<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-8186
DAIN RAUSCHER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1228350
(State or other jurisdiction of incorporation (IRS Employer Identification
of organization) Number)
DAIN RAUSCHER PLAZA, 60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 371-2711
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of April 30, 1999, the Company had 12,373,993 shares of common stock
outstanding.
- --------------------------------------------------------------------------------
<PAGE>
DAIN RAUSCHER CORPORATION
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements
Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations. . . . . . . . . . . . . . . . 2
Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements. . . . . . . . . . . . . 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . 5
II. OTHER INFORMATION:
ITEM 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Index of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAIN RAUSCHER CORPORATION
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 50,254 $ 47,273
Receivable from customers. . . . . . . . . . . . . . . . . . . . . . . . 1,272,089 1,172,398
Receivable from brokers and dealers. . . . . . . . . . . . . . . . . . . 289,620 288,207
Securities purchased under agreements to resell. . . . . . . . . . . . . 255,569 237,662
Trading securities owned, at market. . . . . . . . . . . . . . . . . . . 422,597 379,901
Equipment and leasehold improvements, at cost, net of depreciation . . . 46,083 48,271
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,396 83,957
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 53,302 48,219
Goodwill, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,483 121,580
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,008 39,019
------------ ------------
$ 2,644,401 $ 2,466,487
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity:
Liabilities:
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . $ 293,803 $ 127,415
Customer drafts payable. . . . . . . . . . . . . . . . . . . . . . . . . 93,634 109,396
Payable to customers . . . . . . . . . . . . . . . . . . . . . . . . . . 524,239 585,848
Payable to brokers and dealers . . . . . . . . . . . . . . . . . . . . . 713,538 690,459
Securities sold under repurchase agreements. . . . . . . . . . . . . . . 85,684 38,354
Trading securities sold, but not yet purchased, at market. . . . . . . . 257,920 240,825
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 87,238 139,703
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 130,895 92,209
Subordinated and other debt. . . . . . . . . . . . . . . . . . . . . . . 111,018 112,505
------------ ------------
2,297,969 2,136,714
------------ ------------
Shareholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,586 1,580
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 117,461 112,142
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,232 230,421
Treasury stock, at cost. . . . . . . . . . . . . . . . . . . . . . . . . (22,847) (14,370)
------------ ------------
346,432 329,773
------------ ------------
$ 2,644,401 $ 2,466,487
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenue:
Commissions . . . . . . . . . . . . . . . . . . $ 83,266 $ 72,924
Principal transactions. . . . . . . . . . . . . 42,488 36,795
Investment banking and underwriting . . . . . . 33,435 22,229
Interest. . . . . . . . . . . . . . . . . . . . 30,860 31,797
Asset management. . . . . . . . . . . . . . . . 16,952 13,330
Correspondent clearing. . . . . . . . . . . . . 5,878 4,467
Other . . . . . . . . . . . . . . . . . . . . . 7,778 6,472
Gain on sale of investment. . . . . . . . . . . 15,378 -
-------- --------
Total revenue . . . . . . . . . . . . . . . . . 236,035 188,014
Interest expense. . . . . . . . . . . . . . . . . (16,053) (15,567)
-------- --------
Net revenue . . . . . . . . . . . . . . . . . . . 219,982 172,447
-------- --------
Operating Expenses:
Compensation and benefits . . . . . . . . . . . 130,908 110,960
Communications. . . . . . . . . . . . . . . . . 12,146 12,187
Occupancy and equipment rental. . . . . . . . . 13,225 11,519
Travel and promotional. . . . . . . . . . . . . 9,053 7,213
Floor brokerage and clearing fees . . . . . . . 3,450 2,827
Other . . . . . . . . . . . . . . . . . . . . . 15,055 10,904
Merger and restructuring charges. . . . . . . . - 20,000
-------- --------
Total operating expenses. . . . . . . . . . . . 183,837 175,610
-------- --------
Income (loss) before taxes. . . . . . . . . . . . 36,145 (3,163)
Income taxes. . . . . . . . . . . . . . . . . . . (13,555) 1,139
-------- --------
Net income (loss) . . . . . . . . . . . . . . . . $ 22,590 $ (2,024)
-------- --------
-------- --------
Earning (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . . . $ 1.81 $ (.16)
-------- --------
-------- --------
Diluted . . . . . . . . . . . . . . . . . . . . $ 1.70 $ (.16)
-------- --------
-------- --------
Dividends per share . . . . . . . . . . . . . . . $ .22 $ .22
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
DAIN RAUSCHER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 22,590 $ (2,024)
Adjustments to reconcile income to cash provided
(used) by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 5,735 3,453
Deferred income taxes. . . . . . . . . . . . . . . . . (5,083) (54)
Other non-cash items . . . . . . . . . . . . . . . . . 3,295 2,106
Net payable to brokers and dealers . . . . . . . . . . 21,666 (58,247)
Securities purchased under agreements to resell. . . . (17,907) (192,044)
Net trading securities owned and trading
securities sold, but not yet purchased. . . . . . . . (25,601) 328,404
Short-term borrowings and drafts payable
of securities companies . . . . . . . . . . . . . . . 150,626 28,090
Net receivable from customers. . . . . . . . . . . . . (161,300) 41,055
Other receivables. . . . . . . . . . . . . . . . . . . (15,439) 4,514
Securities sold under repurchase agreements. . . . . . 47,330 (12,150)
Accrued compensation . . . . . . . . . . . . . . . . . (52,464) (56,908)
Accounts payable and other accrued liabilities . . . . 35,793 17,143
Other. . . . . . . . . . . . . . . . . . . . . . . . . (7,843) (9,004)
--------- ---------
Cash provided by operating activities . . . . . . . . . . . 1,398 94,334
--------- ---------
Cash flows from financing activities:
Proceeds from:
Issuance of common stock . . . . . . . . . . . . . . . 664 1,215
Subordinated and other debt. . . . . . . . . . . . . . - 80,000
Payments for:
Revolving credit agreement, net. . . . . . . . . . . . - (50,000)
Purchase of common stock . . . . . . . . . . . . . . . (9,567) -
Subordinated and other debt. . . . . . . . . . . . . . - (9,000)
Dividends on common stock. . . . . . . . . . . . . . . (2,764) (2,713)
--------- ---------
Cash provided (used) by financing activities. . . . . . . . (11,667) 19,502
--------- ---------
Cash flows from investing activities:
Proceeds from gain on sale of investment securities . . . 15,378 1,532
Payments for:
Equipment, leasehold improvements and other. . . . . . (2,128) (3,874)
Acquisition, net of cash acquired. . . . . . . . . . . - (95,588)
--------- ---------
Cash provided (used) by financing activities. . . . . . . . 13,250 (97,930)
--------- ---------
Increase in cash and cash equivalents . . . . . . . . . . . 2,981 15,906
Cash and cash equivalents:
At beginning of period . . . . . . . . . . . . . . . . 47,273 35,909
--------- ---------
At end of period . . . . . . . . . . . . . . . . . . . $ 50,254 $ 51,815
--------- ---------
--------- ---------
</TABLE>
Income tax payments totaled $5,671,000 and $2,651,000 and interest payments
totaled $14,544,000 and $11,489,000 during the three months ended March 31, 1999
and 1998, 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, 1999 and 1998, respectively, the Company had non-cash financing
activity of $4,580,000 and $4,149,000 associated with the crediting of common
stock to deferred compensation plan participants.
See notes to consolidated financial statements.
<PAGE>
DAIN RAUSCHER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have prepared the accompanying unaudited interim consolidated financial
statements in accordance with the instructions for Form 10-Q. These instructions
do not require including all the information and footnotes found in complete
financial statements prepared in accordance with generally accepted accounting
principles. These interim financial statements should be read in conjunction
with the consolidated financial statements and related notes included in our
Annual Report on Form 10-K for the year ended December 31, 1998. We believe we
have included all adjustments necessary for a fair presentation of these
interim financial statements. We have made only normal, recurring adjustments.
However, financial results for the three-months ended March 31, 1999, are not
necessarily indicative of future results.
We have reclassified certain prior year amounts in the financial statements
to conform with our 1999 presentation.
B. ACQUISITION
On March 31, 1998, our broker-dealer subsidiary, Dain Rauscher
Incorporated ("DRI"), acquired Wessels, Arnold, & Henderson, LLC ("WAH"), a
privately held investment banking and 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 only included
in the consolidated statement of operations since April 1, 1998.
We paid $120 million of cash and issued five-year, zero coupon,
subordinated debentures with a March 31, 1999 discounted value of $20.8 million
($27 million face amount) to acquire WAH. Goodwill of approximately $120 million
is recorded and is amortized over an estimated life of 25 years. The
amortization of goodwill is deductible for tax purposes.
C. MERGER AND RESTRUCTURING CHARGES
As part of our acquisition of WAH, we recorded a charge of $20 million
($12.8 million after tax) in the first quarter of 1998. This charge included
$16 million for severance in the elimination of approximately 150 jobs at
DRI, $2.5 million for facilities consolidation, and the remaining $1.5
million for other integration costs. By March 31, 1999, all amounts related
to the WAH acquisition had been charged against this reserve, which was
adequate to cover all expenses.
D. SHORT-TERM BORROWINGS
On March 15, 1999, we extended and amended our $50 million committed,
revolving credit agreement originally dated March 20, 1998. This agreement
expires March 17, 2000 and contains two further one-year renewal options. Loans
under this agreement are unsecured and bear interest at a floating rate of LIBOR
plus 61 basis points. No amounts were outstanding under this facility at March
31, 1999. Under the terms of this credit agreement, we must comply with
provisions regarding net worth, regulatory net capital and limitations on
indebtedness, among others.
F. SUBORDINATED AND OTHER DEBT
On March 31, 1998, DRI entered into an $80 million subordinated term loan
agreement with a group of banks in connection with the acquisition of WAH.
Proceeds from this loan qualify as regulatory capital. Term loans under this
agreement are unsecured, and consist of advances bearing interest generally at
either the current LIBOR plus 160 basis points, or the lead bank's published
Reference Rate, at our discretion. Under the agreement DRI will make quarterly
payments of $5.0 million beginning April 1, 1999, with the final payment due on
December 31, 2002. DRI must also comply with provisions in the agreement
regarding net worth and regulatory net capital.
F. SEGMENT INFORMATION
See Item 2 "Management's Discussion and Analysis" for a discussion of our
results by business line.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with Item 7 (Management's
Discussion and Analysis) of our Annual Report on Form 10-K for the year ended
December 31, 1998.
SUMMARY
Following is a consolidated summary of our operating income and results
of operations for the three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31.
----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenue. . . . . . . . . . . . . . . . . . . . . $ 220,657 $ 188,014
Interest expense . . . . . . . . . . . . . . . . (16,053) (15,567)
--------- ---------
Net revenue. . . . . . . . . . . . . . . . . . . 204,604 172,447
Expenses . . . . . . . . . . . . . . . . . . . . 183,837 155,610
--------- ---------
Operating income before taxes. . . . . . . . . . 20,767 16,837
Income tax expense from operations . . . . . . . (7,788) (6,061)
--------- ---------
Net operating income . . . . . . . . . . . . . . 12,979 10,776
Net nonrecurring items (after tax) . . . . . . . 9,611 (12,800)
--------- ---------
Net income (loss). . . . . . . . . . . . . . . . $ 22,590 $ (2,024)
--------- ---------
--------- ---------
Earnings (loss) per share:
From net operating income:
Basic . . . . . . . . . . . . . . . . . . . . $ 1.04 $ .87
Diluted . . . . . . . . . . . . . . . . . . . $ .98 $ .82
Net
Basic . . . . . . . . . . . . . . . . . . . . $ 1.81 $ (0.16)
Diluted . . . . . . . . . . . . . . . . . . . $ 1.70 $ (0.16)
</TABLE>
Consolidated 1999 first quarter earnings include a $15.4 million pre-tax
gain on the sale of an equity investment, which increased net earnings per
diluted share by $0.72. Consolidated 1998 first quarter results include a $20
million merger-related charge we recorded in conjunction with the acquisition of
WAH. This charge covered severance, facilities consolidation and other expenses
related to the merger. As a result of the charge, we incurred a net loss of $2.0
million, or $.16 cents per diluted share, for the quarter ended March 31,
1998.
RESULTS OF OPERATIONS BY TRANSACTION TYPE
Commission revenue increased $10.3 million or 14% during the 1999 first
quarter over the 1998 first quarter primarily on strong sales of listed
securities. The continuing positive performance of the U.S. economy coupled with
the rise of the securities markets (particularly as measured by NASDAQ and NYSE
indices) pushed securities prices and trading volumes higher during the 1999
quarter, which in turn contributed to an increase in our commission revenue.
Sales of insurance and annuity products also increased in the 1999 first quarter
from the prior year.
Revenue from principal transactions increased $5.7 million or 16% primarily
due to higher sales and trading of over-the-counter securities, as well as
higher revenue from trading of mortgage-backed securities and municipal bonds.
<PAGE>
Investment banking and underwriting revenue rose significantly in 1999 from
the same period a year ago due to equity capital markets activity primarily in
the technology sector. The 50% ($11.2 million) increase was driven by strong
fees from initial or secondary offerings primarily in the technology sector.
Correspondent clearing revenue rose 32% ($1.4 million) as customer
transactions increased over first quarter 1998 volumes. These higher transaction
volumes were in line with market conditions and strong investor activity levels.
Net interest income decreased $1.4 million or 9% during the 1999 first
quarter. Average margin loan balances increased by 5%, however, interest expense
also increased due to the cost of the $80 million in subordinated debt. Margin
loan increases can be attributed to favorable market conditions coupled with
comparatively low interest rates. Average margin spreads (the difference between
the rate our customers pay us on margin loans and our average borrowing cost)
were slightly higher in first quarter 1999 than they had been during first
quarter 1998.
Asset management revenue increased $3.6 million or 27% in the 1999 first
quarter over the prior year. Assets under management at Insight Investment
Management Inc. ("Insight"), our money management subsidiary, increased 18% from
1998.
Other revenue increased $1.3 million or 20% over the 1998 first quarter
primarily due to increases in various retail customer product service fees. The
1999 non-recurring gain resulted from our sale of an equity investment.
During the 1999 first quarter, compensation and benefits increased $19.9
million or 18% from the prior year. First quarter 1998 expenses, including
compensation and benefits, do not include the effects of the WAH merger, and
are not directly comparable with first quarter 1999 expense. Compensation as
a percent of revenue, however, declined slightly to 64.0% in 1999 from 64.4%
in 1998 as guarantees and other transitional compensation arrangements
expired at the end of 1998.
Operating expenses increased in 1999 by $8.3 million or 19% over the 1998
first quarter. The impact of the WAH merger on 1999 expenses included
amortization expense on goodwill from the WAH acquisition, and increased due to
travel and promotional costs incurred in generating new business. Occupancy
costs also increased along with the number of retail offices operating in the
1999 first quarter versus the same period a year ago. Finally, errors and
settlement expenses rose on increased transaction volumes.
RESULTS OF OPERATIONS BY BUSINESS LINE
Our business includes three major segments: Private Client Group, which
includes securities sales to individual investors, correspondent clearing, and
asset management for individual investors; Equity Capital Markets, which
includes investment banking and underwriting and equity sales and trading; and
Fixed Income Capital Markets, which includes fixed income securities trading,
sales, underwriting, and advisory services. All corporate expenses, and
miscellaneous revenues and expenses, which are not allocated to individual
business lines, are included in Corporate.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
(DOLLARS IN THOUSANDS) 1999 1998
--------- ---------
<S> <C> <C>
Net Revenue:
Private Client Group . . . . . . . . . . . $ 142,919 $ 129,303
Equity Capital Markets . . . . . . . . . . 33,415 16,591
Fixed Income Capital Markets . . . . . . . 25,781 21,992
Corporate:
Staff and other. . . . . . . . . . . . . 2,489 4,561
Nonrecurring gain. . . . . . . . . . . . 15,378 -
--------- ---------
TOTAL . . . . . . . . . . . . . . . . $ 219,982 $ 172,447
--------- ---------
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED March 31,
----------------------------
(DOLLARS IN THOUSANDS) 1999 1999
-------- --------
<S> <C> <C>
Pretax income (loss):
Private Client Group . . . . . . . . $ 15,209 $ 14,581
Equity Capital Markets . . . . . . . 1,167 (1,937)
Fixed Income Capital Markets . . . . 2,864 2,142
Corporate:
Staff and other. . . . . . . . . . 1,527 2,051
Nonrecurring gain (expense). . . . 15,378 (20,000)
-------- --------
TOTAL . . . . . . . . . . . . . $ 36,145 $ (3,163)
-------- --------
-------- --------
Pretax margin on net revenue:
Private Client Group . . . . . . . . 10.6% 11.3%
Equity Capital Markets . . . . . . . 3.5 (11.7)
Fixed Income Capital Markets . . . . 11.1 9.7
Corporate. . . . . . . . . . . . . . 61.4 45.0
-------- --------
TOTAL . . . . . . . . . . . . . 16.4% (1.8)%
</TABLE>
PRIVATE CLIENT GROUP: Private Client Group ("PCG") generates revenue
primarily from commissions earned by investment executives on individual
(retail) investor activity. Additional sources of revenue include asset
management fees paid to the group by Insight from the Great Hall money market
funds, and fees paid by customers for us to manage or arrange the management
of their portfolios. PCG also earns interest from customers who have borrowed
funds to settle trades (margin accounts). Revenue generated from
correspondent (or trade) clearing is also included in PCG. Correspondent
clearing fees are paid to us by outside (introducing) brokers to act as their
representative with financial exchanges, and to clear and settle their
clients' transactions.
PCG's increased commission revenue in 1999 resulted from higher sales of
listed securities and annuity and other insurance products. Commission revenue
increased in line with both trade volumes and securities prices on the NASDAQ,
NYSE and other exchanges. Increases in investment executive productivity also
augmented commission revenue. Correspondent clearing revenue increased slightly
over the prior year as customer transaction volumes rose. Asset management fees
were also higher in 1999, increasing as a result of higher levels of assets
under administration in both Great Hall Funds and in other fee-based managed
account programs.
Private Client Group pretax income increased 4% for the year, although
margins declined somewhat with increases in certain operating expenses. The
compensation and benefits ratio decreased slightly as a percent of net revenue
to 56.3% in first quarter 1999 compared with 56.6% in 1998. Occupancy expenses
were higher as there were six more offices operating in 1999 versus the same
period a year ago. Recruiting expenses, including relocation and other new hire
expenses, also increased in the 1999 first quarter with a 2% increase in the
number of investment executives from the prior year.
EQUITY CAPITAL MARKETS: Equity Capital Markets ("ECM") revenue comes from
several sources: underwriting fees from purchasing registered securities and
selling them to customers or institutions through our institutional sales force
or our Private Client Group; advisory fees, which may including valuations,
private placements, initial public offerings ("IPOs"); and merger and
acquisition ("M&A") fees. ECM revenue also includes fees from our syndicate
activities, which involve participating with other securities firms in
underwriting securities offerings, IPO's, and other registered securities. All
of these various fees are included as part of investment banking and
underwriting fees on our consolidated statement of operations. ECM also
makes-a-market (trades) and provides research coverage in certain
over-the-counter and listed securities. These activities allow ECM to develop
expertise in selected market sectors both to increase investment banking
opportunities and to provide services to our institutional and retail customers.
ECM trading gains and losses are included in principal transactions on our
consolidated statement of operations. Commissions earned from transactions on
registered securities sold through our Private Client Group are included in
PCG's business line revenue.
1999 first quarter ECM revenue increased significantly over the prior year.
Investment banking revenue more then doubled, led by strong underwriting
activity in the technology sector. ECM co-managed or led 16 IPO's or secondary
offerings, with a total value of $1.6 billion, during the first three months of
1999. Institutional equity sales were also up almost 80%, mostly due to strong
market conditions. Syndicate business was also stronger in the 1999 quarter than
it had been in the prior year.
<PAGE>
ECM pretax income and margin improved significantly as compensation and
benefits declined to 67.1% of revenue in 1999 versus 74.1% in 1998. The pre-tax
margin was affected by increases in operating expenses during 1999, particularly
promotional and travel which rose as part of the increase in investment banking
activity. Additionally, occupancy and other related expenses (including
information systems), were higher as 1998 expenses do not include the effects of
the WAH acquisition.
FIXED INCOME: Fixed Income Capital Market's ("FICM") revenue comes from
municipal fixed income underwriting fees, as well as taxable and tax-exempt
fixed income securities sales and trading. FICM underwriting fees come from
purchasing the tax-exempt fixed income securities of municipalities, counties,
cities, school districts and other community development organizations. These
securities are then resold, primarily to our retail and institutional customers.
FICM also generates revenue from acting as a financial advisor to state and
local governments and other community development organizations reviewing
financing options or preparing for bond issues. These fees are all included in
investment banking and underwriting fees on our consolidated statement of
operations. FICM also makes-a-market in certain fixed income securities,
primarily to offer these securities to our retail and institutional customers.
This trading income is included as part of principal transaction revenue on our
consolidated statement of operations. FICM earns interest from the fixed income
securities purchased or held in inventory, as well as from entering into reverse
repurchase transactions. FICM also pays interest on the short-term bank
borrowings and repurchase agreements used to finance trading inventories as well
as securities sold short to hedge inventory positions.
FICM's 17% net revenue increase from 1998 was led by increases in taxable
fixed income securities sales and trading revenue. Taxable fixed income
securities continued to be favored by institutional investors, and we increased
our sales force from first quarter 1998. Mortgage-backed securities trading
revenue was the primary driver of increases from 1998 first quarter levels.
Municipal securities sales and trading revenue was also up, although municipal
securities advisory and underwriting revenue declined from a year ago as FICM
was involved in fewer transactions during the first quarter of 1999. Retail
sales of fixed income securities other than municipal equities declined somewhat
from the prior year, as many individual investors favored stocks over bonds
given favorable equity market conditions.
Operating expenses rose modestly as we increased our sales force, number of
fixed income offices, and made other investments in building our infrastructure.
Compensation expense rose along with revenues, and compensation as a percent of
revenue increased to 60.3% in 1999 versus 59.4% in the prior year. Despite these
modest expense increases, FIMC's pre-tax margins increased 14% in 1999 over 1998
first quarter margins.
NONRECURRING ITEMS: The 1999 nonrecurring gain represents profit on the
sale of an equity investment. In the first quarter of 1998 we expensed $20
million, pre-tax, in merger costs related to the WAH acquisition.
CORPORATE: Corporate revenue consists primarily of asset management fees
generated by Insight, and net interest that is not allocated to a specific
business line. Insight manages the Great Hall money market funds and certain
institutional fixed income managed accounts. Great Hall asset management fees
increased in 1999 as assets under management at Insight rose in the first three
months of the year.
Corporate expense includes goodwill amortization, professional fees, and
any other non-allocated expenses. Amortization of WAH goodwill represents a
significant portion of the increase in 1999 corporate expense
LIQUIDITY AND CAPITAL RESOURCES
On March 15, 1999, we renewed our $50 million committed, revolving credit
agreement originally dated March 20, 1998. This agreement expires March 17, 2000
and contains two further one-year renewal options. Loans under this agreement
are unsecured and bear interest at a floating rate of LIBOR plus 61 basis
points. No amounts were outstanding under this facility at March 31, 1999. Under
the terms of this credit agreement, we must comply with provisions regarding net
worth, regulatory net capital and indebtedness, among others.
As described in Note L of the Consolidated Financial Statements of our 1998
Annual Report on Form 10-K, DRI must comply with certain regulations of the SEC
and New York Stock Exchange, Inc. measuring capitalization and liquidity. DRI
continues to operate above minimum net capital standards of 5 percent of
aggregate debit items. At March 31, 1999, net capital was $114.8 million, 9.5
percent of aggregate debit balances and $54.5 million in excess of the 5-percent
requirement.
<PAGE>
During the 1999 first quarter, we declared and paid a regular quarterly
dividend on our common stock of $.22 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 March 31, 1998, DRI 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 generally at
either the current LIBOR plus 160 basis points, or the lead bank's published
Reference Rate, at our discretion. DRI began making principal payments required
under the agreement of $5.0 million per quarter on April 1, 1999. The final
payment is due on December 31, 2002. DRI must also comply with provisions in the
agreement regarding net worth and regulatory net capital.
On March 31, 1998, we issued $30 million (face amount) in 5-year zero
coupon subordinated debentures related to the acquisition of WAH. The debentures
have a discounted present value of $20.8 million.
MARKET RISK
The types of transactions in which we participate and the types of
inventory we hold remain essentially unchanged since year-end 1998. See the
Market Risk discussion of Item 7 (Management's Discussion and Analysis) of our
Annual Report on Form 10-K for the year ended December 31, 1998 for a further
discussion of this issue.
YEAR 2000 ISSUE AND TECHNOLOGY
The technological problems which may occur upon reaching the Year 2000 have
been widely discussed. Since the early 1990s, we have taken steps to assess and
implement upgrade plans, and test our hardware and software systems for Year
2000 compliance. In 1993, we consolidated the back-office operations of our
subsidiary broker-dealers (Dain Bosworth and Rauscher Pierce Refsnes). With that
consolidation, we upgraded or replaced the bulk of our mission-critical
mainframe data processing systems. While we performed these upgrade and
replacement projects primarily for competitive reasons, these systems were also
made Year 2000-compliant at that time.
Our Year 2000 Task Force is headed by our Chief Financial Officer and our
Chief Information Officer. The Task Force analyzes our internal information
technology ("IT") and non-IT systems, including critical connections to and
outsourced systems supplied by vendors, for Year 2000 readiness. The Task Force
also identifies and prioritizes our critical third-party relationships,
including those with securities exchanges, vendors, clients, and transaction
counterparties; and communicates with them about their plans and progress in
addressing the Year 2000 problem. We have consulted with the Securities Industry
Association ("SIA"), our outside auditors and other industry participants to
formulate our Year 2000 program. We have completed a comprehensive Year 2000
project plan (the "Year 2000 Plan"), which covers our mission-critical IT and
non-IT systems and third-party interfaces. The Year 2000 Plan includes steps for
inventory, assessment, remediation and testing, along with a detailed schedule
for completing each of the segments.
For systems that are not currently Year 2000-compliant, we have prepared
and are executing modification or upgrade plans. Our mission-critical internal
mainframe systems (not including external interfaces) have been assessed,
modified, tested, implemented and run in daily production. We have upgraded and
tested our external interfaces as each service provider informed us that the
external interface was ready for testing. Of the approximately 300
mission-critical mainframe interfaces (with 80 third-parties) we have
identified, we have determined that approximately 90% of these interfaces were
either Year 2000-compliant or not affected by Year 2000 sensitivity. The
remaining interfaces were evaluated during industry-wide testing in March and
April of this year. We are currently remediating any issues identified during
this testing. As required by the Year 2000 Plan we collecting and assessing Year
2000 compliance status information directly from of our mission-critical
vendors. As we receive this information, we are taking appropriate action during
1999 to make our vendor relationships Year 2000 compliant. We expect that
testing, installation and certification of all of our mission-critical external
interfaces will be completed by June 30 1999.
We recently completed full-cycle industry testing with other SIA-member
firms, exchanges, clearing organizations and service utilities. Identifying
whether significant Year 2000 problems exist in placing, settling and clearing
orders and trades was a key objective of this March and April 1999 testing
coordinated by the SIA. In announcing the results of the industry-wide testing,
the SIA stated that "virtually all of the simulated trades entered over the six
test weekends were
<PAGE>
processed free of Y2K bugs." Our internal evaluation of our own performance
during the testing was consistent with these results and showed that we
experienced no Y2K-related errors. Testing of other (non-trading) mainframe
systems will be completed by July 31, 1999. While there can be no assurance, we
believe that our internal systems will not experience significant disruption in
connection with the Year 2000.
The assessment of our server systems, local and wide area network systems,
voice systems and facilities is substantially completed. Remediation, often
involving replacement of software with compliant versions, is nearing completion
for our network and voice systems. Testing of these systems, as well as
remediation and testing of our client server systems, is scheduled for the
second and third quarters of 1999.
During 1998 we spent approximately $1 million on Year 2000-related
planning, testing and upgrades or replacements. Such costs have not had, and are
not expected to have, a material effect on our consolidated financial
statements. During 1999 we anticipate spending approximately $1.5 million on
Year 2000-related testing. We believe that we will he able to fund any such
future costs from operations.
Our business is highly dependent on communications, trading, information
and data processing systems. Although we have outsourced some communications,
quotations and trading systems services, we maintain our own order-routing and
back-office processing system. We have in place tested disaster recovery
systems. However, if our internal systems, vendors, other information providers,
the securities exchanges, clearing agencies and other securities firms or
financial institutions with which we transact business, experience any
significant disruption in connection with the Year 2000, the disruption could
affect our ability to conduct business and may have a material adverse effect on
our financial results. We have developed and documented contingency plans to
provide for continuity of processing under various scenarios.
Readers are cautioned that forward-looking statements contained in the
section "Year 2000 Issue" should be read in conjunction with our disclosures
under the heading: "Forward Looking Statements" which appears below.
FORWARD-LOOKING STATEMENTS
This document contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act") which reflect our current views regarding future events and financial
performance. The words "believe," "expect," "anticipate," "intends,"
"estimate," "forecast," "project," "should," and similar expressions are used to
identify these "forward-looking statements". We desire to take advantage of the
"safe harbor" provisions of the Reform Act. We wish to caution investors and
potential investors that any forward-looking statements made by us or on our
behalf are subject to uncertainties and other factors that could cause actual
results to differ materially from those statements. These factors include, among
others, (a) the volatile nature of the securities industry; (b) rapidly growing
competition posed by other broker-dealers, including discount brokerages and
online trading firms; (c) dependence on and competition for experienced
personnel; (d) successful implementation and execution of our long-term
strategies; (e) dependence on highly sophisticated and expensive systems and
technology, including systems maintained and operated by third-parties over
which we have no control; (f) dependence on external sources to finance
day-to-day operations; (g) use of interest-rate sensitive derivative securities
and other hedging instruments; (h) federal and state regulatory and legislative
changes, including any changes affecting net capital requirements; and (i)
adverse findings in existing litigation, increases in class actions,
governmental agency enforcement proceedings, and other litigation-related risks.
This is not an exhaustive list of factors that could have an adverse impact on
our financial performance; other factors which are not identified here or known
to us currently may prove to be important and may adversely affect our results
of operations. It is also not possible for our management to predict or assess
the impact each factor will have on our business or the extent to which any
factor, or a combination of factors, may cause results to differ materially from
those contained in any forward-looking statements. You should also not place
undue reliance on these forward-looking statements as they relate only to our
views as of the date the statements are made. We undertake no obligation to
publicly update or revise any forward-looking statements, even if new
information, future events, or other conditions occur.
We herein incorporate by reference Exhibit 99 of our Annual Report on
Form 10-K for the year ended December 31, 1998.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are defendants in various pending actions, suits and proceedings before
courts, arbitrators and governmental agencies. Certain of these actions claim
substantial damages and, if determined adversely, could have a material adverse
effect on our consolidated financial condition or results of operations. A list
of certain of such actions is included in Item 3 of our Annual Report on Form
10-K for the year ended December 31, 1998, and they are described in more
detail in Item 8, Note I to the Consolidated Financial Statements included in
such Annual Report. The following description of recent developments in
connection with certain of these matters should be read in conjunction with such
description.
MIDWEST LIFE INSURANCE COMPANY RELATED CLAIMS
KARSIAN, ET AL. V. INTER-REGIONAL FINANCIAL GROUP, INC. AND DAIN BOSWORTH
INCORPORATED - In April 1999, the parties agreed to settle this matter for
a cash payment by Dain Rauscher of $15 million and an interest-free note in
the amount of $6.6 million payable over three years. Closing took place on
May 5, 1999.
NEBRASKA LIFE AND HEALTH INSURANCE GUARANTY ASS'N V. INTER-REGIONAL
FINANCIAL GROUP, INC, AND DAIN BOSWORTH INCORPORATED - This Action was
settled in April for a cash payment by Dain Rauscher of $500,000.
These payments, which have an aggregate present value of $21.3 million,
will have no impact on our 1999 earnings.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
ITEM NO. ITEM METHOD OF FILING
-------- ---- ----------------
<S> <C> <C>
3.3 Amended and Restated Bylaws of the Company. Filed herewith.
4.5 First Amendment to Amended and Restated Filed herewith.
Credit Agreement, dated March 15, 1999.
10.12 Dain Rauscher 1996 Stock Incentive Plan, Filed herewith.
as amended through April 27 1999
10.13 Dain Rauscher Deferred Compensation Plan Filed herewith.
for Non-Employee Directors, as amended
through April 27 1999
11 Computation of Net Earnings Per Share. Filed herewith.
27 Financial Data Schedule. Filed herewith.
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31,1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAIN RAUSCHER CORPORATION
Registrant
Date: May 12,1999 By David J. Parrin
---------------------------- -----------------------------------
David J. Parrin
Senior Vice President
and Controller
(Principal Accounting Officer)
<PAGE>
DAIN RAUSCHER CORPORATION
INDEX OF EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED MARCH 31,1999
(a) Exhibits
<TABLE>
<CAPTION>
ITEM NO. ITEM METHOD OF FILING
-------- ---- ----------------
<S> <C> <C>
3.3 Amended and Restated Bylaws of the Company. Filed herewith.
4.5 First Amendment to Amended and Restated Filed herewith.
Credit Agreement, dated March 15, 1999.
10.12 Dain Rauscher 1996 Stock Incentive Plan, Filed herewith.
as amended through April 27 1999
10.13 Dain Rauscher Deferred Compensation Plan Filed herewith.
for Non-Employee Directors, as amended
through April 27 1999
11 Computation of Net Earnings Per Share. Filed herewith.
27 Financial Data Schedule. Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED BYLAWS
OF
DAIN RAUSCHER CORPORATION
---------------------------
ARTICLE I
OFFICES
The registered office of Dain Rauscher Corporation (hereinafter
referred to as the "Corporation") in the State of Delaware shall be located in
the City of Wilmington, County of New Castle. The Corporation's principal
place of business shall be at Dain Rauscher Plaza, 60 South Sixth Street,
Minneapolis, Minnesota. The Corporation may establish or discontinue, from
time to time, such other offices and places of business within or without the
State of Delaware as may be deemed proper for the conduct of the
Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the holders of
shares of such classes of stock as are entitled to notice thereof and to vote
thereat pursuant to the provisions of the Certificate of Incorporation
(hereinafter called the "Annual Meeting of Stockholders") for the purpose of
electing directors and transacting such other business as may come before it
shall be held on the last Friday in April each year (or if that day be a legal
holiday, then on the next succeeding day not a legal holiday), at 2:00 p.m. at
Dain Rauscher Plaza, 60 South Sixth Street, in the City of Minneapolis,
Minnesota, or at such other date, time and place (within or without the State
of Delaware) as shall be designated by the Board of Directors.
SECTION 2. SPECIAL MEETINGS. In addition to such special meetings
as are provided for by law or by the Certificate of Incorporation, special
meetings of the holders of any class or of all classes of the Corporation's
stock may be called at any time by the Board of Directors, the Executive
Committee of the Board, the Chairman of the Board, or the Chief Executive
Officer, and may be held at such time, on such day and at such place, within or
without the State of Delaware, as shall be designated by the Board of
Directors. Special meetings of the holders of the Common Stock shall be called
by the Secretary upon the written request, stating the purpose or purposes of
any such meeting, of the holders of Common Stock who hold of record
collectively at least 25% of the outstanding shares of Common Stock of the
Corporation.
SECTION 3. NOTICE OF MEETINGS. Notice of a stockholders' meeting
shall be given either personally or by mail or by other means of written
communication, addressed to the stockholder at the address of such
stockholder appearing on the books of the Corporation or given by the
stockholder to the Corporation for the purpose of notice. Notice by mail shall
be deemed to have been given at the time a written notice is deposited in the
United States' mail, postage prepaid. Any other written notice shall be deemed
to have been given at the time it is personally delivered to the recipient or
is delivered to a common carrier for transmission, or actually transmitted by
the person giving the notice by electronic means, to the recipient. Notices
shall be delivered personally or mailed not more than sixty (60) days and not
less than
<PAGE>
ten (10) days before the day of the meeting. The business which may be
transacted at any special meeting of stockholders shall consist of and be
limited to the purpose or purposes stated in such notice, make an affidavit
stating that notice has been given. Such affidavit shall be filed with the
minutes of such meeting or otherwise retained by the Corporation in such
manner and place as is determined by the Secretary or an Assistant Secretary
of the Corporation.
SECTION 4. WAIVER OF NOTICE. Whenever notice is required to be
given under any provision of law or of the Certificate of Incorporation or the
Bylaws, a waiver thereof in writing or by telegraph, facsimile transmission,
cable or other form of recorded communication signed by the person entitled
to notice, whether before, or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the person attends
such meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any meeting of stockholders need be specified in a waiver of notice unless
so required by the Certificate of Incorporation.
SECTION 5. ORGANIZATION. The Chairman of the Board of Directors
shall act as Chairman at all meetings of stockholders at which he or she is
present, and as such Chairman shall call such meetings of stockholders to order
and preside thereat. If the Chairman is absent from any meeting of
stockholders, the duties provided in this Section 5, Article II shall be
performed by the Chief Executive Officer of the Corporation or such other
officer as the Board of Directors shall determine. The Secretary of the
Corporation shall act as secretary at all meetings of the stockholders, but in
his or her absence the Chairman of the meeting may appoint any person present
to act as secretary of the meeting.
SECTION 6. INSPECTORS. All votes by ballot at any meeting of
stockholders shall be conducted by two inspectors, who need not be
stockholders, who shall, except as otherwise provided by law, be appointed for
the purpose by the Board of Directors or the chairman of the meeting. The
inspectors shall decide upon the qualification of voters, count the votes and
declare the result.
SECTION 7. STOCKHOLDERS ENTITLED TO VOTE. The Board of Directors may
fix a date not more than sixty (60) days nor less than ten (10) days prior to
the date of any meeting of stockholders, or prior to the last day on which
the consent or dissent of stockholders may be effectively expressed for any
purpose without a meeting, as a record date for the determination of the
stockholders entitled (i) to notice of and to vote at such meeting and any
adjournment thereof, or (ii) to give such consent or express such dissent,
and such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to give such
consent or express such dissent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date fixed as aforesaid. The Secretary or any Assistant Secretary shall
prepare and make, or cause to be prepared and made, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, arranged in alphabetical order and showing
the address of each such stockholder and the number of shares registered in
the name of each such stockholder. Such list shall be open to
-2-
<PAGE>
the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place, specified in the notice of the
meeting, within the city where the meeting is to be held, or, if not so
specified, at the place where the meeting is to be held. Such list shall be
produced and kept at the time and place of the meeting during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
SECTION 8. QUORUM AND ADJOURNMENT. Except as otherwise
provided by law or by the Certificate of Incorporation, the holders of a
majority of the shares of stock entitled to vote at the meeting present in
person or by proxy without regard to class shall constitute a quorum at all
meetings of the stockholders. In the absence of a quorum, the holders of a
majority of such shares of stock present in person or by proxy may adjourn any
meeting, from time to time, until a quorum shall be present. At any such
adjourned meeting at which a quorum may be present, any business may be
transacted which might have been transacted at the meeting as originally
called. No notice of any adjourned meeting need be given other than by
announcement at the meeting that is being adjourned, provided that if the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, then a notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
SECTION 9. ORDER OF BUSINESS. The order of business at all meetings
of stockholders shall be as determined by the chairman of the meeting or as
otherwise determined by the vote of the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote without regard to
class at the meeting.
SECTION 10. VOTE OF STOCKHOLDERS. Except as otherwise permitted
by law or by the Certificate of Incorporation or the Bylaws, all action by
stockholders shall be taken at a stockholders' meeting. Every stockholder of
record, as determined pursuant to Section 7 of this Article II, and who is
entitled to vote, shall, except as otherwise expressly provided in the
Certificate of Incorporation with respect to any class of the Corporation's
capital stock, be entitled at every meeting of the stockholders to one vote for
every share of stock standing in his name on the books of the Corporation.
Election of directors shall be by written ballot if requested by any
stockholder, but, unless otherwise provided by law, no vote on any question
upon which a vote of the stockholders may be taken need be by ballot unless the
chairman of the meeting shall determine that it shall be by ballot or the
holders of a majority of the shares of stock present in person or by proxy and
entitled to participate in such vote shall so demand. In a vote by ballot each
ballot shall state the number of shares voted and the name of the stockholder
or proxy voting. Except as otherwise provided by law or by the Certificate of
Incorporation, all elections of directors and all questions shall be decided by
the vote of the holders of a majority of the shares of stock present in person
or by proxy at the meeting and entitled to vote in the election or on the
question.
SECTION 11. PROXIES. Every stockholder entitled to vote or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy duly appointed by
an instrument in writing, subscribed by such stockholder and executed not
more than three (3) years prior to the meeting, unless the instrument provides
for a longer period. The attendance at any meeting of stockholders of a
-3-
<PAGE>
stockholder who may theretofore have given a proxy shall not have the effect
of revoking such proxy unless such stockholder shall in writing so notify the
secretary of the meeting prior to the voting of the proxy.
SECTION 12. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by law or by the Certificate of Incorporation, any action
required to be taken, or which may be taken, at any meeting of stockholders
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of shares of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares of stock entitled to vote thereon were present and
voted; provided, that prompt notice of the taking of corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
SECTION 13. NOTICE OF BUSINESS. At any meeting of stockholders,
only such business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board, (b) in accordance with Rule
14a-8 under the Securities Exchange Act of 1934, or (c) by a stockholder of
record entitled to vote at such meeting who complies with the notice
procedures set forth in this Section. For business to be properly brought
before a meeting by such a stockholder, the stockholder shall have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely,
such notice shall be delivered to or mailed and received at the principal
executive office of the Corporation not less than one hundred twenty (120) days
in advance of the date of the previous year's annual meeting. Such
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting, and in the event that such
business includes a proposal to amend either the Certificate of Incorporation
or the Bylaws of the Corporation, the language of the proposed amendment,
(b) the name and address of the stockholder proposing such business, (c) the
class and number of shares of stock of the Corporation which are owned by such
stockholder, and (d) any material personal interest of such stockholder in such
business. If notice has not been given pursuant to this Section, the Chairman
of the meeting shall, if the facts warrant, determine and declare to the
meeting that the proposed business was not properly brought before the meeting,
and such business may not be transacted at the meeting. The foregoing
provisions of this Section do not relieve any stockholder of any obligation to
comply with all applicable requirements of the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder.
SECTION 14. NOTICE OF BOARD CANDIDATE. At any meeting of
stockholders, a person may be a candidate for election to the Board only if
such person is nominated (a) by or at the direction of the Board, (b) by any
nominating committee or person appointed by the Board, or (c) by a
stockholder of record entitled to vote at such meeting who complies with the
notice procedures set forth in this Section. To properly nominate a candidate,
a stockholder shall give timely notice of such nomination in writing to the
Secretary of the Corporation. To be timely, such notice shall be delivered to
or mailed and received at the principal executive office of the Corporation not
less than thirty days prior to the meeting; PROVIDED, HOWEVER, that in the
event that less than forty days' notice of the date of the meeting is given by
the Corporation, notice of such nomination to be timely must be so received not
later than the close of business on the fifth
-4-
<PAGE>
day following the day on which such notice of the date of the meeting was
mailed or otherwise given. Such stockholder's notice to the Secretary shall
set forth (a) as to each person whom the stockholder proposes to nominate (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number
of shares of stock of the Corporation which are owned by the person, and (iv)
any other information relating to the person that would be required to be
disclosed in a solicitation of proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934; and (b) as to the
stockholder giving the notice (i) the name and address of such stockholder
and (ii) the class and number of shares of stock of the Corporation owned by
such stockholder. The Corporation may require such other information to be
furnished respecting any proposed nominee as may be reasonably necessary to
determine the eligibility of such proposed nominee to serve as a director of
the Corporation. No person shall be eligible for election by the
stockholders as a director at any meeting unless nominated in accordance with
this Section.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. ELECTION AND TERM. Except as otherwise provided by
law, the Certificate of Incorporation, or by the provisions of this Article
III, directors shall be elected at the Annual Meeting of Stockholders to serve
until the next Annual Meeting of Stockholders and until their successors are
elected and qualify or until their earlier resignation, removal, or
disqualification.
SECTION 2. NUMBER. The number of directors may be fixed from
time to time by resolution of the Board of Directors but shall not be less than
three (3) nor more than thirty (30).
SECTION 3. GENERAL POWERS. The business, properties and affairs of
the Corporation shall be managed by the Board of Directors, which, without
limiting the generality of the foregoing, shall have the power to elect and
appoint officers of the Corporation, to delegate to a committee of the Board
and the ability to elect and appoint certain officers of the Corporation, to
appoint and direct or to delegate to a committee of the Board of one or more
officers of the Corporation the ability to appoint and direct agents, to grant
or to delegate to a committee of the Board or one or more officers of the
Corporation the ability to grant general or limited authority to officers,
employees and agents of the Corporation to make, execute and deliver
contracts and other instruments and documents in the name and on behalf of
the Corporation and over its seal, without specific authority in each case,
and, by resolution adopted by a majority of the whole Board of Directors, to
appoint committees of the Board in addition to those provided for in Article IV
hereof, the membership of which may consist of one or more directors, and which
may advise the Board of Directors with respect to any matters relating to the
conduct of the Corporation's business. The membership of such committees
shall consist of such persons as are designated by the Board of Directors
whether or not any of such persons is then a director of the Corporation. In
addition, the Board of Directors may exercise all the powers of the Corporation
and do all lawful acts and things which are not reserved to the stockholders by
law or by the Certificate of Incorporation.
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SECTION 4. PLACE OF MEETINGS. Meetings of the Board of Directors may
be held at any place, within or without the State of Delaware, from time to
time designated by the Board of Directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times as may be determined by resolution of
the Board of Directors and no notice shall be required for any regular
meeting. Except as otherwise provided by law, any business may be transacted
at any regular meeting of the Board of Directors.
SECTION 6. SPECIAL MEETINGS; NOTICE AND WAIVER OF NOTICE. Special
meetings of the Board of Directors shall be called by the Secretary on the
request of the Chairman of the Board of Directors, the Chief Executive
Officer, or any three other directors stating the purpose or purposes of such
meeting. Special meetings of the Board shall be held upon two (2) days'
written notice (or notice by other recorded means such as facsimile
transmission) or notice given personally or by telephone not later than the
day before such meeting. Any such notice (other than any notice given
personally or by telephone) shall be addressed or delivered to each director
at such director's address as it is shown upon the records of the Corporation
or as may have been given to the Corporation by the director for purposes of
notice or, if such address is not shown on such records or is not readily
ascertainable, at the place in which the meetings of the directors are
regularly held. Notice of any meeting of the Board of Directors need not be
given to any director if he or she shall sign a written waiver thereof either
before or after the time stated therein, or if he or she shall attend a
meeting, except when he or she attends such meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Unless
limited by law, the Certificate of Incorporation, the Bylaws, or by the terms
of the notice thereof, any and all business may be transacted at any special
meeting without the notice thereof having so specifically enumerated the
matters to be acted upon.
SECTION 7. ORGANIZATION. The Chairman of the Board shall preside at
all meetings of the Board of Directors at which he or she is present. If the
Chairman of the Board shall be absent from any meeting of the Board of
Directors, the duties otherwise provided in this Section 7 to be performed by
him or her at such meeting shall be performed at such meeting by one of the
directors present. The Secretary of the Corporation shall act as the
secretary at all meetings of the Board of Directors and in his absence a
temporary secretary shall be appointed by the chairman of the meeting.
SECTION 8. QUORUM AND ADJOURNMENT. Except as otherwise provided by
Section 13 of this Article III, at every meeting of the Board of Directors a
majority of the total number of Directors shall constitute a quorum but in no
event shall a quorum be constituted by less than two directors. Except as
otherwise provided by law, or by Section 13 of this Article III, or by
Section 1 or Section 8 of Article IV, or by Section 3 of Article VI, or by
Article IX, the vote of a majority of the directors present at any such
meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum, any meeting may be adjourned, from
time to time, until a quorum is present. No notice of any adjourned meeting
need be given other than by announcement at the meeting that is being
adjourned. Members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or of
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such committee by means of conference telephone or similar communications by
means of which all persons participating in the meeting can hear each other,
and participation in such a meeting shall constitute presence in person at
such meeting.
SECTION 9. VOTING. On any question on which the Board of Directors
shall vote, the names of those voting and their votes shall be entered in the
minutes of the meeting when any member of the Board of Directors so requests.
SECTION 10. ACTION WITHOUT A MEETING. Except as otherwise provided by
law or by the Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if prior to such action all members
of the Board of Directors or of such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or the committee.
SECTION 11. RESIGNATIONS. Any director may resign at any time either
by oral tender of resignation at any meeting of the Board of Directors or by
written notice thereof to the Corporation. Any resignation shall be
effective immediately unless some other time is specified for it to take
effect. Acceptance of any resignation shall not be necessary to make it
effective unless such resignation is tendered subject to such acceptance.
SECTION 12. REMOVAL OF DIRECTORS. Any director may be removed, either
for or without cause, at any time, by action of the holders of record of a
majority of the shares of Common Stock of the Corporation present in person
or by proxy at a meeting of holders of such shares and entitled to vote
thereon, and the vacancy in the Board of Directors caused by any such removal
may be filled by action of such stockholders at such meeting or at any
subsequent meeting.
SECTION 13. FILLING OF VACANCIES NOT CAUSED BY REMOVAL. Except as
otherwise provided by law, in case of any increase in the number of
directors, or of any vacancy created by death, resignation or
disqualification, the additional director or directors may be elected or the
vacancy or vacancies may be filled, as the case may be, by the Board of
Directors at any meeting by affirmative vote of a majority of the remaining
directors or by a sole remaining director though the remaining director or
directors be less than the quorum provided for in Section 8 of this Article
III. The directors so chosen shall hold office until the next Annual Meeting
of Stockholders and until their successors are elected and qualify or until
their earlier death, resignation, removal or disqualification.
SECTION 14. DIRECTORS' COMPENSATION. Directors shall receive such
reasonable compensation for their services as directors or as members of
committees of the Board of Directors, whether in the form of salary, fixed
fee for attendance at meetings, or other fees, with expenses, if any, stock
incentives, or otherwise, as the Board of Directors or any committee of the
Board delegated such authority by the Board may from time to time determine.
Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
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ARTICLE IV
EXECUTIVE COMMITTEE OF THE BOARD
SECTION 1. CONSTITUTION AND POWERS. The Board of Directors may, by
resolution adopted by affirmative vote of a majority of the whole Board of
Directors, appoint an Executive Committee of the Board, which shall have and
may exercise, during the intervals between the meetings of the Board of
Directors, all the powers and authority of the Board of Directors in the
management of the business, properties and affairs of the Corporation,
including authority to issue stock of the Corporation and to take all action
provided in the Bylaws to be taken by the Board of Directors; provided,
however, that the foregoing is subject to the applicable provisions of law
and shall not be construed (a) as authorizing action by the Executive
Committee of the Board with respect to any action which pursuant to Section
14 of Article III, this Section 1 and Section 8 of this Article IV, Section 3
of Article VI and Article IX is required to be taken by vote of a specified
proportion of the whole Board of Directors, or with respect to action
pursuant to Section 2 of Article III, or (b) as granting the Executive
Committee of the Board the power or authority to amend the Certificate of
Incorporation, adopt an agreement of merger or consolidation, recommend to
the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property in assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution or declaring
a dividend. The Executive Committee of the Board shall consist of such
number of directors as may from time to time be designated by the Board of
Directors, but shall not be less than two (2) nor more than twelve (12)
directors. The members of the Executive Committee shall be appointed by a
majority of the whole Board of Directors, and shall hold office until they
are removed from such committee membership or their respective successor
members of such committee are appointed by a majority of the whole Board of
Directors or until their earlier death or resignation. All acts done and
powers conferred by the Executive Committee of the Board shall be deemed to
be, and may be certified as being, done or conferred under authority of the
Board of Directors.
SECTION 2. PLACE OF MEETINGS. Meetings of the Executive Committee of
the Board may be held at any place, within or without the State of Delaware,
from time to time designated by the Board of Directors or the Executive
Committee of the Board.
SECTION 3. MEETINGS; NOTICE AND WAIVER OF NOTICE. Regular meetings of
the Executive Committee of the Board shall be held at such times as may be
determined by resolution either of the Board of Directors or the Executive
Committee of the Board and no notice shall be required for any regular
meeting. Special meetings of the Executive Committee of the Board shall be
called by the Chairman of the Board of Directors or the Secretary upon the
request of any two members thereof. Notices of special meetings shall be
mailed to each member, addressed to him or her at his or her residence or
usual place of business, not later than two (2) days before the day on which
the meeting is to be held, or shall be sent to him or her at such place by
telegraph, facsimile transmission, cable or any other form of recorded
communication, or be delivered personally or by telephone, not later than the
day before the day of such meeting. Neither the business to be transacted
at, nor the purpose of, any special meeting of the Executive Committee of the
Board need be specified in any notice or written waiver of notice unless so
required by the Certificate of Incorporation or the Bylaws. Notices of any
such meeting need not be given to any member of the Executive Committee of
the Board, however, if
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waived by him or her as provided in Section 6 of Article III, the provisions
of such Section 6 with respect to waiver of notice of meetings of the Board
of Directors applying to meetings of the Executive Committee of the Board as
well.
SECTION 4. ORGANIZATION. The Chairman of the Board of Directors shall
preside at all meetings of the Executive Committee of the Board. In the
absence of the Chairman, one of the members shall be chosen to preside at
such meeting. The Secretary of the Corporation shall act as secretary at all
meetings of the Executive Committee of the Board and in his absence a
temporary secretary shall be appointed by the chairman of the meeting.
SECTION 5. QUORUM AND ADJOURNMENT; ACTION WITHOUT A MEETING. A
majority of the members of the Executive Committee of the Board shall
constitute a quorum for the transaction of business, and the act of a
majority of those present at any meeting at which a quorum is present shall
be the act of the Executive Committee of the Board. In the absence of a
quorum, any meeting may be adjourned from time to time until a quorum is
present. No notice of any adjourned meeting need be given other than by
announcement at the meeting that is being adjourned. The provisions of
Section 8 of Article III with respect to participation in a meeting of a
committee of the Board of Directors and the provisions of Section 10 of
Article III with respect to action taken by a committee of the Board of
Directors without a meeting shall apply to participation in meetings of and
action taken by the Executive Committee.
SECTION 6. VOTING. On any question on which the Executive Committee of
the Board shall vote, the names of those voting and their votes shall be
entered in the minutes of the meeting when any member of the Executive
Committee of the Board so requests.
SECTION 7. RECORDS. The Executive Committee of the Board shall keep
minutes of its acts and proceedings, which shall be submitted at the next
regular meeting of the Board of Directors unless sooner submitted at an
organization or special meeting of the Board of Directors, and any action
taken by the Board of Directors with respect thereto shall be entered in the
minutes of the Board of Directors.
SECTION 8. VACANCIES; ALTERNATE MEMBERS; ABSENCES. Any vacancy among
the appointed members of the Executive Committee of the Board may be filled
by affirmative vote of a majority of the whole Board of Directors. The Board
of Directors may designate one or more directors as alternate members of the
Executive Committee of the Board who may replace any absent or disqualified
member at any meeting of the Executive Committee of the Board. In the
absence or disqualification of any member or alternate member of the
Executive Committee of the Board, the member or members (including alternate
members) thereof present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
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ARTICLE V
OTHER BOARD COMMITTEES
SECTION 1. APPOINTING OTHER BOARD COMMITTEES. The Board of Directors
may from time to time, by resolution adopted by affirmative vote of a
majority of the whole Board of Directors, appoint other committees of the
Board of Directors which shall have such powers and duties as the Board of
Directors may properly determine from time to time. No such other committee
of the Board of Directors shall be composed of fewer than two (2) directors.
The members of any such committee shall be appointed by a majority of the
whole Board of Directors and shall hold office until they are removed from
such committee membership or their respective successor members of such
committee are appointed by a majority of the whole Board of Directors or
until their earlier death or resignation. The provisions of Section 11 of
Article III shall also apply to any resignation of a member of any other
committee of the Board from such committee membership, whether or not such
director also resigns from the Board of Directors. The Board of Directors
may designate one or more directors as alternate members of any such
committee who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any member of such
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
SECTION 2. PLACE AND TIME OF MEETINGS; NOTICE AND WAIVER OF NOTICE;
RECORDS. Meetings of such committees of the Board of Directors may be held
at any place, within or without the State of Delaware, from time to time
designated by the Board of Directors or such committee of the Board. Regular
meetings of any such committee of the Board shall be held at such times as
may be determined by resolution of the Board of Directors or such committee,
and no notice shall be required for any regular meeting. A special meeting
of any such committee of the Board shall be called by resolution of the Board
of Directors, or by the Chairman of the Board of Directors or the Secretary,
upon the request of any member of the committee. The provisions of Section 3
of Article IV with respect to notice and waiver of notice of special meetings
of the Executive Committee shall also apply to all special meetings of other
committees of the Board of Directors. Any such committee may make rules for
holding and conducting its meetings and shall keep minutes of all meetings.
SECTION 3. QUORUM AND ADJOURNMENT. One-third of the members of any
such committee shall constitute a quorum for the transaction of business, and
the act of a majority of those present at any meeting at which a quorum is
present shall be the act of such committee. In the absence of a quorum, any
meeting may be adjourned from time to time until a quorum is present. No
notice of any adjourned meeting need be given other than by announcement at
the meeting that is being adjourned. The provisions of Section 8 of Article
III with respect to participation in a meeting of a committee of the Board of
Directors and the provisions of Section 10 of Article III with respect to
action taken by a committee of the Board of Directors without a meeting shall
apply to participation in meetings of and action taken by any such committee.
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SECTION 4. VOTING. On any question on which such other committee of
the Board shall vote, the names of those voting and their votes shall be
entered in the minutes of the meeting when any member of such committee so
requests.
ARTICLE VI
THE OFFICERS
Section 1. OFFICERS. The officers of the Corporation may include a
Chairman of the Board of Directors, one or more Vice Chairmen of the Board of
Directors, a Chief Executive Officer, a President, one or more Vice
Presidents (which may be designated as Senior Executive Vice President,
Executive Vice President, Senior Vice President, Associate Vice President or
with such other modifier as may be determined from time to time by the
Corporation), a Secretary, one or more Assistant Secretaries, a Chief
Financial Officer, a Treasurer, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers. The officers shall be
appointed by the Board of Directors or, to the extent so authorized by the
Board of Directors, any committee of the Board of Directors, provided,
however, that no committee of the Board of Directors shall be authorized to
appoint the Chairman of the Board of Directors, any Vice Chairman of the
Board of Directors, the Chief Executive Officer, President, Chief Financial
Officer, Treasurer, Secretary or Controller or any Vice President designated
as a Senior Vice President, Executive Vice President or Senior Executive
Vice President. The officers of the Corporation may also include such other
officers and agents as in the judgment of the Board of Directors or such
committee of the Board of Directors may be necessary or desirable. The
Chairman of the Board, any Vice Chairmen of the Board of Directors and the
Chief Executive Officer shall be selected from among the Directors. The
Chief Executive Officer of the Corporation may also appoint from time to time
management or other committees consisting of such officers of the Corporation
or its subsidiaries and having such duties as he or she then determine
consistent with the provisions of these Bylaws, the Certificate of
Incorporation and all applicable laws.
SECTION 2. TERMS OF OFFICE; VACANCIES. Except as otherwise provided in
Section 3 and 4 of this Article VI, all officers appointed as set forth in
Section 1 of this Article VI shall hold office until their respective
successors are elected and qualify, or until they sooner die, retire, resign
or are removed.
SECTION 3. REMOVAL OF OFFICERS. Any officer may be removed at any
time, either for or without cause, by an affirmative vote of a majority of
the whole Board of Directors or any committee of the Board of Directors to
which the Board of Directors delegates such authority (as set forth in
Section 1 of this Article VI). In the event the employment of any officer who
is employed by the Corporation is terminated, such individual shall no longer
be an officer of the Corporation unless the Board of Directors or any Board
Committee to which the Board delegates such authority expressly determines
otherwise.
SECTION 4. RESIGNATIONS. Any officer may resign at any time, upon
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless another date is specified for it to take effect,
and the acceptance of any resignation shall not be necessary to make it
effective unless such resignation is tendered subject to such acceptance.
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SECTION 5. OFFICERS HOLDING MORE THAN ONE OFFICE. Any officer may hold
two or more offices, the duties of which can be consistently performed by the
same person.
SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and at all meetings of the Board
and shall have such other powers and duties as may from time to time be
assigned by the Board or as set forth in these Bylaws.
SECTION 7. VICE CHAIRMAN OF THE BOARD. In the absence of the Chairman
of the Board, the Vice Chairman shall preside at all meetings of the Board
and the stockholders. The Vice Chairman shall also have such other powers
and duties as may from time to time be assigned by the Board or the Chairman
of the Board or as set forth in these Bylaws.
SECTION 8. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer,
subject to the control of the Board and the committees of the Board, is the
general manager of the Corporation. The Chief Executive Officer shall have
supervisory authority over and may exercise general executive power
concerning the supervision, direction and control of the business and
officers of the Corporation, with authority from time to time to delegate to
the President and other officers such executive powers and duties as the
Chief Executive Officer may deem advisable. In the absence of the Chairman
of the Board and the Chief Executive Officer, the President shall preside at
all meetings of the Board and the stockholders.
SECTION 9. PRESIDENT. The President is the chief operating officer of
the Corporation and, subject to the control of the Board, the committees of
the Board and the Chief Executive Officer, has supervisory authority over and
may exercise general executive powers concerning the operations, business and
subordinate officers of the Corporation, with the authority from time to time
to delegate to other officers such executive powers and duties as the
President may deem advisable. In the absence of the Chairman of the Board
and the Chief Executive Officer, the President shall preside at all meetings
of the stockholders.
SECTION 10. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents, in order of their rank as fixed by the Board
or any committee of the Board to which the Board has delegated such authority
or, if not ranked, the Vice President designated by the Board, shall perform
all duties of the President and, when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board or, in the
case of Vice Presidents other than Senior Vice Presidents or Executive Vice
Presidents, any committee of the Board to which the Board has delegated such
authority. The Board of Directors may from time to time designate one or
more Vice Presidents as Senior Executive Vice Presidents, Senior Vice
Presidents, Executive Vice Presidents or such other modifiers as shall be
determined from time to time by the Corporation, and the Board of Directors
or any committee of the Board to which the Board has delegated such authority
may designate one or more Vice Presidents as Associate Vice Presidents or
such other similar modifiers as shall be determined from time to time by the
Corporation.
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SECTION 11. SECRETARY. The Secretary shall keep, or cause to be kept,
at the principal office and such other places as the Board may order, a book
of minutes of all meetings of stockholders, the Board and its committees,
with the time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of those present
at Board and committee meetings, and the number of shares present or
represented at stockholders' meetings, and the proceedings thereof. The
Secretary shall keep, or cause to be kept, a copy of the Bylaws of the
Corporation at the principal office or business office. The Secretary shall
keep at the principal office, or cause to be kept at the principal office of
any transfer agent and registrar appointed by the Board of Directors for each
class of the Corporation's common stock, a share register, or a duplicate
share register, showing the name of the stockholders and their addresses, the
number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation. The Secretary shall give, or
cause to be given, notice of all meetings of the stockholders and of the
Board and of any committee thereof required by these Bylaws or by law to be
given, shall keep the seal of the Corporation in safe custody, and shall have
such other powers and perform such other duties as may be prescribed by the
Board.
SECTION 12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
accounts of the properties and business transactions of the Corporation. The
books of account shall at all time be open to inspection by any director.
The Chief Financial Officer shall deposit or cause to be deposited all monies
and other valuables in the name and to the credit of the Corporation with
such depositories as may be designated by the Board. The Chief Financial
Officer shall disburse or cause to be disbursed the funds of the Corporation
as may be ordered by the Board, shall render to the Chief Executive Officer
and directors, whenever they request it, an account of all transactions as
Chief Financial Officer and of the financial condition of the Corporation,
and shall have such other powers and perform such other duties as may be
prescribed by the Board. The financial officer or officers who are
subordinate to the Chief Financial Officer (including a Controller and/or
Treasurer, if appointed), if any, shall, in the absence or disability of the
Chief Financial Officer, or at his or her request, or if a vacancy shall
exist perform his or her duties and exercise his or her powers and authority,
and shall perform such other duties and have such other powers as the Board
of Directors may from time to time prescribe.
SECTION 13. TREASURER. Subject to direction of the Board, the Chief
Executive Officer, the President and the Chief Financial Officer, the
Treasurer shall have the care and custody of all the funds of the Corporation
and shall deposit or cause to be deposited the same in such banks or other
depositories as the Board of Directors, or any officer or officers thereunto
duly authorized by the Board of Directors, shall, from time to time, direct
or approve. He or she shall generally perform all the duties usually
appertaining to the affairs of the treasurer of a corporation. When required
by the Board of Directors, he or she shall give bonds for the faithful
discharge of his or her duties in such sums and with such sureties as the
Board of Directors shall approve.
SECTION 14. CONTROLLER. The Controller is the Chief Accounting Officer
of the Corporation. The Controller shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus,
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and surplus shares. The Controller is responsible for the formulation of the
Corporation's accounting policies, procedures and practices, and the
preparation of the Corporation's financial reports. The Controller shall
establish and administer a plan for the financial control of the Corporation
and compare performance with that plan. The Controller shall have such other
powers and duties as the Board of Directors may from time to time prescribe.
SECTION 15. ADDITIONAL POWERS AND DUTIES. In addition to the foregoing
especially enumerated duties and powers, the several officers of the
Corporation shall perform such other duties and exercise such further powers
as the Board of Directors may, from to time to time, determine, or as may be
assigned to them by any superior officer.
ARTICLE VII
STOCK AND TRANSFERS OF STOCK
SECTION 1. STOCK CERTIFICATES. The capital stock of the Corporation
shall be represented by certificates signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President and also by any
one of the Secretary, any Assistant Secretary, the Chief Financial Officer or
the Treasurer, and shall be sealed with the seal of the Corporation. Any or
all of the signatures of such officers may be a facsimile. The seal may be a
facsimile, engraved or printed. In case any such officer who has signed any
such certificate shall have ceased to be such officer before such certificate
is issued, it may nevertheless be issued by the Corporation with the same
effect as if he were such officer at the date of issue. The certificates
representing the Common Stock of the Corporation shall be in such form as
shall be approved by the Board of Directors.
SECTION 2. REGISTRATION OF TRANSFERS OF STOCK. Registration of a
transfer of stock shall be made on the books of the Corporation only upon
presentation by the person named in the certificate evidencing such stock, or
by an attorney lawfully constituted in writing, and upon surrender and
cancellation of such certificate, with duly executed assignment and power of
transfer endorsed thereon or attached thereto, and with such proof of the
authenticity of the signature thereon as the Corporation or its agents may
reasonably require.
SECTION 3. LOST CERTIFICATES. In case any certificate of stock shall be
lost, stolen or destroyed, the Board of Directors, in its discretion, or any
officer or officers thereunto duly authorized by the Board of Directors, may
authorize the issuance of a substitute certificate in the place of the
certificate so lost, stolen or destroyed; PROVIDED, HOWEVER, that, in each
such case, the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his, her or its legal representative, to give the
Corporation evidence which the Corporation determines in its discretion is
satisfactory of the loss, theft, or destruction of such certificate and of
the ownership thereof, and may also require a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
SECTION 4. DETERMINATION OF STOCKHOLDERS OF RECORD FOR CERTAIN
PURPOSES. In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
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change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) days prior to any such action.
SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to treat the holder of record of any share or shares of stock of the
Corporation as the holder in fact thereof and shall not be bound to recognize
any equitable or other claim to or interest in such share on the part of any
other person, whether or not it shall have express or other notice thereof,
except as expressly provided by applicable law.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. SEAL. The seal of the Corporation shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware."
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
SECTION 3. REFERENCES TO ARTICLE AND SECTION NUMBERS AND TO THE BYLAWS
AND THE CERTIFICATE OF INCORPORATION. Whenever in the Bylaws reference is
made to an Article or Section number, such reference is to the number of an
Article or Section of the Bylaws. Whenever in the Bylaws reference is made to
the Bylaws, such reference is to these Bylaws of the Corporation, as the same
may from time to time be amended, and whenever reference is made to the
Certificate of Incorporation, such reference is to the Certificate of
Incorporation of the Corporation, as the same may from time to time be
amended.
SECTION 4. BOOKS OF THE CORPORATION. Except as otherwise provided by
law, the books of the Corporation shall be kept at the principal place of
business of the Corporation.
ARTICLE IX
AMENDMENTS
The Bylaws may be altered, amended or repealed at any annual meeting of
stockholders, or at any special meeting of holders of shares of stock
entitled to vote thereon, provided that in the case of a special meeting
notice of such proposed alteration, amendment or repeal be included in the
notice of meeting, by a vote of the holders of a majority of the shares of
stock present in person or by proxy at the meeting and entitled to vote
thereon, or (except as otherwise expressly provided in any Bylaws adopted by
the stockholders) by the Board of Directors at any valid meeting by
affirmative vote of a majority of the whole Board of Directors.
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<PAGE>
EXHIBIT 4.5
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment, dated as of March 15, 1999, is made by and among DAIN
RAUSCHER CORPORATION, a Delaware corporation (the "Borrower"), the banks or
financial institutions listed on the signature pages hereof or which
hereafter become parties to the Credit Agreement (as defined herein) by means
of assignment and assumption as described in the Credit Agreement
(individually referred to as a "Bank" or collectively as the "Banks"), and
U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for
the Banks (in such capacity, the "Agent").
RECITALS
A. The Borrower, the Banks and the Agent have entered into an Amended
and Restated Credit Agreement dated as of March 20, 1998 (the "Credit
Agreement").
B. As of the date hereof, no Loans have been made to the Borrower
under the Credit Agreement and no Loans will be made to the Borrower under
the Credit Agreement until after the First Amendment Effective Date (defined
below). Also as of the date hereof, no Letters of Credit have been issued
for the account of the Borrower under the Credit Agreement and no Letters of
Credit will be issued for the account of the Borrower under the Credit
Agreement until after the First Amendment Effective Date.
C. The Borrower has requested that the Termination Date be extended
for three hundred and sixty-four (364) days.
D. The Banks and the Agent are willing to grant the Borrower's request
pursuant to the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined
therein, unless otherwise defined herein. In addition, Section 1.1 of the
Credit Agreement is amended by adding or amending, as the case may be, the
following definitions:
"COMMITMENT": In the case of each Bank, the amount set forth opposite
such Bank's signature on the signature page of the First Amendment (or in
the relevant Assignment and Assumption Agreement for such Bank), as the
same may be reduced from time to time pursuant to SECTION 4.3, or, as the
context may require, the agreement of each Bank to make Loans to the
Borrower and to participate in Swing Line Loans to the Borrower and to
participate in Letters of Credit issued for the account of the Borrower up
to such amount, subject to the terms and conditions of this Agreement."
"FIRST AMENDMENT": That certain First Amendment to Amended and Restated
Credit Agreement dated as of March 15, 1999, by and among the Borrower,
the Banks and the Agent."
"FIRST AMENDMENT EFFECTIVE DATE": The date on which the First Amendment
becomes effective under paragraph 6 of the First Amendment.
"FIRST REPLACEMENT REVOLVING NOTES": The Revolving Notes of the
Borrower dated March 20, 1998, payable to the order of the Banks.
"PERCENTAGE": As to any Bank, the percentage set forth opposite such
Bank's signature on the signature page of the First Amendment (or in the
relevant Assignment and Assumption Agreement for such Bank) (I.E., the
proportion, expressed as percentage, that such Bank's Commitment bears to
the Aggregate Commitment).
<PAGE>
"TERMINATION DATE": The earliest of (a) March 17, 2000, or such later
date to which the Termination Date is extended pursuant to the provisions
of SECTION 2.9, (b) the date on which the Commitments are terminated
pursuant to SECTION 10.2 hereof or (c) the date on which the Commitments
are reduced to zero pursuant to SECTION 4.3 hereof."
2. REDUCTION OF THE COMMITMENT AND PERCENTAGE OF THE CHASE MANHATTAN
BANK; RETURN OF REVOLVING NOTE PAYABLE TO THE ORDER OF THE CHASE MANHATTAN
BANK. From and after the First Amendment Effective Date, the Commitment of
The Chase Manhattan Bank ("Chase") shall be reduced to zero and the
Percentage of Chase shall be reduced to zero percent. Promptly after the
First Amendment Effective Date, Chase shall return to the Agent the
Borrower's Revolving Note dated March 20, 1998, payable to the order of Chase
in the principal amount of $15,000,000 marked "Cancelled". Upon receipt of
such Revolving Note marked "Cancelled" from Chase, the Agent shall promptly
return such Revolving Note to the Borrower.
3. INCREASE OF COMMITMENTS AND PERCENTAGES OF THE BANKS OTHER THAN
CHASE. From and after the First Amendment Effective Date, the Commitment and
Percentage of each Bank other than Chase are set forth opposite the signature
of such Bank on the signature page of this Amendment.
4. REVOLVING NOTES. Section 2.5(a) of the Credit Agreement is hereby
amended to read as follows:
"(a) REVOLVING NOTES. The Revolving Loans of each Bank shall be
evidenced by a promissory note of the Borrower (each a "Revolving Note"
and collectively for all Banks, the "Revolving Notes"), substantially in
the form of EXHIBIT A-1 hereto, in the amount of such Bank's Commitment
originally in effect and dated as of the First Amendment Effective Date
(or dated as of the relevant date of the Assignment and Assumption
Agreement for such Bank). The Revolving Notes have been issued in
replacement of, and in substitution for, but not in payment of, the First
Replacement Revolving Notes which, in turn, had been issued in replacement
of, and in substitution for, but not in payment of, the Original Notes.
Each Bank shall enter in its respective records the amount of each
Revolving Loan, the rate or rates of interest borne by its Revolving Loans
and the payments made on the Revolving Loans, and such records shall be
deemed conclusive evidence of the subject matter thereof, absent manifest
error."
5. REMAINING EXTENSIONS OF THE TERMINATION DATE. The Borrower, the
Banks and the Agent acknowledge and agree that extension of the Termination
Date effected by this Amendment constitutes the first extension of the
Termination Date contemplated by SECTION 2.9 of the Credit Agreement. Two
(2) further extensions of the Termination Date remain available to the
Borrower pursuant to the terms and conditions of SECTION 2.9 of the Credit
Agreement.
6. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT. This
Amendment shall become effective when the Agent shall have received each of
the following, each in substance and form acceptable to the Agent in its sole
discretion:
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<PAGE>
(a) This Amendment, duly executed on behalf of the Borrower, the Agent,
and the Banks;
(b) A Revolving Note payable to the order of each Bank other than Chase
in the amount of such Bank's Commitment after giving effect to this First
Amendment, duly executed on behalf of the Borrower.
(c) An opinion of counsel to the Borrower; and
(d) Such other items as the Agent shall reasonably require.
7. DELIVERY OF REVOLVING NOTES TO BANKS OTHER THAN CHASE; RETURN OF
FIRST REPLACEMENT REVOLVING NOTES BY BANKS OTHER THAN CHASE. Promptly upon
the Agent's receipt of the Revolving Notes from the Borrower as contemplated
by paragraph 6(b) of this Amendment, the Agent shall deliver to each Bank
other than Chase its respective Revolving Note. Promptly upon each such
Bank's receipt of its Revolving Note, such Bank shall return to the Agent the
Borrower's First Replacement Revolving Note payable to such Bank marked
"Replaced by Replacement Note". Upon receipt of each such First Replacement
Revolving Note marked "Replaced by Replacement Note" from each such Bank, the
Agent shall promptly return each such First Replacement Revolving Note to the
Borrower.
8. BORROWER'S COVENANT TO ENTER INTO A RESTATED CREDIT AGREEMENT.
Upon request of the Agent and the Banks other than Chase, the Borrower shall,
no later than May 31, 1999, enter into a restated credit agreement with the
Agent and the Banks other than Chase which shall be identical in all material
respects to the Credit Agreement, as amended by this Amendment, except that
Chase will not be a party to such restated credit agreement. In connection
with such restated credit agreement, the Borrower shall execute replacement
revolving notes and shall provide such corporate authorization documentation,
opinions of counsel and other items as shall be reasonably requested by the
Agent and the Banks other than Chase.
9. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect.
10. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Agent and the Banks as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action and
do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate
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<PAGE>
any provision of any law, rule or regulation or of any order, writ,
injunction or decree presently in effect, having applicability to the
Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to
which the Borrower is a party or by which it or its properties may be
bound or affected.
(c) All of the representations and warranties contained in Article VII
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.
11. REFERENCES TO CREDIT AGREEMENT. All references in the Credit
Agreement to "this Agreement" shall be deemed to refer to the Credit
Agreement as amended by this Amendment and any and all references in the Loan
Documents to the Credit Agreement shall be deemed to refer to the Credit
Agreement as amended by this Amendment.
12. NO WAIVER. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement, whether or not known to the
Agent and/or the Banks and whether or not existing on the date of this
Amendment.
13. RELEASE. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Agent and each of the Banks, and any and
all participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees
of any of the foregoing, from any and all claims, demands or causes of action
of any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower has had, now has or has made claim to have against any such person
for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
14. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Agent on demand for all
costs and expenses incurred by the Agent in connection with the preparation
of this Amendment, including without limitation all reasonable fees and
disbursements of legal counsel to the Agent.
15. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one
and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
DAIN RAUSCHER CORPORATION
By
-------------------------------
Title
-------------------------
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Attention: Theodore F. Ceglia
Fax: (612) 607-8731
Commitment: U.S. BANK NATIONAL ASSOCIATION,
$17,500,000 as Agent and a Bank
Percentage: 35%
By
-------------------------------
Title
-------------------------
601 2nd Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Vice President, Financial
Services Division
Fax: (612) 973-0832
SIGNATURE PAGE TO FIRST AMENDMENT
<PAGE>
Commitment: NORWEST BANK MINNESOTA,
$17,500,000 NATIONAL ASSOCIATION
Percentage: 35%
By
-------------------------------
Title
-------------------------
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0105
Attention: Vice President, Financial
Institutions Division
Fax: (612) 667-7251
Commitment: THE BANK OF NEW YORK
$15,000,000
Percentage: 30%
By
-------------------------------
Title
-------------------------
One Wall Street
First Floor
New York, New York 10286
Attention: Joe Ciacciarelli
Fax: (212) 809-9375
Commitment: THE CHASE MANHATTAN BANK
$0
Percentage: 0%
By
-------------------------------
Title
-------------------------
Broker-Dealer Division
21st Floor
One Chase Manhattan Plaza
New York, New York 10081
Attention: Diane Leslie
Fax: (212) 552-5287
M1:468107.04
SIGNATURE PAGE TO FIRST AMENDMENT
<PAGE>
EXHIBIT 10.12
DAIN RAUSCHER 1996 STOCK INCENTIVE PLAN
(as amended through April 27, 1999)
SECTION 1. PURPOSE.
The purpose of the Plan is to promote the interests of the Company and
its stockholders by aiding the Company in attracting and retaining management
personnel and Non-Employee Directors capable of providing strategic direction
to, and assuring the future success of, the Company, to offer such personnel
and directors and other employees as determined by the Committee from time to
time incentives to put forth maximum efforts for the success of the Company's
business and an opportunity to acquire a proprietary interest in the Company,
thereby aligning the interests of such personnel and directors with the
Company's stockholders.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case
as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, Other
Stock Grant or Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan, which shall consist
of members appointed from time to time by the Board of Directors and shall be
comprised of not less than such number of directors as shall be required to
permit the Plan to satisfy the requirements of Rule 16b-3. Each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m) of the Code.
(f) "Company" shall mean Dain Rauscher Corporation, a Delaware
corporation, and any successor corporation.
<PAGE>
(g) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
(h) "Eligible Person" shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate who
the Committee determines to be an Eligible Person. A Non-Employee Director
shall not be an Eligible Person.
(i) "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
(j) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding the
foregoing, unless otherwise determined by the Committee, the Fair Market
Value of Shares on a given date for purposes of the Plan shall be the closing
sale price of the Shares as reported on the New York Stock Exchange on such
date or, if such Exchange is not open for trading on such date, on the day
closest to such date when such Exchange is open for trading.
(k) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code or any successor provision.
(l) "Non-Employee Director" shall mean a director who is not also an
employee of the Company or an Affiliate.
(m) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Reload Options.
(o) "Other Stock Grant" shall mean any right granted under Section 6(f)
of the Plan.
(p) "Other Stock-Based Award" shall mean any right granted under
Section 6(g) of the Plan.
(q) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
(r) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
(s) "Person" shall mean any individual, corporation, partnership,
association or trust.
(t) "Plan" shall mean this Dain Rauscher 1996 Stock Incentive Plan, as
amended from time to time.
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<PAGE>
(u) "Reload Option" shall mean any Option granted under
Section 6(a)(iv) of the Plan.
(v) "Restricted Stock" shall mean any Share granted under Section 6(c)
or Section 7(d) of the Plan.
(w) "Restricted Stock Unit" shall mean any unit granted under Section
6(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.
(x) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act or any successor rule or
regulation.
(y) "Shares" shall mean shares of Common Stock, $.125 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(z) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
SECTION 3. ADMINISTRATION.
(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be
administered by the Committee; PROVIDED, HOWEVER, that Section 7 of the Plan
shall not be administered by the Committee but rather by the Board of
Directors subject to the provisions and restrictions of Section 7. Subject
to the express provisions of the Plan and to applicable law, and except with
respect to Section 7 of the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to each Participant under the Plan; (iii) determine the
number of Shares to be covered by (or with respect to which payments, rights
or other matters are to be calculated in connection with) each Award; (iv)
determine the terms and conditions of any Award or Award Agreement; (v) amend
the terms and conditions of any Award or Award Agreement and accelerate the
exercisability of Options or the lapse of restrictions relating to Restricted
Stock, Restricted Stock Units or other Awards; (vi) determine whether, to
what extent and under what circumstances Awards may be exercised in cash,
Shares, other securities, other Awards or other property, or canceled,
forfeited or suspended; (vii) determine whether, to what extent and under
what circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award under the Plan
shall be deferred either automatically or at the election of the holder
thereof or the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon any
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<PAGE>
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
(b) DELEGATION. The Committee may delegate its powers and duties under
the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations
as the Committee may establish in its sole discretion; PROVIDED, HOWEVER,
that the Committee shall not delegate its powers and duties under the Plan
(i) with regard to officers or directors of the Company or any Affiliate who
are subject to Section 16 of the Exchange Act or (ii) in such a manner as
would cause the Plan not to comply with the requirements of Section 162(m) of
the Code.
(c) POWER AND AUTHORITY OF THE BOARD OF DIRECTORS. Notwithstanding
anything to the contrary contained herein, the Board of Directors may, at any
time and from time to time, without any further action of the Committee,
exercise the powers and duties of the Committee under the Plan with regard to
any Person who is not an officer or director of the Company or any Affiliate
who is subject to Section 16 of the Exchange Act.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in Section
4(c), the aggregate number of Shares which may be issued under all Awards
under the Plan shall be 3,000,000. Shares to be issued under the Plan may be
either Shares reacquired and held in the treasury or authorized but unissued
Shares. If any Shares covered by an Award or to which an Award relates are
not purchased or are forfeited, or if an Award otherwise terminates without
delivery of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such
Award, to the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan. Notwithstanding the foregoing,
the number of Shares available for granting Incentive Stock Options under the
Plan shall not exceed 3,000,000, subject to adjustment as provided in the
Plan and Section 422 or 424 of the Code or any successor provision.
(b) ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted
on the date of grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan.
(c) ADJUSTMENTS. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type
of Shares (or other securities or other property) subject to outstanding
Awards and (iii) the purchase or exercise price with respect to any Award;
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<PAGE>
PROVIDED, HOWEVER, that the number of Shares covered by any Award or to which
such Award relates shall always be a whole number.
(d) AWARD LIMITATIONS UNDER THE PLAN. No Eligible Person may be
granted any Award or Awards under the Plan, the value of which Awards is
based solely on an increase in the value of the Shares after the date of
grant of such Awards, for more than 150,000 Shares in the aggregate in any
calendar year. The foregoing annual limitation specifically includes the
grant of any Awards representing "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY.
Any Eligible Person, including any Eligible Person who is an officer or
director (but not a Non-Employee Director) of the Company or any Affiliate,
shall be eligible to be designated a Participant. In determining which
Eligible Persons shall receive an Award and the terms of any Award, the
Committee may take into account the nature of the services rendered by the
respective Eligible Persons, their present and potential contributions to the
success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full or part-time employees (which term
as used herein includes, without limitation, officers and directors who are
also employees), and an Incentive Stock Option shall not be granted to an
employee of an Affiliate unless such Affiliate is also a "subsidiary
corporation" of the Company within the meaning of Section 424(f) of the Code
or any successor provision. Non-Employee Directors shall be eligible to
receive Awards of Non-Qualified Stock Options under the Plan only as provided
in Section 7 of the Plan.
SECTION 6. AWARDS.
(a) OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) EXERCISE PRICE. The purchase price per Share purchasable
under an Option shall be determined by the Committee; PROVIDED, HOWEVER,
that such purchase price shall not be less than 100% of the Fair Market
Value of a Share on the date of grant of such Option.
(ii) OPTION TERM. The term of each Option shall be fixed by the
Committee.
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part
and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof, having a Fair Market Value on the
exercise date equal to the relevant exercise price) in which, payment of
the exercise price with respect thereto may be made or deemed to have been
made.
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<PAGE>
(iv) RELOAD OPTIONS. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which, subject to
the terms and conditions established by the Committee and any applicable
requirements of Rule 16b-3 or any other applicable law, the Participant
would be granted a new Option when the payment of the exercise price of a
previously granted option is made by the delivery of Shares owned by the
Participant pursuant to Section 6(a)(iii) hereof or the relevant
provisions of another plan of the Company, and/or when Shares are tendered
or forfeited as payment of the amount to be withheld under applicable
income tax laws in connection with the exercise of an Option, which new
Option would be an Option to purchase the number of Shares not exceeding
the sum of (A) the number of Shares so provided as consideration upon the
exercise of the previously granted option to which such Reload Option
relates and (B) the number of Shares, if any, tendered or withheld as
payment of the amount to be withheld under applicable tax laws in
connection with the exercise of the option to which such Reload Option
relates pursuant to the relevant provisions of the plan or agreement
relating to such option. Reload Options may be granted with respect to
Options previously granted under the Plan or any other stock option plan
of the Company, and may be granted in connection with any Option granted
under the Plan or any other stock option plan of the Company at the time
of such grant. Such Reload Options shall have a per share exercise price
equal to the Fair Market Value as of the date of grant of the new Option.
Any Reload Option shall be subject to availability of sufficient Shares
for grant under the Plan. Shares surrendered as part or all of the
exercise price of the Option to which it relates that have been owned by
the optionee less than six months will not be counted for purposes of
determining the number of Shares that may be purchased pursuant to a
Reload Option.
(b) STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the
Plan and any applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during
a specified period before or after the date of exercise) over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on
the date of grant of the Stock Appreciation Right. Subject to the terms of
the Plan and any applicable Award Agreement, the grant price, term, methods
of exercise, dates of exercise, methods of settlement and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.
(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is
hereby authorized to grant Awards of Restricted Stock and Restricted Stock
Units to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the
Plan as the Committee shall determine:
(i) RESTRICTIONS. Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the right to vote
a Share of Restricted Stock or the right to receive any dividend or other
right or property with respect thereto), which
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<PAGE>
restrictions may lapse separately or in combination at such time or times,
in such installments or otherwise as the Committee may deem appropriate.
(ii) STOCK CERTIFICATES. Any Restricted Stock granted under the
Plan shall be evidenced by issuance of a stock certificate or
certificates, which certificate or certificates shall be held by the
Company. Such certificate or certificates shall be registered in the name
of the Participant and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Restricted Stock.
In the case of Restricted Stock Units, no Shares shall be issued at the
time such Awards are granted.
(iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise
determined by the Committee, upon termination of employment (as determined
under criteria established by the Committee) during the applicable
restriction period, all Shares of Restricted Stock and all Restricted
Stock Units at such time subject to restriction shall be forfeited and
reacquired by the Company; PROVIDED, HOWEVER, that the Committee may, when
it finds that a waiver would be in the best interest of the Company, waive
in whole or in part any or all remaining restrictions with respect to
Shares of Restricted Stock or Restricted Stock Units. Any Share
representing Restricted Stock that is no longer subject to restrictions
shall be delivered to the holder thereof promptly after the applicable
restrictions lapse or are waived. Upon the lapse or waiver of restrictions
and the restricted period relating to Restricted Stock Units evidencing
the right to receive Shares, such Shares shall be issued and delivered to
the holders of the Restricted Stock Units.
(d) PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards
or other property and (ii) shall confer on the holder thereof the right to
receive payments, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan and any applicable Award
Agreement, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any Performance
Award granted, the amount of any payment or transfer to be made pursuant to
any Performance Award and any other terms and conditions of any Performance
Award shall be determined by the Committee.
(e) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant
Dividend Equivalents to Participants under which such Participants shall be
entitled to receive payments (in cash, Shares, other securities, other Awards
or other property as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee.
Subject to the terms of the Plan and any applicable Award Agreement, such
Dividend Equivalents may have such terms and conditions as the Committee
shall determine.
(f) OTHER STOCK GRANTS. The Committee is hereby authorized, subject to
the terms of the Plan and any applicable Award Agreement, to grant to
Participants Shares without restrictions thereon as are deemed by the
Committee to be consistent with the purpose of the Plan; PROVIDED, HOWEVER,
that such grants must comply with Rule 16b-3 and applicable law.
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(g) OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related
to, Shares (including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent with the purpose of
the Plan; PROVIDED, HOWEVER, that such grants must comply with Rule 16b-3 and
applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of such
Awards. Shares or other securities delivered pursuant to a purchase right
granted under this Section 6(g) shall be purchased for such consideration,
which may be paid by such method or methods and in such form or forms
(including, without limitation, cash, Shares, other securities, other Awards
or other property or any combination thereof), as the Committee shall
determine, the value of which consideration, as established by the Committee,
shall not be less than 100% of the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.
(h) GENERAL. Except as otherwise specified with respect to Awards to
Non- Employee Directors pursuant to Section 7 of the Plan:
(i) NO CASH CONSIDERATION FOR AWARDS . Awards shall be granted
for no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER . Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any plan of the Company or any Affiliate other than the
Plan. Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any such other plan of
the Company or any Affiliate may be granted either at the same time as or
at a different time from the grant of such other Awards or awards.
(iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, Shares, other securities,
other Awards or other property or any combination thereof), and may be
made in a single payment or transfer, in installments or on a deferred
basis, in each case in accordance with rules and procedures established by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents with respect to installment or deferred payments.
(iv) LIMITS ON TRANSFER OF AWARDS. No Award (other than Other
Stock Grants and, as hereinafter set forth, Non-Qualified Stock Options)
and no right under any such Award shall be transferable by a Participant
otherwise than by will or by the laws of descent and distribution;
PROVIDED, HOWEVER, that, if so determined by the Committee, a Participant
may, in the manner established by the Committee, designate a beneficiary
or beneficiaries to exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the death of the
Participant. A Participant
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may transfer a Non-Qualified Stock Option to any "Family Member" (as such
term is defined in General Instruction A.5 to Form S-8 (or any successor
to such Instruction or such Form)) at any time that such Participant holds
such Option; PROVIDED, that, such transfers may not be for value (i.e.,
the transferor may not receive any consideration therefor) and the Family
Member may not make any subsequent transfers otherwise than by will or by
the laws of descent and distribution. Each Award (other than Other Stock
Grants and Non-Qualified Stock Options) or right under any such Award
shall be exercisable during the Participant's lifetime only by the
Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative. No Award or right under any such Award
may be pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance thereof shall be
void and unenforceable against the Company or any Affiliate.
(v) TERM OF AWARDS. The term of each Award shall be for such
period as may be determined by the Committee.
(vi) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates
for Shares or other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations and other requirements of the
Securities and Exchange Commission and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions. If the Shares or other securities are traded on a
securities exchange, the Company shall not be required to deliver any
Shares or other securities covered by an Award unless and until such
Shares or other securities have been admitted for trading on such
securities exchange.
SECTION 7. AWARDS TO NON-EMPLOYEE DIRECTORS.
(a) ELIGIBILITY. Options shall be granted automatically under the plan
to each Non-Employee Director under the terms and conditions contained in
this Section 7. The authority of the Committee under this Section 7 shall be
limited to ministerial and non-discretionary matters.
(b) ANNUAL OPTION GRANTS. Each Non-Employee Director shall be granted
an Option to purchase 2,000 Shares on the date of each Non-Employee
Director's election or reelection to the Board of Directors. The exercise
price of each Option shall be equal to 100 percent of the Fair Market Value
per Share on the date of grant. Such Options shall be Non-Qualified Stock
Options, shall become exercisable six months after the date of grant, and
shall terminate on the fifth anniversary of the date of grant, unless
previously exercised or terminated. Such Options shall be subject to the
terms and conditions of Sections 6(a) and 10 of the Plan and to other
standard terms and conditions contained in the form of Non-Qualified Stock
Option Agreement used by the Company from time to time.
(c) EXERCISE OF NON-EMPLOYEE DIRECTOR OPTIONS. Non-Qualified Stock
Options granted to Non-Employee Directors may be exercised in whole or in
part from time to time by serving written notice of exercise on the Company
at its principal executive offices, to the attention of the Company's
Secretary. The notice shall state the number of Shares as to
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which the Option is being exercised and be accompanied by payment of the
purchase price. A Non-Employee Director may, at such Director's election,
pay the purchase price by check payable to the Company, in Shares, or in any
combination thereof having a Fair Market Value on the exercise date equal to
the applicable exercise price.
(d) DEFERRAL ELECTION AND RESTRICTED STOCK AWARD. Non-Employee
Directors shall not be entitled to make any elections under the terms of this
Section 7(d) after May 6, 1998, and the following terms and conditions of
this Section 7(d) shall only continue to apply after such date to shares of
Restricted Stock outstanding on April 27, 1999 that were granted hereunder
pursuant to irrevocable elections made by Non-Employee Directors prior to May
6, 1998:
(i) DEFERRAL OF REGULAR CASH COMPENSATION INTO RESTRICTED STOCK.
Each Non-Employee Director may irrevocably elect, once per year, to reduce
either 50% or 100% of the annual cash retainer (the "Annual Retainer")
otherwise payable for services to be rendered by him or her as a director
(excluding any additional fees payable for attending any meetings of the
Board of Directors or a committee of the Board of Directors, or for
serving on a committee of the Board of Directors) for the twelve-month
period covered by such Annual Retainer (a "Director Year") and to receive
in lieu thereof Shares of Restricted Stock. Any such election (a
"Deferral Election") shall be in writing and must be made at least six
months before the services are rendered giving rise to such compensation.
In consideration for foregoing the Annual Retainer, the amount so deferred
by a Non-Employee Director who elects to participate (a "Participating
Director") shall be increased by 10% for purposes of determining the
number of Shares of Restricted Stock to be awarded to such Participating
Director under this Section 7(d).
(ii) GRANTS OF RESTRICTED STOCK. If any Non-Employee Director
makes a Deferral Election for any Director Year, there shall be awarded on
the date of the annual meeting for such Director Year (the "Award Date")
to such Participating Director a number of Shares of Restricted Stock
equal to the Annual Retainer payable for such Director Year (increased by
10% as described in the preceding paragraph (i)) divided by the closing
price per share of the Shares on the New York Stock Exchange as reported
for the Award Date, which resulting number shall be rounded up to the
nearest whole number of Shares.
(iii) VESTING SCHEDULE. Restricted Stock granted under this
Section 7(d) to any Non-Employee Director for any given Deferral Election
shall be subject to forfeiture until vested and shall vest in full on the
first anniversary of the Award Date.
(iv) TRANSFER RESTRICTIONS AND FORFEITURE. Except as otherwise
set forth in Section 7(d)(v) hereof, the holder of Restricted Stock may
not sell, transfer, pledge, subject to lien, assign or otherwise
hypothecate such Restricted Stock until the vesting period with respect to
such Restricted Stock has lapsed in accordance with the terms of Section
7(d)(v) hereof. Restricted Stock granted hereunder shall be entirely
forfeited (but any cash dividends previously paid with respect thereto
shall be retained by the Non-Employee Director) in the event that, during
a vesting period, the Participating Director ceases to be a director for
any reason other than as set forth in Section 7(d)(v) hereof. A breach by
a Non-Employee Director of the terms and conditions of the Plan during the
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vesting period shall cause a forfeiture of all Restricted Stock which has
not vested as of the date of such breach.
(v) LAPSE OF RESTRICTIONS. All restrictions on Restricted Stock
issued to a Non-Employee Director shall lapse upon the earliest to occur
of the following: (A) the first anniversary of the Award Date with
respect to such Restricted Stock; (B) the date of the holder's death or
"disability" (as defined below); (C) the date on which the holder retires
from the Board of Directors in accordance with the Company's Board
retirement policy then in effect; or (D) the tenth day following the date
on which a "Change in Control" (as defined below) has occurred. For
purposes of the Plan, "disability" shall mean long-term disability as
defined in the Company's Profit Sharing Plan or any other plan of the
Company then in effect which generally defines disability for its
participants.
For purposes of the Plan, "Change of Control" with respect to the
Company shall mean:
(i) the public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) that any person,
entity or "group," within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act, other than the Company or any of its
subsidiaries, or the Dain Rauscher Retirement Plan or any other
employee benefit plan of the Company or any of its subsidiaries, or
any entity holding shares of Common Stock organized, appointed or
established for, or pursuant to the terms of, any such plan, has
become the beneficial owner (within the meaning of Rule 13d-3 of
the Exchange Act) of 35% or more of the combined voting power of
the Company's then outstanding voting securities in a transaction
or series of transactions;
(ii) the Continuing Directors (as hereinafter defined) cease
to constitute a majority of the Board of Directors;
(iii) the stockholders of the Company approve (A) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares
of the Company's stock would be converted into cash, securities or
other property, other than a merger of the Company in which
stockholders immediately prior to the merger have the same
proportionate ownership of stock of the surviving corporation
immediately after the merger; (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company; or (C) any plan of liquidation or dissolution of the
Company; or
(iv) the majority of the Continuing Directors determine, in
their sole and absolute discretion, that there has been a change in
control of the Company.
For purposes of this Plan, "Continuing Director" shall mean any
person who is a member of the Board of Directors, while such a person is a
member of the Board, who is
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not an Acquiring Person (as hereinafter defined) or an Affiliate or
Associate (as hereinafter defined) of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and who (i) was a member of the Board of Directors on May 1,
1996, or (ii) subsequently becomes a member of the Board of Directors, if
such person's initial nomination for election or initial election to the
Board of Directors is recommended or approved by a majority of the
Continuing Directors.
For purposes of this Plan, "Acquiring Person" shall mean any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) who or which, together with all Affiliates and Associates of such
person, is the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the
Company representing 35% or more of the combined voting power of the
Company's then outstanding securities, but shall not include the Company,
any subsidiary of the Company or any employee benefit plan of the Company
or of any subsidiary of the Company or any entity holding Shares
organized, appointed or established for, or pursuant to the terms of, any
such plan; and "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act.
(vi) RIGHTS AS A STOCKHOLDER. Restricted Stock shall be
represented by a stock certificate registered in the name of the holder as
described in Section 6(c)(ii). Except as otherwise provided in this Plan,
a Participating Director will have all voting, dividend, liquidation and
other rights with respect to Restricted Stock issued to the Participating
Director under this Plan as if such Participating Director were a holder
of record of unrestricted Shares; provided that, if any dividend is
declared and paid by the Company in any form other than cash, such noncash
dividend shall be subject to the same vesting schedule, forfeiture terms
and transferability restrictions as are applicable to the Restricted Stock
on which such dividends were paid.
(vii) STOCK CERTIFICATES. Any Restricted Stock granted to
Non-Employee Directors under this Section 7(d) shall be subject to all of
the terms and conditions contained in Section 6(c)(ii) hereof.
(viii) DISTRIBUTIONS UPON LAPSE OF RESTRICTIONS. Upon the lapsing
of the restrictions on any Shares of Restricted Stock, such Shares shall
become unrestricted Shares vested in the Participating Director, and any
legends regarding the restrictions affixed to the certificates
representing such Shares pursuant to this Section 7(d) shall be removed.
A Participating Director shall be entitled to request delivery of the
certificate or certificates representing such unrestricted Shares at any
time after such vesting has occurred. The Company shall cause delivery of
such certificate or certificates to be made as soon as practicable after
the lapsing (in accordance with Section 7(d)(v) hereof) of all
restrictions imposed by this Plan for all Restricted Stock issued with
respect to a given Deferral Election. An Eligible Director will be
entitled to designate a beneficiary to receive the Restricted Stock that
has vested upon such Eligible Director's death (assuming such director is
a Participating Director at his or her death), and in the event of a
Participating Director's death, payment of any amounts due under this Plan
will be made to such Participating Director's legal representatives, heirs
and legatees.
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(e) ISSUANCE OF SHARES OR OPTIONS IN LIEU OF DIRECTOR CASH COMPENSATION.
(i) AUTOMATIC RECEIPT OF SHARES IN LIEU OF ANNUAL RETAINER. One
hundred percent (100%) of the annual cash retainer (the "Annual Retainer")
payable to a Non-Employee Director for service on the Board shall be
payable solely by issuing to such Non-Employee Director a number of Shares
having a Determination Value equal to 100% of such Annual Retainer (the
"Retainer Shares"). As used herein, "Determination Value" shall mean the
average of the reported closing prices per Share on the NYSE as reported
for each of the five business days prior to the Company's regular annual
meeting of stockholders each year. Each Non-Employee Director shall be
entitled to elect either to: (i) receive a number of Non-Qualified Stock
Options to purchase Shares issuable under this Plan equal to the product
of the Retainer Shares multiplied by four and having the terms set forth
in Sections 7(b) and (c) above (the "Retainer Options"), or (ii) defer
receipt of all or a portion of the Retainer Shares into a "Deferred Stock
Account" pursuant to the Company's Deferred Compensation Plan for
Non-Employee Directors (the "Non-Employee Director Deferred Plan") in
accordance with the terms thereof. The Retainer Shares and/or Retainer
Options shall be issued or granted to a Non-Employee Director in
accordance with the elections described above and made pursuant to this
Section 7(e) and/or the Non-Employee Director Deferred Plan by such
Non-Employee Director prior to the commencement of the service year for
which services will be rendered to the Board; PROVIDED THAT, if no such
election is made, all of the Retainer Shares shall be issued to such
Non-Employee Director at the time or times as the Annual Retainer is
customarily paid.
(ii) ELECTIVE DEFERRAL OF SPECIAL RETAINER AND FEES. Pursuant to
the terms of the Non-Employee Director Deferred Plan, each Non-Employee
Director shall be entitled to defer receipt of all or a portion of the
special retainer payable quarterly in cash to Non- Employee Directors who
chair committees of the Board (the "Special Retainer") and the fees paid
quarterly in cash to Non-Employee Directors for attendance at meetings of
the Board or any committee thereof ("Fees" and together with the Retainer
and the Special Retainer, "Director Compensation") into such Director's
Deferred Stock Account in accordance with the election made pursuant to
the Non-Employee Director Deferred Plan by such Non-Employee Director
prior to the commencement of the service year for which services will be
rendered to the Board; PROVIDED THAT, if no such election is made, all of
the Special Retainer and Fees shall be paid in cash to such Non-Employee
Director at the time or times as such forms of Director Compensation are
customarily paid.
(iii) ISSUANCE OF STOCK IN LIEU OF CASH. The Company shall not
issue fractional shares hereunder. Whenever, under the terms of this
Section 7(e), a fractional share would be required to be issued, an amount
in lieu thereof shall be paid (or, in the event that a Non-Employee
Director elects to defer receipt of any Director Compensation into the
Non-Employee Director Deferred Plan, deferred) in cash for such fractional
share based upon the same Determination Value as was utilized to determine
the number of Shares to be issued on the relevant issue date.
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(f) AMENDMENTS TO SECTION 7. The provisions of this Section 7 may not
be amended more often than once every six months other than to comply with
changes in the Code or the rules and regulations promulgated under the Code.
SECTION 8. AMENDMENT AND TERMINATION; ADJUSTMENTS.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; PROVIDED, HOWEVER,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the stockholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:
(i) would cause Rule 16b-3 to become unavailable with respect to
the Plan;
(ii) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
(iii) would cause the Company to be unable, under the Code, to
grant Incentive Stock Options under the Plan.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as
otherwise herein provided or in the Award Agreement.
(c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
SECTION 9. INCOME TAX WITHHOLDING; TAX BONUSES.
(a) WITHHOLDING. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of
the federal and state taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms and
conditions as it may adopt, may permit the Participant to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the
Shares otherwise to be delivered upon exercise
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or receipt of (or the lapse of restrictions relating to) such Award with a
Fair Market Value equal to the amount of such taxes or (ii) delivering to the
Company Shares other than Shares issuable upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes. The election, if any, must be made on or before
the date that the amount of tax to be withheld is determined.
(b) TAX BONUSES. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid
upon their exercise or receipt of (or the lapse of restrictions relating to)
Awards in order to provide funds to pay all or a portion of federal and state
taxes due as a result of such exercise or receipt (or the lapse of such
restrictions). The Committee shall have full authority in its discretion to
determine the amount of any such tax bonus.
SECTION 10. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. No Eligible Person, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Persons,
Participants or holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to any Participant
or with respect to different Participants.
(b) DELEGATION. The Committee may delegate to one or more officers of
the Company or any Affiliate or a committee of such officers the authority,
subject to such terms and limitations as the Committee shall determine, to
grant Awards to Eligible Persons who are not officers or directors of the
Company for purposes of Section 16 of the Exchange Act.
(c) AWARD AGREEMENTS. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company and, if requested by the Company,
signed by the Participant.
(d) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(e) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant or Non-Employee Director the right to be
retained in the employ of the Company or any Affiliate, nor will it affect in
any way the right of the Company or an Affiliate to terminate such employment
at any time, with or without cause. In addition, the Company or an Affiliate
may at any time dismiss a Participant or Non-Employee Director from
employment free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
(f) GOVERNING LAW. The validity, construction and effect of the Plan
or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the laws of the State of
Minnesota.
(g) SEVERABILITY. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee (or, in the case of grants under
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Section 7 of the Plan, the Board of Directors), such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee
(or, in the case of grants under Section 7 of the Plan, the Board of
Directors), materially altering the purpose or intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction or Award, and
the remainder of the Plan or any such Award shall remain in full force and
effect.
(h) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company or any Affiliate.
(i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash shall be paid in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be canceled,
terminated or otherwise eliminated.
(j) HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(k) OTHER BENEFITS. No compensation or benefit awarded to or realized
by any Participant under the Plan shall be included for the purpose of
computing such Participant's compensation under any compensation-based
retirement, disability, or similar plan of the Company unless required by law
or otherwise provided by such other plan.
SECTION 11. SECTION 16(b) COMPLIANCE.
The Plan is intended to comply in all respects with Rule 16b-3 or any
successor provision, as in effect from time to time, and in all events the
Plan shall be construed in accordance with the requirements of Rule 16b-3.
If any Plan provision does not comply with Rule 16b-3 as hereafter amended or
interpreted, the provision shall be deemed inoperative. The Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
participants who are officers or directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other participants.
SECTION 12. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of March 22, 1996.
SECTION 13. TERM OF THE PLAN.
Awards shall only be granted under the Plan during a 10-year period
beginning on the effective date of the Plan. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond the end of
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such 10-year period, and the authority of the Committee provided for
hereunder with respect to the Plan and any Awards, and the authority of the
Board of Directors of the Company to amend the Plan, shall extend beyond the
termination of the Plan.
-17-
<PAGE>
EXHIBIT 10.13
DAIN RAUSCHER CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. ESTABLISHMENT AND PURPOSE.
1.1 ESTABLISHMENT. DAIN RAUSCHER CORPORATION, a Delaware
corporation, together with any and all subsidiaries, hereby establishes,
effective as of April , 1999, a deferred compensation plan for the
non-employee members of its Board of Directors which shall be known as the
Deferred Compensation Plan for Non-Employee Directors (hereinafter called the
"Plan").
1.2 PURPOSE. The purpose of this Plan is to provide a means
whereby amounts payable by the Company to its Non-Employee Directors for
services as a member of the Company's Board or any committee thereof, or any
committee thereof, may be deferred to some future period. It is also the
purpose of this Plan to motivate such Non-Employee Directors to continue to
make contributions to the growth and profits of the Company and to increase
their ownership of shares of Common Stock, and thereby align their interest
in the long-term success of the Company with that of the other stockholders.
This will be accomplished by allowing each Participating Director to elect
voluntarily to receive all or a portion of his or her annual Stock Retainer,
Special Retainer and meeting Fees in the form of shares of deferred Common
Stock pursuant to an irrevocable election made under this Plan.
2. DEFINITIONS.
2.1 DEFINITIONS. Whenever used in this Plan, the following terms
shall have the meanings set forth below:
(a) "ACCOUNTS" means the Deferred Stock Account and the Deferred
Cash Account for any Participating Director.
(b) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, is
the Beneficial Owner, directly or indirectly, of securities of
the Company, representing thirty-five percent (35%) or more of
the combined voting power of the Company's then outstanding
securities, but shall not include the Company, any subsidiary
of the Company or any employee benefit plan of the Company or
any subsidiary of the Company or any entity holding shares of
stock of the Company organized, appointed or established for,
or pursuant to the terms of, any such plan.
(c) "ADMINISTRATIVE COMMITTEE" means the Chief Executive Officer
and Chief Financial Officer of the Company, whether or not
such individuals are also members of the Board of the Company.
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(d) "AFFILIATE" shall have the meaning ascribed to the term
"Affiliate" in Rule 12b-2 promulgated under the Exchange Act.
(e) "ASSOCIATE" shall have the meaning ascribed to such term in
Rule 12b-2 promulgated under the Exchange Act.
(f) "BENEFICIAL OWNER" shall have the meaning ascribed to such
term in Rule 13d-3 promulgated under the Exchange Act.
(g) "BENEFICIARY" means a Person designated by a Participating
Director (or automatically, by operation of this Plan) to
receive any benefit remaining at the death of such
Participating Director under the terms of this Plan.
(h) "BOARD" means the Board of Directors of the Company.
(i) "CHANGE IN CONTROL" means:
(i) the public announcement (which for purposes of this
definition), shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act that
any person, entity or group, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, other
than the Company or any of its subsidiaries, or the
Company Retirement Plan or any employee benefit plan of
the Company or any of its subsidiaries, or any entity
holding shares in stock of the Company organized,
appointed or established for, or pursuant to the terms
of such plan, has become the Beneficial Owner of
thirty-five percent (35%) or more of the combined voting
power of the Company's then outstanding voting
securities in a transaction or series of transactions;
(ii) the Continuing Directors cease to constitute a majority
of the Board;
(iii) the shareholders of the Company approve (1) any
consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's stock would
be converted into cash, securities or other property,
other than a merger of the Company in which shareholders
immediately prior to the merger have the same
proportionate ownership of stock of the surviving
corporation immediately after merger; (2) any sale,
lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or
substantially all of the assets of the Company; or (3)
any plan of liquidation or dissolution of the Company; or
<PAGE>
(iv) the majority of the Continuing Directors determine, in
their sole and absolute discretion, that there has been
a change in control of the Company.
(j) "COMMON STOCK" means the common stock, par value $0.125 per
share, of the Company.
(k) "COMPANY" means DAIN RAUSCHER CORPORATION, a Delaware
corporation, together with all its subsidiaries.
(l) "CONTINUING DIRECTOR" means any person who is a member of the
Board, while such person is a member of the Board, who is not
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, and who (A) was a
member of the Board on January 1, 1999, or (B) subsequently
becomes a member of the Board, if such person's initial
nomination for election or initial election to the Board is
recommended or approved by the majority of the Continuing
Directors.
(m) "CONVERSION PRICE" means the average of the reported closing
prices per share of the Common Stock on the NYSE as reported
for each of the five business days prior to the measurement
date for any crediting of shares under this Plan.
(n) "DEFERRAL ELECTIONS" means the elections made pursuant to
Section 4.1 of this Plan.
(o) "DEFERRED CASH ACCOUNT" means the bookkeeping account of this
Plan to which all of a Participating Director's deemed cash
allocations are credited pursuant to this Plan.
(p) "DEFERRED STOCK ACCOUNT" means the bookkeeping account of this
Plan to which all of a Participating Director's deemed stock
allocations are credited pursuant to this Plan.
(q) "DISTRIBUTION ELECTION" means the elections made pursuant to
Section 4.3 of the Plan.
(r) "ELECTION AMOUNTS" means the amounts of the Retainer and/or
Fees and Special Retainer the Participating Director elects to
defer, as provided for in Section 4.1 of this Plan.
(s) "ELECTION FORM" means the form containing the irrevocable
elections of a Participating Director to (i) defer the receipt
of the Retainer and/or the Fees and Special Retainer payable
to such Participating Director, as provided for in Section 4.4
of this Plan, and (ii) cause the distribution of
<PAGE>
the amounts credited to such Participating Director's Accounts
to be made on a date or dates selected by such Participating
Director, as provided for in Section 4.3 of this Plan.
(t) "ELIGIBLE DIRECTOR" means any Non-Employee Director of the
Company as set forth in Section 3.1 of this Plan.
(u) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(v) "FEES" means the amount payable quarterly in cash to a
Director during a Plan Year for attendance at meetings of the
Board or any committee thereof, as set forth in Section 4.1 of
this Plan.
(w) "INITIAL CREDIT" shall have the meaning set forth in Section
4.4 of this Plan.
(x) "NON-EMPLOYEE DIRECTOR" means an individual who is a member of
the Board of the Company but who is not an officer or employee
of the Company or any of its subsidiaries.
(y) "NORMAL RETIREMENT" shall have the meaning set forth in
Section 6.1 of this Plan.
(z) "NYSE" means the New York Stock Exchange, Inc.
(aa) "PARTICIPATING DIRECTOR" has the meaning set forth in Section
4.1 of this Plan.
(bb) "PLAN YEAR" means the approximately 12-month period which runs
from the first meeting of the Board following the election of
such Board at the annual meeting of stockholders of the
Company until the next meeting of stockholders at which any
members of such Board are elected by the stockholders of the
Company.
(cc) "PERSON" shall have the meaning ascribed to such term as such
term is used in Sections 13(d) and 14(d) of the Exchange Act.
(dd) "RETAINER" means the amounts payable annually in shares of
Common Stock to a Non-Employee Director for services rendered
to the Company as a Director during a Plan Year, but does not
include the Special Retainer and Fees.
(ee) "SPECIAL RETAINER" means the special retainer payable during a
Plan Year quarterly in cash to Non-Employee Directors who
chair committees of the Board, in the amounts determined by
the Board from time to time.
(ff) "TERMINATION DATE" has the meaning set forth in Section 3.2 of
this Plan.
<PAGE>
(gg) "1996 PLAN" means the 1996 Stock Incentive Plan of the
Company, as it may be amended from time to time.
2.2 RULES OF INTERPRETATION. Whenever appropriate, words used
herein in the singular may be read in the plural, or words used herein in the
plural may be read in the singular; the masculine may include the feminine
and the words "hereof," "herein" or "hereunder" or other similar compounds of
the word "here" shall mean and refer to this entire Plan Statement and not to
any particular paragraph or section of this Plan Statement unless the context
clearly indicates to the contrary. The titles given to the various sections
of this Plan Statement are inserted for convenience of reference only and are
not part of this Plan Statement. and they shall not be considered in
determining the purpose, meaning or intent of any provision hereof. Any
reference in this Plan Statement to a statute or regulation shall be
considered also to mean and refer to any subsequent amendment or replacement
of that statute or regulation. This instrument has been executed and
delivered in the State of Minnesota and has been drawn in conformity to the
laws of that State and shall be construed and enforced in accordance with the
laws of the State of Minnesota.
3. ELIGIBILITY FOR PARTICIPATION.
3.1 ELIGIBILITY. Any Non-Employee Director of the Company shall
be eligible to participate in this Plan (an "Eligible Director"). In the
event a Participating Director no longer meets the requirements for
participation in this Plan, he shall become an inactive Participating
Director, retaining all the rights described under this Plan, except the
right to make any further deferrals, until the time (if ever) that he again
becomes an active Participating Director.
3.2 TERMINATION OF SERVICE AS A DIRECTOR. If a Participating
Director leaves the Board before the conclusion of any calendar quarter, he
or she will be paid the quarterly installment of the Special Retainer and
Fees entirely in cash, notwithstanding that a Deferral Election made by such
Participating Director is on file with the Company. The date of termination
of a Participating Director's service as a Director of the Company will be
deemed to be the earlier of (i) the date of such Director's death,
resignation or removal from the Board of Directors or (ii) the expiration of
such Director's term as a Director without reelection to the Board of
Directors (the "Termination Date").
4. ELECTIONS TO DEFER COMPENSATION.
4.1 ELECTIONS TO DEFER COMPENSATION. On forms provided by the
Company, each Eligible Director who decides to participate (each, a
"Participating Director") may irrevocably elect to make up to two separate
deferral elections (the "Deferral Elections") to defer, in increments equal
to 25%, 50%, 75% or 100% of each of, (i) receipt of the shares of Common
Stock constituting the Retainer and/or (ii) the sum of the Special Retainer
and any Fees otherwise payable to such Participating Director in cash, in
each case, for services to be rendered in the Plan Year following such
election or elections. The amounts to be deferred will be deferred in the
form of credits to the Participating Director's Deferred Stock Account and
Deferred Cash Account, as set forth in Article 5 hereof, for the amount of
the Retainer and/or the
<PAGE>
Special Retainer and Fees the Participating Director elects to defer (the
"Election Amounts"). The Deferral Elections shall be made pursuant to
Section 4.2 hereof. Any Deferral Election may only be amended or revoked in
accordance with the procedure set forth in Section 4.4 hereof.
4.2 MANNER OF MAKING DEFERRAL ELECTION. A Participating Director
may elect to defer payment of the Retainer and/or payment of the Special
Retainer and Fees pursuant to this Plan by filing, at any time prior to the
beginning of a Plan Year (or by such other date as the Administrative
Committee shall determine), an irrevocable election with the Administrative
Committee on a form provided for that purpose (the "Election Form"), except
that:
(a) for the Plan Year which begins April 27, 1999, an Election
Form may be filed at any time on or prior to April 30, 1999,
to be effective for the Retainer and/or Special Retainer and
Fees to be paid after the inception of the Plan on May 1, 1999
and thereafter during such Plan Year, and
(b) any person who is first elected to the Board of the Company
after the beginning of a Plan Year may make initial Deferral
Elections pursuant to Section 4.1 hereof at any time prior to
his attendance at the first meeting of the Board or any
committee thereof after his election to the Board, and shall
be effective as of the date the Participating Director was
elected.
The Election Form shall specify an amount or amounts to be deferred expressed
as a percentage (either 25%, 50%, 75% or 100%, respectively) of the value of
the Participating Director's Retainer and/or Special Retainer and Fees. In
all circumstances, the first credit (after the Initial Credit described in
Section 4.5 hereof) to a Participating Director's Deferred Stock Account and
Deferred Cash Account (if necessary) will only include the Retainer and/or
Special Retainer and Fees for services performed after the date on which the
Administrative Committee receives such Form.
4.3 DISTRIBUTION ELECTION. At the same time that a Participating
Director elects to participate in the Plan with respect to any Plan Year and
makes his Deferral Elections, such Participating Director shall also elect
the timing of the distribution of the amounts credited to such Participating
Director's Accounts with respect to any such Deferral Election by delivering
a signed and completed Election Form to the Company. Unless the following
distribution elections are subsequently amended or otherwise modified by the
Administrative Committee, a Participating Director may only elect to have
distributions attributable to any Deferral Election for any Plan Year be made
in one lump sum or paid out in two or three equal, annual installments, in
each case, following the Termination Date.
4.4 ANNUAL CHANGE IN ELECTIONS. Once each calendar year, a
Participating Director may irrevocably elect in writing to (i) change an
earlier Deferral Election, either to change the percentage of that
Participating Director's Retainer and/or Special Retainer and Fees to be
credited to his Accounts, or to receive the entire Retainer and/or Special
Retainer and Fees when paid without deferral and/or (ii) to change the
Distribution Election. Such amended Election Form shall become effective on
the first business day of the Plan Year following receipt
<PAGE>
by the Administrative Committee thereof with respect to Election Amounts
being deferred for and after such Plan Year.
4.5 INITIAL CREDIT. In connection with the adoption of this
Plan, the Board authorized, and the Participating Directors agreed to, the
termination of the Company's individual retirement agreements with each
Non-Employee Director who will be a director on May 1, 1999, effective as of
the commencement of this Plan. Each Participating Director who will be a
director on May 1, 1999, has agreed to accept a one-time payment, in lieu of
his accrued benefit under his retirement agreement, of shares of Common Stock
to be credited to his Deferred Stock Account hereunder in an amount equal to
the net present value of such accrued benefit as of May 1, 1999, divided by
the Conversion Price of one share of Common Stock as of April 30, 1999 (the
"Initial Credit"). Therefore, effective as May 1, 1999, each Participating
Director's Deferred Stock Account shall be credited with the Initial Credit.
5. DEFERRED COMPENSATION ACCOUNTS.
5.1 ESTABLISHMENT OF ACCOUNTS. The amount of benefits to be paid
by the Company to each Participating Director under this Plan shall be
determined by reference to the Accounts to be established and maintained by
the Company for each Participating Director. Such Accounts shall be
established for bookkeeping purposes only and shall not be considered as, or
as evidence of the creation of, a trust fund or a transfer or other
segregation of assets for the benefit of the Participating Directors or their
designated beneficiaries. Such Accounts will be composed of a Deferred Cash
Account and a Deferred Stock Account for each Participating Director
5.2 CREDITS TO ACCOUNTS.
5.2.1 DEFERRED STOCK ACCOUNT. Except as otherwise
described in the last sentence of this Section 5.2.1, the entire amount of
any Election Amount deferred by a Participating Director shall be allocated
and credited to such Participating Director's Stock Account pursuant to the
terms of this Section 5.2.1. With respect to Deferral Elections covering the
Retainer, such amounts shall be credited as of the first day of the Plan Year
to which such election relates; with respect to Deferral Elections covering
the Special Retainer and/or Fees, such amounts shall be credited as of the
first day of the calendar quarter following the date of such election. Such
Participating Director's Deferred Stock Account shall be deemed to have been
allocated that number of whole shares of Common Stock, rounded down to the
nearest share, resulting from dividing the portion of the Election Amount so
deferred by the Conversion Price in effect on the effective date of
crediting to his Accounts. The portion of any Election Amount equal to the
fraction of a share of Common Stock resulting from such calculation, if any,
shall be deemed to have been allocated to such Participating Director's
Deferred Cash Account.
5.2.2 DIVIDEND ADDITIONS TO STOCK ACCOUNTS. At such times
as dividends are declared by the Company on the outstanding shares of Common
Stock, a determination shall be made of the number of shares of Common Stock
which are credited to a Participating Director's Deferred Stock Account on
the dividend record date, and an amount equal to such total number of shares
of Common Stock multiplied by the declared dividend per share of
<PAGE>
Common Stock shall be credited, on the date such dividends are paid by the
Company, initially to such Participating Director's Deferred Cash Account (if
the dividends are declared in cash) or to such Participating Director's
Deferred Stock Account (if the dividends are declared in shares of Common
Stock). Thereafter, all funds credited to a Participating Director's
Deferred Cash Account under this Plan shall be deemed to have been used to
purchase whole shares of Common Stock once, at the end of each calendar
quarter in which such funds were initially credited. The number of additional
shares of Common Stock credited to each Participating Director's Deferred
Stock Account after the end of each Plan Year due to deemed purchases with
the credited cash dividends (and other deemed cash allocations made to the
Deferred Cash Account under this Plan) shall be equal to the number of whole
shares, rounded down, derived by dividing the total amount of cash credited
to the Participating Director's Deferred Cash Account by the Conversion Price
as of the date of the deemed purchase of the shares of Common Stock credited
to such Participating Director's Deferred Stock Account under this Section
5.2.2. Any credited cash hereunder that would otherwise be deemed to have
been used to purchase a fractional share of Common Stock shall, instead,
continue to be credited to the Participating Director's Deferred Cash Account.
5.3 CHARGES AGAINST ACCOUNTS. On each date that a distribution is
made by, or on behalf of, the Company under this Plan to a Participating
Director, the amount of such distribution shall be charged against, and shall
reduce the remaining credited balance of, the appropriate Account or Accounts
of such Participating Director. The Company also reserves the right to
charge Participating Directors' Accounts with reasonable out-of-pocket costs
incurred by the Company in the administration and record keeping for the Plan.
6. DISTRIBUTIONS TO PARTICIPATING DIRECTORS.
6.1 FORM OF DISTRIBUTION; TAX WITHHOLDING. Subject to such terms
and conditions as the Administrative Committee may from time to time impose:
(a) distributions of all of a Participating Director's Accounts as
a result of such Participating Director's ceasing to serve as
a Director (other than due to his death or disability or due
to a Change in Control) ("Normal Retirement") shall be made,
at such Participating Director's election pursuant to a
Distribution Election, either:
(i) in a single payment; or
(ii) in two annual installments, the first of which shall be
equal to fifty percent (50%) of all amounts deemed
allocated to such Participating Director's Accounts on
the first payment date, and the second of which shall be
equal to all amounts deemed allocated to such
Participating Director's Accounts on the second payment
date; or
(iii) in three annual installments, the first of which
shall be equal to thirty- three and one-third percent
(33_%) of all amounts deemed
<PAGE>
allocated to such Participating Director's Accounts on
the first payment date, the second of which shall be
equal to thirty-three and one-third percent (33_%) of
all amounts deemed allocated to such Participating
Director's Accounts on the second payment date and the
third of which shall be equal to all amounts deemed
allocated to such Participating Director's Accounts on
the third payment date;
(b) distributions of all of a Participating Director's Accounts
pursuant to such Director's ceasing to serve as a Director due
to his death or disability shall be made in a single payment;
and
(c) distributions of all of a Participating Director's Accounts
upon the occurrence of a Change of Control shall be made in a
single payment.
All amounts credited to a Participating Director's Deferred Stock Account
shall only be distributed in shares of Common Stock; EXCEPT that, no
fractional shares shall be issued. Whenever, under the terms of this Plan, a
fractional share would be required to be issued, an amount in lieu thereof
shall be paid in cash for such fractional share based upon the value per
share of Common Stock described in the next sentence of this Section 6.1.
The value of each share of Common Stock credited to a Participating
Director's Deferred Stock Account shall be equal to the closing price per
share of Common Stock on the NYSE as reported for the business day preceding
the distribution date set forth in this Section 6.1 above. A Participating
Director's Deferred Cash Account shall be distributed in cash.
6.2 TIMING OF DISTRIBUTION. Subject to such terms and conditions
as the Administrative Committee may, from time to time, impose:
(a) distributions of the Accounts of a Participating Director due
to a Normal Retirement shall be payable on January 15, or as
soon as administratively feasible following such date, of each
of the Plan Year or Years following the Plan Year in which his
Normal Retirement occurred (in accordance with such
Participating Director's Distribution Election);
(b) distributions of the Accounts of a Participating Director
following the death or disability of a Participating Director
shall be made as soon as administratively feasible following
the end of the next calendar quarter; and
(c) distributions of the Accounts of a Participating Director due
to a Change in Control shall be made as soon as
administratively feasible, but in no case later than sixty
(60) days, after the occurrence of the Change in Control.
6.3 DISTRIBUTIONS TO BENEFICIARIES. Distribution of the Accounts
of a Participating Director who dies before payment to such Participating
Director is made shall
<PAGE>
commence or be made to such Participating Director's Beneficiary as soon as
administratively feasible.
6.4 DESIGNATION OF BENEFICIARY. Each Participating Director shall
have the right to designate in writing, in form satisfactory to the
Administrative Committee, one or more beneficiaries to receive the unpaid
balance of the Participating Director's Accounts in the event of his death
prior to receiving full distribution thereof, and may change or revoke any
prior Beneficiary designation by a similar instrument in writing prior to his
death. If a Participating Director shall fail to designate a Beneficiary or,
having revoked a prior Beneficiary designation, shall fail to designate a new
Beneficiary, or in the event the Participating Director's Beneficiary
designation shall fail, in whole or in part, by reason of the prior death of
a designated Beneficiary or for any other cause, then the undistributed
balance of the Participating Director's Accounts, or the portion thereof as
to which such designation shall fall, as the case may be, shall be paid to
the personal representative of the Participating Director's estate.
6.5 DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participating Director's
Accounts may disclaim his interest therein subject to the following
requirements. To be eligible to disclaim, a Beneficiary must be a natural
person, must not have received a distribution of all or any portion of such
Accounts at the time such disclaimer is executed and delivered, and must have
attained at least age twenty-one (21) years as of the date of the
Participating Director's death. Any disclaimer must be in writing and must
be executed personally by the Beneficiary before a notary public. A
disclaimer shall state that the Beneficiary's entire interest in the
undistributed Accounts is disclaimed or shall specify what portion thereof is
disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Administrative
Committee after the date of the Participating Director's death but not later
than one hundred eighty (180) days after the date of the Participating
Director's death. A disclaimer shall be irrevocable when delivered to the
Administrative Committee. A disclaimer shall be considered to be delivered
to the Administrative Committee only when actually received by the
Administrative Committee. The Administrative Committee shall be the sole
judge of the content, interpretation and validity of a purported disclaimer.
Upon the filing of a valid disclaimer, the Beneficiary shall be considered
not to have survived the Participating Director as to the interest
disclaimed. A disclaimer by a Beneficiary shall not be considered to be a
transfer of an interest in violation of the provisions of Article 8 hereof
and shall not be considered to be an assignment or alienation of benefits in
violation of any law prohibiting the assignment or alienation of benefits
under this Plan. No other form of attempted disclaimer shall be recognized
by the Administrative Committee.
6.6 SPENDTHRIFT PROVISIONS. Neither any Participating Director
nor any Beneficiary of any Participating Director shall have any transferable
interest in the Participating Director's Accounts nor any right to
anticipate, alienate, dispose of, pledge or encumber the same prior to actual
receipt of payments in accordance with this Article 6, nor shall the same be
subject to attachment, garnishment, execution following judgment or other
legal process instituted by creditors of the Participating Director or any
such Beneficiary.
7. SHARES AVAILABLE FOR ISSUANCE.
<PAGE>
7.1 SOURCE OF SHARES AVAILABLE. The shares of Common Stock
available for issuance under this Plan shall be issued under, and in
accordance with the terms of, the 1996 Plan.
7.2 ADJUSTMENTS TO SHARES. In the event of any reorganization,
merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, divestiture or
extraordinary dividend affecting the Common Stock generally, an appropriate
adjustment will be made in the number and/or kind of securities available for
issuance under this Plan, and to the shares of Common Stock credited to the
Deferred Stock Accounts of Participating Directors to prevent either the
dilution or the enlargement of the rights of the Eligible and Participating
Directors.
8. NONTRANSFERABILITY.
In no event shall the Company make any payment under this Plan to
any assignee or creditor of a Participating Director or of a Beneficiary.
Prior to the time of payment hereunder, a Participating Director or
Beneficiary shall have no rights by way of anticipation or otherwise to
assign or otherwise dispose of any interest under this Plan nor shall such
rights be assigned or transferred by operation of the law.
9. LIMITATION ON RIGHTS OF ELIGIBLE AND PARTICIPATING DIRECTORS.
9.1 SERVICE AS A DIRECTOR. Nothing in this Plan will interfere
with or limit in any way the right of the Board or the Company's stockholders
to remove an Eligible or Participating Director from the Board. Neither this
Plan nor any action taken pursuant to it will constitute or be evidence of
any agreement or understanding, express or implied, that the Board or the
Company's stockholders have retained or will retain an Eligible or
Participating Director for any period of time or at any particular rate of
compensation.
9.2 NONEXCLUSIVITY OF THE PLAN. Nothing contained in this Plan is
intended to effect, modify or rescind any of the Company's existing
compensation plans or programs or to create any limitations on the Board's
power or authority to modify or adopt compensation arrangements as the Board
may from time to time deem necessary or desirable.
10. PLAN AMENDMENT, MODIFICATION AND TERMINATION. The Board may
suspend or terminate this Plan at any time, and shall terminate at such time
as the 1996 Plan (or any successor plan thereto) is terminated. The Board
may amend this Plan from time to time in such respects as the Board may deem
advisable in order that this Plan will conform to any change in applicable
laws or regulations or in any other respect that the Board may deem to be in
the Company's best interests; PROVIDED, HOWEVER, that no amendments to this
Plan will be effective without approval of the Company's stockholders, if
stockholder approval of the amendment is then required pursuant to Rule 16b-3
(or any successor rule) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or the rules of the NYSE (or other exchange on which
the shares of Common Stock are then listed and primarily traded).
<PAGE>
11. PARTICIPATING DIRECTORS ARE GENERAL CREDITORS OF THE COMPANY. The
Participating Directors and Beneficiaries thereof shall be general, unsecured
creditors of the Company with respect to any payments to be made pursuant to
this Plan and shall not have any preferred interest by way of trust, escrow,
lien or otherwise in any specific assets of the Company. If the Company
shall, in fact, elect to set aside monies or other assets to meet its
obligations hereunder (there being no obligation to do so), whether in a
grantor's trust or otherwise, the same shall, nevertheless, be regarded as a
part of the general assets of the Company subject to the claims of its
general creditors, and neither any Participating Director nor any Beneficiary
thereof shall have a legal, beneficial or security interest therein.
12. MISCELLANEOUS.
12.1 SECURITIES LAW AND OTHER RESTRICTIONS. Notwithstanding any
other provision of this Plan or any Deferral Election or amended Deferral
Election delivered pursuant to this Plan, the Company will not be required to
issue any shares of Common Stock under this Plan and a Participating Director
may not sell, assign, transfer or otherwise dispose of shares of Common Stock
issued pursuant to this Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") and any applicable state securities laws or an
exemption from such registration under the Securities Act and applicable
state securities laws, and (b) there has been obtained any other consent,
approval or permit from any other regulatory body that the Administrative
Committee, in its sole discretion, deems necessary or advisable. The Company
may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company, in order to comply with such
securities law or other restriction.
12.2 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of this Plan and any rules, regulations and actions
relating to this Plan will be governed by and construed exclusively in
accordance with the laws of the State of Delaware.
12.3 1996 PLAN. Except as otherwise specifically stated herein,
all of the terms and conditions of the 1996 Plan shall also govern the
issuances of shares of Common Stock under this Plan.
<PAGE>
EXHIBIT 11
DAIN RAUSCHER CORPORATION
COMPUTATION OF NET EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
---------- ----------
<S> <C> <C>
BASIC EARNINGS PER SHARE:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,590 $ (2,024)
---------- ----------
---------- ----------
Weighted average common shares outstanding . . . . . . . . . . . . . . . 12,477 12,316
---------- ----------
---------- ----------
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . $ 1.81 $ (.16)
---------- ----------
---------- ----------
EARNINGS PER SHARE ASSUMING DILUTION:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,590 $ (2,024)
---------- ----------
---------- ----------
Weighted average number of common and dilutive
potential common shares outstanding:
Weighted average common shares outstanding . . . . . . . . . . . . . . . 12,477 12,316
Dilutive effect of stock options (net of tax benefits) . . . . . . . . . 296 -
Shares credited to deferred compensation
plan participants. . . . . . . . . . . . . . . . . . . . . . . . . . . 499 -
---------- ----------
Weighted average number of common dilutive
potential common shares outstanding. . . . . . . . . . . . . . . . . . . 13,272 12,316
---------- ----------
---------- ----------
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . $ 1.70 $ (.16)
---------- ----------
---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 50,254
<RECEIVABLES> 1,661,105
<SECURITIES-RESALE> 255,569
<SECURITIES-BORROWED> 0<F1>
<INSTRUMENTS-OWNED> 422,597
<PP&E> 46,083
<TOTAL-ASSETS> 2,644,401
<SHORT-TERM> 293,803
<PAYABLES> 1,549,544
<REPOS-SOLD> 85,684
<SECURITIES-LOANED> 0<F2>
<INSTRUMENTS-SOLD> 257,920
<LONG-TERM> 111,018
0
0
<COMMON> 1,586
<OTHER-SE> 344,846
<TOTAL-LIABILITY-AND-EQUITY> 2,644,401
<TRADING-REVENUE> 42,488
<INTEREST-DIVIDENDS> 30,860
<COMMISSIONS> 83,266
<INVESTMENT-BANKING-REVENUES> 33,435
<FEE-REVENUE> 16,952<F3>
<INTEREST-EXPENSE> 16,053
<COMPENSATION> 130,908
<INCOME-PRETAX> 36,145
<INCOME-PRE-EXTRAORDINARY> 22,590
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,590
<EPS-PRIMARY> 1.81<F4>
<EPS-DILUTED> 1.70<F4>
<FN>
<F1>Included in receivables
<F2>Included in payables
<F3>Includes fees from Asset Management only
<F4>Earnings (loss) per share amounts represent Basic and Diluted as prescribed by
SFAS 128
</FN>
</TABLE>
