305; and
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series (other than Securities offered in a
Periodic Offering) shall be substantially identical except as to
denomination and except as may otherwise be provided by or pursuant to the
Board Resolution referred to above and, subject to Section 303, set forth,
or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of
the Officers' Certificate setting forth the terms of the series.
With respect to Securities of a series offered in a Periodic
Offering, such Board Resolution and Officers' Certificate or supplemental
indenture may provide general terms or parameters for Securities of such
series and provide either that the specific terms of particular Securities
of such series shall be specified in a Company Order or that such terms
shall be determined by the Company or its agents in accordance with
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other procedures specified in a Company Order as contemplated by the third
paragraph of Section 303.
SECTION 302. Denominations.
Unless otherwise provided in the applicable Officers' Certificate or
supplemental indenture, the Securities of each series shall be issued in
registered form without coupons in such denominations as shall be
specified as contemplated by Section 301. In the absence of any such
provisions with respect to the Securities of any series, the Securities of
such series shall be issuable in denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal affixed thereto or reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities, or, in the
case of Securities offered in a Periodic Offering, from time to time in
accordance with such other procedures (including, without limitation, the
receipt by the Trustee of electronic instructions from the Company or its
duly authorized agents, promptly confirmed in writing by the Company)
acceptable to the Trustee as may be specified from time to time by a
Company Order for establishing the specific terms of particular Securities
being so offered, and the Trustee in accordance with the Company Order
shall authenticate and deliver such Securities. If the form or forms or
terms of the Securities of the series have been established by or pursuant
to one or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall
be fully protected in relying upon, an Opinion of Counsel stating,
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(a) that the form or forms of such Securities have been
established in conformity with the provisions of this Indenture;
(b) that the terms of such Securities have been established in
conformity with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer and
other laws of general applicability relating to or affecting the
enforcement of creditors' rights and to general equity principles;
(d) that authentication and delivery of such Securities and the
execution and delivery of the supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such
Securities, and has duly taken all necessary corporate action with
respect to such issuance; and
(f) that the issuance of such Securities will not contravene
the certificate of incorporation or bylaws of the Company or result
in any violation of any of the terms or provisions of any law or
regulation or of any indenture, mortgage or other agreement known to
such Counsel by which the Company is bound;
provided, however, that, with respect to Securities of a series offered in
a Periodic Offering, the Trustee shall be entitled to receive such Opinion
of Counsel in connection only with the first authentication of each form
of Securities of such series and that the opinions described in Clauses
(b) and (c) above may state, respectively, that
(b) if the terms of such Securities are to be established
pursuant to a Company Order or pursuant to such procedures as may be
specified from time to time by a Company Order, all as contemplated
by a Board Resolution or action taken pursuant thereto, such terms
will have been duly authorized by the Company and established in
conformity with the provisions of this Indenture; and
(c) that such Securities, when executed by the Company,
completed, authenticated and delivered by the Trustee in accordance
with this Indenture,
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and issued and delivered by the Company and paid for, all in
accordance with any agreement of the Company relating to the
offering, issuance and sale of such Securities, will be duly issued
under this Indenture and will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting generally the enforcement of
creditors' rights and to general principles of equity.
With respect to Securities of a series offered in a Periodic
Offering, the Trustee may rely, as to the authorization by the Company of
any of such Securities, the form or forms and terms thereof and the
legality, validity, binding effect and enforceability thereof, upon the
Opinion of Counsel, Company Order and other documents delivered pursuant
to Sections 201 and 301 and this Section, as applicable, in connection
with the first authentication of a form of Securities of such series and
it shall not be necessary for the Company to deliver such Opinion of
Counsel and other documents (except as may be required by the specified
other procedures, if any, referred to above) at or prior to the time of
authentication of each Security of such series unless and until the
Trustee receives notice that such Opinion of Counsel or other documents
have been superseded or revoked, and may assume compliance with any
conditions specified in such Opinion of Counsel (other than any conditions
to be performed by the Trustee). If such form or forms or terms have been
so established, the Trustee shall not be required to authenticate such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities
and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and
sold by the Company, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder
and shall never be entitled to the benefits of this Indenture.
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SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any Series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which
they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary
Securities may be in the form of Global Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of like tenor of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company
in a Place of Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive
Securities of the same series and of like tenor and of any authorized
denominations. Until so exchanged the temporary Securities of any series
shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided at the Corporate
Trust Office.
Upon surrender for registration of transfer of any Security of any
series at the office or agency of the Company in any Place of Payment for
such series, the Company shall execute and the Trustee shall authenticate
and deliver (in the name of the designated transferee or transferees) one
or more new Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and tenor and bearing a number
not contemporaneously outstanding.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Securities to be
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exchanged at the office or agency of the Company in any Place of Payment
for such series. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver,
the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing
the same debt and entitled to the same benefits under this Indenture as
the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed,
by the Holder thereof or such Holder's attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906 or 1107 not
involving any transfer.
The Company may but shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning
at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities of that series selected for redemption
under Section 1103 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any Global Security shall be exchangeable
pursuant to this Section 305 for Securities registered in the name of
Persons other than the Depositary for such Security or its nominee only if
(i) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or if at any time such
Depositary ceases to be a clearing agency registered under the Exchange
Act, (ii) the Company executes and delivers to the Trustee a Company Order
that such Global Security shall be so exchangeable or (iii) there shall
have occurred and be continuing an Event of Default with respect to the
Securities of such series. Upon the occurrence in respect of any Global
Security of any series of any one or more of the conditions specified in
Clauses (i), (ii) or (iii) of the preceding sentence or such other
conditions as may be specified as contemplated by Section 301 for such
series, such Global Security may be exchanged for Securities not bearing
the legend
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specified in Section 205 and registered in the names of such Persons as
may be specified by the Depositary (including Persons other than the
Depositary).
Notwithstanding any other provision of this Indenture, a Global
Security may not be transferred except as a whole by the Depositary for
such Global Security to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and upon
its written request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security, including a
Global Security if the destroyed, lost or stolen Security was a Global
Security, of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities of that
series duly issued hereunder. A new Security shall have such legends as
appeared on the old Security unless the Company determines otherwise.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date
shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered in the Security Register at the
close of business on the Regular Record Date for such Interest Payment
Date.
Any interest on any Security of any series which is payable but is
not punctually paid or duly provided for on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable
to the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of
such series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
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Interest shall be paid to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of, or in
exchange for, or in lieu of, any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered in the Security
Register as the owner of such Security for the purpose of receiving
payment of principal of (and premium, if any) and (subject to Section 307)
interest on such Security and for all other purposes whatsoever, whether
or not such Security be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary (or its nominee) shall have any rights under
this Indenture with respect to such Global Security or any Security
represented thereby, and such Depositary may be treated by the Company,
the Trustee, and any agent of the Company or the Trustee as the owner of
such Global Security or any Security represented thereby for all purposes
whatsoever. Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall prevent the Company, the Trustee, or any
agent of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by a Depositary or
impair, as between a Depositary and such holders of beneficial interest in
such Global Security, the operation of customary practices governing the
exercise of the rights of the Depositary (or its nominees) as Holder of
such Global Security.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be destroyed unless otherwise directed by a Company Order.
The Trustee is hereby directed by the Company to destroy the cancelled
Securities held by the Trustee (subject to the record retention
requirements of the Exchange Act), and the Trustee shall provide the
Company with a certificate of a Responsible Officer certifying as to the
destruction of such Securities.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. CUSIP Number.
The Company in issuing the Securities may use "CUSIP" numbers, and if
it does so, the Trustee shall use the applicable CUSIP number in notices
of redemption or exchange as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company will
promptly notify the Trustee of any change in any CUSIP number.
SECTION 312. Payment to be in Proper Currency.
In the case of any Securities denominated in any currency (the
"Required Currency") other than United States of America dollars, except
as otherwise provided therein, the obligation of the Company to make any
payment of principal, premium or interest thereon shall not be discharged
or satisfied by any tender by the Company, or recovery by the Trustee, in
any currency other than the Required Currency, except to the extent that
such tender or recovery shall result in the Trustee timely holding the
full amount of the Required Currency then due and payable. If
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any such tender or recovery is in a currency other than the Required
Currency, the Trustee may take such actions as it considers appropriate to
exchange such currency for the Required Currency. The costs and risks of
any such exchange, including without limitation the risks of delay and
exchange rate fluctuation, shall be borne by the Company, the Company
shall remain fully liable for any shortfall or delinquency in the full
amount of Required Currency then due and payable, and in no circumstances
shall the Trustee be liable therefor except in the case of its negligence
or willful misconduct.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) if redeemable at the option of the Company, are
to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
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and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount, in the currency in
which such Securities are payable, sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or to the respective Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company, and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614,
and, if money shall have been deposited with the Trustee pursuant to
Subclause (B) of Clause (1) of this Section, the obligations of the
Trustee under Section 402 and the last paragraph of Section 1003, shall
survive.
SECTION 402. Application of Trust Money.
Subject to provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee but such money need not be segregated
from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities
of any series, and unless otherwise provided with respect to Securities of
any series pursuant to Section 301(15), means any one of the following
events (whatever the
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reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Security of
that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of a series of one
or more Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a
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decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to
Securities of that series.
The term "BANKRUPTCY LAW" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "CUSTODIAN"
means any receiver, trustee, assignee, liquidator or similar official
under any Bankruptcy Law.
A default under clause (4) is not an Event of Default with respect to
any series of Securities until the Trustee notifies the Company in
writing, or the Holders of at least 25% in principal amount of the then
outstanding Securities of such series notify the Company and the Trustee
in writing, of the default and the Company does not cure the default
within 60 days after receipt of such notice. The written notice must
specify the default, demand that it be remedied and state that the notice
is a "NOTICE OF DEFAULT."
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Outstanding Securities of any
series occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount
(or, if any of the Securities of that series are Original Issue Discount
Securities, such lesser portion of the principal amount of such Securities
as may be specified in the terms thereof) of all of the Securities of that
series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified portion thereof) shall
become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Outstanding Securities of any series has been made and before a judgment
or decree for payment of the money due has been obtained by the Trustee as
hereinafter in
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this Article provided, the Holders of a majority in aggregate principal
amount of the Outstanding Securities of that series, by written notice to
the Company and the Trustee, may rescind and annul such declaration and
its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than
by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607; and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of
that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit
of the Holders of such Security, the whole amount then due and payable on
such Security
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for principal (and premium, if any) and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest at the
rate or rates prescribed therefor in such Security, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such
Security and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon such Security, wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities
of such series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) or such portion of the principal amount of any
series of Original Issue Discount Securities as may be specified in
the terms of such series and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its
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agents and counsel, and any other amounts due the Trustee under
Section 607) and of the Holders allowed in such judicial proceeding,
and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any
plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such
proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and for any other amounts due the Trustee
under Section 607, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
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SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the
Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of
any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
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SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series may, on behalf of the Holders
of all the Securities of such series, waive any past default hereunder
with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to waive any past default
hereunder. If a record date is fixed, the Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to
waive any default hereunder, whether or not such Holders remain Holders
after such record date; provided, that unless such majority in principal
amount shall have waived such default prior to the date which is 90 days
after such record date, any such waiver of such default previously given
shall automatically and without further action by any Holder be canceled
and of no further effect.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by such Holder's acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement
of any right or remedy under this Indenture, or in any suit against the
Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; provided, however,
that the provisions of this Section shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any
series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any
Security on or after the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not hinder, delay
or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The provisions of TIA Section 315 shall apply to the Trustee.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by
mail to all Holders of
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Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided however,
that, except in the case of a default in the payment of the principal of
(or premium, if any) or interest on any Security of such series or in the
payment of any sinking fund installment with respect to Securities of such
series, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of
the Holders of Securities of such series; and provided, further, that in
the case of any default of the character specified in Section 501(4) with
respect to Securities of such series, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of TIA Section 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any instruction, request or direction of the Company
mentioned herein shall be sufficiently evidenced by a Company Request
or Company Order or as otherwise expressly provided herein and any
resolution of the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) before the Trustee acts or refrains from acting, the
Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such fact or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Indenture; and
(i) the Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(j) Except with respect to Sections 1001 herein, the Trustee
shall have no duty to inquire as to the performance of the Company's
covenants in Article 4 hereof. In addition, the Trustee shall not be
deemed to have knowledge of any Event of Default except (i) any Event
of Default occurring pursuant to Sections 501(1), 501(2) and 1001
herein or (ii) any Event of Default of which the Trustee shall have
received written notification or obtained actual knowledge.
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SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of
the Securities, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements
made by it in a Statement of Eligibility on Form T-1 supplied to the
Company is true and accurate subject to the qualifications set forth
therein. The Trustee or any Authenticating Agent shall not be accountable
for the use or application by the Company of Securities or the proceeds
thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject
to TIA Sections 310(b) and 311, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating
Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any money received by it hereunder
except as otherwise agreed to in writing by the Company and the Trustee.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense,
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disbursement or advance as may be attributable to its negligence or
bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section 607 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of
this Indenture. Such additional indebtedness shall be a senior claim to
that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the payment of
principal of (and premium, if any) or interest on particular Securities,
and the Securities are hereby subordinated to each senior claim. When the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Article Five hereof, the expenses (including
reasonable fees and expenses of counsel) and the compensation for the
service in connection therewith are intended to constitute expenses of
administration under any applicable bankruptcy law.
The Trustee shall give the Company notice of any claim or liability
for which the Trustee might be entitled to indemnification under
subparagraph (3) of this Section 607 within a reasonable amount of time
after a trust officer of the Trustee becomes aware of such claim or
liability.
SECTION 608. Disqualification; Conflicting Interests.
The provisions of TIA Section 310(b) shall apply to the Trustee.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal, State or District of Columbia authority. The
Trustee hereby represents and warrants that it is currently in compliance
and at all times will remain in compliance with the requirements of this
Section 609. If such Corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall
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cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article. Neither the Company, nor any Person directly or
indirectly controlling, controlled by or under common control with the
Company, shall act as Trustee hereunder.
SECTION 610. Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee in accordance with
the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required
by Section 611 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with TIA Section 310(b)
after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the
Company or by any such Holder,
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, or
(4) the Trustee shall commence a voluntary case under the
Federal bankruptcy laws, as now or thereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or similar
law or shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Trustee or its
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property or affairs, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debt
generally as they become due, or shall take corporate action in
furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove
the Trustee with respect to all Securities, or (ii) subject to Section
514, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Securities of one or more series, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Securities of any
particular series) and shall comply with the applicable requirements of
Section 611. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such
series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 611, any Holder who
has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders of Securities of such series as their
names and addresses appear in the Security Register. Each notice shall
include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to
the Securities of one or more series shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee;
and upon the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become effective to
the extent provided therein and each such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates. Whenever there
is a successor
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Trustee with respect to one or more (but less than all) series of
securities issued pursuant to this Indenture, the terms "Indenture" and
"Securities" shall have the meanings specified in the provisos to the
respective definitions of those terms in Section 101 which contemplate
such situation.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) and (b) of this Section, as the case
may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any Corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such Corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if
such successor Trustee had itself authenticated such Securities; in case
any of the Securities shall not have been authenticated by the Trustee
then in office, any successor by merger, conversion or consolidation to
such Trustee may authenticate such Securities either in the name of such
predecessor hereunder or in the name of the successor Trustee; and in all
such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right
to adopt the certificate of authentication of any predecessor Trustee or
to authenticate Securities in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 613. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a). A Trustee which
has resigned or been removed is subject to TIA Section 311(a) to the
extent indicated therein.
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SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the
Trustee, with the concurrence of the Company, may appoint an
Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication
and delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a Corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by Federal,
State or District of Columbia authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in
this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any Corporation succeeding to
the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
Corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company
and shall mail written notice of such appointment by first class mail,
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postage prepaid, to all Holders of Securities of the series with respect
to which such Authenticating Agent will serve, as their names and
addresses appear in the Security Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under
the provisions of this Section 614.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 614.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon,
in addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated herein and
issued pursuant to the within-mentioned Indenture.
Norwest Bank Minnesota, National Association,
as Trustee
By ___________________________________
As Authenticating Agent
By ___________________________________
Authorized Signatory
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
If the Trustee is not acting as Security Registrar for the Securities
of any series, the Company will furnish or cause to be furnished to the
Trustee.
(a) at intervals of no more than six months commencing after
the first issue of such series, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as
of a date not more than 15 days prior to the time such information is
furnished, and
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(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request,
a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 701
and the names and addresses of Holders received by the Trustee in its
capacity as Security Registrar. The Trustee may destroy any list
furnished to it as provided in Section 701 upon receipt of a new list so
furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and privileges of the Trustee, shall be as
provided by TIA Section 312(b).
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 702(b), regardless of
the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the later of
May 15, 1998 or the first May 15 after the first issuance of Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Securities as provided in TIA Section 313(c) a brief report
dated as of such May 15 if required by TIA Section 313(a). A copy of each
such report shall, at the time of such transmission to Holders, be filed
by the Trustee with each stock exchange upon which any Securities are
listed, with the Commission and with the Company. The Company will notify
the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or
copies of such
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portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or
Section 15 (d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Securities Exchange Act
of 1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations; notwithstanding anything contrary herein, the
Trustee shall have no duty to review such documents for the purposes
of determining compliance with any provision of this Indenture;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations;
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules
and regulations prescribed from time to time by the Commission; and
(4) furnish to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, a brief
certificate of the Company's principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and
covenants under this Indenture. For purposes of this paragraph, such
compliance shall be determined without regard to any period of grace
or requirement of notice provided under this Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
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The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person and the Company shall not permit any person to
consolidate with or merge into the Company or convey transfer or lease all
or substantially all of its properties and assets to the Company, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Corporation, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have happened and be
continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company
would become subject to a mortgage, pledge, lien, security interest
or other encumbrance which would not be permitted by this Indenture,
the Company or such successor Person, as the case may be, shall take
such steps as shall be necessary to effectively secure the Securities
equally and ratably with (or prior to) all indebtedness secured
thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture, comply with this Article
and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger by the Company
into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is
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merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
or pursuant to a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for
the benefit of one or more specified series) or to surrender any
right or power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such Events
of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change or elimination (i) shall
neither (A) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit
of such provision nor (B) modify the
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rights of the Holder of any such Security with respect to such
provision or (ii) shall become effective only when there is no such
Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611(b);
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall
not adversely affect the interests of the Holders of Securities of
any series in any material respect; or
(10) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
Trust Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any such Security, or
reduce the principal amount thereof or the rate of interest thereon
or any premium payable upon the redemption thereof, or reduce the
amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502, or change any
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Place of Payment where, or the coin or currency in which, any such
Security or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of
redemption or repayment, on or after the Redemption Date or any
repayment date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section 902, Section
513 or Section 1008, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; provided however, that this
Clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section 902 and Section 1008, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b) and
901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed for such purpose,
the Holders on such record date or their duly designated proxies, and only
such Persons, shall be entitled to consent to such supplemental indenture,
whether or not such Holders remain Holders after such record date;
provided, that unless such consent shall have become effective by virtue
of the requisite percentage having been obtained prior to the date which
is 90 days after such record date, any such consent previously given shall
automatically and without further action by any Holder be canceled and of
no further effect.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
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SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby to the extent
provided therein.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in a form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the
Company shall give notice thereof to the Holders of each Outstanding
Security so affected, pursuant to Section 106, setting forth in general
terms the substance of such supplemental indenture.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities of that series in
accordance with the terms of the Securities and this Indenture. In the
absence of contrary provisions with respect to the Securities of any
series, interest on the Securities of any series may, at the option of the
Company, be paid by check mailed to the address of the Person entitled
thereto as it appears on the Security Register.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may
be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location and any change in the
location of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of
the Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of
any change in the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date
of the principal of (and premium, if any) or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum in the currency in
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which such series of Securities is payable sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of
(and premium, if any) or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities of that series in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in the making
of any payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee
all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums
were held by the Company or such Paying Agent, and, upon such payment by
any Paying Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall
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be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the City of Minneapolis, notice that such money
remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Company on Company request.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right
or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct
of its business or the business material to be maintained and kept in good
condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business and not disadvantageous in any
material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income, profits
or property, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law
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become a lien upon its property; PROVIDED, HOWEVER, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.
SECTION 1007. Compliance Certificate.
(1) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision
of the signing Officers with a view to determining whether each has
kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to his or her knowledge each entity has kept,
observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she
may have knowledge and what action each is taking or proposes to take
with respect thereto) and that to his or her knowledge no event has
occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Securities of
any series is prohibited or if such event has occurred, a description
of the event and what action each is taking or proposes to take with
respect thereto.
(2) The Company shall, so long as any of the Securities of any
series are Outstanding, deliver to the Trustee, forthwith upon any
Officer becoming aware of (a) any Default or Event of Default with
respect to such series of Securities or (b) any event of default
under any other mortgage, indenture or instrument, an Officers'
Certificate specifying such Default, Event of Default or event of
default an what action the Company is taking or proposes to take with
respect thereto.
SECTION 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1006,
inclusive, with respect to the Securities of any series if before the time
for such compliance the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of such series shall, by
Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall
become effective, the
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obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to waive any such term,
provision or condition. If a record date is fixed for such purpose, the
Holders on such record date or their duly designated proxies, and only
such Persons, shall be entitled to waive any such term, provision or
condition hereunder, whether or not such Holders remain Holders after such
record date; provided that unless the Holders of not less than a majority
in principal amount of the Outstanding Securities of such series shall
have waived such term, provision or condition prior to the date which is
90 days after such record date, any such waiver previously given shall
automatically and without further action by any Holder be canceled and of
no further effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by an Officers' Certificate. The Company shall, at least 45 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of
(1) such Redemption Date,
(2) if the Securities of such series have different terms and
less than all of the Securities of such series are to be redeemed,
the terms of the Securities to be redeemed, and
(3) if less than all the Securities of such series with
identical terms are to be redeemed, the principal amount of such
Securities to be redeemed.
In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this
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Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of like tenor of such series not previously called
for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of
like tenor of that series or any integral multiple thereof) of the
principal amount of Securities of such series of a denomination larger
than the minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at each such
Holder's address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of like tenor
of any series are to be redeemed, the identification (and, in the
case of partial redemption, the principal amounts) of the particular
Securities to be redeemed,
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(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the
case, and
(7) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money in immediately available funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities which are
to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price
and accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption
Price, together with accrued interest to the Redemption Date; provided,
however, that, unless otherwise specified as contemplated by Section 301,
installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of
business on the relevant Regular Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
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SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed in part shall be surrendered at
a Place of Payment for such series (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered; provided, however, that if a Global Security
is so surrendered, such new Security so issued shall be a new Global
Security in a denomination equal to the unredeemed portion of the
principal of the Global Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred
to as an "optional sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 1202. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of like tenor of a
series (other than any previously called for redemption) and (2) may apply
as a credit Securities of like tenor of a series which have been redeemed
either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect
to the Securities of like tenor of such series required to be made
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pursuant to the terms of such Securities as provided for by the terms of
such series; provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose
by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for
Securities of like tenor of a series, the Company will deliver to the
Trustee an Officers' Certificate specifying the amount of the next ensuing
sinking fund payment for such Securities pursuant to the terms of such
Securities, the portion thereof, if any, which is to be satisfied by
payment of cash and the portion thereof, if any, which is to be satisfied
by delivering and crediting Securities of like tenor of that series
pursuant to Section 1202 and, at the time of delivery of such Officers'
Certificate, will also deliver to the Trustee any Securities to be so
delivered. Not less than 45 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given. the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 1106 and 1107.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and the respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By /s/ John C. Appel
---------------------------------
Its Vice Chairman and Chief
Financial Officer
Norwest Bank Minnesota, National Association,
as Trustee
By /s/ Curtis D. Schwegman
-----------------------------------
Its Assistant Vice President
70
<PAGE>
EXHIBIT 4.4
________________________________________________________________________________
DAIN RAUSCHER CORPORATION
TO
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
TRUSTEE
_______________________
SUBORDINATED SECURITIES
_______________________
INDENTURE
DATED AS OF MAY 15, 1998
_______________________
<PAGE>
DAIN RAUSCHER CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of May 15, 1998
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313 . . . . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 508
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
____________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Periodic Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . 7
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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<PAGE>
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act or TIA . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . 8
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . 9
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . 11
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . 11
SECTION 107. Compliance with Trust Indenture Act . . . . . . . . . . . . 11
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . 12
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . 12
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . 12
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . 12
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . 13
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . 16
SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . 20
SECTION 205. Form of Legend for Global Securities . . . . . . . . . . . . 21
ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . 21
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . 24
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . 27
SECTION 305. Registration, Registration of Transfer and Exchange . . . . 28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . 29
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . 30
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . 31
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . 32
SECTION 311. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 312. Payment to be in Proper Currency . . . . . . . . . . . . . . 33
ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . 33
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . 33
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . 35
ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . 35
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . 37
iii
<PAGE>
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 39
SECTION 505. Trustee May Enforce Claims Without Possession of
Securitie. . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . 40
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . 40
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . 41
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 41
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 42
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 42
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . 42
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . 42
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . 43
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . 43
ARTICLE SIX THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . 44
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 44
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . 44
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . 46
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . 46
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . 46
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . 47
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . 48
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . 48
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . 48
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . 50
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 613. Preferential Collection of Claims Against Company . . . . . 52
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . 52
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . 54
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. . 54
SECTION 702. Preservation of Information; Communications to Holders . . . 54
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . 54
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . 56
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . 56
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . 57
iv
<PAGE>
ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . 57
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . 58
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . 60
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . 60
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . 60
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . 60
SECTION 907. Notice of Supplemental Indentures . . . . . . . . . . . . . 61
ARTICLE TEN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . 61
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . 61
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . 62
SECTION 1004. Existence . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1005. Maintenance of Properties . . . . . . . . . . . . . . . . . 63
SECTION 1006. Payment of Taxes and Other Claims . . . . . . . . . . . . . 64
SECTION 1007 Compliance Certificate . . . . . . . . . . . . . . . . . . . 64
SECTION 1008. Waiver of Certain Covenants . . . . . . . . . . . . . . . . 65
ARTICLE ELEVEN REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . 65
SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . 65
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . 65
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . 66
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . 66
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . 67
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . 67
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . 68
ARTICLE TWELVE SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . 68
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . 69
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . 69
ARTICLE THIRTEEN SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . 69
SECTION 1301 Agreements that the Securities Subordinated to Extent
Provided . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1302. Company Not to Make Payments with Respect to Securities
in Certain Circumstances. . . . . . . . . . . . . . . . . . 70
SECTION 1303. Securities Subordinated to Prior Payment of All Senior
Debt of the Company on Dissolution, Liquidation or
Reorganization of the Company Subrogation. . . . . . . . . . 70
SECTION 1304. Obligation of the Company Unconditional . . . . . . . . . . 73
SECTION 1305. No Fiduciary Duty to Holders of Senior Debt of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1306. Notice to Trustee of Facts Prohibiting Payments . . . . . . 73
SECTION 1307. Application by Trustee of Moneys Deposited with It . . . . . 74
v
<PAGE>
SECTION 1308. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt . . . . . . . . . . 74
SECTION 1309. Authorization of Trustee to Effectuate Subordination of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1310. Right of Trustee to Hold Senior Debt of the Company . . . . 75
SECTION 1311. Article Thirteen Not to Prevent Events of Default . . . . . 75
SECTION 1312. Article Applicable to Paying Agents . . . . . . . . . . . . 75
SECTION 1313. Trustee Compensation Not Prejudiced . . . . . . . . . . . . 75
</TABLE>
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<PAGE>
INDENTURE, dated as of May 15, 1998 between DAIN RAUSCHER CORPORATION, a
corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at Dain
Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422, and
Norwest Bank Minnesota, National Association, Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein; the following TIA terms used in this Indenture
have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
<PAGE>
(3) any gender used in this Indenture shall be deemed and construed
to include correlative words of the masculine, feminine or neuter gender;
(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States of America at the date of such
computation; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee appointed by that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification. Where any provision of this Indenture refers to action to be
taken pursuant to a Board Resolution (including establishment of any series of
the Securities and the forms and terms thereof), such action may be taken by any
committee, officer or employee of the Company authorized to take such action by
a Board Resolution.
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<PAGE>
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions generally in that Place of Payment are authorized or
obligated by law or executive order to close, unless otherwise specified in a
form of Security.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in The City of
Minneapolis, Minnesota, at which at any particular time its corporate trust
business shall be principally administered.
"Corporation" includes corporations, limited liability companies,
associations, companies, joint stock companies and business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
clearing agency registered under the Exchange Act, specified for that purpose as
contemplated by Section 301 or any successor clearing agency registered under
the Exchange Act as contemplated by Section 305, and if at any time there is
more than one such Person, "Depositary" as used with respect to the Securities
of any series shall mean the Depositary with respect to the Securities of such
series.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-3-
<PAGE>
"Global Security" means a Security bearing the legend specified in Section
205 evidencing all or part of a series of Securities, issued to the Depositary
for such series or its nominee, and registered in the name of such Depositary or
nominee.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301; provided, however, that, if at any time more than one Person is
acting as Trustee under this instrument due to the appointment of one or more
separate Trustees for any one or more separate series of Securities pursuant to
Section 610(e), "Indenture" shall mean, with respect to such series of
Securities for which any such Person is Trustee, this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of particular series of Securities
for which such Person is Trustee established as contemplated by Section 301,
exclusive, however, of any provisions or terms which relate solely to other
series of Securities for which such Person is not Trustee, regardless of when
such terms or provisions were adopted, and exclusive of any provisions or terms
adopted by means of one or more indentures supplemental hereto executed and
delivered after such Person had become such Trustee but to which such Person, as
such Trustee, was not a party.
"Interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President, a Vice President or an Assistant Vice President of the
Company, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
-4-
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Securities, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units that shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined in the
manner provided as contemplated by Section 301 as of the date of original
issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent, determined as of
the date of original issuance of such Security, of the amount determined as
provided in (i) above) of such Security as determined by the Company pursuant to
-5-
<PAGE>
Section 301, and (iii) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) and/or interest on any Securities on behalf
of the Company.
"Periodic Offering" means an offering of Securities of a series from time
to time the specific terms of which Securities, including without limitation the
rate or rates of interest (or formula for determining the rate or rates of
interest), if any, thereon, the Stated Maturity or Maturities thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the
Company or its agents upon the issuance of such Securities.
"Person" means any individual, Corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and/or
interest on the Securities of that series are payable, where Securities of that
series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served as specified in Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security, and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
-6-
<PAGE>
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee assigned by it to administer its corporate trust matters.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture; PROVIDED, HOWEVER, that if at any time there is more than one
Person acting as Trustee under this Indenture, "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this Indenture and shall more particularly mean Securities
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" of the Company means the principal of and premium, if any,
and interest on (i) all indebtedness of the Company for money borrowed,
whether outstanding on the date of execution of this Indenture or thereafter
created, assumed or incurred, except (a) such indebtedness as is by its terms
expressly stated to rank junior in right of payment to the Securities or to
rank PARI PASSU with the Securities and (b) Senior Debt, and (ii) any
deferrals, renewals or extensions of any such Senior Debt. The term
"indebtedness of the Company for money borrowed" as used in the foregoing
sentence shall mean any obligation of, or any obligation guaranteed by, the
Company, for the repayment of money borrowed, whether or not evidenced by
bonds, debentures, notes or other written instruments, and any deferred
obligation for the payment of the purchase price of property or assets.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
-7-
<PAGE>
"Subsidiary" means any Corporation of which securities (excluding
securities entitled to vote for directors only by reason of the happening of a
contingency) entitled to elect at least a majority of the corporation's
directors shall at the time be owned, directly or indirectly, by the Company, or
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
-8-
<PAGE>
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion whether such covenant or condition has been
complied with; and
(4) a statement whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of any officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing,
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
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instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) The Company may fix any day as the record date for the purpose of
determining the Holders of Securities of any series entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Holders of Securities of such series, but the Company shall have no
obligation to do so. If not set by the Company prior to the first solicitation
of a Holder of Securities of such series made by any Person in respect of any
such action, or, in the case of any such vote, prior to such vote, the record
date for any such action or vote shall be the 30th day (or, if later, the date
of the most recent list of Holders required to be provided pursuant to Section
701) prior to such first solicitation or vote, as the case may be. With regard
to any record date for action to be taken by the Holders of one or more series
of Securities, only the Holders of Securities of such series on such date (or
their duly designated proxies) shall be entitled to give or take, or vote on,
the relevant action.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
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SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with a Responsible Officer of the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Services, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument (Attention: Secretary) or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made by or with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Compliance with Trust Indenture Act.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act that are required to be part of this Indenture. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that
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is required under such Act to be a part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company or the
Trustee shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto, any Authenticating Agent, any
Paying Agent, any Securities Registrar, and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of Minnesota.
SECTION 113. Legal Holidays.
Except as may be otherwise specified with respect to any particular
Securities, in any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that
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no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution and set forth in an Officers' Certificate or established by
one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, a copy
of an appropriate record of such action shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture.
The definitive Securities may be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
on which the Securities may be listed, all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
SECTION 202. Form of Face of Security.
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE REGULATIONS
THEREUNDER.]
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DAIN RAUSCHER CORPORATION
______________________
No. __________ [$]____________
Dain Rauscher Corporation, a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _________________________________________,
or registered assigns, the principal sum of ______________________________
[Dollars] on ________________________________ [IF THE SECURITY IS TO BEAR
INTEREST PRIOR TO MATURITY, INSERT --, and to pay interest thereon from
________________ or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, [semi-annually in arrears on
___________________ and __________________________ in each year] [annually in
arrears on _________________________], commencing ________________________, at
the rate of _________% per annum, until the principal hereof is paid or made
available for payment [IF APPLICABLE INSERT --, and (to the extent that the
payment of such interest shall be legally enforceable) at the rate of ______%
per annum on any overdue principal and premium and on any overdue installment of
interest]. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ________________________________ or
_______________________________ (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture]. [IF THE SECURITY IS NOT TO BEAR
INTEREST PRIOR TO MATURITY, INSERT --. The principal of this Security shall not
bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue
principal of this Security shall bear interest at the rate of ______% per annum
(to the extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such default in payment to the date payment
of such principal has been made or duly provided for. Interest on any overdue
principal shall be payable on demand. Any such interest on any overdue
principal that is not so paid on demand shall bear interest at the rate of
_________% per annum (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue
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from the date of such demand for payment to the date payment of such interest
has been made or duly provided for, and such interest shall also be payable on
demand.]
Payment of the principal of (and premium, if any) and [If applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in ______________________, in
such coin or currency [of the United States of America] as at the time of
payment is legal tender for payment of public and private debts [IF APPLICABLE,
INSERT --; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register].
[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity as described on the
reverse hereof.]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
DAIN RAUSCHER CORPORATION
By __________________________________
Attest:
_____________________________________
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SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of __________, (herein called the
"Indenture"), between the Company and ________________________, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be authenticated and delivered. This Security is one of the series
designated on the face hereof [, limited in aggregate principal amount to [$]
________________________]. By the terms of the Indenture, additional Securities
[IF APPLICABLE, INSERT -- of this series and] of other separate series, which
may vary as to date, amount, Stated Maturity, interest rate or method of
calculating the interest rate and in other respects as therein provided, may be
issued in an unlimited principal amount.
The indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture referred to above, subordinate and subject to
right of payment to the prior payment in full of the principal of and premium,
if any, and interest on all Senior Debt of the Company, as defined in the
Indenture, and each Holder of this Security, by accepting the same, agrees to
and shall be bound by the provisions of the Indenture and authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination of this Security as provided in
the Indenture and appoints the Trustee his attorney-in-fact for any and all such
purposes.
[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity hereof upon not less than
30 days' notice by mail to the Person[s] in whose name[s] [the Securities to be
redeemed are/this Security is] registered at the address specified in the
Security Register, [IF APPLICABLE, INSERT -- (1) on ____________ in any year
commencing with the year ______________ and ending with the year _____________
through operation of the sinking fund for this series at a Redemption Price
equal to 100% of the principal amount, and (2)] at any time [on or after
_____________], as a whole or in part, at the election of the Company, at the
following Redemption Prices (expressed as percentages of the principal amount):
if redeemed [on or before ________________, ________%, and if redeemed] during
the 12-month period beginning _____________ of the years indicated,
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Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to _______% of the principal amount,
[IF APPLICABLE, INSERT -- together in the case of any such redemption [IF
APPLICABLE, INSERT -- (whether through operation of the sinking fund or
otherwise)] with accrued interest to the Redemption Date, provided, however,
that installments of interest whose Stated Maturity is on or prior to such
Redemption Date will be payable to the [Holders of such Securities/Holder of
this Security] (or one or more Predecessor Securities) of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture]. [IF THERE IS NO SINKING FUND, INSERT -- [The
Securities of this series are/This Security is] not subject to any sinking
fund.]
[IF APPLICABLE, INSERT -- [The Securities of this series are/This Security
is] subject to redemption prior to the Stated Maturity hereof upon not less than
30 days' notice by mail to the Person[s] in whose name[s] [the Securities to be
redeemed are/this Security is] registered at the address specified in the
Security Register, (1) on ______________ in any year commencing with the year
_______ and ending with the year ______________ through operation of the sinking
fund for this series at the Redemption Prices for redemption through operation
of the sinking fund (expressed as percentages of the principal amount) set forth
in the table below, and (2) at any time [on or after ______________________], as
a whole or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below: If redeemed
during the 12-month period beginning _________________ of the years indicated,
Redemption Price
for Redemption Redemption Price for
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund Of the Sinking Fund
---- ------------------ ----------------------
and thereafter at a Redemption Price equal to _____% of the principal amount [IF
APPLICABLE, INSERT --, together in the case of any such redemption (whether
through operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, provided, however, that installments of interest whose Stated
Maturity is on or prior to such Redemption Date will be payable to the [Holders
of such
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<PAGE>
Securities/Holder of this Security] (or one or more Predecessor Securities) of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture].]
[Notwithstanding the foregoing, the Company may not, prior to _____, redeem
any Securities of this series as contemplated by [Clause (2) of] the preceding
paragraph as a part of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an interest cost
to the Company (calculated in accordance with generally accepted financial
practice) of less than _____% per annum.]
[The sinking fund for this series provides for the redemption on
___________________ in each year beginning with the year _____ and ending with
the year _____ of [not less than] [$] _____________________ [("mandatory sinking
fund") and not more than [$] ___________] aggregate principal amount of
Securities of this series. [Securities of this series acquired or redeemed by
the Company otherwise than through [mandatory] sinking fund payments may be
credited against subsequent [mandatory] sinking fund payments otherwise required
to be made -- in the inverse order in which they become due.]]
[In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor or an authorized denomination for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof, and, in the event of transfer or exchange, a new
Security or Securities of this series and of like tenor and for a like aggregate
principal amount will be issued to the Holder, in the case of exchange, or the
designated transferee or transferees, in the case of transfer.]
[If the Security is not an Original Issue Discount Security, -- If an Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may (subject to the
conditions set forth in the Indenture) be declared due and payable in the manner
and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- If an Event of
Default with respect to Securities of this series shall occur and be continuing,
a lesser amount than the principal amount due at the Stated Maturity of the
Securities of this series may (subject to the conditions set forth in the
Indenture) be declared due and payable in the manner and with the effect
provided in the Indenture. The amount due and payable on this Security in the
event that this Security is declared due and payable prior to the Stated
Maturity hereof shall be -- INSERT FORMULA FOR DETERMINING THE AMOUNT -- or in
the event that this Security is redeemed shall be the specified percentage --
INSERT FORMULA FOR DETERMINING THE AMOUNT. Upon payment (i) of the amount of
principal so declared due and payable and (ii) of interest on any overdue
principal and overdue interest (in each case to the extent
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that the payment of such interest shall be legally enforceable), all of the
Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities at the time Outstanding of each series to be affected and, for
certain purposes, without the consent of the Holders of any Securities at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, -- In determining
whether the Holders of the requisite principal amount of the Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver under the Indenture or whether a quorum is present at a
meeting of Holders of Securities, the principal amount of any Original Issue
Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon the acceleration of the Maturity thereof.]
Subject to the rights of holders of Senior Debt of the Company set forth in
this Security and as provided in the Indenture referred to above, no reference
herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing,
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and thereupon one or more new Securities of this series and of like tenor of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of [$1,000] and any amount in excess thereof which is
an integral multiple of [$1,000]. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered in the Security Register as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.
The Securities shall be governed by and construed in accordance with the
laws of the State of [__________].
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities of the series designated therein and issued
pursuant to the within-mentioned Indenture.
Norwest Bank Minnesota, National Association,
as Trustee
By ____________________________________________
Authorized Signatory
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SECTION 205. Form of Legend for Global Securities.
Any Global Security authenticated and delivered hereunder shall, in
addition to the provisions contained in Sections 202 and 203, bear a legend in
substantially the following form or such similar form as may be required by the
Depositary:
"Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New
York, New York) to the issuer or to its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article 13 and may be issued in one or more series. There shall be
established by or pursuant to a Board Resolution and, subject to Section 303,
set forth or determined in the manner provided in an Officers' Certificate or
established in one or more indentures supplemental hereto, prior to the initial
issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in lieu of, other Securities of the series pursuant to
Section 304, 305, 306, 906, 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);
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(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal or installments of
principal of the Securities of the series is or are payable and any rights
to extend such date or dates;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the formula pursuant to which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest shall be payable
and the Regular Record Date for the interest payable on any Interest
Payment Date;
(6) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable, any Securities
of the series may be surrendered for registration of transfer or exchange
and notices and demands to or upon the Company with respect to the
Securities of the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) whether the Securities of the series will be convertible into
shares of Common Stock and/or exchangeable for other securities, and if so,
the terms and conditions upon which such Securities will be so convertible
or exchangeable, and any deletions from or modifications or additions to
this Indenture to permit or to facilitate the issuance of such convertible
or exchangeable Securities or the administration thereof;
(10) the identity of each Security Registrar and Paying Agent, if
other than or in addition to the Trustee;
(11) if the amount of principal of, or any premium or interest on, any
Securities of the series may be determined by reference to an index or
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pursuant to a formula, the manner in which such amounts shall be
determined;
(12) the applicability of, and any addition to or change in, the
covenants and definitions currently set forth in this Indenture;
(13) if other than denominations of $1,000 or any amount in excess
thereof which is an integral multiple of $1,000, the denominations in which
Securities of the series shall be issuable;
(14) if other than the currency of the United States of America, the
currency, currencies or currency units in which the Securities of such
series shall be denominated and in which payment of the principal of
and any premium and interest on any Securities of the series shall be
payable if other than the currency of the United States of America,
provided, however, that prior to the issuance of any such Securities, the
Company shall have obtained the written consent of the Trustee, which
consent may be withheld in the sole discretion of the Trustee, to the
currency, currencies or currency units so established; the manner of
determining the U.S. dollar equivalent of the principal amount thereof
for purposes of the definition of "Outstanding" in Section 101, and, if
the principal of or any premium or interest on any Securities of the
series is to be payable, at the election of the Company or a Holder
thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable; the currency,
currencies or currency units in which payment of the principal of and any
premium and interest on Securities of such series as to which such election
is made shall be payable; and the periods within which and the terms and
conditions upon which such election is to be made;
(15) any other event or events of default applicable with respect to
Securities of the series in addition to or in lieu of those provided in
Section 501(1)-(7);
(16) if less than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502;
(17) whether the Securities of the series shall be issued in whole or
in part in the form of one or more Global Securities and, if so, (a) the
Depositary with respect to such Global Security or Securities and (b) the
circumstances under which any such Global Security may be exchanged for
Securities registered in the name of, and any transfer of such Global
Security may be registered to, a Person other than such Depositary or its
nominee, if other than as set forth in Section 305; and
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
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All Securities of any one series (other than Securities offered in a
Periodic Offering) shall be substantially identical except as to denomination
and except as may otherwise be provided by or pursuant to the Board Resolution
referred to above and, subject to Section 303, set forth, or determined in the
manner provided, in the Officers' Certificate referred to above or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
With respect to Securities of a series offered in a Periodic Offering, such
Board Resolution and Officers' Certificate or supplemental indenture may provide
general terms or parameters for Securities of such series and provide either
that the specific terms of particular Securities of such series shall be
specified in a Company Order or that such terms shall be determined by the
Company or its agents in accordance with other procedures specified in a Company
Order as contemplated by the third paragraph of Section 303.
SECTION 302. Denominations.
Unless otherwise provided in the applicable Officers' Certificate or
supplemental indenture, the Securities of each series shall be issued in
registered form without coupons in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such provisions with respect
to the Securities of any series, the Securities of such series shall be issuable
in denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal affixed thereto or reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
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At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, or, in the case of Securities
offered in a Periodic Offering, from time to time in accordance with such other
procedures (including, without limitation, the receipt by the Trustee of
electronic instructions from the Company or its duly authorized agents, promptly
confirmed in writing by the Company) acceptable to the Trustee as may be
specified from time to time by a Company Order for establishing the specific
terms of particular Securities being so offered, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or forms or terms of the Securities of the series have been established by
or pursuant to one or more Board Resolutions as permitted by Sections 201 and
301, in authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) that the form or forms of such Securities have been established
in conformity with the provisions of this Indenture;
(b) that the terms of such Securities have been established in
conformity with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to
general equity principles;
(d) that authentication and delivery of such Securities and the
execution and delivery of the supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such
Securities, and has duly taken all necessary corporate action with respect
to such issuance; and
(f) that the issuance of such Securities will not contravene the
certificate of incorporation or bylaws of the Company or result in any
violation of any of the terms or provisions of any law or regulation or of
any
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indenture, mortgage or other agreement known to such Counsel by which the
Company is bound;
provided, however, that, with respect to Securities of a series offered in a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel in connection only with the first authentication of each form of
Securities of such series and that the opinions described in Clauses (b) and (c)
above may state, respectively, that
(b) if the terms of such Securities are to be established pursuant to
a Company Order or pursuant to such procedures as may be specified from
time to time by a Company Order, all as contemplated by a Board Resolution
or action taken pursuant thereto, such terms will have been duly authorized
by the Company and established in conformity with the provisions of this
Indenture; and
(c) that such Securities, when executed by the Company, completed,
authenticated and delivered by the Trustee in accordance with this
Indenture, and issued and delivered by the Company and paid for, all in
accordance with any agreement of the Company relating to the offering,
issuance and sale of such Securities, will be duly issued under this
Indenture and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting generally the enforcement of creditors' rights and to general
principles of equity.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Company of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel, Company
Order and other documents delivered pursuant to Sections 201 and 301 and this
Section, as applicable, in connection with the first authentication of a form of
Securities of such series and it shall not be necessary for the Company to
deliver such Opinion of Counsel and other documents (except as may be required
by the specified other procedures, if any, referred to above) at or prior to the
time of authentication of each Security of such series unless and until the
Trustee receives notice that such Opinion of Counsel or other documents have
been superseded or revoked, and may assume compliance with any conditions
specified in such Opinion of Counsel (other than any conditions to be performed
by the Trustee). If such form or forms or terms have been so established, the
Trustee shall not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
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Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement (which
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any Series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in the form of Global Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
like tenor of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series and of like tenor and of any
authorized denominations. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
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SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided at the Corporate Trust Office.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Company in any Place of Payment for such series,
the Company shall execute and the Trustee shall authenticate and deliver (in the
name of the designated transferee or transferees) one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor and bearing a number not contemporaneously
outstanding.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at the office or agency of the Company in any Place of Payment for
such series. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits under this Indenture as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company may but shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities
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of that series selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (ii) to register the transfer
of or exchange any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any Global Security shall be exchangeable pursuant
to this Section 305 for Securities registered in the name of Persons other than
the Depositary for such Security or its nominee only if (i) such Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time such Depositary ceases to be a
clearing agency registered under the Exchange Act, (ii) the Company executes and
delivers to the Trustee a Company Order that such Global Security shall be so
exchangeable or (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities of such series. Upon the occurrence in
respect of any Global Security of any series of any one or more of the
conditions specified in Clauses (i), (ii) or (iii) of the preceding sentence or
such other conditions as may be specified as contemplated by Section 301 for
such series, such Global Security may be exchanged for Securities not bearing
the legend specified in Section 205 and registered in the names of such Persons
as may be specified by the Depositary (including Persons other than the
Depositary).
Notwithstanding any other provision of this Indenture, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security, including a Global Security if the destroyed, lost or
stolen Security was a Global Security, of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder. A new
Security shall have such legends as appeared on the old Security unless the
Company determines otherwise.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered in the Security Register at the close of business on
the Regular Record Date for such Interest Payment Date.
Any interest on any Security of any series which is payable but is not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same
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time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of Securities of
such series at such Holder's address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered in the Security Register as the
owner of such Security for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Section 307) interest on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither
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the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary (or its nominee) shall have any rights under this
Indenture with respect to such Global Security or any Security represented
thereby, and such Depositary may be treated by the Company, the Trustee, and any
agent of the Company or the Trustee as the owner of such Global Security or any
Security represented thereby for all purposes whatsoever. Notwithstanding the
foregoing, with respect to any Global Security, nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and such holders of beneficial
interest in such Global Security, the operation of customary practices governing
the exercise of the rights of the Depositary (or its nominees) as Holder of such
Global Security.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be destroyed unless otherwise directed by a Company Order. The
Trustee is hereby directed by the Company to destroy the cancelled Securities
held by the Trustee (subject to the record retention requirements of the
Exchange Act), and the Trustee shall provide the Company with a certificate of a
Responsible Officer certifying as to the destruction of such Securities.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
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SECTION 311. CUSIP Number.
The Company in issuing the Securities may use "CUSIP" numbers, and if it
does so, the Trustee shall use the applicable CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company will promptly notify the Trustee of any change in
any CUSIP number.
SECTION 312. Payment to be in Proper Currency.
In the case of any Securities denominated in any currency (the "Required
Currency") other than United States of America dollars, except as otherwise
provided therein, the obligation of the Company to make any payment of
principal, premium or interest thereon shall not be discharged or satisfied by
any tender by the Company, or recovery by the Trustee, in any currency other
than the Required Currency, except to the extent that such tender or recovery
shall result in the Trustee timely holding the full amount of the Required
Currency then due and payable. If any such tender or recovery is in a currency
other than the Required Currency, the Trustee may take such actions as it
considers appropriate to exchange such currency for the Required Currency. The
costs and risks of any such exchange, including without limitation the risks of
delay and exchange rate fluctuation, shall be borne by the Company, the Company
shall remain fully liable for any shortfall or delinquency in the full amount of
Required Currency then due and payable, and in no circumstances shall the
Trustee be liable therefor except in the case of its negligence or willful
misconduct.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and
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which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount, in the currency in which such
Securities are payable, sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the respective Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company, and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614, and, if money shall
have been deposited with the Trustee pursuant to Subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003, shall survive.
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SECTION 402. Application of Trust Money.
Subject to provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, and unless otherwise provided with respect to Securities of any series
pursuant to Section 301(15), means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of a series of one or more
Securities other than that series), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series
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a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of
that series.
The term "BANKRUPTCY LAW" means title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "CUSTODIAN" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A default under clause (4) is not an Event of Default with respect to any
series of Securities until the Trustee notifies the Company in writing, or the
Holders of at least 25% in principal amount of the then outstanding Securities
of such series notify the Company and the Trustee in writing, of the default and
the Company
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does not cure the default within 60 days after receipt of such notice. The
written notice must specify the default, demand that it be remedied and state
that the notice is a "NOTICE OF DEFAULT."
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Outstanding Securities of any series
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
of that series may declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such lesser portion of the
principal amount of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified portion thereof)
shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Outstanding Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607; and
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(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Security, the whole amount then due and payable on such Security
for principal (and premium, if any) and interest and, to the extent that payment
of such interest shall be legally enforceable, interest on any overdue principal
(and premium, if any) and on any overdue interest at the rate or rates
prescribed therefor in such Security, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Security and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Security, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) or such portion of the principal amount of any series of
Original Issue Discount Securities as may be specified in the terms of such
series and interest owing and unpaid in respect of the Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607) and of the Holders allowed in such judicial proceeding,
and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
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SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and for any other amounts due
the Trustee under Section 607, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the
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Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
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SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series may, on behalf of the Holders of all
the Securities of such series, waive any past default hereunder with respect to
such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
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(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any past default hereunder.
If a record date is fixed, the Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to waive any
default hereunder, whether or not such Holders remain Holders after such record
date; provided, that unless such majority in principal amount shall have waived
such default prior to the date which is 90 days after such record date, any such
waiver of such default previously given shall automatically and without further
action by any Holder be canceled and of no further effect.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of
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this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The provisions of TIA Section 315 shall apply to the Trustee.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; and
provided, further, that in the case of any default of the character specified in
Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of TIA Section 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
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(b) any instruction, request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order or as otherwise expressly provided herein and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) before the Trustee acts or refrains from acting, the Trustee may
consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such fact or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Indenture; and
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(i) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
(j) Except with respect to Sections 1001 herein, the Trustee shall
have no duty to inquire as to the performance of the Company's covenants in
Article 4 hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Event of Default except (i) any Event of Default occurring
pursuant to Sections 501(1), 501(2) and 1001 herein or (ii) any Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility on Form T-1 supplied to the
Company is true and accurate subject to the qualifications set forth therein.
The Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed to in writing by the Company and the Trustee.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee and its agents for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The obligations of the Company under this Section 607 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be a senior claim to that of the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of principal of (and premium, if any) or interest
on particular Securities, and the Securities are hereby subordinated to each
senior claim. When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Article Five hereof, the
expenses (including reasonable fees and expenses of counsel) and the
compensation for the service in connection therewith are intended to constitute
expenses of administration under any applicable bankruptcy law.
The Trustee shall give the Company notice of any claim or liability for
which the Trustee might be entitled to indemnification under subparagraph (3) of
this Section 607 within a reasonable amount of time after a trust officer of the
Trustee becomes aware of such claim or liability.
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SECTION 608. Disqualification; Conflicting Interests.
The provisions of TIA Section 310(b) shall apply to the Trustee.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to
act under TIA Section 310(a)(1) and shall have a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by Federal, State
or District of Columbia authority. The Trustee hereby represents and warrants
that it is currently in compliance and at all times will remain in compliance
with the requirements of this Section 609. If such Corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. Neither
the Company, nor any Person directly or indirectly controlling, controlled by or
under common control with the Company, shall act as Trustee hereunder.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with TIA Section 310(b) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder,
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
(4) the Trustee shall commence a voluntary case under the Federal
bankruptcy laws, as now or thereafter constituted, or any other applicable
Federal or state bankruptcy, insolvency or similar law or shall consent to
the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Trustee or its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debt generally as they become due, or shall take corporate action in
furtherance of any such action,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by
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Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
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or in such supplemental indenture shall constitute such Trustees co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates. Whenever there is a successor Trustee with
respect to one or more (but less than all) series of securities issued pursuant
to this Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of those terms
in Section 101 which contemplate such situation.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any Corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
Corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities; in case
any of the Securities shall not have been authenticated by the Trustee then in
office, any successor by merger, conversion or consolidation to such Trustee may
authenticate such Securities either in the name of such predecessor hereunder or
in the name of the successor Trustee; and in all
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such cases such certificates shall have the full force which it is anywhere in
the Securities or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
SECTION 613. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a). A Trustee which has
resigned or been removed is subject to TIA Section 311(a) to the extent
indicated therein.
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee, with
the concurrence of the Company, may appoint an Authenticating Agent or Agents
with respect to one or more series of Securities which shall be authorized to
act on behalf of the Trustee to authenticate Securities of such series, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a Corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal, State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust
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business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such Corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 614.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 614.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated herein and issued
pursuant to the within-mentioned Indenture.
Norwest Bank Minnesota, National Association,
as Trustee
By________________________________________
As Authenticating Agent
By________________________________________
Authorized Signatory
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
If the Trustee is not acting as Security Registrar for the Securities of
any series, the Company will furnish or cause to be furnished to the Trustee.
(a) at intervals of no more than six months commencing after the
first issue of such series, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of a date
not more than 15 days prior to the time such information is furnished, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by TIA
Section 312(b).
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the later of
May 15, 1998 or the first May 15 after the first issuance of Securities pursuant
to this
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Indenture, the Trustee shall transmit by mail to all Holders of Securities as
provided in TIA Section 313(c) a brief report dated as of such May 15 if
required by TIA Section 313(a). A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each stock exchange
upon which any Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15 (d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations; notwithstanding anything contrary herein, the Trustee shall
have no duty to review such documents for the purposes of determining
compliance with any provision of this Indenture;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission; and
(4) furnish to the Trustee, within 120 days after the end of each
fiscal year of the Company ending after the date hereof, a brief
certificate of the
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Company's principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture. For
purposes of this paragraph, such compliance shall be determined without
regard to any period of grace or requirement of notice provided under this
Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person and the Company shall not permit any person to consolidate with or
merge into the Company or convey transfer or lease all or substantially all of
its properties and assets to the Company, unless:
(1) the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety shall be a Corporation, partnership or trust, shall be organized
and validly existing under the laws of the United States of America any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and
the performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor Person, as the case may be, shall take such steps as shall
be necessary to effectively secure the Securities equally and ratably with
(or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
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conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture, comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger by the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of one or
more specified series) or to surrender any right or power herein conferred
upon the Company; or
(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of Securities,
stating that such Events of Default are being included solely for the
benefit of such series); or
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(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Security with respect to such provision or
(ii) shall become effective only when there is no such Security
Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611(b);
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect; or
(10) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
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Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any such Security, or reduce
the principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any such Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption or repayment, on or after the Redemption Date or any repayment
date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section 902, Section 513 or
Section 1008, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided however, that this Clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section 902 and Section 1008, or
the deletion of this proviso, in accordance with the requirements of
Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed for such purpose, the Holders on
such record date or their duly designated proxies, and only such Persons, shall
be entitled to consent to such supplemental indenture, whether or not such
Holders remain
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Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby to the extent provided therein.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in a form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
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SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security so
affected, pursuant to Section 106, setting forth in general terms the substance
of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture. In the absence of contrary
provisions with respect to the Securities of any series, interest on the
Securities of any series may, at the option of the Company, be paid by check
mailed to the address of the Person entitled thereto as it appears on the
Security Register.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location and any change in the location of such office or agency. If at any time
the Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company
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will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum in the currency in which such series of Securities is payable
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its failure so
to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities of
that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company
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or such Paying Agent, such sums to be held by the Trustee upon the same trusts
as those upon which such sums were held by the Company or such Paying Agent,
and, upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security of any series and remaining unclaimed for
two years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only
to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of Minneapolis,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Company on Company request.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of its
business or the business material to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of
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the Company, desirable in the conduct of its business and not disadvantageous in
any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon its property; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 1007. Compliance Certificate.
(1) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review
of the activities of the Company and its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers
with a view to determining whether each has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to his or her knowledge
each entity has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may
have knowledge and what action each is taking or proposes to take with
respect thereto) and that to his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Securities of any series is
prohibited or if such event has occurred, a description of the event and
what action each is taking or proposes to take with respect thereto.
(2) The Company shall, so long as any of the Securities of any series
are Outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of (a) any Default or Event of Default with respect to such
series of Securities or (b) any event of default under any other mortgage,
indenture or instrument, an Officers' Certificate specifying such Default,
Event of Default or event of default an what action the Company is taking
or proposes to take with respect thereto.
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SECTION 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 to 1006, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any such term, provision or
condition. If a record date is fixed for such purpose, the Holders on such
record date or their duly designated proxies, and only such Persons, shall be
entitled to waive any such term, provision or condition hereunder, whether or
not such Holders remain Holders after such record date; provided that unless the
Holders of not less than a majority in principal amount of the Outstanding
Securities of such series shall have waived such term, provision or condition
prior to the date which is 90 days after such record date, any such waiver
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
an Officers' Certificate. The Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of
(1) such Redemption Date,
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(2) if the Securities of such series have different terms and less
than all of the Securities of such series are to be redeemed, the terms of
the Securities to be redeemed, and
(3) if less than all the Securities of such series with identical
terms are to be redeemed, the principal amount of such Securities to be
redeemed.
In the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of like tenor of any series are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of like tenor of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of like tenor of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at each such Holder's address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of like tenor of any
series are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case,
and
(7) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in immediately available funds sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or
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one or more Predecessor Securities, registered as such at the close of business
on the relevant Regular Record Dates according to their terms and the provisions
of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed in part shall be surrendered at a
Place of Payment for such series (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or such Holder's attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered; provided, however, that
if a Global Security is so surrendered, such new Security so issued shall be a
new Global Security in a denomination equal to the unredeemed portion of the
principal of the Global Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
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SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of like tenor of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities of like tenor of a series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of like tenor of such series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for
Securities of like tenor of a series, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for such Securities pursuant to the terms of such Securities, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of like tenor of that series pursuant to Section 1202 and, at the
time of delivery of such Officers' Certificate, will also deliver to the Trustee
any Securities to be so delivered. Not less than 45 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given. the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 1301 Agreements that the Securities Subordinated to Extent Provided.
The Company, for itself, its successors and assigns, covenants and agrees,
and each Holder of a Security likewise covenants and agrees by his acceptance
thereof, that any payment of principal of (and premium, if any) and interest on
each and all
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of the Securities is hereby expressly subordinated, to the extent and in the
manner hereinafter provided, to the prior payment in full of all Senior Debt of
the Company.
SECTION 1302. Company Not to Make Payments with Respect to Securities in
Certain Circumstances.
No payment of principal of (or premium, if any) or interest on the
Securities shall be made and no Holder of the Securities shall be entitled to
demand or receive any such payment (i) unless all amounts then due for principal
of (and premium, if any) and interest (including interest accruing subsequent to
the commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on all Senior Debt of the Company have been paid in full or
duly provided for, or (ii) if, at the time of such payment or immediately after
giving effect thereto, there shall exist with respect to any such Senior Debt
any event of default permitting the holders thereof to accelerate the maturity
thereof or any event which, with notice or lapse of time or both, would become
such an event of default.
SECTION 1303. Securities Subordinated to Prior Payment of All Senior Debt of
the Company on Dissolution, Liquidation or Reorganization of the Company
Subrogation.
Upon any distribution of the assets of the Company in connection with
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise), the holders of Senior Debt of the Company shall
first be entitled to receive payment in full in accordance with the terms of
such Senior Debt of the principal thereof (and premium, if any) and the interest
due thereon (including interest accruing subsequent to the commencement of any
proceedings for the bankruptcy or reorganization of the Company under any
applicable bankruptcy, insolvency, or similar law now or hereafter in effect)
before the Holders of the Securities are entitled to receive any payment upon
the principal thereof (and premium, if any) or interest thereon and, upon any
such dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Securities, shall be made by the liquidating trustee or agent or
other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness of the Company or their representative or
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representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the principal
of (and premium, if any) and interest (including interest accruing subsequent to
the commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency, or similar law now or
hereafter in effect) on the Senior Debt of the Company held or represented by
each, to the extent necessary to pay in full all such Senior Debt remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
If the Holders of the Securities or any of them, shall fail to file a
proper claim in the form required in any proceeding referred to in the first
paragraph of this Section, prior to 30 days before the expiration of the time to
file such claim or claims, and if the Trustee shall likewise fail, prior to 15
days before the expiration of the time to file such claim or claims, pursuant to
the authority granted to the Trustee pursuant to the provisions of Sections 503
and 504, then the holders of Senior Debt of the Company are hereby authorized to
file an appropriate claim or claims for and on behalf of the Holders of the
Securities in the form required in any such proceeding.
In the event that, notwithstanding the foregoing, upon any such
dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities, shall be received
by the Trustee, the Paying Agent or the Holders of the Securities before all
Senior Debt of the Company is paid in full, such payment or distribution shall
be paid over to the holders of such Senior Debt or their representative or
representatives or to the trustee or trustees under any indenture under which
any instrument evidencing any of such Senior Debt may have been issued, ratably
as aforesaid, for application to the payment of all Senior Debt of the Company
remaining unpaid until all such Senior Debt shall have been paid in full, after
giving effect to any concurrent payment or distribution (or provision thereof)
to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt of the Company, the
Holders of the Securities shall be subrogated to the rights of the holders of
such Senior Debt to receive payments or distributions of assets of the Company
applicable to such Senior Debt until the Securities shall be paid in full and
none of the payments or distributions to the holders of such Senior Debt to
which the Holders of the Securities or the Trustee would be entitled except for
the provisions of this Article or of payments over, pursuant to the provisions
of this Article, to the holders of such Senior Debt by the Holders of the
Securities or the Trustee shall, as between the
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Company, its creditors other than the holders of such Senior Debt, and the
Holders of the Securities, be deemed to be a payment by the Company to or on
account of such Senior Debt, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining and relative
rights of the Holders of the Securities, on the one hand, and the holders of the
Senior Debt of the Company, on the other hand.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company within the
meaning of this Article. The Trustee, subject to the provisions of Section 601,
shall be entitled to assume that no such event has occurred and shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of moneys to or by the Trustee or the taking of any other
action by the Trustee, unless the Company or any one or more holders of Senior
Debt of the Company or any trustee therefor (who shall have been certified or
otherwise established to the satisfaction of the Trustee to be such a holder or
trustee) has given written notice thereof to a Responsible Officer of the
Trustee at its Corporate Trust Office. Upon any distribution of assets of the
Company referred to in this Article, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article, and the Trustee, subject to the provisions of Article Six, and the
Holders of the Securities shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders of the Securities for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article. In the event that the Trustee determines, in good faith, that
further evidence is required with respect to the right of any person, as a
holder of Senior Debt of the Company, to participate in any payment or
distribution pursuant to this Section, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Senior Debt held by such person, as to the extent to which such person
is entitled to participation in such payment or distribution, and as to other
facts pertinent to the rights of such person under this Section, and if such
evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
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SECTION 1304. Obligation of the Company Unconditional.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Company and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency, or similar law nor or
hereafter in effect) on the Securities as and when the same shall become due and
payable in accordance with the terms thereof, or is intended to or shall affect
the relative rights of the Holders of the Securities and creditors of the
Company (other than the holders of the Senior Debt of the Company), nor shall
anything herein or therein prevent the Trustee or the Holder of any Securities
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to me rights, if any, under this Article of the
holders of Senior Debt of the Company in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.
SECTION 1305. No Fiduciary Duty to Holders of Senior Debt of the Company.
Notwithstanding anything to the contrary in this Article, the Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior Debt of the
Company, and shall have no duties to such holders, except as expressly set forth
in this Article and no implied covenants or obligations shall be read into this
Indenture against the Trustee. The Trustee shall not be liable to holders of
Senior Debt if it shall mistakenly pay over or distribute to or on behalf of
Holders of Securities or the Company monies or assets to which any holders of
Senior Debt shall be entitled by virtue of this Article.
SECTION 1306. Notice to Trustee of Facts Prohibiting Payments.
Notwithstanding any of the provisions of this Article or any other
provision of this Indenture (other than Section 601), the Trustee shall not at
any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of moneys to or by the Trustee or the taking
of any other action by the Trustee, unless and until a Responsible Officer of
the Trustee shall have received at its Corporate Trust Office written notice
thereof from the Company or from one or more holders of Senior Debt of the
Company or from any trustee therefor who shall have been certified by the
Company or otherwise established to the reasonable satisfaction of the Trustee
to be such a holder or trustee; and, prior to the receipt of any such written
notice, the Trustee shall be entitled, subject to Section 601, in all respects
to assume that no such facts exist; PROVIDED, that, if prior to the fifth
business day preceding the date upon which by the terms hereof any such
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moneys may become payable for any purpose, or in the event of the execution of
an instrument pursuant to Section 401 acknowledging satisfaction and discharge
of this Indenture, then if prior to the second business day preceding the date
of such execution, the Trustee shall not have received with respect to such
moneys the notice provided for in this Section, then, anything herein contained
to the contrary notwithstanding, the Trustee may, in its discretion, receive
such moneys and/or apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary, which may be received
by it on or after such date; PROVIDED, HOWEVER, no such application shall affect
the obligations under this Article of the persons receiving such moneys from the
Trustee.
SECTION 1307. Application by Trustee of Moneys Deposited with It.
Anything in this Indenture to the contrary notwithstanding, any deposit of
moneys by the Company with the Trustee or any paying agent (whether or not in
trust) for the payment of the principal of (or premium, if any) or interest on
for any Securities shall, except as provided in Section 1306, be subject to the
provisions of Sections 1301, 1302 and 1303.
SECTION 1308. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Debt.
No right of any person or future holders of any Senior Debt of the Company
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof with which any such holder may
have or be otherwise charged. The holders of Senior Debt of the Company may at
any time or from time to time and in their absolute discretion, change the
manner, place or terms of payment, change or extend the time of payment of, or
renew or alter, any such Senior Debt, or amend or supplement any instrument
pursuant to which any such Senior Debt is issued or by which it may be secured,
or release any security therefor, or exercise or refrain from exercising any
other of their rights under the Senior Debt of the Company, including, without
limitation, the waiver of default thereunder, all without notice to or assent
from the Holders of the Securities or the Trustee and without affecting the
obligations of the Company, the Trustee or the Holders of the Securities under
this Article.
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SECTION 1309. Authorization of Trustee to Effectuate Subordination of
Securities.
Each Holder of a Security, by his acceptance thereof, authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the Holders of the Securities
and the holders of Senior Debt of the Company, the subordination provided in
this Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
SECTION 1310. Right of Trustee to Hold Senior Debt of the Company.
The Trustee shall be entitled to all of the rights set forth in this
Article to respect of any Senior Debt of the Company at any time held by it to
the same extent as any other holder of such Senior Debt, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 1311. Article Thirteen Not to Prevent Events of Default.
The failure to make a payment pursuant to the Securities by reason of any
provision in this Article shall not be construed as preventing the occurrence of
a default, a Default or an Event of Default.
SECTION 1312. Article Applicable to Paying Agents.
In case at any time Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context shall require
otherwise) be construed as extending to and including such Paying Agent as if
such Paying Agent were named in this Article in addition to or in place of the
Trustee; PROVIDED, HOWEVER, that Sections 1306 and 1310 shall not apply to the
Company if it acts as Paying Agent hereunder.
SECTION 1313. Trustee Compensation Not Prejudiced.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee pursuant to Section 607.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and the respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By /s/ John C. Appel
------------------------------
Its Vice Chairman and Chief
Financial Officer
Norwest Bank Minnesota, National
Association,
as Trustee
By /s/ Curtis D. Schwegman
----------------------------------
Its Assistant Vice President
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EXHIBIT 4.7
________________________________________________________________________________
________________________________________________________________________________
DAIN RAUSCHER CORPORATION
AND
______________________________, AS WARRANT AGENT
_____________________
FORM OF COMMON STOCK
WARRANT AGREEMENT
_____________________
DATED AS OF ________, ____
________________________________________________________________________________
________________________________________________________________________________
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TABLE OF CONTENTS
PAGE
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . 1
SECTION 2. Form of Warrant. . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Countersignature and Registration. . . . . . . . . . . . . 2
SECTION 4. Transfers and Exchanges. . . . . . . . . . . . . . . . . . 2
SECTION 5. Exercise of Warrants . . . . . . . . . . . . . . . . . . . 3
SECTION 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Mutilated or Missing Warrants. . . . . . . . . . . . . . . 4
SECTION 8. Reservation of Shares, etc.. . . . . . . . . . . . . . . . 4
SECTION 9. Warrant Price; Adjustments . . . . . . . . . . . . . . . . 5
SECTION 10. Notice to Warrantholders . . . . . . . . . . . . . . . . . 13
SECTION 11. Certain Covenants of the Company . . . . . . . . . . . . . 13
SECTION 12. Disposition of Proceeds, etc.. . . . . . . . . . . . . . . 14
SECTION 13. Merger or Consolidation or Change of Name of
Warrant Agent. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 14. Duties of Warrant Agent. . . . . . . . . . . . . . . . . . 14
SECTION 15. Change of Warrant Agent. . . . . . . . . . . . . . . . . . 16
SECTION 16. Identity of Transfer Agent . . . . . . . . . . . . . . . . 17
SECTION 17. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 18. Supplements and Amendments . . . . . . . . . . . . . . . . 18
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SECTION 19. Successors . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 20. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 21. Benefits of This Agreement . . . . . . . . . . . . . . . . 18
SECTION 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 18
[SECTION 23. Acceleration of Warrants by the Company. . . . . . . . . . 19]
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXHIBIT A: Form of Warrant. . . . . . . . . . . . . . . . . . . . . . A-1
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DAIN RAUSCHER CORPORATION
Form of Common Stock Warrant Agreement
COMMON STOCK WARRANT AGREEMENT, dated as of ________, ____, between Dain
Rauscher Corporation, a Delaware corporation (hereinafter called the "Company"),
and ____________________ having a corporate trust office in __________________,
as warrant agent (hereinafter called the "Warrant Agent").
WHEREAS, the Company proposes to issue [Class __] Purchase Warrants
(hereinafter called the "Warrants") entitling the holders thereof to purchase an
aggregate of ______ shares of Common Stock of the Company (par value $.125 per
share) (hereinafter called the "Shares") at an initial cash purchase price of
$_____ per Share at any time [after __________ and] prior to [____] p.m., [City]
time, on ________, ____ (hereinafter called the "Expiration Date") (unless
extended as provided in Section 9A hereof); and
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT -
WHEREAS, the Warrants will be offered in Units, each of which consists of
________________ and Warrants to purchase _______ Shares; and]
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of Warrants to be issued
from time to time by the Company,
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter in this Agreement set forth, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. FORM OF WARRANT. The text of the Warrants and the form of
election to purchase Shares to be set forth on the reverse thereof shall be
substantially as set forth in Exhibit A attached hereto. Each Warrant shall,
subject to the terms of this Warrant Agreement, entitle the registered holder
thereof to initially purchase the number of Shares specified therein at an
initial exercise price of $_____ per Share; PROVIDED, HOWEVER, that the Warrant
Exercise Price and the number of Shares issuable upon exercise of Warrants are
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrants
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shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman of the Board, President or Vice President
of the Company, under its seal, affixed or in facsimile, and by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
The Company shall promptly notify the Warrant Agent from time to time in
writing of the number of Warrants to be issued and furnish written instructions
in connection therewith signed by an executive officer of the Company; such
notification and instructions may, but need not be, in the form of a general or
continuing authorization to the Warrant Agent.
The Warrants shall be dated by the Warrant Agent as of the date of each
initial issuance, and as of the date of issuance thereof upon any transfer or
exchange thereof.
SECTION 3. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective registered holders thereof. The
Warrants shall be countersigned by the Warrant Agent (or by any successor to the
Warrant Agent then acting as warrant agent under this Agreement) and shall not
be valid for any purpose unless so countersigned. Such Warrants may be so
countersigned, however, by the Warrant Agent (or by its successor as warrant
agent) and be delivered by the Warrant Agent, notwithstanding that the persons
whose manual or facsimile signatures appear thereon as proper officers of the
Company shall have ceased to be such officers at the time of such
countersignature or delivery. Upon issuance of any Warrant, the Company will
present the same, or cause the same to be presented, to the Warrant Agent for
countersignature of such Warrant.
SECTION 4. TRANSFERS AND EXCHANGES. The Warrant Agent shall transfer,
from time to time, any outstanding Warrants upon the books to be maintained by
the Warrant Agent for that purpose, upon the surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer. Upon
any such transfer, a new Warrant of like tenor shall be issued to the transferee
and the surrendered Warrant shall be canceled by the Warrant Agent. All such
Warrants so canceled shall be delivered by the Warrant Agent to the Company from
time to time. The Warrants may be exchanged at the option of the holder
thereof, when surrendered at the office in _____________________ of the Warrant
Agent, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Shares. The Warrant Agent is hereby irrevocably authorized to countersign
and deliver, in accordance with the provisions of this Section and Section 3 of
this Agreement, such new Warrants required pursuant to the provisions of this
Section,
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and the Company, whenever required by the Warrant Agent, will supply the Warrant
Agent with Warrants duly executed on behalf of the Company for such purpose.
[IF THE WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT -
Notwithstanding the foregoing, until ________________________, the Warrants
shall not be transferable apart from the _______________________ to which they
are attached, any transfer of the _____________________________ shall be deemed
a transfer of the Warrants attached thereto, and any attempt to transfer the
Warrants apart from the _________ shall be void and of no effect. Each Warrant
shall contain a legend to the foregoing effect.]
SECTION 5. EXERCISE OF WARRANTS. The registered holder of each Warrant
shall have the right, which may be exercised as in such Warrant expressed, to
purchase from the Company (and the Company shall issue and sell to such
registered holder) the number of Shares specified in such Warrants, upon
surrender to the Company, at the office in ________________________________
of the Warrant Agent of such Warrant, with the form of election to purchase
on the reverse thereof duly filled in and signed, and upon payment to the
Warrant Agent for the account of the Company of the Warrant Exercise Price,
determined in accordance with the provisions of Section 9 of this Agreement,
for the number of Shares in respect of which such Warrant is then exercised.
Payment of such Warrant Exercise Price may be made in cash, or by certified
check or bank draft or postal or express money order, payable in United
States dollars, to the order of the Warrant Agent. No adjustment shall be
made for any dividends on any Shares issuable upon exercise of any Warrant.
Subject to Section 6, upon such surrender of Warrants, and payment of the
Warrant Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants, and in such name or names as such
registered holder may designate, a certificate or certificates for the number
of full Shares so purchased upon the exercise of such Warrants, together with
cash, as provided in Section 9 of this Agreement, in respect of any fraction
of a Share otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Shares as of the date of the surrender of such Warrants and payment of the
Warrant Exercise Price as aforesaid; PROVIDED, HOWEVER, that if, at the date
of surrender of such Warrants and payment of such Warrant Exercise Price, the
transfer books for the Shares purchasable upon the exercise of such Warrants
shall be closed, no such surrender of such Warrants and no such payment of
such Warrant Exercise Price shall be effective to constitute the person so
designated to be named therein as the holder of record of such Shares on such
date, but shall be effective to constitute such person as the holder of
record of such Shares for all purposes at the opening of business on the next
succeeding day on which the transfer books for the Shares purchasable upon
the exercise of such Warrants shall
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be opened, and the certificates for the Shares in respect of which such Warrants
are then exercised shall be issuable as of the date on which such books shall
next be opened, and until such date the Company shall be under no duty to
deliver any certificate for such Shares. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only of the Shares
specified therein and, in the event that any Warrant is exercised in respect of
less than all of the Shares specified therein at any time prior to the
Expiration Date of the Warrants, a new Warrant or Warrants of like tenor will be
issued for the remaining number of Shares specified in the Warrant so
surrendered, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrants pursuant to the provisions
of this Section and of Section 3 of this Agreement, and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with Warrants duly
executed on behalf of the Company for such purpose.
SECTION 6. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Shares issuable upon the exercise
of Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Shares in a name other than that of
the registered holder of Warrants in respect of which such Shares are issued and
the Company shall not be required to issue and deliver the certificates for such
Shares unless and until the holder has paid to the Company the amount of any tax
which may be payable in respect of any transfer involved in such issuance or
shall establish to the satisfaction of the Company that such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANTS. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company will issue and the
Warrant Agent will countersign and deliver in exchange and substitution for and
upon cancellation of the mutilated Warrant, or in lieu of and substitution for
the Warrant lost, stolen or destroyed, a new Warrant of like tenor and
representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrants and indemnity, if requested, also satisfactory to
them. Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
the Warrant Agent may prescribe. Any such new Warrant shall constitute an
original contractual obligation of the Company whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
SECTION 8. RESERVATION OF SHARES, ETC. Prior to the issuance of any
Warrants there shall have been reserved, and the Company shall at all times
through the Expiration Date keep reserved, out of its authorized and unissued
Common Stock, a number of Shares sufficient to provide for the exercise of the
rights of purchase
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represented by the Warrants, and the Transfer Agent for the Shares and every
subsequent Transfer Agent for the Shares issuable upon the exercise of any of
the rights of purchase aforesaid are hereby irrevocably authorized and directed
at all times to reserve such number of authorized and unissued Shares as shall
be requisite for such purpose. The Company will keep a copy of this Agreement
on file with the Transfer Agent for the Shares and with every subsequent
Transfer Agent for the Shares issuable upon the exercise of the rights of
purchase represented by the Warrants. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from such Transfer Agent
certificates required to honor outstanding Warrants that have been exercised.
The Company will supply such Transfer Agent with duly executed certificates for
such purpose and will itself provide or otherwise make available any cash which
may be issuable as provided in Section 9 of this Agreement. All Warrants
surrendered in the exercise of the rights thereby evidenced or surrendered for
transfer, exchange or partial exercise shall be canceled by the Warrant Agent
and shall thereafter be delivered to the Company.
SECTION 9. WARRANT PRICE; ADJUSTMENTS. A. The warrant price per share
at which Shares shall be purchasable upon exercise of Warrants (herein called
the "Warrant Exercise Price") to and including the Expiration Date (unless the
Expiration Date is extended as provided below in this Section 9A) shall be $____
per share, or, if adjusted as provided in this Section, shall be such price as
so adjusted. The Warrants will not be exercisable prior to [the close of
business on the date of any initial issuance thereof] [_________________] and
will expire at [_______] p.m., [City] time, on the Expiration Date; PROVIDED
THAT the Company reserves the right to, and may, in its sole discretion, at any
time and from time to time, at such time or times as the Company so determines,
extend the Expiration Date of the Warrants for such periods of time as it
chooses; FURTHER PROVIDED that in no case may the Expiration Date of the
Warrants (as extended) be extended beyond five years from the Expiration Date
set forth above. Whenever the Expiration Date of the Warrants is so extended,
the Company shall at least 20 days prior to the then Expiration Date cause to be
mailed to the Warrant Agent and the registered holders of the Warrants in
accordance with the provisions of Section 17 hereof a notice stating that the
Expiration Date has been extended and setting forth the new Expiration Date.
B. The above provision is, however, subject to the following:
(1) The warrant purchase price, the number of Shares purchasable
upon exercise of each Warrant and the number of Warrants outstanding
shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of
this Agreement (i) pay a dividend, or make a distribution, on the
Common Stock which is payable in shares of its capital stock
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(whether shares of Common Stock or of capital stock of any other
class), (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of securities (including
shares of Common Stock), or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of
shares (including shares of Common Stock), the number of shares
purchasable upon exercise of each Warrant immediately prior to
the occurrence of such event shall be adjusted so that the holder
of each Warrant shall be entitled to receive upon payment of the
warrant purchase price the aggregate number of shares of the
Company which, if such Warrant had been exercised immediately
prior to the occurrence of such event, such holder would have
owned or have been entitled to receive immediately after the
occurrence of such event. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately after the
record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision
or combination. If, as a result of an adjustment made pursuant
to this subparagraph (a), the holder of any Warrant thereafter
exercised shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors
of the Company (whose determination shall be conclusive) shall
determine the allocation between or among shares of such classes
of capital stock.
In the event that at any time, as a result of an adjustment
made pursuant to this subparagraph (a), the holder of any Warrant
thereafter exercised shall become entitled to receive any shares
or other securities of the Company other than shares of Common
Stock, thereafter the number of such other shares so received
upon exercise of any Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of
Common Stock contained in this paragraph, and other provisions of
this paragraph 9B(1) with respect to the shares of Common Stock
shall apply on like terms to any such other shares or other
securities.
(b) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after such
record date) to subscribe for or purchase Common Stock at a price
per share less than the current market price per share of
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Common Stock (as defined in subparagraph (e) below) at such
record date, the warrant purchase price shall be determined by
multiplying the warrant purchase price in effect immediately
prior to such record date by a fraction, the numerator of which
shall be the number of Shares of Common Stock outstanding on such
record date plus the number of Shares of Common Stock which the
aggregate offering price of the total number of Shares so offered
would purchase at such current market price, and the denominator
of which shall be the number of Shares of Common Stock
outstanding on such record date plus the number of additional
Shares of Common Stock offered for subscription or purchase.
Such adjustment shall be made successively whenever such a record
date is fixed, and shall become effective immediately after such
record date. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of common
stock at less than such current market price, and in determining
the aggregate offering price of such shares, there shall be taken
into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors of the
Company. Common Stock owned by or held for the account of the
Company or any majority owned subsidiary shall not be deemed
outstanding for the purpose of any adjustment required under this
subparagraph (b).
(c) In case the Company shall fix a record date for making
a distribution to all holders of its Common Stock of evidences of
its indebtedness or assets (excluding regular quarterly or other
periodic or recurring cash dividends or distributions and cash
dividends or distributions paid from retained earnings or
referred to in subparagraph (a) above) or rights or warrants to
subscribe or warrants to purchase (excluding those referred to in
subparagraph (b) above), then in each such case the warrant
purchase price shall be determined by multiplying the warrant
purchase price in effect immediately prior to such record date by
a fraction (x) the numerator of which shall be such current
market price (as defined in subparagraph (e) below) per Share of
Common Stock on such record date, less the then fair market value
(as determined in good faith by the Board of Directors, whose
determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of the
Common Stock and (y) the denominator of which shall be the
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current market price per share of the Common Stock on such record
date. Such adjustment shall be made successively whenever such a
record date is fixed and shall become effective immediately after
such record date. Notwithstanding the foregoing, in the event
that the Company shall distribute any rights or warrants to
acquire capital stock ("Rights") pursuant to this subparagraph
(c), the distribution of separate certificates representing such
Rights subsequent to their initial distribution (whether or not
such distribution shall have occurred prior to the date of the
issuance of such Warrants) shall be deemed to be the distribution
of such Rights for purposes of this subparagraph (c), provided
that the Company may, in lieu of making any adjustment pursuant
to this subparagraph (c) upon a distribution of separate
certificates representing such Rights, make proper provision so
that each holder of such Warrants who exercises such Warrants (or
any portion thereof) (A) before the record date for such
distribution of separate certificates shall be entitled to
receive upon such exercise shares of Common Stock issued with
Rights and (B) after such record date and prior to the
expiration, redemption or termination of such Rights shall be
entitled to receive upon such exercise, in addition to the shares
of Common Stock issuable upon such exercise, the same number of
such Rights as would a holder of the number of shares of Common
Stock that such Warrants so exercised would have entitled the
holder thereof to purchase in accordance with the terms and
provisions of and applicable to the Rights if such Warrants were
exercised immediately prior to the record date for such
distribution. Common Stock owned by or held for the account of
the Company or any majority owned subsidiary shall not be deemed
outstanding for the purpose of any adjustment required under this
subparagraph (c).
(d) After each adjustment of the number of shares
purchasable upon exercise of each Warrant pursuant to
subparagraph 9B(1)(a), the Warrant Exercise Price shall be
adjusted by multiplying such Warrant Exercise Price immediately
prior to such adjustment by a fraction of which the numerator
shall be the number of Shares purchasable upon exercise of each
Warrant immediately prior to such adjustment, and the denominator
of which shall be the number of Shares so purchasable immediately
thereafter. After each adjustment of the Warrant Exercise Price
pursuant to subparagraph 9B(1)(b) or (c), the total number of
Shares or fractional part thereof purchasable upon the exercise
of each Warrant shall be
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proportionately adjusted to such number of shares or fractional
parts thereof as the aggregate Warrant Exercise Price of the
number of shares or fractional part thereof purchasable
immediately prior to such adjustment will buy at the adjusted
Warrant Exercise Price.
(e) For the purpose of any computation under subparagraphs
9B(1)(b) and (c) above, the current market price per Share of
Common Stock at any date shall be deemed to be the average of the
daily closing prices for the 30 consecutive business days
commencing 45 business days before the day in question. The
closing price for each day shall be (i) if the Common Stock is
listed or admitted for trading on the New York Stock Exchange,
the last sale price (regular way), or the average of the closing
bid and ask prices (regular way), if no sale occurred, of Common
Stock, in either case as reported on the New York Stock Exchange
Composite Tape or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on the National Market
System of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, (ii) if not listed or
quoted as described in (i), the mean between the closing high bid
and low asked quotations of Common Stock reported by NASDAQ, or
any similar system for automated dissemination of quotations of
securities prices then in common use, if so quoted, or (iii) if
not quoted as described in clause (ii), the mean between the high
bid and low asked quotations for Common Stock as reported by the
National Quotation Bureau Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common
Stock on at least 5 of the 10 preceding days. If none of the
conditions set forth above is met, the closing price of Common
Stock on any day or the average of such closing prices for any
period shall be the fair market value of Common Stock as
determined by a member firm of the New York Stock Exchange
selected by the Company.
(f) (A) Nothing contained herein shall be construed to
require an adjustment as a result of the issuance of Common Stock
pursuant to, or the granting or exercise of any rights under, the
Company's [LIST EMPLOYEE AND SHAREHOLDER PLANS, IF ANY, THAT
MIGHT OTHERWISE RESULT IN ADJUSTMENTS].
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(B) In addition, no adjustment in the Warrant Exercise
Price shall be required unless and until the earlier of the
following shall have occurred: (x) such adjustment would
require an increase or decrease of at least 1% in the
Warrant Exercise Price or (y) a period of 3 years shall have
elapsed from the date of the occurrence of any event
requiring any such adjustment pursuant to subparagraphs
9B(1)(a), (b) or (c) above. All adjustments shall be made
to the nearest one hundredth of a Share and the nearest
cent, and any adjustments which by reason of this
subparagraph (f) are not required to be made shall be
carried forward cumulatively and taken into account in any
subsequent adjustment which (including such carry-forward)
is required to be made under this subparagraph (f).
(g) In any case in which this subparagraph 9B(1) shall
require that an adjustment be made retroactively immediately
following a record date, the Company may elect to defer (but only
until five business days following the mailing of the notice
described in subparagraph 9B(5) below) issuing to the holder of
any Warrant exercised after such record date the Shares of the
Company issuable upon such exercise over and above the Shares
issuable upon such exercise only on the basis of the Warrant
Exercise Price prior to adjustment.
(h) The Company may, at its option, at any time until the
Expiration Date, reduce the then current Warrant Exercise Price
to any amount deemed appropriate by the Board of Directors of the
Company for any period not exceeding twenty (20) consecutive days
(as evidenced in a resolution adopted by such Board of
Directors), but only upon giving the notices required by
subparagraph 9(B)(5) twenty (20) days prior to taking such
action.
(i) Except as herein otherwise expressly provided, no
adjustment in the Warrant Exercise Price shall be made by reason
of the issuance of Shares, or securities convertible into or
exchangeable for Shares, or securities carrying the right to
purchase any of the foregoing or for any other reason whatsoever.
(j) Irrespective of any of the adjustments in the Warrant
Exercise Price or the number of Shares, Warrant Certificates
theretofore issued may continue to express the same prices and
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number of Shares as are stated in a similar Warrant Certificate
issuable initially, or at some subsequent time, pursuant to this
Agreement and such number of Shares specified therein shall be deemed
to have been so adjusted.
(2) No fractional Shares of Common Stock shall be issued upon
the exercise of Warrants. If more than one Warrant shall be exercised
at one time by the same holder, the number of full Shares which shall
be issuable upon such exercise shall be computed on the basis of the
aggregate number of Shares purchased pursuant to the Warrants so
exercised. Instead of any fractional Share of Common Stock which
would otherwise be issuable upon exercise of any Warrant, the Company
shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the last sales price (or bid price if
there were no sales) per Share of Common Stock, in either case as
reported on the New York Stock Exchange Composite Tape on the business
day which next precedes the day of exercise or, if the Common Stock is
not then listed or admitted to trading on the New York Stock Exchange,
an amount equal to the same fraction of the market price per share of
Common Stock (as determined in a manner described by the Board of
Directors of the Company) at the close of business on the business day
which next precedes the day of exercise.
(3) In case any of the following shall occur while any Warrants
are outstanding: (a) any reclassification or change of the
outstanding Shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value);
or (b) any consolidation or merger to which the Company is a party
(other than a consolidation or a merger in which the Company is the
continuing corporation and which does not result in any
reclassification of, or change in, the outstanding shares of Common
Stock issuable upon exercise of the Warrants); or (c) any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety; then the Company, or such
successor or purchasing corporation, as the case may be, shall make
appropriate provision by amendment of this Agreement or otherwise so
that the holders of the Warrants then outstanding shall have the right
at any time thereafter, upon exercise of such Warrants, to purchase
the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as would be received by a holder of the
number of shares of Common Stock issuable upon exercise of such
Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such provision shall
provide for
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adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 9. The above
provisions of this subparagraph 9B(3) shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales
or conveyances.
(4) Before taking any action which would cause an adjustment
decreasing the Warrant Exercise Price so that the Warrant Exercise
Price is below the then par value of the shares of Common Stock, the
Company will take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Shares of Common Stock at
the Warrant Exercise Price as so adjusted.
(5) Whenever the Warrant Exercise Price then in effect is
adjusted as herein provided, the Company shall mail to each holder of
the Warrants at such holder's address as it shall appear on the books
of the Company a statement setting forth the adjusted Warrant Exercise
Price then and thereafter effective under the provisions hereof,
together with the facts, in reasonable detail, upon which such
adjustment is based.
(6) In case (i) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise than in cash
out of its current or retained earnings, or (ii) the Company shall
authorize the granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or
of any other rights, or (iii) there is to be any reclassification of
the Common Stock of the Company (other than a subdivision or
combination of its outstanding shares of Common Stock), or any
consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or (iv) any
distribution is to be made on or in respect of the Common Stock in
connection with the dissolution, liquidation or winding up of the
Company, then the Company shall mail to each holder of Warrants at
such holder's address as it shall appear on the books of the Company,
at least twenty days (or ten days in any case specified in clause (i)
or (ii) above) prior to the applicable record date hereinafter
specified, a notice stating (x) the record date for such dividend,
distribution or rights, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined, or (y) the
date on which such reclassification, consolidation, merger,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that
-12-
<PAGE>
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable
upon such reclassification, consolidation, merger, dissolution,
liquidation or winding up. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect any such
transaction or any adjustment in the Warrant Exercise Price required
by this Section 9.
SECTION 10. NOTICE TO WARRANTHOLDERS. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the holders
thereof the right to vote or to consent or to receive notice as shareholders in
respect of the meetings of shareholders or the election of directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company.
SECTION 11. CERTAIN COVENANTS OF THE COMPANY.
A. So long as any unexpired Warrants remain outstanding and if
required in order to comply with the Securities Act of 1933, as amended
(the "Act"), the Company covenants and agrees that it will file such
post-effective amendments to the registration statement filed pursuant to
the Act with respect to the Warrants (File No. 333-__________) (or such
other registration statements or post-effective amendments or supplements)
as may be necessary to permit the Company to deliver to each person
exercising a Warrant a prospectus meeting the requirements of Section
10(a)(3) of the Act and otherwise complying therewith, and will deliver
such a prospectus to each such person. The Company further covenants and
agrees that it will obtain and keep effective all permits, consents and
approvals of governmental agencies and authorities, and will use its best
efforts to take all action which may be necessary to qualify the Shares for
sale under the securities laws of such of the United States, as may be
necessary to permit the free exercise of the Warrants, and the issuance,
sale, transfer and delivery of the Shares issued upon exercise of the
Warrants, and to maintain such qualifications during the entire period in
which the Warrants are exercisable.
B. The Company covenants and agrees that it shall take all such
action as may be necessary to ensure that all Shares will at the time of
delivery of certificates for such Shares (subject to payment of the Warrant
Exercise Price) be duly and validly authorized and issued and fully paid
and nonassessable Shares, free from any preemptive rights and taxes, liens,
charges and security interests created by or imposed upon the Company.
C. The Company covenants and agrees that it will take all action
which may be necessary to cause the Shares to be duly listed on the New
York Stock Exchange or any securities exchange on which the other shares of
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<PAGE>
Common Stock of the Company are listed or on the National Market System of
NASDAQ at the dates of exercise of the Warrants.
SECTION 12. DISPOSITION OF PROCEEDS, ETC.
A. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all
moneys received by the Warrant Agent for the purchase of Shares through the
exercise of such Warrants.
B. The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of Warrants during normal business hours at its
principal office in the City of ________________________, ____________.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, PROVIDED that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of Section 15 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and if any of the Warrants shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned; and in case at that time any of the Warrants shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrants
either in the name of the predecessor Warrant Agent or in the name of the
successor Warrant Agent; and in all such cases such Warrant shall have the full
force provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned; and in case at that time any of the Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants either in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
SECTION 14. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
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<PAGE>
A. The statements contained herein and in the Warrants shall be
taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of
the Warrants except as herein otherwise provided.
B. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrants to be complied with by the Company.
C. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys, agents or employees, and the Warrant Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any loss to
the Company resulting from such neglect or misconduct, provided reasonable
care shall have been exercised in the selection and continued employment
thereof.
D. The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
holder of any Warrant in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or the
advice of such counsel.
E. The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
F. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution of this Agreement except
as a result of the Warrant Agent's gross negligence or bad faith.
G. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve
-15-
<PAGE>
expense unless the Company or one or more registered holders of Warrants
shall furnish the Warrant Agent with reasonable security and indemnity for
any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without the possession of any
of the Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent, and any
recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may
appear.
H. The Warrant Agent and any shareholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
I. The Warrant Agent shall act hereunder solely as agent and not in
a ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own gross negligence or bad faith.
SECTION 15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and to the holders of the Warrants notice by publication, of such
resignation, specifying a date when such resignation shall take effect, which
notice shall be published at the expense of the Company at least once a week for
two consecutive weeks in a newspaper of general circulation in the City of
[City] prior to the date so specified. The Warrant Agent may be removed by the
Company by like notice from the Company to the Warrant Agent and the holders of
Warrants at the expense of the Company. If the Warrant Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the
-16-
<PAGE>
registered holder of a Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then, at the expense of the Company,
the Warrant Agent or the registered holder of any Warrant may apply to any
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company
or by such a court, shall be a bank or trust company, in good standing,
incorporated under the laws of any State or of the United States of America,
having at the time of its appointment as Warrant Agent a combined capital and
surplus of at least $100,000,000. After appointment the successor Warrant
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer
to the successor Warrant Agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Failure to file or publish any notice provided
for in this Section, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or
the appointment of the successor Warrant Agent, as the case may be.
SECTION 16. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any Transfer Agent for the Shares or of any subsequent Transfer
Agent for Shares issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such Transfer Agent.
SECTION 17. NOTICES. Any notice pursuant to this Agreement to be
given or made by the Warrant Agent or by the registered holder of any Warrant to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing by
the Company with the Warrant Agent) as follows:
Dain Rauscher Corporation
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Attn: Secretary
Any notice pursuant to this Agreement to be given or made by the Company or by
the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
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<PAGE>
Any notice pursuant to this Agreement to be given or made by the Company or
the Warrant Agent to the registered holder of any Warrant shall be sufficiently
given or made (unless otherwise specifically provided for herein) if sent by
first-class mail, postage prepaid, addressed to said registered holder at his
address appearing on the Warrant register.
SECTION 18. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Warrants in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which will not materially adversely affect
the interest of the registered holders of the Warrants.
SECTION 19. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 20. GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of [______________].
SECTION 21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or entity other than the Company and the
Warrant Agent and the holders of Warrants any legal or equitable right, remedy
or claim under this Agreement, but this Agreement shall be for the sole and
exclusive benefit of the Company and the Warrant Agent and the holders of
Warrants.
SECTION 22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[IF THE WARRANTS ARE SUBJECT TO ACCELERATION BY THE COMPANY, INSERT -
-18-
<PAGE>
SECTION 23. ACCELERATION OF WARRANTS BY THE COMPANY.
A. At any time on or after ____________________, the Company shall
have the right to accelerate any or all Warrants at any time by causing
them to expire at the close of business on the day next preceding a
specified date (the "Acceleration Date"), if the Market Price (as
hereinafter defined) of the Common Stock equals or exceeds _________
percent (____%) of the then effective Warrant Exercise Price, adjusted as
if no changes in such Warrant Exercise Price had been made pursuant to
subsection 9B, on any 20 Trading Days (as hereinafter defined) within a
period of 30 consecutive Trading Days ending no more than five Trading Days
prior to the date on which the Company gives notice to the Warrant Agent of
its election to accelerate the Warrants.
B. "Market Price" for each Trading Day shall be, if the Common
Stock is listed or admitted for trading on the New York Stock Exchange, the
last reported sale price, regular way (or, if no such price is reported,
the average of the reported closing bid and asked prices, regular way) of
Common Stock, in either case as reported on the New York Stock Exchange
Composite Tape or, if the Common Stock is not listed or admitted to trading
on the New York Stock Exchange, on the principal national securities
exchange on which Common Stock is not listed or admitted to trading or, if
not listed or admitted to trading on any national securities exchange, on
the National Market System of NASDAQ or, if not listed or admitted to
trading on any national securities exchange or quoted on the National
Market System of NASDAQ, the average of the closing high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ, or such other
system then in use, or if on any such date the Shares of Common Stock are
not quoted by any such organization, the average of the closing bid and
asked prices as furnished by any New York Stock Exchange firm selected from
time to time by the Company for that purpose. "Trading Day" shall be each
Monday through Friday, other than any day on which securities are not
traded in the system or on the exchange that is the principal market for
the Common Stock, as determined by the Board of Directors of the Company.
C. In the event of an acceleration of less than all of the
Warrants, the Warrant Agent shall select the Warrants to be accelerated by
lot, pro rata or in such other manner as it deems, in its discretion, to be
fair and appropriate.
D. Notice of an acceleration specifying the Acceleration Date
shall be sent by mailing first class, postage prepaid, to each registered
holder of a Warrant Certificate representing a Warrant accelerated at such
holder's address appearing on the Warrant register not more than 60 days
nor less than 30 days before the Acceleration Date. Such notice of an
acceleration also shall be given no more than 20 days, and no less than 10
days, prior to the
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<PAGE>
mailing of notice to registered holders of Warrants pursuant to this
Section, by publication at least once in a newspaper of general circulation
in the City of New York.
E. Any Warrant accelerated may be exercised until [_______] p.m.,
[City] time, on the business day next preceding the Acceleration Date. The
Warrant Exercise Price shall be payable as provided in Section 5]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By_________________________
Its_____________________
Attest:
______________________________
____________________________, as
Warrant Agent
By__________________________
Its_____________________
Attest:
______________________________
-20-
<PAGE>
Exhibit A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[IF WARRANTS ARE ATTACHED TO Prior to _______________ this
OTHER SECURITIES AND ARE NOT Warrant Certificate cannot be
IMMEDIATELY DETACHABLE. transferred or exchanged unless
attached to a [Title of Other
Securities].]
[FORM OF LEGEND IF WARRANTS ARE Prior to _______________,
NOT IMMEDIATELY EXERCISABLE. Warrants evidenced by this
Warrant Certificate cannot be
exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN
VOID AFTER [______] P.M., [CITY] TIME, ON ____________, 19__
DAIN RAUSCHER CORPORATION
Warrants to Purchase
Warrant Certificate Representing
[Title of Warrant Securities]
No. __________ ___________ Warrants
This certifies that ____________________________ or registered assigns is
the registered owner of the above indicated number of Warrants, each Warrant
entitling such owner [IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT
IMMEDIATELY DETACHABLE - , subject to the registered owner qualifying as a
"Holder" of this Warrant Certificate, as hereinafter defined) to purchase, at
any time [after [___] P.M., [City] time, on _______________ and] on or before
[___] P.M., [City] time, on ____________________, ____________ shares of [Title
of Warrant Securities] (the "Warrant Securities"), of Dain Rauscher Corporation
(the "Company") on the following basis: during the period from _______________,
through and including ______________, the exercise price of each Warrant will be
___________; during the period from ________, through and including ________,
the exercise price of each warrant will be ________ (the "Warrant Price"). No
adjustment shall be made for any dividends on any Warrant Securities
A-1
<PAGE>
issuable upon exercise of any Warrant. The Holder may exercise the Warrants
evidenced hereby by providing certain information set forth on the back hereof
and by paying in full [in lawful money of the United States of America] [in cash
or by certified check or official bank check or by bank wire transfer, in each
case,] [by bank wire transfer] in immediately available funds, the Warrant Price
for each Warrant exercised to the Warrant Agent (as hereinafter defined) and by
surrendering this Warrant Certificate, with the purchase form on the back hereof
duly executed, at the corporate trust office of [name of Warrant Agent], or its
successor as warrant agent (the "Warrant Agent"), [or ________________________],
which is, on the date hereof, at the address specified on the reverse hereof,
and upon compliance with and subject to the conditions set forth herein and in
the Warrant Agreement (as hereinafter defined).
The term "Holder" as used herein shall mean [IF WARRANTS ARE ATTACHED TO
OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE - prior to ___________, __
(the "Detachable Date"), the registered owner of the Company's [title of Other
Securities] to which this Warrant Certificate was initially attached, and after
such Detachable Date,] the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose pursuant to Section 4.01 of the Warrant Agreement.
Any whole number of Warrants evidenced by this Warrant Certificate may be
exercised to purchase Warrant Securities in registered form. Upon any exercise
of fewer than all of the Warrants evidenced by this Warrant Certificate, there
shall be issued to the Holder hereof a new Warrant Certificate evidencing the
number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of____________, __ (the "Warrant Agreement") between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. Copies of the
Warrant Agreement are on file at the above-mentioned office of the Warrant Agent
[and at __________________________________________].
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY
DETACHABLE - Prior to the Detachable Date, this Warrant Certificate may be
exchanged or transferred only together with the [Title of Other Securities] (the
"Other Securities") to which this Warrant Certificate was initially attached,
and only for the purpose of effecting, or in conjunction with, an exchange or
transfer of such Offered Security. Additionally, on or prior to the Detachable
Date, each transfer of such Other Security or the register of the Other
Securities shall operate also to transfer this Warrant Certificate. After such
date, transfer of this] [IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE
NOT IMMEDIATELY DETACHABLE - Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the
A-2
<PAGE>
corporate trust office of the Warrant Agent [or _________________________] by
the registered owner of such owner's assigns, in person or by an attorney duly
authorized in writing, in the manner and subject to the limitations provided in
the Warrant Agreement.
[IF OTHER SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE -
Except as provided in the immediately preceding paragraph, after] [IF OTHER
SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANT ALONE -
After] countersignature by the Warrant Agent and prior to the expiration of this
Warrant Certificate, this Warrant Certificate may be exchanged at the corporate
trust office of the Warrant Agent [or ____________] for Warrant Certificates
representing the same aggregate number of Warrants.
This Warrant Certificate shall not entitle the Holder hereof to any of the
rights of a holder of the Warrant Securities, including, without limitation, the
right to receive payments of dividends or distributions, if any, on the Warrant
Securities or to exercise any voting rights.
This Warrant Certificate shall not be valid or obligatory for any purpose
until countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its name and on its behalf by the facsimile signatures of its duly authorized
officers.
Dated: _________________, ________
DAIN RAUSCHER CORPORATION
By ________________________________
Its ____________________________
ATTEST:
___________________________________
Countersigned:
___________________________________
As Warrant Agent
By ________________________________
Authorized Signature
A-3
<PAGE>
[Reverse of Warrant Certificate]
(Instructions for Exercise of Warrant)
To exercise the Warrants evidenced hereby, the Holder must pay [in United
States dollars] [in cash or by certified check or official bank check or by bank
wire transfer, in each case] [by bank wire transfer in immediately available
funds], the Warrant Price in full for Warrants exercised, to [Warrant Agent]
[address of Warrant Agent], Attn: __________________, which payment must specify
the name of the Holder and the number of Warrants exercised by such Holder. In
addition, the Holder must complete the information required below and present
this Warrant Certificate in person or by mail (certified or registered mail is
recommended) to the Warrant Agent at the appropriate address set forth below.
This Warrant Certificate, completed and duly executed, must be received by the
Warrant Agent within five business days of the payment.
To Be Executed Upon Exercise of Warrant
The undersigned hereby irrevocably elects to exercise ______ Warrants,
evidenced by this Warrant Certificate, to purchase ______ shares of the [Title
of Warrant Securities] (the "Warrant Securities") of Dain Rauscher Corporation
and represents that he has tendered payment for such Warrant Securities [in
Dollars] [in cash or by certified check or official bank check or by bank wire
transfer, in each case] [by bank wire transfer in immediately available funds]
to the order of Dain Rauscher Corporation, c/o [insert name and address of
Warrant Agent], in the amount of ________ in accordance with the terms hereof.
The undersigned requests that said principal amount of Warrant Securities be in
fully registered form in the authorized denominations, registered in such names
and delivered all as specified in accordance with the instructions set forth
below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
Dated:___________________________ Name________________________________
(Please Print)
_________________________________ Address_____________________________
(Insert Social Security or Other
Identifying Number of Holder) _____________________________
A-4
<PAGE>
Signature Guaranteed
______________________________ Signature_____________________________
[FOR REGISTERED WARRANTS -- Signature
must conform in all respects to name of
holder as specified on the face of this
Warrant Certificate and must bear a
signature guarantee by a bank, trust
company or member broker of the New
York, Midwest or Pacific Stock Exchange)
This Warrant may be exercised at the following addresses:
By hand at _____________________________________________________
_____________________________________________________
_____________________________________________________
By mail at _____________________________________________________
_____________________________________________________
_____________________________________________________
[Instructions as to form and delivery of Warrant Securities and, if
applicable, Warrant Certificates evidencing unexercised Warrants - complete as
appropriate.]
A-5
<PAGE>
ASSIGNMENT
(Form of assignment to be executed if
Warrant Holder desires to transfer Warrant)
FOR VALUE RECEIVED,_________________________ hereby sells, assigns and
transfers unto _____________________________________________________________
________________________________________________________________________________
Print or Type Name
________________________________________________________________________________
Street Address
________________________________________________________________________________
City State Zip Code
________________________________________________________________________________
Social Security or other Identifying Number
the right represented by the within Warrant to purchase ___________________
Shares of Common Stock ($.125 par value) of Dain Rauscher Corporation to which
the within Warrant relates and appoints ________________________________________
attorney to transfer such right on the books of the Warrant Agent with full
power of substitution in the premises.
Dated: ________________________
_____________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
Signature Guaranteed
________________________________
A-6
<PAGE>
EXHIBIT 4.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAIN RAUSCHER CORPORATION
AND
___________________, AS WARRANT AGENT
--------------------------
PREFERRED STOCK
WARRANT AGREEMENT
--------------------------
DATED AS OF ________, ____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<S> <C> <C>
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
ISSUANCE OF WARRANTS AND EXECUTION AND
DELIVERY OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants . . . . . . . . . . . . . . 2
SECTION 1.02. Execution and Delivery of Warrant Certificates . 2
SECTION 1.03. Issuance of Warrant Certificates . . . . . . . . 3
ARTICLE II
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS
SECTION 2.01. Warrant Price. . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Duration of Warrants . . . . . . . . . . . . . . 4
SECTION 2.03. Exercise of Warrants . . . . . . . . . . . . . . 4
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS
OF HOLDERS OF WARRANT CERTIFICATES
SECTION 3.01. No Rights as Warrant Securityholder Conferred
by Warrants or Warrant Certificates. . . . . . . 5
SECTION 3.02. Lost, Stolen, Mutilated or Destroyed Warrant
Certificates . . . . . . . . . . . . . . . . . . 5
SECTION 3.03. Holder of Warrant Certificate May Enforce
Rights . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.04. Reclassification, Consolidation, Merger, Sale,
Conveyance or Lease. . . . . . . . . . . . . . . 6
i
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ARTICLE IV
EXCHANGE AND TRANSFER OF
WARRANT CERTIFICATES
SECTION 4.01. Exchange and Transfer of Warrant Certificates. . 7
SECTION 4.02. Treatment of Holders of Warrant Certificates . . 8
SECTION 4.03. Cancellation of Warrant Certificates . . . . . . 8
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent. . . . . . . . . . . . . . . . . . 9
SECTION 5.02. Conditions of Warrant Agent's Obligations. . . . 9
SECTION 5.03. Resignation and Appointment of Successor . . . . 11
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment. . . . . . . . . . . . . . . . . . . . 12
SECTION 6.02. Notices and Demands to the Company and
Warrant Agent. . . . . . . . . . . . . . . . . . 13
SECTION 6.03. Addresses. . . . . . . . . . . . . . . . . . . . 13
SECTION 6.04. Governing Law. . . . . . . . . . . . . . . . . . 13
SECTION 6.05. Delivery of Prospectus . . . . . . . . . . . . . 13
SECTION 6.06. Obtaining of Governmental Approvals. . . . . . . 13
SECTION 6.07. Persons Having Rights Under Warrant Agreement. . 13
SECTION 6.08. Headings . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.09. Counterparts . . . . . . . . . . . . . . . . . . 14
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SECTION 6.10. Inspection of Agreement. . . . . . . . . . . . . 14
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT A: Form of Warrant Certificate. . . . . . . . . . . A-1
</TABLE>
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<PAGE>
DAIN RAUSCHER CORPORATION
Form of Preferred Stock Warrant Agreement
PREFERRED STOCK WARRANT AGREEMENT, dated as of ___________ between
Dain Rauscher Corporation, a Delaware corporation (hereinafter called the
"Company") and __________________________________________ as Warrant Agent
(herein called the "Warrant Agent").
WHEREAS, the Company proposes to sell [IF WARRANTS ARE SOLD WITH OTHER
SECURITIES - [title of such other securities being offered] (the "Other
Securities") with] warrant certificates evidencing one or more warrants (the
"Warrants" or individually a "Warrant") representing the right to purchase
[title of Preferred Stock purchasable through exercise of Warrants] (the
"Warrant Securities"), such warrant certificates and other warrant certificates
issued pursuant to this Agreement being herein called the "Warrant
Certificates"; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company in connection with the issuance, exchange, exercise and replacement of
the Warrant Certificates, and in this Agreement wishes to set forth, among other
things, the form and provisions of the Warrant Certificates and the terms and
conditions on which they may be issued, exchanged, exercised and replaced;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
_______________________________
* Complete or modify the provisions of this Form as appropriate to reflect
the terms of the Warrants, Warrant Securities and Other Securities.
<PAGE>
ARTICLE I
ISSUANCE OF WARRANTS AND EXECUTION AND
DELIVERY OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS. [IF WARRANTS ALONE - Upon issuance,
each Warrant Certificate shall evidence one or more Warrants.] [IF OTHER
SECURITIES AND WARRANTS - Warrants shall be [initially] issued in connection
with the issuance of the Other Securities [but shall be separately transferable
on and after (the "Detachable Date")] [and shall not be separately transferable]
and each Warrant Certificate shall evidence one or more Warrants.] Each Warrant
evidenced thereby shall represent the right, subject to the provisions contained
herein and therein, to purchase one Warrant Security. [IF OTHER SECURITIES AND
WARRANTS - Warrant Certificates shall be initially issued in units with the
Other Securities and each Warrant Certificate included in such a unit shall
evidence _________________________________ Warrants for each
_______________________ principal amount] [________________________ shares] of
Other Securities included in such unit.]
SECTION 1.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Each
Warrant Certificate, whenever issued, shall be in registered form substantially
in the form set forth in Exhibit A hereto, shall be dated ____________________
and may have such letters, numbers, or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve (execution
thereof to be conclusive evidence of such approval) and as are inconsistent with
the provisions of this Agreement, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be signed on behalf of the
Company by the Chairman of the Board, the President or a Vice President of the
Company and by the Treasurer or one of the Assistant Treasurers or the Secretary
or one of the Assistant Secretaries of the Company under its corporate seal
reproduced thereon. Such signatures may be manual or facsimile signatures of
such authorized officers and may be imprinted or otherwise reproduced on the
Warrant Certificates. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.
No Warrant Certificate shall be valid for any purpose, and no Warrant
evidenced thereby shall be exercisable, until such Warrant Certificate has been
countersigned by the manual signature of the Warrant Agent. Such signature by
the Warrant Agent upon any Warrant Certificate executed by the Company shall be
conclusive evidence that the Warrant Certificate so countersigned has been duly
issued hereunder.
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In case any officer of the Company who shall have signed any of the Warrant
Certificates either manually or by facsimile signature shall cease to be such
officer before the Warrant Certificates so signed shall have been countersigned
and delivered by the Warrant Agent, such Warrant Certificates may be
countersigned and delivered notwithstanding that the person who signed such
Warrant Certificates ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution of this Agreement
any such person was not such officer.
The term "holder" or "holder of a Warrant Certificate" as used herein shall
mean any person in whose name at the time any Warrant Certificate shall be
registered upon the books to be maintained by the Warrant Agent for that purpose
[IF OTHER SECURITIES AND WARRANTS ARE NOT IMMEDIATELY DETACHABLE - or upon the
register of the Other Securities prior to the Detachable Date. Prior to the
Detachable Date, the Company will, or will cause the Registrar of the Other
Securities to, make available at all times to the Warrant Agent such information
as to holders of the Other Securities with Warrants as may be necessary to keep
the Warrant Agent's records up to date].
SECTION 1.03. ISSUANCE OF WARRANT CERTIFICATES. Warrant Certificates
evidencing the right to purchase an aggregate not exceeding __________________
Warrant Securities (except as provided in Sections 2.03(c), 3.02 and 4.01) may
be executed by the Company and delivered to the Warrant Agent upon the execution
of this Warrant Agreement or from time to time thereafter. The Warrant Agent
shall, upon receipt of Warrant Certificates duly executed on behalf of the
Company, countersign Warrant Certificates evidencing Warrants representing the
right to purchase up to ______________________ Warrant Securities and shall
deliver such Warrant Certificates to or upon the order of the Company.
Subsequent to such original issuance of the Warrant Certificates, the Warrant
Agent shall countersign a Warrant Certificate only if the Warrant Certificate is
issued in exchange or substitution for one or more previously countersigned
Warrant Certificates or in connection with their transfer, as hereinafter
provided.
ARTICLE II
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS
SECTION 2.01. WARRANT PRICE. During the period from _______, through and
including _______________________________________________, the exercise price of
each Warrant will be _______. During the period from ________________________,
through and including _________________________________________________, the
exercise price of each Warrant will
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<PAGE>
be _______. Such purchase price of Warrant Securities is referred to in this
Agreement as the "Warrant Price". No adjustment shall be made for any dividends
on any Warrant Securities issuable upon exercise of any Warrant.
SECTION 2.02. DURATION OF WARRANTS. Each Warrant may be exercised in
whole at any time, as specified herein, on or after [the date thereof]
[__________________________] and at or before [_______] P.M., [City] time, on
___________________________________ or such later date as the Company may
designate, by notice to the Warrant Agent and the holders of Warrant
Certificates mailed to their addresses as set forth in the record books of the
Warrant Agent (the "Expiration Date"). Each Warrant not exercised at or before
[_______] P.M., [City] time, on the Expiration Date shall become void, and all
rights of the holder of the Warrant Certificate evidencing such Warrant under
this Agreement shall cease.
SECTION 2.03. EXERCISE OF WARRANTS. (a) During the period specified in
Section 2.02 any whole number of Warrants may be exercised by providing certain
information as set forth on the reverse side of the Warrant Certificate and by
paying in full, in [lawful money of the United States of America] [in cash or by
certified check or official bank check or by bank wire transfer, in each case,]
[by bank wire transfer] [in immediately available funds] the Warrant Price for
each Warrant exercised to the Warrant Agent at its corporate trust office [or at
_________________________________], provided that such exercise is subject to
receipt within five business days of such [payment] [wire transfer] by the
Warrant Agent of the Warrant Certificate with the form of election to purchase
Warrant Securities set forth on the reverse side of the Warrant Certificate
properly completed and duly executed. The date on which payment in full of the
Warrant Price is received by the Warrant Agent shall, subject to receipt of the
Warrant Certificate as aforesaid, be deemed to be the date on which the Warrant
is exercised. The Warrant Agent shall deposit all funds received by it in
payment of the Warrant Price in an account of the Company maintained with it and
shall advise the Company by telephone at the end of each day on which a
[payment] [wire transfer] for the exercise of Warrants is received of the amount
so deposited to its account. The Warrant Agent shall promptly confirm such
telephone advice to the Company in writing.
(b) The Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company of (i) the number of Warrants exercised,
(ii) the instructions of each holder of the Warrant Certificates evidencing
such Warrants with respect to delivery of the Warrant Securities to which
such holder is entitled upon such exercise, (iii) delivery of Warrant
Certificates evidencing the balance, if any, of the Warrants remaining
after such exercise, and (iv) such other information as the Company shall
reasonably require.
(c) As soon as practicable after the exercise of any Warrant, the
Company shall issue to or upon the order of the holder of the Warrant
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<PAGE>
Certificate evidencing such Warrant the Warrant Securities to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder. If fewer than all of the Warrants
evidenced by such Warrant Certificate are exercised, the Company shall
execute, and an authorized officer of the Warrant Agent shall manually
countersign and deliver, a new Warrant Certificate evidencing the number of
such Warrants remaining unexercised.
(d) The Company shall not be required to pay any stamp or other tax
or other governmental charge required to be paid in connection with any
transfer involved in the issue of the Warrant Securities, and in the event
that any such transfer is involved, the Company shall not be required to
issue or deliver any Warrant Security until such tax or other charge shall
have been paid or it has been established to the Company's satisfaction
that no such tax or other charge is due.
(e) Prior to the issuance of any Warrants there shall have been
reserved, and the Company shall at all times keep reserved, out of its
authorized but unissued Warrant Securities, a number of shares sufficient
to provide for the exercise of the Warrant Certificates.
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS
OF HOLDERS OF WARRANT CERTIFICATES
SECTION 3.01. NO RIGHTS AS WARRANT SECURITYHOLDER CONFERRED BY WARRANTS OR
WARRANT CERTIFICATES. No Warrant Certificates or Warrant evidenced thereby
shall entitle the holder thereof to any of the rights of a holder of Warrant
Securities, including, without limitation, the right to receive the payment of
dividends or distributions, if any, on the Warrant Securities or to exercise any
voting rights.
SECTION 3.02. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it and
the Company of the ownership of and the loss, theft, destruction or mutilation
of any Warrant Certificate and or indemnity reasonably satisfactory to the
Warrant Agent and the Company and, in the case of mutilation, upon surrender
thereof to the Warrant Agent for cancellation, then, in the absence of notice to
the Company or the Warrant Agent that such Warrant Certificate has been acquired
by a bona fide purchaser, the Company shall execute, and an authorized officer
of the Warrant Agent shall manually countersign and deliver, in exchange for or
in lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new
Warrant Certificate of the same tenor and evidencing a like number of Warrants.
Upon the issuance of any new Warrant Certificate under this Section, the Company
may require the payment
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<PAGE>
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Warrant Agent) in connection therewith. Every substitute
Warrant Certificate executed and delivered pursuant to this Section in lieu of
any lost, stolen or destroyed Warrant Certificate shall represent an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
of mutilated, lost, stolen or destroyed Warrant Certificates.
SECTION 3.03. HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS.
Notwithstanding any of the provisions of this Agreement, any holder of a Warrant
Certificate, without the consent of the Warrant Agent, the holder of any Warrant
Securities or the holder of any other Warrant Certificate, may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such holder's right to exercise the Warrants
evidenced by such holder's Warrant Certificate in the manner provided in such
holder's Warrant Certificate and in this Agreement.
SECTION 3.04. RECLASSIFICATION, CONSOLIDATION, MERGER, SALE, CONVEYANCE OR
LEASE. In case any of the following shall occur while any Warrants are
outstanding: (a) any reclassification or change of the outstanding shares of
Warrant Securities; or (b) any consolidation or merger to which the Company is
party (other than a consolidation or a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change in, the outstanding shares of Warrant Securities issuable upon exercise
of the Warrants); or (c) any sale, conveyance or lease to another corporation
of the property of the Company as an entirety or substantially as an entirety;
then the Company, or such successor or purchasing corporation, as the case may
be, shall make appropriate provision by amendment of this Agreement or otherwise
so that the holders of the Warrants then outstanding shall have the right at any
time thereafter, upon exercise of such Warrants, to purchase the kind and amount
of shares of stock and other securities and property receivable upon such a
reclassification, change, consolidation, merger, sale, conveyance or lease as
would be received by a holder of the number of shares of Warrant Securities
issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale, conveyance or lease, and,
in the case of a consolidation, merger, sale, conveyance or lease, the Company
shall thereupon be relieved of any further obligation hereunder or under the
Warrants, and the Company as the predecessor corporation may thereupon or at any
time thereafter be dissolved, wound up or liquidated. Such successor or
assuming
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<PAGE>
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Company, any or all of the Warrants issuable
hereunder which heretofore shall not have been signed by the Company, and may
execute and deliver Warrant Securities in its own name, in fulfillment of its
obligations to deliver Warrant Securities upon exercise of the Warrants. All
the Warrants so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Warrants theretofore or thereafter issued in
accordance with the terms of this Agreement as though all of such Warrants had
been issued at the date of the execution hereof. In any case of any such
reclassification, change, consolidation, merger, conveyance, transfer or lease,
such changes in phraseology and form (but not in substance) may be made in the
Warrants thereafter to be issued as may be appropriate.
The Warrant Agent may receive a written opinion of legal counsel as
conclusive evidence that any such reclassification, change, consolidation,
merger, conveyance, transfer or lease complies with the provisions of this
Section 3.04.
ARTICLE IV
EXCHANGE AND TRANSFER
OF WARRANT CERTIFICATES
SECTION 4.01. EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. [IF OTHER
SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE - Upon] [IF OTHER
SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE - Prior to the
Detachable Date a Warrant Certificate may be exchanged or transferred only
together with the Offered Security to which the Warrant Certificate was
initially attached, and only for the purpose of effecting or in conjunction with
an exchange or transfer of such Offered Security. Prior to any Detachable Date,
each transfer of the Offered Security [on the register of the Other Securities]
shall operate also to transfer the related Warrant Certificates. After the
Detachable Date upon] surrender at the corporate trust office of the Warrant
Agent [or ____________________________ ], Warrant Certificates evidencing
Warrants may be exchanged for Warrant Certificates in other denominations
evidencing such Warrants or the transfer thereof may be registered in whole or
in part; provided that such other Warrant Certificates evidence the same
aggregate number of Warrants as the Warrant Certificates so surrendered. The
Warrant Agent shall keep, at its corporate trust office [and at ______________
_____________________], books in which, subject to such reasonable regulations
as it may prescribe, it shall register Warrant Certificates and exchanges and
transfers of outstanding Warrant Certificates, upon surrender of the Warrant
Certificates to the Warrant Agent at its corporate trust office [or ____________
________________] for exchange or registration of transfer, properly endorsed or
accompanied by appropriate instruments of registration of transfer and written
instructions for transfer, all in
-7-
<PAGE>
form satisfactory to the Company and the Warrant Agent. No service charge shall
be made for any exchange or registration of transfer of Warrant Certificates,
but the Company may require payment of a sum sufficient to cover any stamp or
other tax or other governmental charge that may be imposed in connection with
any such exchange or registration of transfer. Whenever any Warrant
Certificates are so surrendered for exchange or registration of transfer, an
authorized officer of the Warrant Agent shall manually countersign and deliver
to the person or persons entitled thereto a Warrant Certificate or Warrant
Certificates duly authorized and executed by the Company, as so requested. The
Warrant Agent shall not be required to effect any exchange or registration of
transfer which will result in the issuance of a Warrant Certificate evidencing a
fraction of a Warrant or a number of full Warrants and a fraction of a Warrant.
All Warrant Certificates issued upon any exchange or registration of transfer of
Warrant Certificates shall be the valid obligations of the Company, evidencing
the same obligations and entitled to the same benefits under this Agreement as
the Warrant Certificate surrendered for such exchange or registration of
transfer.
SECTION 4.02. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES. [IF OTHER
SECURITIES AND WARRANTS ARE NOT IMMEDIATELY DETACHABLE - Prior to the Detachable
Date, the Company, the Warrant Agent and all other persons may treat the owner
of the Offered Security as the owner of the Warrant Certificates initially
attached thereto for any purpose and as the person entitled to exercise the
rights represented by the Warrants evidenced by such Warrant Certificates, any
notice to the contrary notwithstanding. After the Detachable Date and prior to
due presentment of a Warrant Certificate for registration of transfer, ] [T]he
Company and the Warrant Agent may treat the registered holder of a Warrant
Certificate as the absolute owner thereof for any purpose and as the person
entitled to exercise the rights represented by the Warrants evidenced thereby,
any notice to the contrary notwithstanding.
SECTION 4.03. CANCELLATION OF WARRANT CERTIFICATES. Any Warrant
Certificate surrendered for exchange, registration of transfer or exercise of
the Warrants evidenced thereby shall, if surrendered to the Company, be
delivered to the Warrant Agent and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall be promptly canceled by the Warrant Agent
and shall not be reissued and, except as expressly permitted by this Agreement,
no Warrant Certificate shall be issued hereunder in exchange therefor or in lieu
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of canceled Warrant Certificates in a manner satisfactory to
the Company.
-8-
<PAGE>
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. WARRANT AGENT. The Company hereby appoints _________ as
Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth; and
_____________________________________ hereby accepts such appointment. The
Warrant Agent shall have the powers and authority granted to and conferred upon
it in the Warrant Certificates and hereby and such further powers and authority
to act on behalf of the Company as the Company may hereafter grant to or confer
upon it. All of the terms and provisions with respect to such powers and
authority contained in the Warrant Certificates are subject to and governed by
the terms and provisions hereof.
SECTION 5.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof, including the following to all of which the Company agrees and to all of
which the rights hereunder of the holders from time to time of the Warrant
Certificates shall be subject:
(a) COMPENSATION AND INDEMNIFICATION. The Company agrees promptly to
pay the Warrant Agent the compensation to be agreed upon with the Company
for all services rendered by the Warrant Agent and to reimburse the Warrant
Agent for reasonable out-of-pocket expenses (including counsel fees)
incurred without gross negligence by the Warrant Agent in connection with
the services rendered hereunder by the Warrant Agent. The Company also
agrees to indemnify the Warrant Agent for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
the part of the Warrant Agent, arising out of or in connection with its
acting as Warrant Agent hereunder, as well as the costs and expenses of
defending against any claim of such liability.
(b) AGENT FOR THE COMPANY. In acting under this Warrant Agreement
and in connection with the Warrant Certificates, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligations
or relationship of agency or trust for or with any of the holders of
Warrant Certificates or beneficial owners of Warrants.
(c) COUNSEL. The Warrant Agent may consult with counsel satisfactory
to it, and the written advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the advice of
such counsel.
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<PAGE>
(d) DOCUMENTS. The Warrant Agent shall be protected and shall incur
no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the
proper parties.
(e) CERTAIN TRANSACTIONS. The Warrant Agent, and its officers,
directors and employees, may become the owner of, or acquire any interest
in, Warrants, with the same rights that it or they would have if it were
not the Warrant Agent hereunder, and, to the extent permitted by applicable
law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depositary, trustee or
agent for, any committee or body of holders of Warrant Securities or other
obligations of the Company as freely as if it were not the Warrant Agent
hereunder. Nothing in this Warrant Agreement shall be deemed to prevent
the Warrant Agent from acting as Trustee under any of the Indentures.
(f) NO LIABILITY FOR INTEREST. Unless otherwise agreed with the
Company, the Warrant Agent shall have no liability for interest on any
monies at any time received by it pursuant to any of the provisions of this
Agreement or of the Warrant Certificates.
(g) NO LIABILITY FOR INVALIDITY. The Warrant Agent shall have no
liability with respect to any invalidity of this Agreement or any of the
Warrant Certificates (except as to the Warrant Agent's countersignature
thereon).
(h) NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant Agent shall
not be responsible for any of the recitals or representations herein or in
the Warrant Certificates (except as to the Warrant Agent's countersignature
thereon), all of which are made solely by the Company.
(i) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be obligated to
perform only such duties as are herein and in the Warrant Certificates
specifically set forth and no implied duties or obligations shall be read
into this Agreement or the Warrant Certificates against he Warrant Agent.
The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the
payment of which within a reasonable time is not, in its reasonable
opinion, assured to it. The Warrant Agent shall not be accountable or
under any duty or responsibility for the use by the Company of any of the
Warrant Certificates authenticated by the Warrant Agent and delivered by it
to the Company pursuant to this Agreement or for the application by the
Company of the proceeds of the Warrant Certificates. The Warrant Agent
shall have no duty
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<PAGE>
or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained herein or in the Warrant
Certificates or in the case of the receipt of any written demand from a
holder of a Warrant Certificate with respect to such default, including,
without limiting the generality of the foregoing, any duty or
responsibility to initiate or attempt to initiate any proceedings at law or
otherwise or, except as provided in Section 6.02 hereof, to make any demand
upon the Company.
SECTION 5.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The Company
agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder until
all the Warrants have been exercised or are no longer exercisable.
(b) The Warrant Agent may at any time resign as agent by giving
written notice to the Company of such intention on its part, specifying the
date on which its desired resignation shall become effective; provided that
such date shall not be less than three months after the date on which such
notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an instrument
in writing signed by or on behalf of the Company and specifying such
removal and the intended date when it shall become effective. Such
resignation or removal shall take effect upon the appointment by the
Company, as hereinafter provided, of a successor Warrant Agent (which shall
be a bank or trust company authorized under the laws of the jurisdiction of
its organization to exercise corporate trust powers) and the acceptance of
such appointment by such successor Warrant Agent. The obligation of the
Company under Section 5.02(a) shall continue to the extent set forth
therein notwithstanding the resignation or removal of the Warrant Agent.
(c) In case at any time the Warrant Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or under any other
applicable Federal or State bankruptcy, insolvency or similar law or shall
consent to the appointment of or taking possession by a receiver,
custodian, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Warrant Agent or its property or affairs, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order
for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or similar law, or a
decree or order by a court having jurisdiction in the premises
-11-
<PAGE>
shall have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or similar official) of the
Warrant Agent or of its property or affairs, or any public officer shall
take charge or control of the Warrant Agent or of its property or affairs
for the purpose of rehabilitation, conservation, winding up or liquidation,
a successor Warrant Agent, qualified as aforesaid, shall be appointed by
the Company by an instrument in writing, filed with the successor Warrant
Agent. Upon the appointment as aforesaid of a successor Warrant Agent and
acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder.
(d) Any successor Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on deposit
with or held by such predecessor, as Warrant Agent hereunder.
(e) Any corporation into which the Warrant Agent hereunder may be
merged or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all
or substantially all the assets and business of the Warrant Agent, provided
that it shall be qualified as aforesaid, shall be the successor Warrant
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. AMENDMENT. This Agreement may be amended by the parties
hereto, without the consent of the holder of any Warrant Certificate, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable; PROVIDED that such action
shall not affect adversely the interests of the holders of the Warrant
Certificates.
-12-
<PAGE>
SECTION 6.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If
the Warrant Agent shall receive any notice or demand addressed to the Company by
the holder of a Warrant Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or demand to
the Company.
SECTION 6.03. ADDRESSES. Any communication from the Company to the
Warrant Agent with respect to this Agreement shall be addressed to
_____________________________, Attention: ____________________ and any
communication from the Warrant Agent to the Company with respect to this
Agreement shall be addressed to Dain Rauscher Corporation, Dain Rauscher Plaza,
60 South Sixth Street, Minneapolis, Minnesota 55402-4422, Attention: Secretary
(or such other address as shall be specified in writing by the Warrant Agent or
by the Company).
SECTION 6.04. GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of [_________].
SECTION 6.05. DELIVERY OF PROSPECTUS. The Company shall furnish to the
Warrant Agent sufficient copies of a prospectus relating to the Warrant
Securities deliverable upon exercise of the Warrants (the "Prospectus"), and the
Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent
will deliver to the holder of the Warrant Certificate evidencing such Warrant,
prior to or concurrently with the delivery of the Warrant Securities issued upon
such exercise, a Prospectus. The Warrant Agent shall not, by reason of any such
delivery, assume any responsibility for the accuracy or adequacy of such
Prospectus.
SECTION 6.06. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from
time to time take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities and securities act filings under United States Federal and State
laws (including without limitation a registration statement in respect of the
Warrants and Warrant Securities under the Securities Act of 1933), which may be
or become requisite in connection with the issuance, sale, transfer, and
delivery of the Warrant Securities issued upon exercise of the Warrant
Certificates, the exercise of the Warrants, the issuance, sale, transfer and
delivery of the Warrants or upon the expiration of the period during which the
Warrants are exercisable.
SECTION 6.07. PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in
this Agreement shall give to any person other than the Company, the Warrant
Agent and the holders of the Warrant Certificates any right, remedy or claim
under or by reason of this Agreement.
-13-
<PAGE>
SECTION 6.08. HEADINGS. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 6.09. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which as so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.
SECTION 6.10. INSPECTION OF AGREEMENT. A copy of this Agreement shall be
available at all reasonable times at the principal corporate trust office of the
Warrant Agent for inspection by the holder of any Warrant Certificate. The
Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By______________________
Its_____________________
Attest:
__________________________
________________________
Warrant Agent
By______________________
Its_____________________
Attest:
_________________________
-14-
<PAGE>
Exhibit A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[IF WARRANTS ARE ATTACHED TO OTHER Prior to _______________ this Warrant
SECURITIES AND ARE NOT IMMEDIATELY Certificate cannot be transferred or
DETACHABLE. exchanged unless attached to a [Title
of Other Securities].]
[FORM OF LEGEND IF WARRANTS ARE Prior to _______________, Warrants
NOT IMMEDIATELY EXERCISABLE. evidenced by this Warrant Certificate
cannot be exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN
VOID AFTER [_________] P.M., [CITY] TIME, ON ____________, 19__
DAIN RAUSCHER CORPORATION
Warrants to Purchase
Warrant Certificate Representing
[Title of Warrant Securities]
No. __________ ___________ Warrants
This certifies that ____________________________ or registered assigns is
the registered owner of the above indicated number of Warrants, each Warrant
entitling such owner [IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT
IMMEDIATELY DETACHABLE - , subject to the registered owner qualifying as a
"Holder" of this Warrant Certificate, as hereinafter defined) to purchase, at
any time [after [______] P.M., [City] time, on _______________ and] on or before
[_______] P.M., [City] time, on ____________________, ____________ shares of
[Title of Warrant Securities] (the "Warrant Securities"), of Dain Rauscher
Corporation (the "Company") on the following basis: during the period
from _______________, through and including ______________, the exercise price
of each Warrant will be ___________; during the period from ________, through
and including ________, the exercise price of each warrant will be ________
(the "Warrant
A-1
<PAGE>
Price"). No adjustment shall be made for any dividends on any Warrant
Securities issuable upon exercise of any Warrant. The Holder may exercise the
Warrants evidenced hereby by providing certain information set forth on the back
hereof and by paying in full [in lawful money of the United States of America]
[in cash or by certified check or official bank check or by bank wire transfer,
in each case,] [by bank wire transfer] in immediately available funds, the
Warrant Price for each Warrant exercised to the Warrant Agent (as hereinafter
defined) and by surrendering this Warrant Certificate, with the purchase form on
the back hereof duly executed, at the corporate trust office of [name of Warrant
Agent], or its successor as warrant agent (the "Warrant Agent"), [or _________
________________________], which is, on the date hereof, at the address
specified on the reverse hereof, and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement (as hereinafter
defined).
The term "Holder" as used herein shall mean [IF WARRANTS ARE ATTACHED TO
OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE - prior to ___________, __
(the "Detachable Date"), the registered owner of the Company's [title of Other
Securities] to which this Warrant Certificate was initially attached, and after
such Detachable Date,] the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose pursuant to Section 4.01 of the Warrant Agreement.
Any whole number of Warrants evidenced by this Warrant Certificate may be
exercised to purchase Warrant Securities in registered form. Upon any exercise
of fewer than all of the Warrants evidenced by this Warrant Certificate, there
shall be issued to the Holder hereof a new Warrant Certificate evidencing the
number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of____________, __ (the "Warrant Agreement") between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. Copies of the
Warrant Agreement are on file at the above-mentioned office of the Warrant Agent
[and at _____________________________].
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY
DETACHABLE - Prior to the Detachable Date, this Warrant Certificate may be
exchanged or transferred only together with the [Title of Other Securities] (the
"Other Securities") to which this Warrant Certificate was initially attached,
and only for the purpose of effecting, or in conjunction with, an exchange or
transfer of such Offered Security. Additionally, on or prior to the Detachable
Date, each transfer of such Other Security or the register of the Other
Securities shall operate also to transfer this Warrant Certificate. After such
date, transfer of this] [IF WARRANTS ARE ATTACHED
A-2
<PAGE>
TO OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE - Transfer of this]
Warrant Certificate may be registered when this Warrant Certificate is
surrendered at the corporate trust office of the Warrant Agent [or __________
_______________] by the registered owner of such owner's assigns, in person or
by an attorney duly authorized in writing, in the manner and subject to the
limitations provided in the Warrant Agreement.
[IF OTHER SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE -
Except as provided in the immediately preceding paragraph, after] [IF OTHER
SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANT ALONE -
After] countersignature by the Warrant Agent and prior to the expiration of this
Warrant Certificate, this Warrant Certificate may be exchanged at the corporate
trust office of the Warrant Agent [or ____________] for Warrant Certificates
representing the same aggregate number of Warrants.
This Warrant Certificate shall not entitle the Holder hereof to any of the
rights of a holder of the Warrant Securities, including, without limitation, the
right to receive payments of dividends or distributions, if any, on the Warrant
Securities or to exercise any voting rights.
This Warrant Certificate shall not be valid or obligatory for any purpose
until countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its name and on its behalf by the facsimile signatures of its duly authorized
officers.
Dated: ____________________, _______________
DAIN RAUSCHER CORPORATION
By____________________________
Its_________________________
ATTEST:
_____________________________________________
Countersigned:
_____________________________________________
As Warrant Agent
By
_____________________________________________
Authorized Signature
A-3
<PAGE>
[Reverse of Warrant Certificate]
(Instructions for Exercise of Warrant)
To exercise the Warrants evidenced hereby, the Holder must pay [in United
States dollars] [in cash or by certified check or official bank check or by bank
wire transfer, in each case] [by bank wire transfer in immediately available
funds], the Warrant Price in full for Warrants exercised, to [Warrant Agent]
[address of Warrant Agent], Attn: __________________, which payment must specify
the name of the Holder and the number of Warrants exercised by such Holder. In
addition, the Holder must complete the information required below and present
this Warrant Certificate in person or by mail (certified or registered mail is
recommended) to the Warrant Agent at the appropriate address set forth below.
This Warrant Certificate, completed and duly executed, must be received by the
Warrant Agent within five business days of the payment.
To Be Executed Upon Exercise of Warrant
The undersigned hereby irrevocably elects to exercise ______ Warrants,
evidenced by this Warrant Certificate, to purchase ______ shares of the [Title
of Warrant Securities] (the "Warrant Securities") of Dain Rauscher Corporation
and represents that he has tendered payment for such Warrant Securities [in
Dollars] [in cash or by certified check or official bank check or by bank wire
transfer, in each case] [by bank wire transfer in immediately available funds]
to the order of Dain Rauscher Corporation, c/o [insert name and address of
Warrant Agent], in the amount of ________ in accordance with the terms hereof.
The undersigned requests that said principal amount of Warrant Securities be in
fully registered form in the authorized denominations, registered in such names
and delivered all as specified in accordance with the instructions set forth
below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
Dated: ___________________________ Name ________________________________
(Please Print)
___________________________________ Address______________________________
(Insert Social Security or Other
Identifying Number of Holder) _______________________________
A-4
<PAGE>
Signature Guaranteed
__________________________________ Signature____________________________
[FOR REGISTERED WARRANTS -- Signature
must conform in all respects to name of
holder as specified on the face of this
Warrant Certificate and must bear a
signature guarantee by a bank, trust
company or member broker of the New
York, Midwest or Pacific Stock Exchange)
This Warrant may be exercised at the following addresses:
By hand at__________________________________________________
__________________________________________________
__________________________________________________
By mail at__________________________________________________
__________________________________________________
__________________________________________________
[Instructions as to form and delivery of Warrant Securities and, if
applicable, Warrant Certificates evidencing unexercised Warrants - complete as
appropriate.]
A-5
<PAGE>
EXHIBIT 4.11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DAIN RAUSCHER CORPORATION
AND
____________________, AS WARRANT AGENT
--------------------
DEBT SECURITIES
WARRANT AGREEMENT
--------------------
DATED AS OF ________, ____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
ISSUANCE, EXECUTION AND AUTHENTICATION
OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrant Certificates. . . . . . . . . . . . 2
SECTION 1.02. Form of Warrant Certificates. . . . . . . . . . . . . . 2
SECTION 1.03. Execution and Authentication of Warrant Certificates. . 2
SECTION 1.04. Temporary Warrant Certificates. . . . . . . . . . . . . 3
SECTION 1.05. Payment of Taxes. . . . . . . . . . . . . . . . . . . . 4
SECTION 1.06. Definition of Holder. . . . . . . . . . . . . . . . . . 4
ARTICLE II
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS
SECTION 2.01. Warrant Price . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Duration of Warrants. . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Exercise of Warrants. . . . . . . . . . . . . . . . . . 5
ARTICLE II
[REGISTRATION;] EXCHANGE, TRANSFER AND
SUBSTITUTION OF WARRANT CERTIFICATES
SECTION 3.01. [Registration;] Exchange and Transfer of Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.02. Mutilated, Destroyed, Lost or Stolen Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03. Persons Deemed Owners . . . . . . . . . . . . . . . . . 8
SECTION 3.04 Cancellation of Warrant Certificates. . . . . . . . . . 8
i
<PAGE>
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF WARRANT CERTIFICATES
SECTION 4.01. No Rights as Holders of Warrant Debt Securities
Conferred by Warrants or Warrant Certificates . . . . . 8
SECTION 4.02. Holder of Warrant Certificate May Enforce Rights. . . . 8
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.02. Conditions of Warrant Agent's Obligations . . . . . . . 9
SECTION 5.03. Resignation, Removal and Appointment of Successor . . . 11
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Rights and Duties of Successor Corporation. . . . . . . 13
SECTION 6.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.03. Notices and Demands to the Corporation and Warrant
Agent . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.04 Addresses . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.05. Governing Law . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.06. Delivery of Prospectus. . . . . . . . . . . . . . . . . 14
SECTION 6.07. Obtaining of Governmental Approvals . . . . . . . . . . 14
SECTION 6.08. Persons Having Rights Under Warrant Agreement . . . . . 14
SECTION 6.09. Headings. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.11. Inspection of Agreement . . . . . . . . . . . . . . . . 15
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit A - Form of Warrant Certificate. . . . . . . . . . . . . . . . . A-1
</TABLE>
ii
<PAGE>
DAIN RAUSCHER CORPORATION
FORM OF DEBT SECURITIES WARRANT AGREEMENT
DEBT SECURITIES WARRANT AGREEMENT, dated as of _____________ , ___ between
Dain Rauscher Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (the "Company") and _________________, a
[corporation] [national banking association] organized and existing under the
laws of ___________________, as Warrant Agent (herein called the "Warrant
Agent").
WHEREAS, the Company has entered into an indenture dated as of [__________
(the "Senior Indenture"), with _____________, as trustee (such trustee, and any
successors to such trustee, herein called the "Senior Trustee"), providing for
the issuance from time to time of its unsecured and unsubordinated debt
securities, to be issued in one or more series as provided in the Senior
Indenture (the "Debt Securities");] [__________ (the "Subordinated Indenture"),
with _______________, as trustee (such trustee, and any successors to such
trustee, herein called the "Subordinated Trustee"), providing for the issuance
from time to time of its subordinated debt securities, to be issued in one or
more series as provided in the Subordinated Indenture (the "Debt Securities");]
WHEREAS, the Company proposes to sell [IF OTHER DEBT SECURITIES AND
WARRANTS --title of Debt Securities being offered (the "Other Debt Securities")
with] warrant certificates (such warrant certificates and other warrant
certificates issued pursuant to this Agreement herein called the "Warrant
Certificates") evidencing one or more warrants (the "Warrants" or, individually,
a "Warrant" representing the right to purchase [title of Debt Securities
purchasable through exercise of Warrants] (the "Warrant Debt Securities"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, exchange, exercise and replacement of the Warrant Certificates, and in
this Agreement wishes to set forth, among other things, the form and provisions
of the Warrant Certificates and the terms and conditions on which they may be
issued, exchanged, exercised and replaced;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I
ISSUANCE, EXECUTION AND AUTHENTICATION OF
WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANT CERTIFICATES. [IF WARRANTS ALONE--Upon
issuance, each Warrant Certificate shall evidence one or more Warrants.] [IF
OTHER DEBT SECURITIES AND WARRANTS--Warrant Certificates shall be [initially]
issued in units with the Other Debt Securities and shall [not] be separately
transferable [before _____, __ (the "Detachable Date"). The Warrant Certificate
or Certificates included in each such unit shall evidence an aggregate of
_______ Warrants for each $______ principal amount of Other Debt Securities
included in such unit.] Each Warrant evidenced thereby shall represent the
right, subject to the provisions contained herein and therein, to purchase
Warrant Debt Securities in the aggregate principal amount of $_________.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant Certificates
(including the Form(s) of Exercise [and Assignment] to be set forth on the
reverse thereof) shall be in substantially the from set forth in Exhibit A
hereto, shall be printed, lithographed or engraved on steel engraved borders (or
in any other manner determined by the officers executing such Warrant
Certificates, as evidenced by their execution of such Warrant Certificates) and
may have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any securities exchange on which the Warrant Certificates may be listed or as
may, consistently herewith, be determined by the officers executing such Warrant
Certificates, as evidenced by their execution of the Warrant Certificates.
SECTION 1.03. EXECUTION AND AUTHENTICATION OF WARRANT CERTIFICATES. The
Warrant Certificates shall be executed on behalf of the Company by its Chairman
of the Board, it President or one of its Vice Presidents under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Warrant Certificates
may be manual or facsimile.
Warrant Certificates evidencing the right to purchase an aggregate
principal amount not exceeding $______ of Warrant Debt Securities (except as
provided in Section 1.04, 2.03(c), 3.01 and 3.02) may be executed by the Company
and delivered to the Warrant Agent upon the execution of this Warrant Agreement
or from time to time thereafter. The Warrant Agent shall, upon receipt of
Warrant Certificates duly executed on behalf of the Company, authenticate
Warrant Certificates evidencing Warrants representing the right to purchase up
to $_____ aggregate principal
-2-
<PAGE>
amount of Warrant Debt Securities and shall deliver such Warrant Certificates to
or upon the order of the Company. Subsequent to such original issuance of the
Warrant Certificates, the Warrant Agent shall authenticate a Warrant Certificate
only if the Warrant Certificate is issued in exchange or substitution for one or
more previously authenticated Warrant Certificates [IF REGISTERED WARRANTS--or
in connection with their transfer], as hereinafter provided.
Each Warrant Certificate shall be dated the date of its authentication by
the Warrant Agent.
No Warrant Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, and no Warrant evidence
thereby shall be exercisable, until such Warrant Certificate has been
authenticated by the manual signature of the Warrant Agent. Such signature by
the Warrant Agent upon any Warrant Certificate executed by the Company shall be
conclusive evidence, and the only evidence, that the Warrant Certificate so
authenticated has been duly issued hereunder.
Warrant Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Warrant
Certificates or did not hold such offices at the date of such Warrant
Certificates.
SECTION 1.04. TEMPORARY WARRANT CERTIFICATES. Pending the preparation of
definitive Warrant Certificates, the Company may execute, and upon the order of
the Company the Warrant Agent shall authenticate and deliver, temporary Warrant
Certificates which are printed, lithographed, typewritten, mimeographed or
otherwise produced substantially of the tenor of the definitive Warrant
Certificates in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Warrant Certificates may determine, as evidenced by their
execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at the corporate trust office of
the Warrant Agent [or ___________], without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Warrant Certificates,
the Company shall execute and the Warrant Agent shall authenticate and deliver
in exchange therefor definitive Warrant Certificates representing the same
aggregate number of Warrants. Until so exchanged, the temporary Warrant
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Warrant Certificates.
-3-
<PAGE>
SECTION 1.05. PAYMENT OF TAXES. The Company will pay all stamp taxes and
other duties, if any, to which, under the laws of the United States of America
or any State or political subdivision thereof, this Agreement or the original
issuance of the Warrant Certificates may be subject.
SECTION 1.06. DEFINITION OF HOLDER. The term "Holder" as used herein
shall mean [IF OTHER DEBT SECURITIES AND WARRANTS WHICH ARE NOT IMMEDIATELY
DETACHABLE--, prior to the Detachable Date, the [bearer] [registered owner] of
the Other Debt Securities to which such Warrant Certificates was initially
attached, and, after such Detachable Date,] [the bearer of such Warrant
Certificate] [the person in whose name at the time such Warrant Certificate
shall be registered upon the books to be maintained by the Warrant Agent for
that purpose pursuant to Section 3.01.]. [IF OTHER DEBT SECURITIES AND WARRANTS
WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to the Detachable Date, the Company
will, or will cause the registrar of the Other Debt Securities to make available
to the Warrant Agent current information as to Holders of the Other Debt
Securities.]
ARTICLE II
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS
SECTION 2.01. WARRANT PRICE/(1)/ During the period from ______, __ through
and including __________, ___, each Warrant shall entitle the Holder thereof,
subject to the provisions of this Agreement, to purchase from the Company the
principal amount of Warrant Debt Securities stated in the Warrant Certificate at
the Warrant Price of ____% of the principal amount thereof [plus accrued
amortization, if any, of the original issue discount of the Warrant Debt
Securities] [plus accrued interest, if any, from the most recent date from which
interest shall have been paid on the Warrant Debt Securities or, if no interest
shall have been paid on the Warrant Debt Securities, from ________, ____].
During the period from ____________, ___ through and including ___________, ___,
each Warrant shall entitled the Holder thereof, subject to the provisions of
this Agreement, to purchase from the Company the principal amount of Warrant
Debt Securities stated in the Warrant Certificate at the Warrant Price of _____%
of the principal amount thereof [plus accrued amortization, if any, of the
original issue discount of the Warrant] [plus accrued interest, if any, from the
most recent date from which interest shall have been paid on the Warrant Debt
Securities or, if no interest shall have been paid on the Warrant Debt
Securities, from _________, __]. [In each case, the original issue discount
($_____ for each $1,000 principal amount of
____________________
(1)/Complete and modify the provision of this Section as appropriate to reflect
the exact terms of the Warrants and the Warrant Debt Securities.
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Warrant Debt Securities) will be amortized at a ____% annual rate, computed on
a[n] [semi-] annual basis [using a 360-day year consisting of twelve 30-day
months].] Such Warrant Price of each Warrant is referred to in this Agreement
as the "Warrant Price."
SECTION 2.02. DURATION OF WARRANTS. Any Warrant evidence by a Warrant
Certificate may be exercised at any time, as specified herein, on or after [the
date thereof] [______, ___] and at or before [__________] p.m., [City] time, on
_______, ___, (the "Expiration Date"). Each Warrant not exercised at or before
such time on the Expiration Date shall become void, and all rights of the Holder
of the Warrant Certificate evidencing such Warrant under this Agreement or
otherwise shall cease.
SECTION 2.03. EXERCISE OF WARRANTS. (a) During the period specified in
Section 2.02, any whole number of Warrants may be exercised by surrendering the
Warrant Certificate evidencing such Warrants at the place or at the places set
forth in the Warrant Certificate, with the purchase form set forth in the
Warrant Certificate duly executed, accompanied by payment in full, in lawful
money of the United States of America, [in cash or by certified check or
official bank check in New York Clearing House funds] [by wire transfer in
immediately available funds], of the Warrant Price for each Warrant exercised.
The date on which payment in full of the Warrant Price for a Warrant and the
duly executed and completed Warrant Certificate are received by the Warrant
Agent shall be deemed to be the date on which such Warrant is exercised. The
Warrant Agent shall deposit all funds received by it as payment for the exercise
of Warrants to the account of the Company maintained with it for such purpose
and shall advise the Company by telephone at the end of each day on which such a
payment is received of the amount so deposited to its account. The Warrant
Agent shall promptly confirm such telephonic advice to the Company in writing.
(b) The Warrant Agent shall from time to time, as promptly as
practicable after the exercise of any Warrants in accordance with the terms
and conditions of this Agreement and the Warrant Certificates, advise the
Company and the Trustee of (i) the number of Warrants so exercised, (ii)
the instructions of each Holder of the Warrant Certificates evidencing such
Warrants with respect to delivery of the Warrant Debt Securities to which
such Holder is entitled upon such exercise, and instructions of such Holder
as to delivery of Warrant Certificates evidencing the balance, if any, of
the Warrants remaining after such exercise, and (iii) such other
information as the Company or the Trustee shall reasonably require.
(c) As soon as practicable after the exercise of any Warrants, the
Company shall issue, pursuant to the Indenture, in authorized
denominations, to or upon the order of the Holder of the Warrant
Certificate evidencing such Warrants, the Warrant Debt Securities to which
such Holder
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is entitled in fully registered form, registered in such name or names as
may be directed by such Holder; and, if fewer than all of the Warrants
evidenced by such Warrant Certificate were exercised, the Company shall
execute and an authorized officer of the Warrant Agent shall manually
authenticate and deliver a new Warrant certificate evidencing the number of
Warrants remaining unexercised.
(d) The Company shall not be required to pay any stamp or other tax
or other governmental charge required to be paid in connection with any
transfer involved in the issue of the Warrant Debt Securities; and in the
event that any such transfer is involved, the Company shall not be required
to issue or delivery any Warrant Debt Securities until such tax or other
charge shall have been paid or it has been established to the Company's
satisfaction that no such tax or other charge is due.
ARTICLE III
[REGISTRATION;] EXCHANGE, TRANSFER AND
SUBSTITUTION OF WARRANT CERTIFICATES
SECTION 3.01. [REGISTRATION;] EXCHANGE AND TRANSFER OF WARRANT
CERTIFICATES. [IF REGISTERED WARRANTS--The Warrant Agent shall keep, at its
corporate trust office [and at ________], books in which, subject to such
reasonable regulations as it may prescribe, it shall register Warrant
Certificates and transfer of outstanding Warrant Certificates.]
[IF OTHER DEBT SECURITIES AND WARRANTS WHICH ARE NOT IMMEDIATELY
DETACHABLE--Prior to the Detachable Date, a Warrant Certificate may be exchanged
or transferred only together with the Other Debt Security to which such Warrant
Certificate was initially attached, and only for the purpose of effecting, or in
conjunction with, an exchange or transfer of such Other Debt Securities.
Additionally, on or prior to the Detachable Date, each transfer of an Other Debt
Security [on the register of the Other Debt Securities] shall operate also to
transfer the Warrant Certificate or Certificates to which such Other Debt
Security was initially attached. After the Detachable Date, upon] [IF OTHER
DEBT SECURITIES AND WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR IF WARRANTS
ALONE--Upon] current at the corporate trust office of the Warrant Agent [or
________] of Warrant Certificates properly endorsed [or accompanied by
appropriate instruments of transfer] and accompanied by written instructions for
[transfer or] exchange, all in form satisfactory to the Company and the Warrant
Agent, such Warrant Certificates may be exchanged for other Warrant Certificates
[IF REGISTERED WARRANTS--or may be transferred in whole or in part]; provided
that Warrant Certificates issued in exchange for [or upon transfer of]
surrendered Warrant Certificates shall evidence the same aggregate number of
Warrants and the
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Warrant Certificates so surrendered. No service charge shall be made for any
exchange [or transfer] of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or governmental
charge that may be imposed in connection with any such exchange [or transfer].
Whenever any Warrant certificates are so surrendered for exchange [or transfer],
the Company shall execute and an authorized officer of the Warrant Agent shall
manually authenticate and deliver to the person or persons entitled thereto a
Warrant Certificate or Warrant Certificates as so requested. The Warrant Agent
shall not be required to effect any exchange [or transfer] which would result in
the issuance of a Warrant Certificate evidencing a fraction of a Warrant or a
number of full Warrants and a fraction of Warrant. All Warrant Certificates
issued upon any exchange [or transfer] of Warrant Certificates shall evidence
the same obligations, and be entitled to the same benefits under this Agreement,
as the Warrant Certificates surrendered for such exchange [or transfer].
SECTION 3.02. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES.
If any mutilated Warrant Certificate is surrendered to the Warrant Agent, the
Company shall execute and an officer of the Warrant Agent shall manually
authenticate and deliver in exchange therefor a new Warrant Certificate of like
tenor and principal amount and bearing a number not contemporaneously
outstanding. If there shall be delivered to the Company and the Warrant Agent
(i) evidence to their satisfaction of the destruction, loss or theft of any
Warrant Certificate and of the ownership thereof and (ii) such security or
indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser, the Company shall execute and upon its request an officer of the
Warrant Agent shall manually authenticate and deliver, in lieu of any such
destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like
tenor and principal amount and bearing a number not contemporaneously
outstanding, upon the issuance of any new Warrant Certificate under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Warrant Agent) connected
therewith. Every new Warrant Certificate issued pursuant to this Section in
lieu of any destroyed, lost or stolen Warrant Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Warrant Certificates duly issued
hereunder. The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Warrant Certificates.
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SECTION 3.03. PERSONS DEEMED OWNERS. [IF OTHER DEBT SECURITIES AND
WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE--Prior to the Detachable Date, the
Company, the Warrant Agent and all other persons may treat the owner of any
Other Debt Security as the owner of the Warrant Certificates initially attached
thereto for any purpose and as the person entitled to exercise the rights
represented by the Warrants evidence by such Warrant Certificates, any notice to
the contrary notwithstanding. After the Detachable Date,] [IF REGISTERED
WARRANTS--and prior to due presentment of a Warrant Certificate for registration
or transfer,] the Company, the Warrant Agent and all other person may treat the
Holder as the owner thereof for any purpose and as the person entitled to
exercise the rights represented by the Warrants evidenced thereby, any notice to
the contrary notwithstanding.
SECTION 3.04. CANCELLATION OF WARRANT CERTIFICATES. Any Warrant
Certificate surrendered for exchange [, transfer] or exercise of the Warrants
evidenced thereby shall, if surrendered to the Corporation, be delivered to the
Warrant Agent, and [IF WARRANT CERTIFICATES ARE ISSUED IN BEARER FORM--, except
as provided bellow,] all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly canceled by it and shall not be reissued and,
except as expressly permitted by this Agreement, no Warrant Certificate shall be
issued hereunder in lieu or in exchange thereof. [IF WARRANT CERTIFICATES ARE
ISSUED IN BEARER FORM--Warrant Certificates delivered to the Warrant Agent in
exchange for Warrant Certificates of other denominations may be retained by the
Warrant Agent for reissue as authorized hereunder.] The Company may at any time
deliver to the Warrant Agent for cancellation any Warrant Certificates
previously issued hereunder which the Company may have acquired in any manner
whatsoever, and all Warrant Certificates so delivered shall be promptly canceled
by the Warrant Agent. All canceled Warrant certificates held by the Warrant
Agent shall be destroyed by it unless by written order the Company requests
their return to it.
ARTICLE IV
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OR WARRANT CERTIFICATES
SECTION 4.01. NO RIGHTS AS HOLDERS OF WARRANT DEBT SECURITIES CONFERRED BY
WARRANTS OR WARRANT CERTIFICATES. No Warrant Certificate or Warrant evidenced
thereby shall entitle the Holder thereof to any of the rights of a Holder of the
Warrant Debt Securities, including, without limitation, the right to receive the
payment of principal of (or premium, if any) or interest, if any, on the Warrant
Debt Securities or to enforce any of the covenants in the Indenture.
SECTION 4.02. HOLDER OF WARRANT CERTIFICATE MAY ENFORCE RIGHTS.
Notwithstanding any of the provisions of this Agreement, any Holder of any
Warrant Certificate, without the consent of the Warrant Agent, the Trustee, the
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holder of any Warrant Debt Securities or the Holder of any other Warrant
Certificate, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce or otherwise in respect of, his right to exercise the
Warrant or Warrants evidenced by this Warrant Certificate in the manner provided
in the Warrant Certificates and in this Agreement.
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. WARRANT AGENT. The Company hereby appoints __________ as
Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth, and
__________ hereby accepts such appointment. The Warrant Agent shall have the
power and authority granted to and conferred upon it in the Warrant Certificates
and hereby and such further power and authority to act on behalf of the Company
as the Company may hereafter grant to or confer upon it All of the terms and
provisions with respect to such power and authority contained in the Warrant
Certificates are subject to and governed by the terms and provisions hereof.
SECTION 5.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant
Agent accepts its obligations herein set forth, upon the terms and conditions
hereof, including the following, to all of which the Company agrees and to all
of which the rights hereunder of the Holders from time to time of the Warrant
Certificates shall be subject:
(a) COMPENSATION AND INDEMNIFICATION. The Company agrees promptly to
pay the Warrant Agent the compensation to be agreed upon with the Company
for all services rendered by the Warrant Agent and to reimburse the Warrant
Agent for reasonable out-of-pocket expenses (including counsel fees)
incurred by the Warrant Agent in connection with the services rendered
hereunder by the Warrant Agent. The Company also agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Warrant
Agent, arising out of or in connection with its acting as such Warrant
Agent hereunder, including the costs land expenses of defending itself
against any claim or liability in connection with the exercise or
performance at any time of its powers or duties hereunder. The obligations
of the Company under this subsection (a) shall survive the exercise of the
Warrant Certificates and the resignation or removal of the Warrant Agent.
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(b) AGENT FOR THE COMPANY. In acting under this Warrant Agreement
and in connection with the Warrant Certificates, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with any of the owners or Holders of
the Warrant Certificates.
(c) COUNSEL. The Warrant Agent may consult with counsel, which may
include counsel for the Company, and the written advice of such counsel
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(d) DOCUMENTS. The Warrant Agent shall be protected and shall incur
no liability for or in respect of any action taken or omitted by it in
reliance upon any Warrant Certificates, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the
proper parties.
(e) CERTAIN TRANSACTIONS. The Warrant Agent, any of its officers,
directors and employees, or any other agent of the Company, in its
individual or any other capacity, may become the owner of, or acquire any
interest in, any Warrant Certificates, with the same rights that it would
have if it were not such Warrant Agent, officer, director, employee or
other agent, and, to the extent permitted by applicable law, it may engage
or be interested in any financial or other transaction with the Company and
may act on, or as depositary, trustee or agent for, any committee or body
of holders of Warrant Debt Securities or other obligations of the Company
as freely as if it were not such Warrant Agent, officer, director, employee
or other agent. Nothing in this Warrant Agreement shall be deemed to
prevent the Warrant Agent from acting as Trustee under the Indenture.
(f) NO LIABILITY FOR INTEREST. The Warrant Agent shall not be under
any liability for interest on any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the Warrant
Certificates.
(g) NO LIABILITY FOR INVALIDITY. The Warrant Agent shall not incur
any liability with respect to the validity of this Agreement or any of the
Warrant Certificates.
(h) NO RESPONSIBILITY FOR REPRESENTATIONS. The Warrant Agent shall
not be responsible for any of the recitals or representations contained
herein or in the Warrant Certificates (except as to the Warrant Agent's
Certificate of Authentication thereon), all of which are made solely by the
Company.
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(i) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be obligated to
perform such duties as are herein and in the Warrant Certificates
specifically set forth and no implied duties or obligations shall be read
into this Agreement or the Warrant Certificates against the Warrant Agent.
The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the
payment of which within a reasonable time is not, in its reasonable
opinion, assured to it. The Warrant Agent shall not be accountable or
under any duty or responsibility for the use by the Company of any of the
Warrant Certificates authenticated by the Warrant Agent and delivered by it
to the Company pursuant to this Agreement or for the application by the
Company of the proceeds of the Warrant Certificates or any exercise of the
Warrants evidenced thereby. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in the performance of
its covenants or agreements contained herein or in the Warrant Certificates
or in the Warrant Debt Securities or in the case of the receipt of any
written demand from a Holder of a Warrant certificate with respect to such
default, including, without limiting the generality of the foregoing, any
duty or responsibility to initiate or attempt to initiate any proceedings
at law or otherwise or, except as provided in Section 6.03 hereof, to make
any demand upon the Company.
SECTION 5.03. RESIGNATION, REMOVAL AND APPOINTMENT OF SUCCESSORS.
(a) The Company agrees, for the benefit of the Holders from time to
time of the Warrant Certificates, that there shall at all times be a
Warrant Agent hereunder until all of the Warrant Certificates are no longer
exercisable.
(b) The Warrant Agent may at any time resign as such agent by giving
written notice to the Company of such intention on its part, specifying the
date on which it desires its resignation to become effective; provided
that, without the consent of the Company, such date shall not be less than
[three months] after the date on which such notice is given. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying
such removal and the date on which the Company expects such removal to
become effective. Such resignation or removal shall take effect upon the
appointment by the Company of a successor Warrant Agent (which shall be a
bank or trust company organized and doing business under the laws of The
United States of America, any State thereof or the District of Columbia and
authorized under such laws to exercise corporate trust powers) by an
instrument in writing filed with such successor Warrant Agent and the
acceptance of such appointment by such successor Warrant Agent pursuant to
Section 5.03(d).
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(c) In case at any time the Warrant Agent shall resign, or be
removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall file a voluntary petition in bankruptcy or
make an assignment for the benefit of its creditors or consent to the
appointment of a receiver or custodian of all or any substantial part of
its property, or shall admit in writing its inability to pay or meet its
debts as they mature, or if a receiver or custodian of it or of all or any
substantial part of its property shall be appointed, or if an order of any
court shall be entered approving any petition filed by or against it under
the provisions of any applicable bankruptcy or similar law, or if any
public officer shall have taken charge or control of the Warrant Agent or
of its property or affairs, a successor Warrant Agent, qualified as
aforesaid, shall be appointed by the Company by an instrument in writing,
filed with the successor Warrant Agent. Upon the appointment as aforesaid
of a successor Warrant Agent and acceptance by the latter of such
appointment the Warrant Agent so superseded shall cease to be Warrant Agent
hereunder.
(d) Any successor Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on deposit
with or held by such predecessor, as Warrant Agent hereunder.
(e) Any corporation into which the Warrant Agent hereunder may be
merged or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Warrant Agent, provided that it shall be qualified as
aforesaid, shall be the successor Warrant Agent under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties hereto.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.01. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of any
consolidation, merger or sale, lease or conveyance of all or substantially all
of the assets of the Company and upon any assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the Company, with the same effect as if it had been named herein, and the
predecessor corporation, except in the event of a lease, shall be relieved of
any further obligation under this Agreement and the Warrants. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Company, any or all of the Warrant Debt Securities
issuable pursuant to the terms hereof. All the Warrant Debt Securities so
issued shall in all respects have the same legal rank and benefit under the
Indenture as the Warrant Debt Securities theretofore or thereafter issued in
accordance with the terms of this Agreement and the Indenture.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Warrant Debt Securities thereafter to be issued as may be appropriate.
SECTION 6.02. AMENDMENT. This Agreement may be amended by the parties
hereto, without the consent of the Holder of any Warrant Certificate, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making such provisions in regard to
matters or questions arising under this Agreement as the Company may deem
necessary or desirable; provided that such action shall not adversely affect the
interests of the Holders of the Warrant Certificates in any material respect.
The Warrant Agent may, but shall not be obligated to, enter into any amendment
to this agreement which affects the Warrant Agent's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 6.03. NOTICES AND DEMANDS TO THE CORPORATION AND WARRANT AGENT.
If the Warrant Agent shall receive any notice or demand addressed to the Company
by the Holder of a Warrant Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or demand to
the Company.
SECTION 6.04. ADDRESSES. Any communications from the Company to the
Warrant Agent with respect to this Agreement shall be addressed to __________,
Attention: Secretary, and any communications from the Warrant Agent to the
Company with respect to this Agreement shall be addressed to Dain Rauscher
Corporation, Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota
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55402-4422, Attention: Secretary, (or such other address as shall be specified
in writing by the Warrant Agent or by the Company).
SECTION 6.05. GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of [____________].
SECTION 6.06. DELIVERY OF PROSPECTUS. The Company will furnish to the
Warrant Agent sufficient copies of a prospectus, appropriately supplemented,
relating to the Warrant Debt Securities (the "Prospectus"), and the Warrant
Agent agrees that, upon the exercise of any Warrant Certificate, the Warrant
Agent will deliver to the person designated to receive Warrant Debt Securities
prior to or concurrently with the delivery of such Securities, a Prospectus.
SECTION 6.07. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from
time to time take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities and securities acts filings under United States Federal and State
laws (including, without limitation, the maintenance of the effectiveness of a
registration statement in respect of the Warrant Debt Securities under the
Securities Act of 1933), which may be or become required in connection with
exercise of the Warrant Certificates and the original issuance and delivery of
the Warrant Debt Securities.
SECTION 6.08. PERSONS HAVING RIGHTS UNDER WARRANT AGREEMENT. Nothing in
this Agreement expressed or implied and nothing that may be inferred from any of
the provisions hereof is intended, or shall be construed, to confer upon, or
give to, any person or corporation other than the Company, the Warrant Agent and
the Holders of the Warrant Certificates any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Agreement contained shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors and of the
Holders of the Warrant Certificates.
SECTION 6.09. HEADINGS. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 6.10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.
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SECTION 6.11. INSPECTION OF AGREEMENT. A copy of this Agreement shall be
available at all reasonable times at the principal corporate trust office of the
Warrant Agent [and at __________ for inspection by the Holder of any Warrant
Certificate. The Warrant Agent may require such Holder to submit his Warrant
Certificate for inspection by it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By_________________________
Its_____________________
Attest:
__________________________
________________________, as
Warrant Agent
By______________________
Its_____________________
Attest:
_________________________
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EXHIBIT A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[FORM IF WARRANTS ARE ATTACHED Prior to __________, this Warrant
TO OTHER SECURITIES AND Certificate cannot be transferred or
ARE NOT IMMEDIATELY exchanged unless attached to a [Title
DETACHABLE of Other Debt Security]]
[FORM OF LEGEND IF WARRANTS Prior to __________, Warrants
ARE NOT IMMEDIATELY evidenced by this Warrant
EXERCISABLE Certificate cannot be exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN.
VOID AFTER [ ] P.M., [CITY] TIME, ON __________, __
DAIN RAUSCHER CORPORATION
WARRANT CERTIFICATE REPRESENTING
WARRANTS TO PURCHASE
[TITLE OF WARRANT DEBT SECURITIES]
_____________________
No. _______ _______ Warrants
This certifies that [the bearer is the] [__________ or registered assigns
is the registered] owner of the above indicated number of Warrants, each Warrant
entitling such [bearer [IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT
IMMEDIATELY DETACHABLE --, subject to the bearer qualifying as a "Holder" of
this Warrant Certificate, as hereinafter defined]] [registered owner] to
purchase, at any time [after [______] p.m., [City] time, on __________, __ and]
on or before [______] p.m., [City] time, on ___________, __, $__________
principal amount of [Title of Warrant Debt Securities] (the "Warrant Debt
Securities") of Dain Rauscher Corporation (the "Company"), issued or to be
issued under the Indenture (as hereinafter defined), on the following basis:(*)
[During the period from __________, __ through and including __________, __,
each Warrant shall
_______________________
(*)Complete and modify the following provisions as appropriate to reflect the
terms of the Warrants and the Warrant Debt Securities.
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entitle the Holder thereof, subject to the provisions of this Agreement, to
purchase from the Company the principal amount of Warrant Debt Securities stated
in the Warrant Certificate at the Warrant Price of ___% of the principal amount
thereof [plus accrued amortization, if any, of the original issue discount of
the Warrant Debt Securities] [plus accrued interest, if any, from the most
recent date from which interest shall have been paid on the Warrant Debt
Securities or, if no interest shall have been paid on the Warrant Debt
Securities, from __________, __]; during the period from __________, __ through
and including __________, __, each Warrant shall entitle the Holder thereof,
subject to the provisions of this Agreement, to purchase from the Company the
principal amount of Warrant Debt Securities stated in the Warrant Certificate at
the Warrant Price of ___% of the principal amount thereof [plus accrued
amortization, if any, of the original issue discount of the Warrant Debt
Securities] [plus accrued interest, if any, from the most recent date from which
interest shall have been paid on the Warrant Debt Securities or, if no interest
shall have been paid on the Warrant Debt Securities, from ___________, __] [in
each case, the original issue discount ($__________ for each $1,000 principal
amount of Warrant Debt Securities) will be amortized at __ % annual rate,
computed on a[n] [semi-]annual basis [, using a 360 day year consisting of
twelve 30 day months] (the "Warrant Price"). The Holder of this Warrant
Certificate may exercise the Warrants evidenced hereby, in whole or in part, by
surrendering this Warrant Certificate, with the purchase form set forth hereon
duly completed, accompanied by payment in full, in lawful money of the United
States of America, [in cash or by certified check or official bank check in New
York Clearing House funds] [by bank wire transfer in immediately available
funds], the Warrant Price for each Warrant exercised, to the Warrant Agent (as
hereinafter defined), at the corporate trust office of [name of Warrant Agent],
or its successor as warrant agent (the "Warrant Agent") [or at ___________,], at
the addresses specified on the reverse hereof and upon compliance with and
subject to the conditions set forth herein and in the Warrant Agreement (as
hereinafter defined). This Warrant Certificate may be exercised only for the
purchase of Warrant Debt Securities in the principal amount of [$1,000] or any
integral multiple thereof.
The term "Holder" as used herein shall mean [IF WARRANTS ARE ATTACHED TO
OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE--, prior to __________, __
(the "Detachable Date"), the [bearer] [registered owner] of the Company's [title
of Other Debt Securities] to which this Warrant Certificate was initially
attached, and after such Detachable Date,] [the bearer of such Warrant
Certificate] [the person in whose name at the time such Warrant Certificate
shall be registered upon the books to be maintained by the Warrant Agent Or that
purpose pursuant to Section 3.01].
Any whole number of Warrants evidenced by this Warrant Certificate may be
exercised to purchase Warrant Debt Securities in registered form. Upon any
exercise of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall
-17-
<PAGE>
be issued to the [bearer] [registered owner] hereof a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of __________, __ (the "Warrant Agreement"), between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
holder of this Warrant Certificate consents by acceptance hereof. Copies of the
Warrant Agreement are on file at the above-mentioned office of the Warrant Agent
[and at __________].
The Warrant Debt Securities to be issued and delivered upon the exercise of
Warrants evidenced by this Warrant Certificate may be issued under and in
accordance with an Indenture, [dated as of ___________, ___________ (the "Senior
Indenture"), between the Company and __________, as trustee (such trustee, and
any successors to such trustee, the "Senior Trustee")] [dated as of _________,
_________(the "Subordinated Indenture"), between the Company and _________, as
trustee (such trustee, and any successors to such trustee, the "Subordinated
Trustee")] and will be subject to the terms and provisions contained in the
Warrant Debt Securities and in the Indenture. Copies of the
[Senior][Subordinated] Indenture, including the form of the Warrant Debt
Securities, are on file at the corporate trust office of the Trustee [and at
__________].
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY
DETACHABLE--Prior to __________, __ (the "Detachable Date"), this Warrant
Certificate may be exchanged or transferred only together with the [title of
Other Debt Security] (the "Other Debt Security") to which this Warrant
Certificate was initially attached, and only for the purpose of effecting or in
conjunction with, an exchange or transfer of such Other Debt Security.
Additionally, on or prior to the Detachable Date, each transfer of such Other
Debt Security on the register of the Other Debt Securities shall operate also to
transfer this Warrant Certificate. After the Detachable Date, this] [IF
WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE IMMEDIATELY DETACHABLE OR
WARRANTS ALONE--This] Warrant Certificate, and all rights hereunder, may be
transferred [IF BEARER WARRANTS--by delivery and the Company and the Warrant
Agent may treat the bearer hereof as the owner for all purposes] [IF REGISTERED
WARRANTS--when surrendered at the corporate trust office of the Warrant Agent
[or __________] by the registered owner or his assigns, in person or by an
attorney duly authorized in writing in the manner and subject to the limitations
provided in the Warrant Agreement.]
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY
DETACHABLE--Except as provided in the immediately preceding paragraph, after]
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE IMMEDIATELY DETACHABLE OR
WARRANTS ALONE--After] authentication by the Warrant Agent and prior to the
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<PAGE>
expiration of this Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent [or at __________]
for Warrant Certificates representing the same aggregate number of Warrants.
This Warrant Certificate shall not entitle the Holder hereof to any of the
rights of a holder of the Warrant Debt Securities, including, without
limitation, the right to receive payments of principal of (and premium, if any)
or interest, if any, on the Warrant Debt Securities or to enforce any of the
covenants of the Indenture.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Warrant Certificate shall not be valid or obligatory for any purpose
until authenticated by the Warrant Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
DAIN RAUSCHER CORPORATION
By______________________
Its_____________________
Attest:
__________________________
________________________, as
Warrant Agent
By______________________
Its_____________________
Attest:
_________________________
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<PAGE>
[Reverse of Warrant Certificate]
(Instructions for Exercise of Warrants)
To exercise any Warrants evidenced hereby, the Holder of this Warrant
Certificate must pay [in cash or by certified check or official bank check in
New York Clearing House funds] [by bank wire transfer in immediately available
funds], the Warrant Price in full for each of the Warrants exercised, to
[Warrant Agent] [address of Warrant Agent], Corporate Trust Department,
__________, Attn: __________, which payment should specify the name of the
Holder of this Warrant Certificate and the number of Warrants exercised by such
Holder. In addition, the Holder of this Warrant Certificate should complete the
information required below and present in person or mail by registered mail this
Warrant Certificate to the Warrant Agent at the addresses set forth below.
FORM OF EXERCISE
(To be executed upon exercise of Warrants.)
The undersigned hereby irrevocably elects to exercise __________ Warrants,
represented by this Warrant Certificate, to purchase $___________ principal
amount of the [Title of Warrant Debt Securities] (the 'Warrant Debt Securities")
of Dain Rauscher Corporation and represents that he has tendered payment for
such Warrant Debt Securities [in cash or by certified check or official bank
check in New York Clearing House funds] [by bank wire transfer in immediately
available funds] to the order of Dain Rauscher Corporation, c/o [NAME AND
ADDRESS OF WARRANT AGENT], in the amount of $__________ in accordance with the
terms hereof. The undersigned requests that said principal amount of Warrant
Debt Securities be in fully registered form, in the authorized denominations,
registered in such names and delivered, all as specified in accordance with the
instructions set forth below.
If said principal amount of Warrant Debt Securities is less than all of the
Warrant Debt Securities purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of the Warrants
evidenced hereby be issued and delivered to the undersigned unless otherwise
specified in the instructions below.
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<PAGE>
Dated:___________________________ Name_______________________________
(Please Print)
_________________________________ Address____________________________
(Insert Social Security or Other
Identifying Number of Holder) Signature__________________________
[IF REGISTERED WARRANT--(Signature must
conform in all respects to name of
holder as specified on the face of this
Warrant Certificate and must bear a
signature guarantee by a bank, trust
company or member broker of the New
York, Midwest or Pacific Stock
Exchange.)]
This Warrant may be exercised at the following addresses:
By hand at___________________________________________________________
___________________________________________________________
___________________________________________________________
By mail at___________________________________________________________
___________________________________________________________
___________________________________________________________
[Instructions as to form and delivery of Warrant Debt Securities and/or Warrant
Certificates -- complete as appropriate.]
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<PAGE>
[IF REGISTERED WARRANT-
FORM OF ASSIGNMENT]
(TO BE EXECUTED TO TRANSFER)
THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers
unto
____________________________ Please insert social security or
____________________________ other identifying number
____________________________ ________________________
(Please print name and
address including zip code)
the right represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint ________________, Attorney, to transfer said
Warrant Certificate on the books of the Warrant Agent with full power of
substitution.
Dated: _____________________ ____________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Warrant
Certificate and must bear a signature guarantee by
a bank, trust company or member broker of the New
York, Midwest or Pacific Stock Exchange)
Signature Guaranteed:
_____________________________
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<PAGE>
EXHIBIT 4.13
FORM OF CERTIFICATE OF DESIGNATIONS TO
BE ADOPTED BY THE BOARD OF DIRECTORS
CERTIFICATE OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF
$_______________PREFERRED STOCK, SERIES ________________
($_______________ Par Value)
OF
DAIN RAUSCHER CORPORATION
_________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
_________________
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the "Board") of Dain Rauscher
Corporation, a Delaware corporation (hereinafter called the "Corporation"), at a
meeting held on _______________________:
RESOLVED that, pursuant to authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation (hereinafter,
as amended and restated to date, called the "Certificate of Incorporation"), at
a meeting duly held on ________________________, the Board hereby provides for
the issuance of a series of Preferred Stock of the Corporation ("Preferred
Stock"), and hereby fixes the voting powers, designation, and certain of the
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of such
series, as follows:
(a) DESIGNATION. The designation of the series of Preferred Stock
created by this resolution shall be "$ _______________ Preferred Stock,
Series " (hereinafter referred to as this "Series") and the
number of shares constituting this Series shall be __________________.
The number of authorized shares of this Series may be reduced by further
resolution duly adopted by the Board of Directors of the Corporation, and
by the filing of a certificate pursuant to the
<PAGE>
provisions of the General Corporation Law of the State of Delaware stating
that such reduction has been so authorized, but the number of authorized
shares of this Series shall not be increased.
(b) DIVIDENDS. (1) Dividend periods ("Dividend Periods") shall
commence on ______________ , ______________ , ______________, and
______________ in each year and shall end on and include the day next
preceding the first day of the next Dividend Period. Such dividends shall
be cumulative from the date of original issue of shares of this Series and
shall be payable, when and as declared by the Board of Directors, on
______________, ______________, ______________, and ______________ of each
year, commencing ___________________________. Each such dividend shall be
paid to the holders of record of shares of this Series as they appear on
the stock register of the Corporation on such record date, not exceeding ___
days or less than ____ days preceding the payment date thereof, as shall be
fixed by the Board of Directors of the Corporation. Dividends on account of
arrears for any past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of record
on such date, not exceeding ____ days preceding the payment date thereof, as
may be fixed by the Board of Directors of the Corporation.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
the shares of this Series for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other Preferred Stock ranking on a parity as to dividends
with this Series, all dividends declared upon shares of this Series and any
other Preferred Stock ranking on a parity as to dividends with this Series
shall be declared pro rata so that the amount of dividends declared per
share on this Series and such other Preferred Stock shall in all cases bear
to each other the same ratio that accrued dividends per share on the shares
of this Series and such other Preferred Stock bear to each other. Except
as provided in the preceding sentence, unless full cumulative dividends on
all outstanding shares of this Series shall have been paid or declared and
set aside for payment for the then-current dividend payment period and all
past dividend payment periods, no dividends (other than a dividend in the
Common Stock, par value $.125 per share, of the Corporation (the "Common
Stock"), or another stock ranking junior to this Series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or
other distribution declared or made upon the Common Stock or upon any other
stock of the Corporation ranking junior to or on a parity with this Series
as to dividends or upon liquidation, nor shall any Common Stock or any
other stock of the
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<PAGE>
Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation). Holders of shares of this Series shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on this Series. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments which may be in arrears.
(3) Dividends payable on this Series for each full Dividend Period
shall be computed by dividing the Dividend Rate by four (4). Dividends
payable on this Series for any period less than a full Dividend Period,
including the Initial Dividend Period (as defined in Section (c) below),
shall be computed on the basis of 30-day months, a 360-day year, and the
actual number of days elapsed in the period.
(c) DIVIDEND RATE. The Dividend Rate on the shares of this Series
for the period (the "Initial Dividend Period") from the date of original
issue thereof (except that shares of this Series originally issued after
the date of original issue of the first ______________ shares of this
Series to be issued shall accrue dividends from the date of original issue
of such first ______________ shares) to and including ______________ , and
for each Dividend Period thereafter, shall be $______________ per annum per
share (excluding any accrued but unpaid dividends).
(d) REDEMPTION.
(1) OPTIONAL REDEMPTION. The shares of this Series shall not be
redeemable prior to ______________. The Corporation, at its option, may
redeem shares of this Series, as a whole or in part, at any time or from
time to time on or after ____________________, at a redemption price as set
forth below (expressed as a percentage of the liquidation preference
thereof), plus, in each case, accrued and unpaid dividends thereon to the
date fixed for redemption:
DATE OF REDEMPTION REDEMPTION PRICE PER SHARE
On or after _______________
but prior to ______________ ______________ %
On or after _______________
but prior to ______________ ______________ %
On or after _______________
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<PAGE>
but prior to ______________ ______________ %
On or after _______________
but prior to ______________ ______________ %
On or after _______________
but prior to ______________ ______________ %
On or after _______________
but prior to ______________ ______________ %
On or after ______________ 100%
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board of Directors of the Corporation, and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by
the Board of Directors of the Corporation or by any other method as may be
determined by the Board of Directors of the Corporation in its sole
discretion to be equitable, provided that such method satisfies any
applicable requirements of any securities exchange on which this Series is
listed.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than nor more than days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date;
(ii) the number of shares of this Series to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on the redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the applicable redemption price),
dividends on the shares of this Series so called for redemption shall cease
to accrue, and said shares shall no longer be deemed to be outstanding, and
all rights of the holders thereof as stockholders of the Corporation
(except the right to receive from the Corporation the applicable redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the
-4-
<PAGE>
Board of Directors of the Corporation, shall so require and the notice
shall so state), such shares shall be redeemed by the Corporation at the
applicable redemption price. In case fewer than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(5) Any shares of this Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of Directors of the Corporation.
(6) Notwithstanding the foregoing provisions of this Section (d), in
the event that full cumulative dividends on the shares of this Series have
not been paid, no shares of this Series shall be redeemed unless all
outstanding shares of this Series are simultaneously redeemed, and the
Corporation shall not purchase or acquire any shares of this Series
otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of outstanding shares of this Series.
(e) SINKING FUND. The shares of this Series will not be subject to
a sinking fund.
(f) VOTING RIGHTS. The shares of this Series shall not have any
voting powers either general or special, except as expressly required by
applicable law and except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of
the holders of at least 66-2/3% of all of the shares of this Series at the
time outstanding, voting separately as a class, shall be required to
authorize any amendment of the Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto (including any
certificate of designation or any similar document relating to any series
of Preferred Stock) which will adversely affect the powers, preferences,
privileges or rights of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of
the holders of at least 66-2/3% of all of the shares of this Series and all
other series of Preferred Stock ranking on a parity with shares of this
Series, either as to dividends or upon liquidation, at the time
outstanding, voting as a single class without regard to series, shall be
required to issue, authorize or increase the authorized amount of, or to
issue or authorize any obligation or security convertible into or
evidencing the right to purchase, any additional class or
-5-
<PAGE>
series of stock ranking prior to the shares of this Series as to dividends
or upon liquidation; and
(3) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends on the Preferred
Stock shall exist, the number of directors constituting the Board of
Directors of the Corporation shall be increased by two, and the holders of
the Preferred Stock of all series (whether or not the holders of such
series of Preferred Stock would be entitled to vote for the election of
directors if such default in preference dividends did not exist), shall
have the right at such meeting, voting together as a single class without
regard to series, to the exclusion of the holders of Common Stock, to elect
two directors of the Corporation to fill such newly created directorships.
Such right shall continue until there are no dividends in arrears upon the
Preferred Stock. Each director elected by the holders of shares of
Preferred Stock (herein called a "Preferred Director") shall continue to
serve as such director for the full term for which he shall have been
elected, notwithstanding that prior to the end of such term a default in
preference dividends shall cease to exist. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of Preferred Stock, voting together as a
single class without regard to series, at a meeting of the stockholders, or
of the holders of shares of Preferred Stock, called for the purpose. So
long as a default in any preference dividends on the Preferred Stock shall
exist (A) any vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (B)) by an instrument in
writing signed by the remaining Preferred Director and filed with the
Corporation and (B) in the case of the removal of any Preferred Director,
the vacancy may be filled by the vote of the holders of the outstanding
shares of Preferred Stock, voting together as a single class without regard
to series, at the same meeting at which such removal shall be voted. Each
director appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director. Whenever
the term of office of the Preferred Directors shall end and a default in
preference dividends shall no longer exist, the number of directors
constituting the Board of Directors of the Corporation shall be reduced by
two. For the purposes hereof, a "default in preference dividends" on the
Preferred Stock shall be deemed to have occurred whenever the amount of
accrued but unpaid dividends upon any series of the Preferred Stock shall
be equivalent to six full quarter-yearly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all shares of Preferred Stock of each and
every series then outstanding shall have been paid to the end of the last
preceding dividend period.
-6-
<PAGE>
(g) LIQUIDATION RIGHTS.
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of this Series shall
be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution of
assets shall be made on the Common Stock or on any other class of stock of
the Corporation ranking junior to this Series upon liquidation, dissolution
or winding up, the amount of $ per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accrued and
unpaid thereon to the date of final distribution.
(2) For the purposes of this Section (g), a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation shall not include
the consolidation or merger of the Corporation with or into any other
corporation, or a merger of another corporation with or into the
Corporation, or any sale, lease or conveyance of all or any part of the
property or business of the Corporation.
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (g), the holders
of this Series as such shall not be entitled to any further participation
in any distribution of assets of the Corporation.
(4) If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation available for
distribution to the holders of shares of this Series and of any other
shares of stock of the Corporation ranking on a parity with this Series
upon liquidation shall not be sufficient to pay in full all amounts to
which such holders are entitled pursuant to subsection (1) of this Section
(g), the holders of shares of this Series and of such other shares shall
share ratably in any such distribution of assets of the Corporation in
proportion to the full respective preferential amounts to which they are
entitled.
(h) CONVERSION OR EXCHANGE. The holders of shares of this Series
shall not have any rights herein to convert such shares into or exchange
such shares for shares of any other class or classes or of any other series
of any class or classes of capital stock of the Corporation.
(i) RELATIVE RANK. For purposes of this resolution, any stock of any
class or classes of the Corporation shall be deemed to rank:
(1) Prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be entitled
to the receipt of dividends or of amounts distributable upon dissolution,
liquidation
-7-
<PAGE>
or winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of this Series;
(2) On a parity with shares of this Series, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of this Series, if the holders of such
stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the
other, as between the holders of such stock and the holders of shares of
this Series; and
(3) Junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
The outstanding shares of the Corporation's ______________ Preferred
Stock and ______________ Preferred Stock shall be deemed to rank on a parity
with the outstanding shares of this Series with respect to the payment of
dividends and upon liquidation.
IN WITNESS WHEREOF, said Dain Rauscher Corporation has caused this
certificate to be signed by its ______________ , and attested by its
______________ , this ______ day of _________________ .
DAIN RAUSCHER CORPORATION
By ____________________________
Attested by:
_________________________________
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<PAGE>
EXHIBIT 4.14
FORM OF CERTIFICATE OF DESIGNATIONS
TO BE ADOPTED BY THE BOARD OF DIRECTORS
CERTIFICATE OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF
$_________ CONVERTIBLE PREFERRED STOCK, SERIES ________
($__________ Par Value)
OF
DAIN RAUSCHER CORPORATION
----------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------------
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the "Board") of Dain Rauscher
Corporation, a Delaware corporation (hereinafter called the "Corporation"), at a
meeting held on :
---------------------------
RESOLVED that, pursuant to authority conferred upon the Board by the
Certificate of Incorporation of the Corporation (hereinafter, as amended and
restated to date, called the "Certificate of Incorporation"), at a meeting duly
held on ________________, the Board hereby provides for the issuance of a series
of Convertible Preferred Stock of the Corporation, and hereby fixes the voting
powers, designation, and certain of the preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series, as follows:
SECTION 1. DESIGNATION; NUMBER OF SHARES. The shares of such
series shall be designated as "$______ Convertible Preferred Stock, Series
______" (the "Convertible Preferred Stock"), and the number of shares
constituting the Convertible Preferred Stock shall be ______. Such number of
shares may be decreased by resolution of the Board adopted and filed pursuant to
the Delaware General
<PAGE>
Corporation Law, Section 151(g), or any successor provision; provided, that no
such decrease shall reduce the number of authorized shares of Convertible
Preferred Stock 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, warrants, convertible or exchangeable securities or other rights to
acquire shares of Convertible Preferred Stock.
SECTION 2. STATED CAPITAL. The amount to be represented in the stated
capital of the Corporation for each share of Convertible Preferred Stock shall
be $_______.
SECTION 3. RANK. The Convertible Preferred Stock shall rank prior to all
of the Corporation's Common Stock, par value $.125 per share (the "Common
Stock"), now outstanding or hereafter issued, both as to payment of dividends
and as to distributions of assets upon the liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary.
SECTION 4. DIVIDENDS AND DISTRIBUTIONS. The holders of shares of
Convertible Preferred Stock shall be entitled to receive, when, as and if
declared by the Board out of funds legally available for such purpose, dividends
at the rate of $____ per annum per share, and no more. Such dividends shall be
fully cumulative, shall accumulate without interest from the date of original
issuance of the Convertible Preferred Stock and shall be payable ____ in arrears
in cash on each ______ commencing (provided, that if any such date is a
Saturday, Sunday or legal holiday in the place where such dividend is to be
paid, then such dividend shall be payable without interest on the next day that
is not a Saturday, Sunday or legal holiday) to holders of record as they appear
on the stock books of the Corporation on such record dates as shall be fixed by
the Board. Such record dates shall be not more than 60 nor less than 10 days
preceding the respective dividend payment dates. The amount of dividends
payable per share of Convertible Preferred Stock for each full dividend period
shall be computed by dividing the annual dividend amount by _____. The amount
of dividends payable for the initial dividend period and for any other period
shorter than a full______ dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. No dividends or other distributions,
other than dividends payable solely in shares of Common Stock or other capital
stock of the Corporation ranking junior as to payment of dividends to the
Convertible Preferred Stock (such Common Stock and other capital stock being
referred to herein collectively as "Junior Dividend Stock"), shall be paid or
set apart for payment on, and no purchase, redemption or other acquisition shall
be made by the Corporation of, any shares of Junior Dividend Stock unless and
until all accumulated and unpaid dividends on the Convertible Preferred Stock,
including the full dividend
2
<PAGE>
for the then-current ______ dividend period, shall have been paid or declared
and set apart for payment.
If at any time any dividend on any capital stock of the Corporation ranking
senior as to payment of dividends to the Convertible Preferred Stock (such
capital stock being referred to herein as "Senior Dividend Stock") shall be in
default, in whole or in part, no dividend shall be paid or declared and set
apart for payment on the Convertible Preferred Stock unless and until all
accumulated and unpaid dividends with respect to the Senior Dividend Stock,
including the full dividend for the then-current dividend period, shall have
been paid or declared and set apart for payment, without interest. No full
dividends shall be paid or declared and set apart for payment on any capital
stock of the Corporation ranking, as to payment of dividends, on a parity with
the Convertible Preferred Stock (such capital stock being referred to herein as
"Parity Dividend Stock") for any period unless full cumulative dividends have
been, or contemporaneously are, paid or declared and set apart for payment on
the Convertible Preferred Stock for all dividend periods terminating on or prior
to the date of payment of such full cumulative dividends. No full dividends
shall be paid or declared and set apart for payment on the Convertible Preferred
Stock for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for payment on any Parity
Dividend Stock for all dividend periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid in full
upon the Convertible Preferred Stock and any Parity Dividend Stock, all
dividends paid or declared and set apart for payment upon shares of Convertible
Preferred Stock and Parity Dividend Stock shall be paid or declared and set
apart for payment pro rata, so that the amount of dividends paid or declared and
set apart for payment per share on the Convertible Preferred Stock and the
Parity Dividend Stock shall in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the shares of Convertible
Preferred Stock and Parity Preferred Stock bear to each other.
Any reference to "distribution" contained in this Section 4 shall not be
deemed to include any distribution made in connection with a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
SECTION 5. LIQUIDATION PREFERENCE. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Convertible Preferred Stock shall be entitled to receive out of
the assets of the Corporation, whether such assets constitute stated capital or
surplus of any nature, an amount equal to the dividends accumulated and unpaid
thereon to the date of final distribution to such holders, whether or not
declared, without interest, plus a
3
<PAGE>
sum equal to $______ per share, and no more, before any payment shall be made or
any assets distributed to the holders of Common Stock or any other capital stock
of the Corporation ranking junior as to liquidation rights to the Convertible
Preferred Stock (such Common Stock and other capital stock being referred to
herein collectively as "Junior Liquidation Stock"); provided, that such rights
shall accrue to the holders of Convertible Preferred Stock only in the event
that the Corporation's payments with respect to the liquidation preferences of
the holders of capital stock of the Corporation ranking senior as to liquidation
rights to the Convertible Preferred Stock (such capital stock being referred to
herein as "Senior Liquidation Stock") are fully met. The entire assets of the
Corporation available for distribution after the liquidation preferences of any
Senior Liquidation Stock are fully met shall be distributed ratably among the
holders of the Convertible Preferred Stock and any other capital stock of the
Corporation which ranks on a parity as to liquidation rights with the
Convertible Preferred Stock in proportion to the respective preferential amounts
to which each is entitled (but only to the extent of such preferential amounts).
After payment in full of the liquidation preference of the shares of the
Convertible Preferred Stock, the holders of such shares shall not be entitled to
any further participation in any distribution of assets by the Corporation.
Neither a consolidation or merger of the Corporation with another corporation
nor a sale or transfer of all or part of the Corporation's assets for cash,
securities or other property will be deemed a liquidation, dissolution or
winding up of the Corporation for purposes of this Section 5.
SECTION 6. REDEMPTION AT OPTION OF THE CORPORATION. The Corporation may
not redeem the Convertible Preferred Stock prior to ______. The Corporation, at
its option, may, on or after __________, redeem at any time all, or from time to
time any portion, of the Convertible Preferred Stock on any date set by the
Board, at the following cash redemption prices per share if redeemed during the
periods specified below:
4
<PAGE>
<TABLE>
<CAPTION>
Twelve Months
Beginning , Redemption Price
------------------- ----------------
<S> <C>
$
$
$
$
and thereafter $ ,
</TABLE>
plus, in each case, an amount per share in cash equal to all dividends on the
Convertible Preferred Stock accumulated and unpaid on such share, whether or not
declared, to the date fixed for redemption (such sum being hereinafter referred
to as the "Redemption Price").
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in such
other manner as the Board may determine, the shares to be redeemed, or shall
effect such redemption pro rata. Notwithstanding the foregoing, the Corporation
shall not redeem less than all of the Convertible Preferred Stock at any time
outstanding until all dividends accumulated and in arrears upon all Convertible
Preferred Stock then outstanding shall have been paid for all past dividend
periods.
Not more than 60 nor less than 30 days prior to the redemption date, notice
by first class mail, postage prepaid, shall be given to the holders of record of
the Convertible Preferred Stock to be redeemed, addressed to such shareholders
at their last addresses as shown on the stock books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption; the
redemption price; the place or places of payment; the then-effective Conversion
Rate and Conversion Price (as defined in Section 7); that the right of holders
of Convertible Preferred Stock called for redemption to exercise their
conversion right pursuant to Section 7 shall expire as to such shares at the
close of business on the date fixed for redemption (provided that there is no
default in payment of the Redemption Price); that payment of the Redemption
Price will be made upon presentation and surrender of certificates representing
the shares of Convertible Preferred Stock; that accumulated but unpaid dividends
to the date fixed for redemption will be paid on the date fixed for redemption;
that accumulated but unpaid dividends will not be paid in the case of a
conversion of Convertible Preferred Stock; and that on and after the redemption
date, dividends will cease to accumulate on such shares.
Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not a holder of the Convertible
5
<PAGE>
Preferred Stock receives such notice; and failure so to give such notice, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Convertible Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called for
redemption (other than shares which have been duly surrendered for conversion at
or before the close of business on the date fixed for redemption) shall
surrender the certificate or certificates evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. If fewer than all the
shares represented by any such surrendered certificate or certificates are
redeemed, a new certificate shall be issued representing the unredeemed shares.
If, on the date fixed for redemption, funds necessary for the redemption shall
be available therefor and shall have been irrevocably deposited or set aside,
then, notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accumulate on and after the date fixed for
redemption, such shares shall no longer be deemed outstanding, the holders
thereof shall cease to be shareholders, and all rights whatsoever with respect
to such shares (except the right of the holders thereof to receive the
Redemption Price without interest upon surrender of their certificates) shall
terminate.
SECTION 7. CONVERSION AT OPTION OF HOLDERS. Holders of Convertible
Preferred Stock may, at their option upon surrender of the certificates
therefor, convert any or all of their shares of Convertible Preferred Stock into
fully paid and nonassessable shares of Common Stock (and such other securities
and property as they may be entitled to, as hereinafter provided) at any time
after issuance thereof; provided, that such conversion right shall expire at the
close of business on the date, if any, fixed for the redemption of Convertible
Preferred Stock in any notice of redemption given pursuant to Section 6 hereof
if there is no default in payment of the Redemption Price. Each share of
Convertible Preferred Stock shall be convertible at the office of any transfer
agent for the Convertible Preferred Stock, and at such other office or offices,
if any, as the Board may designate, into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) as shall be equal to the Conversion Rate, determined
as hereinafter provided, in effect at the time of conversion. Shares of
Convertible Preferred Stock may initially be converted into full shares of
Common Stock at the rate of ______ shares of Common Stock for each share of
Convertible Preferred Stock, subject to adjustment from time to time as provided
in Section 8 (such conversion rate, as so adjusted from time to time, being
referred to herein as the "Conversion Rate"). The "Conversion Price" shall be
equal to
6
<PAGE>
$_______ divided by the Conversion Rate. Upon conversion, no adjustment or
payment shall be made in respect of accumulated and unpaid dividends on the
Convertible Preferred Stock surrendered for conversion.
The right of holders of Convertible Preferred Stock to convert their shares
shall be exercised by surrendering for such purpose to the Corporation or its
agent, as provided above, certificates representing shares to be converted, duly
endorsed in blank or accompanied by proper instruments of transfer. The
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of Common Stock or other
securities or property upon conversion of Convertible Preferred Stock in a name
other than that of the holder of the shares of Convertible Preferred Stock being
converted, nor shall the Corporation shall be required to issue or deliver any
such shares or other securities or property unless and until the person or
persons requesting the issuance thereof shall have paid to the Corporation the
amount of any such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
A number of shares of the authorized but unissued Common Stock sufficient
to provide for the conversion of the Convertible Preferred Stock outstanding
upon the basis hereinbefore provided shall at all times be reserved by the
Corporation, free from preemptive rights, for such conversion, subject to the
provisions of the next paragraph. If the Corporation shall issue any securities
or make any change in its capital structure which would change the number of
shares of Common Stock into which each share of the Convertible Preferred Stock
shall be convertible as herein provided, the Corporation shall at the same time
also make proper provision so that thereafter there shall be a sufficient number
of shares of Common Stock authorized and reserved, free from preemptive rights,
for conversion of the outstanding Convertible Preferred Stock on the new basis.
The Corporation shall comply with all securities laws regulating the offer and
delivery of shares of Common Stock upon conversion of the Convertible Preferred
Stock and shall use its best efforts to list such shares on each national
securities exchange on which the Common Stock is listed or to have such shares
admitted for quotation on the NASDAQ National Market System if the Common Stock
is admitted for quotation thereon.
Upon the surrender of certificates representing shares of Convertible
Preferred Stock to be converted, duly endorsed or accompanied by proper
instruments of transfer as provided above, the person converting such shares
shall be deemed to be the holder of record of the Common Stock issuable upon
such conversion, and all rights with respect to the shares surrendered shall
forthwith
7
<PAGE>
terminate except the right to receive the Common Stock or other securities, cash
or other assets as herein provided.
No fractional shares of Common Stock shall be issued upon conversion of
Convertible Preferred Stock but, in lieu of any fraction of a share of Common
Stock which would otherwise be issuable in respect of the aggregate number of
such shares surrendered for conversion at one time by the same holder, the
Corporation shall pay in cash an amount equal to the product of (a) the Closing
Price of a share of Common Stock (as defined in the next sentence) on the last
trading day before the conversion date and (b) such fraction of a share. The
"Closing Price" for each day shall be the last reported sale price regular way
or, in case no sale takes place on such day, the average of the closing bid and
asked prices regular way on such day, in either case as reported on the New York
Stock Exchange Composite Tape, or, if the Common Stock is not listed or admitted
to trading on such Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, on the
NASDAQ National Market System, or, if the Common Stock is not admitted for
quotation on the NASDAQ National Market System, the average of the high bid and
low asked prices on such day as recorded by the National Association of
Securities Dealers, Inc. through NASDAQ, or, if the National Association of
Securities Dealers, Inc. through NASDAQ shall not have reported any bid and
asked prices for the Common Stock on such day, the average of the bid and asked
prices for such day as furnished by any New York Stock Exchange member firm
selected from time to time by the Corporation for such purpose, or, if no such
bid and asked prices can be obtained from any such firm, the fair market value
of one share of the Common Stock on such day as determined in good faith by the
Board.
SECTION 8. ADJUSTMENTS TO CONVERSION RATE. Notwithstanding anything in
this Section 8 to the contrary, no change in the Conversion Rate shall be made
until the cumulative effect of the adjustments called for by this Section 8
since the date of the last change in the Conversion Rate would change the
Conversion Rate by more than 1%. However, once the cumulative effect would
result in such a change, then the Conversion Rate shall be changed to reflect
all adjustments called for by this Section 8 and not previously made. Subject
to the foregoing, the Conversion Rate shall be adjusted from time to time as
follows:
(a) In case of any consolidation or merger of the Corporation with any
other corporation (other than a wholly owned subsidiary of the
Corporation), or in case of any sale or transfer of all or substantially
all of the assets of the Corporation, or in case of any share exchange
pursuant to which all of the
8
<PAGE>
outstanding shares of Common Stock are converted into other securities or
property, the Corporation shall, prior to or at the time of such
transaction, make appropriate provision or cause appropriate provision to
be made so that holders of each share of Convertible Preferred Stock then
outstanding shall have the right thereafter to convert such share of
Convertible Preferred Stock into the kind and amount of shares of stock and
other securities and property receivable upon such consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of
Common Stock into which such share of Convertible Preferred Stock could
have been converted immediately prior to the effective date of such
consolidation, merger, sale, transfer or share exchange. If in connection
with any such consolidation, merger, sale, transfer or share exchange, each
holder of shares of Common Stock is entitled to elect to receive either
securities, cash or other assets upon completion of such transaction, the
Corporation shall provide or cause to be provided to each holder of
Convertible Preferred Stock the right to elect the securities, cash or
other assets into which the Convertible Preferred Stock held by such holder
shall be convertible after completion of any such transaction on the same
terms and subject to the same conditions applicable to holders of the
Common Stock (including, without limitation, notice of the right to elect,
limitations on the period in which such election shall be made and the
effect of failing to exercise the election).
(b) In case the Corporation shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its capital stock,
(ii) subdivide its outstanding Common Stock into a greater number of
shares, (iii) combine the shares of its outstanding Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its Common
Stock any shares of its capital stock, then in each such case the
Conversion Rate in effect immediately prior thereto shall be
proportionately adjusted so that the holder of any Convertible Preferred
Stock thereafter surrendered for conversion shall be entitled to receive,
to the extent permitted by applicable law, the number and kind of shares of
capital stock of the Corporation which such holder would have owned or have
been entitled to receive after the happening of such event had such
Convertible Preferred Stock been converted immediately prior to the record
date for such event (or if no record date is established in connection with
such event, the effective date for such action). An adjustment pursuant to
this subparagraph (b) shall become effective immediately after the record
date in the case of a stock dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
9
<PAGE>
(c) In case the Corporation shall issue rights or warrants to all
holders of the Common Stock entitling such holders on the record date
referred to below to subscribe for or purchase Common Stock at a price per
share less than the average of the daily Closing Prices of the Common Stock
(as defined in Section 7) on the 30 consecutive business days commencing 45
business days before such record date (the "Current Market Price"), then in
each such case the Conversion Rate in effect on such record date shall be
adjusted in accordance with the formula
O + N
C(1) = C x ------
O + N x P
-----
M
where
C(1) = the adjusted Conversion Rate.
C = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Current Market Price per share of Common Stock on the
record date.
Such adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive such rights or
warrants. If all of the shares of Common Stock subject to such rights or
warrants have not been issued when such rights or warrants expire, then the
Conversion Rate shall promptly be readjusted to the Conversion Rate which
would be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Common
Stock issued upon the exercise of such rights or warrants.
(d) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness
or assets (including securities, but excluding any rights or warrants to
purchase securities of the Corporation referred to in subparagraph (c)
above, any dividend or distribution paid in cash out of the retained
earnings of the Corporation and any dividend or distribution referred to in
subparagraph (b) above), then in each such case the Conversion Rate then in
effect shall be adjusted in accordance with the formula
10
<PAGE>
M
C(1)= C x------
M - F
where
C(1) = the adjusted Conversion Rate.
C = the current Conversion Rate.
M = the Current Market Price per share of Common Stock on the
record date mentioned below.
F = the amount of such cash dividend and/or the fair market
value on the record date of the assets, securities, rights
or warrants to be distributed divided by the number of
shares of Common Stock outstanding on the record date. The
Board of the Corporation shall determine in good faith such
fair market value.
Such adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive such dividend or
distribution.
(e) All calculations hereunder shall be made to the nearest cent or
to the nearest 1/100 of a share, as the case may be.
(f) In the event that at any time, as a result of an adjustment made
pursuant to subparagraph (a) or (b) above, the holder of any Convertible
Preferred Stock thereafter surrendered for conversion shall become entitled
to receive securities, cash or assets other than Common Stock, the number
or amount of such securities or property so receivable upon conversion
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in subparagraphs (a) through (e) above.
Except as otherwise provided above in this Section 8, no adjustment in the
Conversion Rate shall be made in respect of any conversion for share
distributions or dividends theretofore declared and paid or payable on the
Common Stock.
Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall send to each transfer agent for the Convertible Preferred
Stock and the Common Stock, and to the principal securities exchange, if any, on
which the Convertible Preferred Stock and the Common Stock is traded, or the
NASDAQ National Market System if the Convertible Preferred Stock or Common Stock
is admitted for quotation thereon, a statement signed by the Chairman of the
Board,
11
<PAGE>
the President or any Vice President of the Corporation and by its Treasurer or
its Secretary stating the adjusted Conversion Rate determined as provided in
this Section 8; and any adjustment so evidenced, given in good faith, shall be
binding upon all shareholders and upon the Corporation. Whenever the Conversion
Rate is adjusted, the Corporation shall give notice by mail at the time of, and
together with, the next dividend payment to the holders of record of Convertible
Preferred Stock, setting forth the adjustment and the new Conversion Rate and
Conversion Price. Notwithstanding the foregoing notice provisions, failure by
the Corporation to give such notice or a defect in such notice shall not affect
the binding nature of such corporate action of the Corporation.
Whenever the Corporation shall propose to take any of the actions specified
in subparagraphs (a), (b), (c) or (d) of the first paragraph of this Section 8
which would result in any adjustment in the Conversion Rate, the Corporation
shall cause a notice to be mailed at least 30 days prior to the date on which
the books of the Corporation will close or on which a record will be taken for
such action to the holders of record of the outstanding Convertible Preferred
Stock on the date of such notice. Such notice shall specify the action proposed
to be taken by the Corporation and the date as of which holders of record of the
Common Stock shall participate in any such actions or be entitled to exchange
their Common Stock for securities or other property, as the case may be.
Failure by the Corporation to give such notice or any defect in such notice
shall not affect the validity of the transaction.
Notwithstanding any other provision of this Section 8, no adjustment in the
Conversion Rate need be made (A) for a transaction referred to in subparagraphs
(a), (b), (c) or (d) of the first paragraph of this Section 8 if holders of
Convertible Preferred Stock are to participate in the transaction or
distribution on such a basis and with such notice as the Board determines in
good faith to be fair to the holders of the Convertible Preferred Stock and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction; (B) for sales of Common Stock pursuant to a plan
for reinvestment of dividends on Common Stock, provided that the purchase price
in any such sale is at least equal to 95% of the market price of the Common
Stock at the time of such sales; (C) for sales of Common Stock pursuant to any
plan adopted by the Corporation for the benefit of its employees or consultants,
provided that such plan has been approved by the Corporation's independent
directors, or pursuant to any plan for the benefit of the Corporation's
directors, provided that such plan has been approved by the Corporation's
shareholders; (D) for a change in par value of the Common Stock not involving a
subdivision or combination described in clause (ii) or (iii) of subparagraph (b)
of the first paragraph of this Section 8; or (E) after the Convertible
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<PAGE>
Preferred Stock becomes convertible solely into cash (and no interest shall
accrue on the cash).
SECTION 9. CONVERTIBLE PREFERRED STOCK NOT REDEEMABLE AT OPTION OF HOLDERS
OR EXCHANGEABLE; NO SINKING FUND. The Convertible Preferred Stock shall not be
redeemable upon the request of holders thereof or exchangeable for other capital
stock or indebtedness of the Corporation or other property. The shares of
Convertible Preferred Stock shall not be subject to the operation of a purchase,
retirement or sinking fund.
SECTION 10. VOTING RIGHTS. The holders of Convertible Preferred Stock
shall not have any voting rights except as set forth below or as otherwise from
time to time required by law. Whenever dividends on the Convertible Preferred
Stock shall be in arrears in an amount equal to at least six quarterly dividends
(whether or not consecutive), the holders of the Convertible Preferred Stock
(voting separately as a single class with all other affected classes or series
of Parity Dividend Stock upon which like voting rights have been conferred and
are then exercisable) will be entitled to vote for and elect two additional
directors. Such right of the holders of Convertible Preferred Stock to vote for
the election of such two directors may be exercised at any annual meeting or at
any special meeting called for such purpose as hereinafter provided or at any
adjournment thereof, until dividends in default on such outstanding shares of
Convertible Preferred Stock shall have been paid in full (or such dividends
shall have been declared and funds sufficient therefor set apart for payment),
at which time the term of office of the two directors so elected shall terminate
automatically (subject to revesting in the event of each and every subsequent
default of the character specified in the preceding sentence and to any
continuing rights of holders of such Parity Dividend Stock). So long as such
right to vote continues, the Secretary of the Corporation shall call, upon the
written request of the holders of record of at least 10% of the outstanding
shares of Convertible Preferred Stock addressed to him or her at the principal
office of the Corporation or, if such a request is not made, upon his or her own
motion, a special meeting of the holders of such shares (and of such Parity
Dividend Stock, if any) for the election of such two directors, as provided
herein. Such meeting shall be held not less than 45 or more than 90 days after
the accrual of such right, at the place and upon the notice provided by law and
in the by-laws of the Corporation for the holding of meetings of shareholders.
No such special meeting or adjournment thereof shall be held on a date less than
30 days before an annual meeting of shareholders or any special meeting in lieu
thereof; provided, that at such annual meeting appropriate provisions are made
to allow the holders of the Convertible Preferred Stock (and of such Parity
Dividend Stock, if any) to exercise such right at such meeting. If at any such
annual or special meeting or any adjournment thereof the holders of a
13
<PAGE>
majority of the then outstanding shares of Convertible Preferred Stock (and of
such Parity Dividend Stock, if any) entitled to vote in such election shall be
present or represented by proxy, then the authorized number of directors of the
Corporation shall be increased by two, and the holders of Convertible Preferred
Stock (voting separately as a single class with all such Parity Dividend Stock,
if any) shall be entitled to elect such two additional directors. Directors so
elected shall serve until the next annual meeting or until their successors
shall be elected and shall qualify, unless the term of office of the persons so
elected as directors shall have terminated by virtue of the payment in full of
all dividends in arrears (or such dividends shall have been declared and funds
sufficient therefor set apart for payment). In case of any vacancy occurring
among the directors so elected by the holders of Convertible Preferred Stock
(and of such Parity Dividend Stock, if any), the remaining director who shall
have been so elected may appoint a successor to hold office for the unexpired
term of the director whose place shall be vacant, and such successor shall be
deemed to have been elected by the holders of Convertible Preferred Stock (and
of such Parity Dividend Stock, if any). If both directors so elected by the
holders of Convertible Preferred Stock (and of such Parity Dividend Stock, if
any) shall cease to serve as directors before their terms shall expire, the
holders of Convertible Preferred Stock (and of such Parity Dividend Stock, if
any) then outstanding and entitled to vote for such directors may, at a special
meeting of such holders called as provided above, elect successors to hold
office for the unexpired terms of the directors whose places shall be vacant.
SECTION 11. CERTAIN ACTIONS NOT TO BE TAKEN WITHOUT VOTE OF HOLDERS OF
CONVERTIBLE PREFERRED STOCK. Without the consent or affirmative vote of the
holders of at least a majority of the outstanding shares of Convertible
Preferred Stock, voting separately as a class, the Corporation shall not
authorize, create or issue any shares of any other class or series of capital
stock ranking senior to the Convertible Preferred Stock as to dividends or upon
liquidation.
SECTION 12. OUTSTANDING SHARES. For purposes of this Certificate of
Designations, all shares of Convertible Preferred Stock shall be deemed
outstanding except for (a) shares of Convertible Preferred Stock held of record
or beneficially by the Corporation or any subsidiary of the Corporation; (b)
from the date of surrender of certificates representing Convertible Preferred
Stock for conversion pursuant to Section 7, all shares of Convertible Preferred
Stock which have been converted into Common Stock or other securities or
property pursuant to Section 7; and (c) from the date fixed for redemption
pursuant to Section 6, all shares of Convertible Preferred Stock which have been
called for redemption, provided that funds necessary for such redemption are
available therefor and have been irrevocably deposited or set aside for such
purpose.
14
<PAGE>
SECTION 13. STATUS OF CONVERTIBLE PREFERRED STOCK UPON RETIREMENT. Shares
of Convertible Preferred Stock which are acquired or redeemed by the Corporation
or converted pursuant to Section 7 shall be retired pursuant to the Delaware
General Corporation Law, Section 243, or any successor provision, and thereupon
shall return to the status of authorized and unissued shares of Preferred Stock
of the Corporation without designation as to series. Upon the acquisition or
redemption by the Corporation or conversion pursuant to Section 7 of all
outstanding shares of Convertible Preferred stock, all provisions of this
Certificate of Designations shall cease to be of further effect. Upon the
occurrence of such event, the Board shall have the power, pursuant to the
Delaware General Corporation Law, Section 151(g), or any successor provision and
without shareholder action, to cause this Certificate of Designations to be
eliminated from the Corporation's Articles of Incorporation.
IN WITNESS WHEREOF, Dain Rauscher Corporation has caused this
certificate to be signed by _____, its ____, and attested by ______, its
[Assistant] Secretary, this _______ day of _____________,_______.
DAIN RAUSCHER CORPORATION
By
--------------------------------------
[Name of signer]
[Title of signer]
Attest:
By
---------------------------------------------
[Name of signer]
[Assistant] Secretary
15
<PAGE>
[Letterhead of Dorsey & Whitney LLP]
Exhibit 5.1
May 28, 1998
The Board of Directors
Dain Rauscher Corporation
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, MN 55402
Re: Registration Statement on Form S-3
$200,000,000 of Securities
Ladies and Gentlemen:
We have acted as counsel to Dain Rauscher Corporation, a Delaware
corporation (the "Company"), in connection with a Registration Statement on Form
S-3 (the "Registration Statement") relating to the sale by the Company from time
to time of (i) its unsecured debt securities, which may be either senior debt
securities (the "Senior Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities" and, together with the Senior Debt Securities,
the "Debt Securities"); (ii) shares of its preferred stock, par value $1.00 per
share (the "Preferred Stock"), in one or more series; (iii) shares of its common
stock, par value $.125 per share (the "Common Stock"); and (iv) warrants
(collectively, the "Securities Warrants") to purchase Debt Securities (the "Debt
Securities Warrants"), Preferred Stock (the "Preferred Stock Warrants") or
Common Stock (the "Common Stock Warrants"), for an aggregate initial public
offering price of up to $200,000,000 (or the equivalent in foreign currencies,
currency units or composite currencies). The Debt Securities, Preferred Stock,
Common Stock and Securities Warrants are herein collectively referred to as the
"Securities."
We have examined such documents, including resolutions of the Board
of Directors adopted on April 30, 1997 and December 9, 1997 (collectively,
the "Resolutions"), and have reviewed such questions of law, as we have
considered necessary and appropriate for the purposes of our opinion set
forth below. In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness
of all signatures and the conformity to authentic
<PAGE>
Dain Rauscher Corporation
May 28, 1998
Page 2
originals of all documents submitted to us as copies. We have also assumed the
legal capacity for all purposes relevant hereto of all natural persons and, with
respect to all parties to agreements or instruments relevant hereto other than
the Company, that such parties had the requisite power and authority (corporate
or otherwise) to execute, deliver and perform such agreements or instruments,
that such agreements or instruments have been duly authorized by all requisite
action (corporate or otherwise), executed and delivered by such parties and that
such agreements or instruments are the valid, binding and enforceable
obligations of such parties. As to questions of fact material to our opinion,
we have relied upon certificates of officers of the Company and of public
officials. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Indentures incorporated by reference
as Exhibits 4.3 and 4.4 to the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. When the specific terms of a series of Debt Securities have been
specified in a Supplemental Indenture or an Officer's Certificate, which has
been executed and delivered to the Trustee by a Designated Officer (as defined
in the Resolutions), such series of Debt Securities will have been duly
authorized by all requisite corporate action and, when executed and
authenticated as specified in the Indentures and delivered against payment
therefor pursuant to the terms described in the Registration Statement and as
specified by a Designated Officer, or when issued upon valid exercise of Debt
Securities Warrants that have been duly authorized by all requisite corporate
action and validly issued, such series of Debt Securities will constitute valid
and binding obligations of the Company, enforceable in accordance with the terms
of such series.
2. When the specific terms of the Securities Warrants have been specified
in a Common Stock Warrant Agreement, Preferred Stock Warrant Agreement or a Debt
Securities Warrant Agreement (individually a "Warrant Agreement and,
collectively the "Warrant Agreements"), as the case may be, executed and
delivered by a Designated Officer (as defined in the Resolutions), in
substantially the forms incorporated by reference as Exhibits 4.7, 4.9 or 4.11
to the Registration Statement, as the case may be, the Securities Warrants
established in such Warrant Agreement will have been duly authorized by all
requisite corporate action and, when executed and authenticated as specified in
such Warrant Agreement and delivered against payment therefor pursuant to the
terms described in the Registration Statement and as specified by a Designated
Officer, such Securities Warrants will constitute valid and binding obligations
of the Company, enforceable in accordance with the terms of such Securities
Warrants.
<PAGE>
Dain Rauscher Corporation
May 28, 1998
Page 3
3. When the specific terms of a series of Preferred Stock have been
specified in a Certificate of Designations duly adopted by the Board of
Directors, in substantially the forms filed as Exhibits 4.11 or 4.12 to the
Registration Statement, and such Certificate of Designations has been duly filed
with the Secretary of State of the State of Delaware, such series of Preferred
Stock will have been duly authorized by all requisite corporate action and, upon
issuance, delivery and payment therefor as described in the Registration
Statement, or when issued upon valid exercise of Preferred Stock Warrants that
have been duly authorized by all requisite corporate action, such series of
Preferred Stock will be validly issued, fully paid and nonassessable.
4. The shares of Common Stock have been duly authorized for future
issuance and, upon issuance, delivery and payment therefor as described in the
Registration Statement, or when issued upon valid exercise of Common Stock
Warrants that have been duly authorized by all requisite corporate action, such
shares of Common Stock will be validly issued, fully paid and nonassessable.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinions in paragraphs 1 and 2 above are subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar law of general application affecting creditors' rights.
(b) Our opinions in paragraphs 1 and 2 above are subject to the
effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing, and
other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
(c) In rendering the opinions set forth above, we have assumed that,
at the time of the authentication and delivery of a series of Securities,
the Resolutions referred to above will not have been modified or rescinded,
there will not have occurred any change in the law affecting the
authorization, execution, delivery, validity or enforceability of the
Securities, the Registration Statement will have been declared effective by
the Commission and will continue to be effective, none of the particular
terms of a series of Securities will violate any applicable law and neither
the issuance and sale thereof nor the compliance by the Company with the
terms thereof will result in a violation of any agreement or instrument
then binding upon the Company or any order of any court or governmental
body having jurisdiction over the Company.
<PAGE>
Dain Rauscher Corporation
May 28, 1998
Page 4
(d) As of the date of this opinion, a judgment for money in an action
based on a Debt Security denominated in a foreign currency or currency unit
in a federal or State court in the United States ordinarily would be
enforced in the United States only in United States dollars. The date used
to determine the rate of conversion into United States dollars of the
foreign currency or currency unit in which a particular Debt Security is
denominated will depend upon various factors, including which court renders
the judgment. Under Section 27 of the New York Judiciary Law, a state
court in the State of New York rendering a judgment on a Debt Security
would be required to render such judgment in the foreign currency or
currency unit in which such Debt Security is denominated, and such judgment
would be converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment.
(e) Minnesota Statutes Section 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
Our opinions expressed above are limited to the laws of the State of
Minnesota and the Delaware General Corporation Law and the federal laws of the
United States of America.
We hereby consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Validity of Securities" contained in the Prospectus included therein.
Very truly yours,
/s/ Dorsey & Whitney LLP
RAR
<PAGE>
EXHIBIT 12
RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED, DOLLARS IN THOUSANDS)
THE FOLLOWING ARE THE CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES FOR
THE PERIODS PRESENTED.
<TABLE>
<CAPTION>
Three
Months
Ended Fiscal year ended December 31,
March 31, --------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Computation of earnings:
Earnings (loss) before income taxes* $ 3,163 $ 76,755 $ 87,402 $ 56,271 $39,795 $ 77,353
Fixed charges 17,833 67,799 66,079 73,367 46,409 35,017
------- -------- -------- -------- ------- --------
EARNINGS FOR COMPUTATION $14,670 $144,554 $153,481 $129,638 $86,204 $112,370
------- -------- -------- -------- ------- --------
------- -------- -------- -------- ------- --------
COMPUTATION OF FIXED CHARGES:
Net rental expense $ 6,797 $ 27,679 $ 25,558 $ 25,771 $22,414 $ 19,085
------- -------- -------- -------- ------- --------
------- -------- -------- -------- ------- --------
Portion of rentals deemed
representative of interest $ 2,266 $ 9,226 8,519 $ 8,590 $ 7,471 $ 6,362
Interest expense:
Customer funds on deposit 3,264 23,577 29,067 35,922 22,125 16,249
Short-term bank loans and other 12,154 32,943 25,526 25,154 14,946 10,850
Subordinated and other long-term debt 149 2,053 2,967 3,701 1,867 1,556
------- -------- -------- -------- ------- --------
Total interest expense 15,567 58,573 57,560 64,777 38,938 28,655
------- -------- -------- -------- ------- --------
TOTAL FIXED CHARGES FOR COMPUTATION $17,833 $ 67,799 $ 66,079 $ 73,367 $46,409 $ 35,017
------- -------- -------- -------- ------- --------
------- -------- -------- -------- ------- --------
RATIO OF EARNINGS TO FIXED CHARGES* .82x 2.13x 2.32x 1.77x 1.86x 3.21x
------- -------- -------- -------- ------- --------
------- -------- -------- -------- ------- --------
</TABLE>
* For the three months ended March 31, 1998, the ratio of earnings to fixed
charges is less than 1.0 due to a $20 million merger-related charge.
Excluding the merger-related charge, the ratio is 1.94.
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Dain Rauscher Corporation:
We consent to the use of our report dated February 5, 1998 included or
incorporated by reference herein and the references to our Firm under the
headings "SELECTED CONSOLIDATED FINANCIAL DATA" and "EXPERTS" in the
Registration Statement on Form S-3.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 28, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Irving Weiser, John C. Appel,
David J. Parrin and Carla J. Smith, and each of them, his or her true and
lawful attorneys-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign a Registration Statement on Form
S-3 of Dain Rauscher Corporation (the "Company"), and any and all amendments
thereto, including post-effective amendments, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and with such state securities commissions
and other agencies as necessary; granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or the substitutes for such attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Irving Weiser Chairman of the Board, President, May 6, 1998
- ----------------------------- Chief Executive Officer and Director
Irving Weiser (Principal executive officer)
/s/ John C. Appel Vice Chairman, Chief Financial May 6, 1998
- ----------------------------- Officer and Director (Principal
John C. Appel Financial Officer)
/s/ David J. Parrin Senior Vice President, Controller May 6, 1998
- ----------------------------- (Principal Accounting Officer)
David J. Parrin
/s/ Kenneth J. Wessels Senior Executive Vice President and May 6, 1998
- ----------------------------- Director
Kenneth J. Wessels
/s/ J. Evans Attwell Director May 6, 1998
- -----------------------------
J. Evans Attwell
/s/ Susan S. Boren Director May 6, 1998
- -----------------------------
Susan S. Boren
/s/ F. Gregory Fitz-Gerald Director May 6, 1998
- -----------------------------
F. Gregory Fitz-Gerald
/s/ Walter F. Mondale Director May 6, 1998
- -----------------------------
Walter F. Mondale
<PAGE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ C.A. Rundell, Jr. Director May 6, 1998
- -----------------------------
C.A. Rundell, Jr.
/s/ Robert L. Ryan Director May 6, 1998
- -----------------------------
Robert L. Ryan
/s/ Arthur R. Schulze, Jr. Director May 6, 1998
- -----------------------------
Arthur R. Schulze, Jr.
</TABLE>
-2-
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESGINATED TO ACT AS TRUSTEE
-----------------------------
__ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip Code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
-----------------------------
DAIN RAUSCHER CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
DAIN RAUSCHER PLAZA
60 SOUTH SIXTH STREET
MINNEAPOLIS, MN 55402-4422
(Address of principal executive offices) (Zip Code)
-----------------------------
DEBT SECURITIES
(Title of the indenture securities)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the
obligor is not in default as provided under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility. Norwest Bank
incorporates by reference into this Form T-1
the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of
the Currency dated January 2, 1934, approving the
consolidation of The Northwestern National Bank of
Minneapolis and The Minnesota Loan and Trust
Company of Minneapolis, with the surviving entity
being titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank of
Minneapolis.*
<PAGE>
d. A copy of the letter dated May 12, 1983 from the
Regional Counsel, Comptroller of the Currency,
acknowledging receipt of notice of name change
effective May 1, 1983 from Northwestern National
Bank of Minneapolis to Norwest Bank Minneapolis,
National Association.*
e. A copy of the letter dated January 4, 1988 from
the Administrator of National Banks for the
Comptroller of the Currency certifying approval of
consolidation and merger effective January 1, 1988
of Norwest Bank Minneapolis, National Association
with various other banks under the title of
"Norwest Bank Minnesota, National Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25 filed with registration
statement number 33-66026.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City
of Minneapolis and State of Minnesota on the 28th day of May 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Curtis D. Schwegman
--------------------------------
Curtis D. Schwegman
Assistant Vice President
<PAGE>
EXHIBIT 6
May 28, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Curtis D. Schwegman
----------------------------------
Curtis D. Schwegman
Assistant Vice President
