<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Under Section 240.14a-12
DAIN RAUSCHER CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Acquisition Questions & Answers
The date after each question indicates when it was added to this Q&A list. To
submit a question, send an e-mail to the ACQUISITION QUESTIONS e-mail box.
BENEFITS
COMPENSATION
WHEN CAN WE EXPECT TO BE INFORMED ABOUT DETAILS OF THE RETENTION POOL FOR IES?
(10/09/00)
We expect to be able to inform IEs about the details of the retention pool
within the next several weeks. In the interim, questions regarding the retention
pool should be directed to the PCG regional directors through the branch
managers.
WILL OUR COMP AND BENEFITS STRUCTURE CHANGE NOW THAT WE ARE PART OF A CANADIAN
COMPANY RATHER THAN A US COMPANY? IF SO, HOW? (09/28/00)
The fact that we are owned by a Canadian company will have little impact on our
company. Royal Bank owns several other US companies, and their comp and benefit
programs reflect US regulations and geographical market competitiveness. For the
year 2001, little will change in our compensation and benefits structure except
where stock based plans are impacted by DRC stock converting to cash. During the
year, we will review what the other RBC US companies offer and determine whether
a common US structure makes sense. This may result in some changes for 2002 and
beyond. We remain committed to offering programs that are market competitive and
provide for the needs of our employees.
WHAT IS RBC'S COMPENSATION PHILOSOPHY? HOW DOES THEIR BASE-TO-BONUS STRUCTURE
COMPARE TO DRC'S? (09/28/00)
The base-to-bonus structure at RBC is similar to Dain's. Incentive compensation
rewarding employees based on results is the key philosophy.
HOW WILL THIS AFFECT MY 2000 BONUS? (09/28/00)
All bonus programs will continue as planned for 2000. Employees will still be
eligible to receive bonus payments. The bonus pools will continue to accumulate
based on Dain Rauscher financial results. The timing of the bonus payments will
remain on the normal schedule - February 2001 for calendar year 2000.
HOW WILL THIS AFFECT THE 2000 EPS BONUS FOR NON-EXEMPT EMPLOYEES? (09/28/00)
The 2000 EPS bonus will be determined by the company's full-year financial
results. The timing of the bonus payments will remain on the normal schedule -
February 2001 for calendar year 2000.
HOW WILL THE RETENTION POOL BE ALLOCATED? (09/28/00)
The vast majority of the retention pool is being allocated to Private Client
Group IEs and Capital Markets revenue producers. This is being done to retain
those employees who directly serve our clients. This will ensure that our
revenue stream continues for future growth and profitability and that we keep
important business relationships with our client base.
EMPLOYEE STOCK PURCHASE PLAN
WILL THOSE OF US IN THE EMPLOYEE STOCK PURCHASE PLAN BE REQUIRED TO HOLD THE
STOCK FOR ONE YEAR OR WILL FULL VESTING ALLOW FOR IMMEDIATE WITHDRAWAL FROM THE
PLAN? (10/09/00)
Employees will be fully vested in their shares when the acquisition is
finalized. Those shares will convert to cash, which will be distributed at that
time.
<PAGE>
WILL RBC HAVE AN EMPLOYEE STOCK PURCHASE PLAN THAT WE WILL BE ABLE TO
PARTICIPATE IN? (10/09/00)
Currently there is not a plan similar to the Employee Stock Purchase Plan where
we can purchase shares of Royal Bank of Canada at a 15 percent discount. Over
the coming months we will explore potential new benefit opportunities that may
be available to us through our association with Royal Bank.
WHAT WILL HAPPEN TO THE CONTRIBUTIONS TO THE EMPLOYEE STOCK PURCHASE PLAN THAT I
MADE DURING THE THIRD QUARTER? (10/02/00)
All contributions that you made during the third quarter will be invested in
Dain Rauscher stock at $79.05 per share (September 29 closing price of $93.00
per share less 15 percent discount). The shares that are held in your account
will then be exchanged for $95 each at the closing of the acquisition. The cash
proceeds will then be distributed to you.
HOW WILL THIS AFFECT MY EMPLOYEE STOCK PURCHASE PLAN? (09/28/00)
The Employee Stock Purchase Plan, implemented July 1 of this year, will be
discontinued as of the end of September. All employee contributions made during
the quarter will be invested as described in the plan prospectus, ensuring
employees receive the 15% discount. No payroll deductions or investments will be
made after that date. We will distribute shares to participants immediately
prior to the close of the transaction.
GENERAL
WILL THE LENGTH-OF-SERVICE AWARD PROGRAM STILL BE IN PLACE NEXT YEAR? (10/09/00)
Yes, this program will continue through 2001. It honors employees who celebrate
milestone service anniversaries in five-year increments, and includes a company
gift and a Visa debit card. As with many other of our benefit programs, we will
review this program during the course of the year, which may result in some
changes for 2002 and beyond. However, we remain committed to offering programs
that are market competitive and provide for the needs of our employees.
WHAT ARE THE STOCK-BASED PLANS THAT WILL BE IMPACTED BY THE TRANSACTION?
(09/28/00)
The plans that will be affected include the following:
- Dain Rauscher Retirement and Savings Plan;
- Employee Stock Purchase Plan;
- Deferred compensation: Wealth Accumulation Plan (WAP), Management Deferred
Stock Plan (MDSP); and
- DRC stock options and restricted stock grants.
See additional questions for impact on these plans.
HOW WILL THIS AFFECT MY STOCK OPTIONS OR RESTRICTED STOCK? (09/28/00)
The impact on stock options and restricted stock depends on when the stock was
granted - a) those granted prior to 2000 and b) those granted in 2000.
Options granted prior to 2000 will fully vest and will be automatically
exercised and will be paid out as cash when the transaction closes. Options and
restricted stock granted in 2000 will convert to RBC stock when the transaction
closes. 2000 options will continue with their current vesting schedule but will
fully vest on the two- year anniversary of the transaction close date. You will
then be able to exercise those grants on the same terms as you would have with
your DRC stock.
Options will create taxable income only as the employee exercises them. However
restricted stock grants will generate taxable ordinary income on the date that
they vest for the fair market value of the stock on that date.
We are still exploring to what extent we will use RBC stock for option and
restricted stock grants going forward.
<PAGE>
HEALTH & WELFARE BENEFITS
HOW WILL THIS AFFECT MY INSURANCE AND PAID TIME OFF BENEFITS (HEALTH INSURANCE,
ETC.)? (09/28/00)
For 2001, your Dain Rauscher benefit plans will continue, aside from possible
enhancements in the Aetna policy, which we have been considering separately.
Because RBC owns other US companies, we will look at our benefits programs along
with that of the other companies and recommend changes for January 1, 2002. We
remain committed to providing a quality benefits program for you.
RETIREMENT PLAN
CAN I STILL CONTRIBUTE TO THE DAIN RAUSCHER STOCK FUND IN THE 401(k)/RETIREMENT
PLAN? (10/09/00)
Yes. You can still make contributions into the Dain Rauscher stock fund with new
401(k) contributions until the acquisition transaction closes. You purchase
additional units of the stock fund at the price on the day the contributions are
made.
WILL I BECOME FULLY VESTED IN THE 401(k)/RETIREMENT PLAN AS A RESULT OF THE
ACQUISITION? (10/02/00)
If you are an employee of Dain Rauscher on the date the acquisition closes you
will become fully vested in the retirement plan. At that time all unvested
balances and all future contributions will be fully vested. If you are not
currently participating but are still an employee when the acquisition closes,
you will be fully vested if you decide to participate at some point in the
future.
WHAT WILL HAPPEN TO MY DAIN RAUSCHER STOCK FUND BALANCE? (10/02/00)
When the acquisition closes your stock fund balance will be fully liquidated at
$95 per share of Dain Rauscher stock. You will be able to direct the balance in
your stock fund to any of the investment options offered in the plan. We are
planning to have Royal Bank of Canada stock and additional mutual funds
available to you when the transaction closes. You will receive additional
information regarding the election process for investing your stock fund
proceeds later this year.
WHAT WILL HAPPEN TO THE REST OF MY RETIREMENT PLAN ACCOUNT BALANCES AND WHAT IF
I HAVE AN OUTSTANDING LOAN BALANCE? (10/02/00)
The Dain Rauscher Retirement and Savings plan will remain in place in 2001, and
all other account balances and/or loans will be unaffected. During 2001, we will
review the design of the plan and compare it with other RBC US companies. If a
common US structure makes sense, there may be some plan changes for 2002 and
beyond.
HOW WILL THIS AFFECT MY RETIREMENT PLAN? (09/28/00)
The Dain Rauscher Retirement and Savings Plan will continue through 2001. You
will continue to receive your fixed and variable matching contribution based on
your own participation in the plan. Beyond 2001 we'll be reviewing the plan
design, which may result in some changes for 2002 and beyond. One factor we'll
be looking at is what other RBC's other US companies offer.
All participants in the retirement plan will become fully vested on the date of
the transaction closing. Although vesting will accelerate, all account balances
will remain invested within the plan. Because there are no distributions from
the plan as a result of change in ownership, you will not receive any taxable
income as your account balance vests.
<PAGE>
Since DRC shares will be purchased for cash by Royal Bank, you will receive cash
in your account as well.
You will be able to direct the cash into other retirement plan investment
choices. Royal Bank stock will be offered as an investment option. We will also
look at adding additional mutual fund choices to the retirement plan. When these
investment decisions are finalized, you will be given information on the new
fund choices and instructions on how to reinvest your cash.
SINCE EMPLOYEES ARE NOW AUTOMATICALLY VESTED IN THEIR 401(k) DAIN RAUSCHER STOCK
FUND HOLDINGS, HOW ARE WE GOING TO KEEP THEM AT THE NEW COMPANY? (09/28/00)
First of all, we believe that we have a great company. We have strong values
that employees find attractive, and a platform that helps people grow in their
careers. Our corporate culture is not expected to change, due to the autonomy
with which we will be operating.
Being part of a bank offers employees more stability and capital to pursue
growth opportunities. We believe that employees will be excited about the
business opportunity represented by this combination, as well as the additional
career opportunities afforded as part of a larger organization.
WEALTH ACCUMULATION PLAN
WILL I STOP MAKING DEFERRALS TO THE WEALTH ACCUMULATION PLAN (WAP) BECAUSE OF
THE ACQUISITION? (10/02/00)
Not immediately. If you are eligible for WAP we will continue to take deferrals
from your check until we are closer to the acquisition closing date. When we are
able to more accurately determine the actual closing date, we will cease taking
deferrals from your paycheck and begin valuing your account for distribution.
WHAT HAPPENS TO MY WEALTH ACCUMULATION PLAN ACCOUNT BALANCE AS A RESULT OF THE
ACQUISITION? (10/02/00)
All active employees on the date the acquisition closes will become fully vested
in their entire account balance in the plan. In addition, under the plan you are
required to receive a complete distribution of your account balance. If the
acquisition closes in 2000, you will receive a distribution of your entire
account balance prior to the end of the year. Should the transaction close in
2001, you will receive a distribution shortly after the closing date. You are
not able to transfer this money into another plan or to keep it deferred. It
will be reported to you as ordinary income in the year distributed.
HOW WILL THIS AFFECT MY DEFERRED COMPENSATION (E.G. WEALTH ACCUMULATION PLAN)?
(09/28/00)
All deferred compensation programs (WAP, MDSP and Excess plan) will have two
events happen as a result of the change in ownership. 1) all unvested balances
in the plans will vest in full, and 2) all account balances will be paid out to
participants. Account balances will be paid out in cash in the year that the
transaction closes. This will create taxable W-2 income in the year payments are
made.
Deferrals will not be made from 2000 bonuses. We will notify all affected
employees when this has been determined. Any company matching on deferrals that
would have occurred for the year, as if the plan had continued, will be paid out
in cash to participants in Feb. 2001.
We plan to continue a deferred compensation program in 2001. Because DRC stock
is no longer available as a component of these plans, we will take the next 60
days to review the plan provisions. You will receive information about the new
plan design and enrollment kits when the new plan is developed.
<PAGE>
BUSINESS STRATEGY
SOME NEWS ARTICLES HAVE TALKED ABOUT THE POSSIBILITY OF DAIN RAUSCHER BEING
COMBINED WITH DOMINION SECURITIES, RBC'S BROKER-DEALER IN CANADA? IS THAT TRUE?
(10/09/00)
It would be difficult for us to merge for a number of reasons:
- There are differences in regulatory requirements between Canada and the
United States;
- From an operational standpoint, they use a different currency than we do;
- RBC has a strong record of letting their affiliated companies operate
autonomously, in fact Dominion Securities, their Canadian broker-dealer,
has run autonomously for 13 years; and
- RBC has acquired us to serve as their U.S. growth platform.
WILL DAIN RAUSCHER RENAME "INVESTMENT EXECUTIVE" TO INVESTMENT OR FINANCIAL
ADVISOR? (10/09/00)
As you might expect, Dain Rauscher and RBC sometimes use different terminology
to describe the same thing. However, we have no plans at this time to change our
"Investment Executive " terminology.
AFTER JUST ISSUING NEW CHECKS TO CLIENTS, WILL THEY BE GETTING NEW CHECKS YET
AGAIN? (10/09/00)
This is one of the many details we will need to work out over the next several
weeks.
HOW AUTONOMOUS WILL THE RBC DAIN RAUSCHER WESSELS BE FROM RBC CORPORATE?
(09/28/00)
We will retain our management team, and there will be very few changes in
organizational structure at this time. In addition, there will be no immediate
changes in daily business operations.
WHAT BUSINESS UNITS WILL WEISER HAVE RESPONSIBILITY FOR UNDER THE NEW STRUCTURE?
(09/28/00)
Those who currently report to Irv Weiser will continue to do so except that
Peter Grant will report to RBC for business line purposes but will continue to
report to Irv for legal and regulatory purposes.
WHAT HAPPENS TO DAIN CORRESPONDENT SERVICES? (09/28/00)
We remain committed to the clearing business, and RBC is buying into our growth
strategy and strategic plan, a large part of which is growth in the clearing
business.
We will continue to execute that plan and anticipate no changes in the plan as a
result of the transaction.
WHAT HAPPENS TO FIXED INCOME CAPITAL MARKETS? (09/28/00)
FICM, as it stands today, will continue to report to John Appel under Irv
Weiser.
WHAT WILL JOHN APPEL'S ROLE BE IN THE NEW RBC DAIN RAUSCHER WESSELS? (09/28/00)
John will continue to be responsible for Fixed Income Capital Markets, legal,
compliance and asset management.
WILL DAIN RAUSCHER EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT GROUP CONTINUE TO
EXIST? IF SO, WHAT WILL BE THEIR ROLES AND WILL THEIR MEMBERSHIP CHANGE?
(09/28/00)
We will reevaluate this as part of the transition plans.
ARE YOU STILL SEARCHING FOR A HEAD OF PRIVATE CLIENT GROUP HEAD TO SUCCEED RON
TSCHETTER? (09/28/00)
Yes, we will continue with that search.
<PAGE>
WHAT HAPPENS TO THE DAIN RAUSCHER FOUNDATION? (09/28/00)
RBC is very supportive of Dain Rauscher's giving program and has agreed that we
will continue to donate up to 5% of our pretax profits to charitable
organizations.
RBC currently supports a wide range of community organizations in Canada, giving
$25 million to charitable organizations in 1999. The firm is the largest
corporate donor to charities in Canada.
WHAT ARE THE ADVANTAGES OF THIS DEAL TO OUR EQUITY CAPITAL MARKETS GROUP?
(09/28/00)
This move accelerates our goal of attaining top-tier status in North America
within our industry sectors. It provides us with more resources, a broader
product range (which allows for deeper client relationships) and the opportunity
to grow with our existing client base.
WHAT IS THE GROWTH PLAN FOR THE NEW RBC DAIN RAUSCHER WESSELS? (09/28/00)
We will continue to be guided by our five-year strategic plan. This acquisition
will bring us farther down the road, and faster than originally envisioned, in
terms of alternative distribution channels and product line expansions. With
RBC's support, we also intend to continue to rapidly grow the equity capital
markets and explore related new businesses, such as venture capital and asset
management.
DOES THIS MEAN OUR IES WILL HAVE TO "CROSS-SELL" BANK PRODUCTS AND PROPRIETARY
FUNDS? (09/28/00)
No. IEs will have the opportunity to sell bank products, but there will not be
"quotas." Like Dain Rauscher, RBC believes in the importance of objectivity and
of putting clients' interests first.
HOW DOES THIS ACQUISITION BENEFIT DAIN RAUSCHER CLIENTS? (09/28/00)
It should help increase client loyalty, to the extent that their relationship
with us is expanded to new products. Aside from that, it is our goal to make the
combination transparent to clients, and we are counting on you to provide them
with the same, excellent service as always during the transition.
WHAT DOES A CANADIAN BANK KNOW ABOUT THE US BROKERAGE AND INVESTMENT BANKING
BUSINESS? (09/28/00)
RBC operates the largest brokerage firm in Canada. They're a well-run,
successful financial institution and the largest bank in Canada. They have a
Standard and Poors' senior debt rating of AA-. Their high regard for us is part
of their motivation for structuring this deal so that we retain our autonomy.
WHAT IMPACT DOES THIS HAVE ON PCG'S AGREEMENT WITH COMERICA TO PROVIDE TRUST
SERVICES? (09/28/00)
We will continue to offer Comerica products along with other products offered by
RBC.
WILL ANY RBC FUNDS BE PART OF FUND ADVISORY SERVICE OR INVESTMENT CHOICE?
(09/28/00)
They have no U.S. funds.
WILL ANY DRC JOBS BE ELIMINATED AS A RESULT OF THIS ACQUISITION? IF SO, HOW MANY
AND WHERE? (09/28/00)
We expect there will be very few job eliminations, and only by attrition. Given
our increased resources, we hope to increase the number of jobs.
WILL ANY "CORPORATE" FUNCTIONS BE MANAGED CENTRALLY BY RBC (OPERATIONS, FINANCE,
HR, COMMUNICATIONS, MARKETING, ETC.)? IF SO, WHICH ONES? (09/28/00)
No, most of those jobs will continue to report through Dain Rauscher. Some jobs
will have dotted line reporting relationships to RBC. All will continue to
report as they do currently.
WHAT DO I TELL MY CLIENTS? (09/28/00)
We would like you to explain that this will not disrupt their service and that
they may continue to expect the same great service from you. But in addition,
they will have access to some new
<PAGE>
products (which will vary based on business line). Client letters and statement
stuffers will be created to make sure your clients are well informed about the
transaction. Please note, all written communications about the transaction must
be filed with the SEC. Therefore you must only use firm-approved materials.
HAS A TRANSITION TEAM BEEN FORMED? IF SO, WHO FROM DRC WILL BE ON IT? HOW WILL
THE TRANSITION BE MANAGED? (09/28/00)
We will create transition teams representing all affected areas. It will include
members from RBC as well as from Dain Rauscher. We will communicate more about
the teams in the near future.
NAME CHANGE
WHAT WILL OUR NEW LOGO LOOK LIKE? (10/09/00)
The Marketing Department currently is working in consultation with RBC on the
design of our new logo.
IS THE NEW NAME RBC DAIN RAUSCHER IN EFFECT TODAY OR DOES THAT NOT TAKE EFFECT
UNTIL THE ACQUISITION IS FINAL? (10/09/00)
Employees should wait until the acquisition is final to use the new name: RBC
Dain Rauscher Wessels. Until then, use Dain Rauscher, or for equity capital
markets, Dain Rauscher Wessels.
WHAT WILL BE THE NAME OF OUR COMPANY OR AFFILIATE? (09/28/00)
We will become RBC Dain Rauscher Wessels.
WILL WE HAVE OUR OWN LOGO? (09/28/00)
We are likely to adapt RBC's logo. A team will examine this question more
closely in the coming weeks.
WILL THE NAME OF THE DAIN RAUSCHER PLAZA CHANGE? IF SO, WHAT WILL THE NEW NAME
BE? (09/28/00)
The name of the building will be studied during the transition.
WHEN WILL OUR OFFICES GET NEW SIGNAGE? (09/28/00)
We will begin working with our landlords immediately. However, the process
usually takes several months.
WHEN WILL WE GET NEW LETTERHEAD AND BUSINESS CARDS? (09/28/00)
Upon closing of the transaction, we will distribute new letterhead and business
cards to people who currently use them.
ROYAL BANK OF CANADA
HOW CAN WE FIND OUT MORE ABOUT RBC? (09/28/00)
RBC has a web site at www.royalbank.com and additional information is posted on
InfoNET.
HOW STRONG, FINANCIALLY, IS RBC AND HOW IS IT IMPACTED BY THE CANADIAN ECONOMY,
WHICH IS NOT AS ROBUST AS THE US ECONOMY? (09/28/00)
RBC is a very strong financial services firm. It is AA- rated and trades on the
New York Stock Exchange at 61 1/4. It has market capitalization of U.S. $18.6
billion and is the number one retail/commercial financial services company and
largest wealth management organization in Canada.
<PAGE>
WHAT HAS BEEN RBC'S TRACK RECORD IN MANAGING PAST ACQUISITIONS? (09/28/00)
The bank has made acquisitions that add to shareholder value, operate
independently and yet leverage its client base and financial services expertise.
HOW AUTONOMOUS HAS DOMINION SECURITIES BEEN SINCE IT WAS ACQUIRED BY RBC?
(09/28/00)
Dominion has retained its autonomy since its acquisition by RBC 13 years ago.
Dominion's headquarters is in the same city as RBC in a different building. We
do not expect RBC to treat us any differently.
TRANSACTION
HOW WAS THE $1.46 BILLION VALUATION WAS REACHED? DID WE HAVE AN "ASKING PRICE"
GOING IN? (10/09/00)
The price was negotiated and approved by the Board. Among the things we
considered were the pricing and terms of other transactions in our sector. The
$1.46 billion figure is arrived at by multiplying the number of shares
outstanding by the $95 per share price we agreed upon, plus the cost of the
payout of DRC options and the deferred compensation plan.
WHEN THE ACQUISITION CLOSES, WHAT WILL HAPPEN TO THE DAIN RAUSCHER BOARD OF
DIRECTORS? (10/09/00)
After the closing date, DRC's Board of Directors will be replaced by a Board
made up of Dain Rauscher's Executive Committee members as well as
representatives chosen by Royal Bank.
WILL DRC PAY A FOURTH QUARTER DIVIDEND? (10/09/00)
We expect to pay our normal dividend during fourth quarter 2000, subject to
board approval.
WHY DID MANAGEMENT SELL AFTER PROMOTING THE CONCEPT OF "INDEPENDENCE" AND THE
IMPORTANCE OF "REMAINING INDEPENDENT"? (09/28/00)
We have often said that we believe it is important that we control our own
destiny. Our high level of performance has been key to our independence up to
this point. In addition, it has enabled us to turn down offers from acquirers
when we did not believe the price or the fit were beneficial to our
shareholders, clients and employees. As a public company, we have a duty to
shareholders to consider all bona fide offers, and this is a very good offer for
shareholders. Beyond the price per share, we view this as a "win" at every
level, for employees, clients and the community.
- It's a "win" for clients who will retain their relationship with their
investment executives but it will give us more resources to serve them.
- It's a "win" for employees on many different levels. We will enjoy more
stability and more career opportunities as part of a larger organization.
There will be additional resources available for growing our businesses and
investing in technology. In addition, all employees are immediately vested
in the company's 401(k) plan, including the company's match and
profit-sharing contributions. All account balances in the deferred
compensation plans (WAP, MDSP, Excess) will also fully vest. Stock options
granted prior to 2000 also automatically vest and will be paid out upon
change in control, as will deferred plan balances. RBC also is setting up a
$200 million pool to retain key employees.
- It's a "win" for the community, given that we will continue to give back 5%
of our pretax profits and manage our giving program locally.
WHY DID MANAGEMENT ACCEPT THIS PARTICULAR OFFER? (09/28/00)
In this case, not only were we given an attractive offer, but it was structured
so that we can retain our autonomy. We also will have the capital to more
quickly fully implement our five-year strategic plan, which includes growing our
existing businesses and launching new ones in related fields, such as asset
management or venture capital. RBC shares our commitment to growth and has more
resources - both people and financial resources - to fuel that growth. As
importantly, RBC shares our values and culture as a client-focused firm.
<PAGE>
WHY IS $95 PER-SHARE AN "ATTRACTIVE PRICE"? HOW DOES IT COMPARE TO THE PRICE
PAID IN OTHER RECENT BANK-BROKERAGE ACQUISITIONS? (09/28/00)
Our multiple is in line with that of other regional firms sold in the past
couple of years. Our price of $95 is equal to three times book value, four times
tangible book, compared with a median purchase price of comparable brokerage
firms in the past few years of 2.7 times book. This price also represents a
premium of 104.3% over the Dec. 31, 1999 closing price, and a 19% premium over
the Sept. 27 closing price, all at a time when securities firms are trading at
all-time highs and Dain Rauscher is at its peak performance.
<TABLE>
<CAPTION>
BROKERAGE FIRM MULTIPLE TO BOOK
<S> <C>
US Bancorp/Piper Jaffray 4.0
UBS/Paine Webber 3.5
KeyCorp/McDonald 3.0
Chase/Hambrecht & Quist 3.0
First Union/Wheat First 3.0
Bankers Trust/Alex. Brown 2.4
First Union/Everen 2.4
Wachovia/Interstate Johnson Lane 2.2
Wells Fargo/Ragen MacKenzie 2.2
MONY/Advest 2.0
Median 2.7
</TABLE>
WERE THERE OTHER OFFERS? DID WE GET THE BEST PRICE? (09/28/00)
Our strong performance has attracted other preliminary inquiries, but no other
firm met our criteria.
WERE THERE OTHER REASONS TO SELL, BESIDES PRICE? (09/28/00)
Yes, and these are as important as price:
- Cultural fit - both firms are client-focused;
- Degree of independence post-transaction;
- Access to capital;
- Ability to leverage our strengths and achieve the growth outlined in our
strategic plan; and
- Dominant market share/industry knowledge of the acquirer.
WHAT ARE THE ADVANTAGES OF THIS DEAL TO RBC? (09/28/00)
RBC is seeking to build a unique global investment bank and strong North
American wealth management platform. This acquisition is a significant step
toward achieving that goal. In addition, the two firms have complementary
investment banking strengths, similar cultures and a common vision. This
acquisition also is expected to be accretive to RBC earnings (cash) in year one,
accretive to EPS in 2002 and growing thereafter.
WHEN DOES THE ACQUISITION TAKE EFFECT? (09/28/00)
We expect the transaction to close by year end.
WHAT IF I AM OPPOSED TO THE ACQUISITION? (09/28/00)
As a shareholder you will have an opportunity to vote, and there will be
pass-through voting rights through the Employee Stock Ownership Plan portion of
the retirement plan.
WHAT MAY I COMMUNICATE TO MY CLIENTS OR VENDORS? (09/28/00)
By the end of the week we plan to have client letters and communications
available for you to use. All written communications about the transaction must
be filed with the SEC. Therefore you must only use firm-approved materials.
<PAGE>
HOW DOES THIS ACQUISITION BENEFIT DAIN RAUSCHER EMPLOYEES? (09/28/00)
As shareholders, the purchase price is a 19% premium over the stock's 9/27/00
close. In addition, all employees are immediately vested in the company's 401(k)
plan, including the company's match and profit-sharing contributions. Stock
options granted prior to 2000 also automatically vest and will be paid out upon
change of control, as will balances in the deferred compensation plans From a
business perspective, it offers more stability and capital for growth. In
addition, our corporate culture is not expected to change, due to the autonomy
with which we will be operating. And very few employees' jobs will be affected
by the acquisition.
WHAT IS THE TIMETABLE FOR COMPLETING THE TRANSITION? (09/28/00)
The transaction is expected to close by year-end 2000.
Dain Rauscher will be filing a proxy statement and other relevant documents
concerning the acquisition with the SEC. WE URGE INVESTORS TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED THE SEC, BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents
free of charge at the SEC's website, www.sec.gov. In addition, documents filed
with the SEC by Dain Rauscher will be available free of charge from Investor
Relations.
Dain Rauscher and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Dain
Rauscher in favor of the acquisition. The directors and executive officers of
Dain Rauscher include the following: J.C. Appel, J.E. Attwell, S.S. Boren, D.
Collins, F.G. Fitz-Gerald, P.M. Grant, W.F. Mondale, D.J. Parrin, P.H.
Phillippe, C.A. Rundell, Jr., R.L. Ryan, A. R. Schulze, Jr., C.J. Smith , R.A.
Tschetter, I. Weiser and K.J. Wessels. Collectively, as of March 2, 2000, the
directors and executive officers of Dain Rauscher beneficially owned
approximately 8.9% of the outstanding shares of Dain Rauscher common stock.
Stockholders of Dain Rauscher may obtain additional information regarding the
interests of such participants by reading the proxy statement when it becomes
available.
