<PAGE>
As filed with the Securities and Exchange Commission on January 31, 1997
REGISTRATION NO. 333-18677
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
Pre-Effective
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
ST. PAUL BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-3504665
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
6700 W. NORTH AVENUE
CHICAGO, ILLINOIS 60707
(773) 622-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
CLIFFORD M. SLADNICK, ESQ.
ST. PAUL BANCORP, INC.
6700 W. NORTH AVENUE
CHICAGO, ILLINOIS 60707
(773) 804-2282
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
COPIES TO:
STUART G. STEIN, ESQ. STEPHEN A. TSORIS, ESQ.
HOGAN & HARTSON L.L.P. MCDERMOTT, WILL & EMERY
555 THIRTEENTH STREET, N.W. 227 WEST MONROE STREET
WASHINGTON, D.C. 20004-1109 CHICAGO, ILLINOIS 60606
(202) 637-8575 (312) 984-7584
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [_]
_______________
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 30, 1997
- ----------
$100,000,000
ST. PAUL BANCORP, INC.
____% SENIOR NOTES DUE 2004
The ____% Senior Notes Due 2004 (the "Notes") are not subject to
redemption or repayment prior to maturity and will not be subject to any sinking
fund. The Notes will be unsecured debt obligations of St. Paul Bancorp, Inc.
("St. Paul Bancorp" or the "Company") and will rank equally with all other
unsubordinated and unsecured Indebtedness of the Company. As of September 30,
1996, the Company had $34.5 million of outstanding Indebtedness which ranked
junior to the Notes. See "Description of Notes."
The Notes will be represented by one permanent global certificate (the
"Global Security") registered in the name of a nominee of The Depository Trust
Company, as depositary (the "Depositary"). The Notes will be available for
purchase in minimum denominations of $1,000 or any amount in excess thereof
which is an integral multiple of $1,000 in book-entry form only. Beneficial
interests in the Global Security will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary and its
participants. Except as described under "Description of Notes" herein, owners
of beneficial interests in the Global Security will not be entitled to receive
Notes in definitive form.
____________________
THE NOTES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT
INSURED BY THE SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF
THE FEDERAL DEPOSIT INSURANCE CORPORATION.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT/ (1)/ CORPORATION/(2)/
- -----------------------------------------------------------
<S> <C> <C> <C>
Per Note.. ____% .__% _____%
- -----------------------------------------------------------
Total..... $__________ $_______ $__________
===========================================================
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $_______.
The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Global Security, in book-entry form, will be made through the facilities of the
Depository on or about ____________, 1997, against payment in immediately
available funds.
KEEFE, BRUYETTE & WOODS, INC. ABN AMRO CHICAGO CORPORATION
THE DATE OF THIS PROSPECTUS IS ______________ __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files proxy statements, reports and other information
with the Securities and Exchange Commission (the "Commission"). This filed
material can be inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and the Commission's Regional Offices in
New York (Seven World Trade Center, 14th Floor, New York, New York 10048) and
Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511)
and copies of such materials can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a web site (http:\\www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants such as the Company. In addition, the Common Stock of
the Company is quoted on the NASDAQ National Market System (symbol: SPBC),
and such reports, proxy statements, and other information concerning the
Company also may be inspected at the offices of the National Association of
Securities Dealers, Inc. at 9513 Key West Avenue, Rockville, Maryland 20850-
3389.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto.
For further information with respect to the Company and the securities
offered hereby, reference is hereby made to the Registration Statement and
the exhibits and schedules filed therewith, which may be obtained from the
principal office of the Commission in Washington, D.C., upon payment of the
fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996, and the Company's
Current Reports on Form 8-K dated as of January 18, 1996, March 26, 1996,
July 16, 1996, December 16, 1996 and January 15, 1997, previously filed with
the Commission by the Company, are incorporated in this Prospectus by
reference and made a part hereof. Financial information included in these
documents do not reflect the five-for-four stock split effective January 14,
1997 for stockholders of record as of December 31, 1996 (the "Stock Split").
However, the financial information presented in this Prospectus has been
restated to give effect to the Stock Split. Each document or report
subsequently filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Notes shall be deemed to be
incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein, or in the document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of the Registration Statement and this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated by reference,
other than certain exhibits to such documents. Written requests should be
directed to St. Paul Bancorp, Inc., 6700 West North Avenue, Chicago, Illinois
60707; Attention: Clifford M. Sladnick (telephone: (773) 622-5000).
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
-2-
<PAGE>
THE COMPANY
St. Paul Bancorp is the holding company for St. Paul Federal Bank For
Savings (the "Bank"), the largest independent savings institution in the
State of Illinois. The Company, either directly or through the Bank, also
owns financial services subsidiaries involved in discount brokerage, real
estate development, insurance and annuity product sales. For the nine months
ended September 30, 1996, the Company had consolidated net income of $15.4
million, after a pre-tax charge of $21.0 million in connection with a one-
time special assessment on the Bank's deposits to recapitalize the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC"). At September 30, 1996, the Company had $4.3 billion in assets and
$371.6 million in stockholders' equity.
The Bank is a FDIC insured retail depository institution that operates
through 52 branches in the Chicago metropolitan area. The Bank's branch
network includes 35 free-standing offices and 17 banking offices located in
Omni(R) and Cub(R) superstores. The Bank's expansion of its branch network
through "in-store" facilities provides access to a larger retail customer
base through offices which have relatively lower overhead. The Bank has also
recently expanded its automated teller machine ("ATM") network to 460
machines by installing 261 ATMs in White Hen Pantry(R) convenience stores in
the eight county Chicago area, including stores in Northwest Indiana. In
addition, the Bank opened a telephone banking facility in 1995 to support
customer service, as well as handle inquiries and loan applications.
The Bank services approximately 179,000 checking accounts, offering a
number of options, including special sports checking programs such as Chicago
Bulls Checking, Chicago Cubs Checking and Chicago Bears Checking. The Bank
also offers a variety of savings, money market and certificate of deposit
products. At September 30, 1996, the Bank had total deposits of $3.3
billion.
The Bank's interest earning assets primarily consist of loans secured by
mortgages on residential real estate, securities and, to a lesser extent,
consumer and commercial real estate loans. At September 30, 1996, the Bank's
mortgage loan portfolio included $2.0 billion of 1-4 family residential
mortgage loans, $961.4 million of multifamily residential mortgage loans,
$54.4 million of commercial and other mortgage loans, and $20.0 million in
consumer loans. At September 30, 1996, the Bank also held $799.2 million of
mortgage-backed securities ("MBS"), and invested in government and other
investment grade, liquid securities.
The Bank's 1-4 family residential mortgage products are originated
through its retail banking offices and telephone banking facility, as well as
a correspondent loan program in the Chicago metropolitan area and midwestern
states (including Wisconsin, Indiana, Michigan and Ohio). In the first nine
months of 1996, the Bank (either directly or through correspondents)
originated over $220.0 million of 1-4 family residential mortgage loans. In
addition to such originations, in the first nine months of 1996 the Bank
purchased $435.1 million of 1-4 family adjustable rate mortgage loans secured
by 1-4 family residential real estate located throughout the U.S.
The Bank also originates loans secured by apartment buildings in
Illinois, Wisconsin, Indiana, Minnesota and Ohio, using the same underwriting
standards throughout the area. At September 30, 1996, the Bank's portfolio
of Midwest apartment building loans totaled $111.5 million or 3.7% of the
loan portfolio.
The Bank offers a variety of consumer loan products through its retail
banking offices, telemarketing and its telephone banking facility, including
home equity loans, secured lines of credit, education and automobile loans.
The Bank has entered into agreements to sell consumer loans that do not meet
its underwriting standards to third parties, rather than retaining them.
At September 30, 1996, the Bank's loan portfolio included $909.1 million
of loans originated prior to 1990 on a nationwide basis secured by
multifamily real estate and, to a lesser extent, commercial real estate.
Approximately 38% of this portfolio is scheduled to mature between the third
quarter of 1996 and the end of
-3-
<PAGE>
1998. The Bank intends to refinance a large portion of these loans,
depending upon the credit characteristics. The Bank was able to refinance
over 70% of the loans in this portfolio which matured in the first nine
months of 1996. The remainder of these loans was paid off or liquidated out
of foreclosed real estate.
Subsidiaries of the Bank or the Company include Investment Network,
Inc., a discount broker with over $3.8 million in commission revenue for the
nine months ended September 30, 1996; Annuity Network, Inc., which offers
customers fixed rate annuity products; and SPF Insurance Agency, Inc., which
offers homeowners, auto, life and disability insurance. The Company's real
estate development subsidiary, St. Paul Financial Development Corporation,
engages in single family real estate development and, to some extent,
commercial real estate construction financing.
The principal offices of the Company are located at 6700 West North
Avenue, Chicago, Illinois 60707, telephone (773) 622-5000.
-4-
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth certain historical selected consolidated
financial information regarding the Company and its subsidiaries at the dates
and for the periods indicated. The Financial Condition Data and Operating Data
at and for the years ended December 31, 1995, 1994, 1993, 1992 and 1991 were
derived from the Company's consolidated financial statements which have been
audited by Ernst & Young LLP, independent auditors. This data should be read in
conjunction with the Company's consolidated financial statements and related
notes thereto and its Management's Discussion and Analysis, which are
incorporated by reference in this Prospectus. See "Incorporation of Certain
Documents by Reference." The financial data for the nine-month period ended
September 30, 1996, and 1995 are derived from unaudited financial statements.
The unaudited financial statements include all adjustments, consisting of normal
recurring accruals, which St. Paul Bancorp. Inc. considered necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the nine months ended September 30, 1996, are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1996. The data should be used in conjunction with the
consolidated financial statements, related notes, and other financial
information incorporated by reference herein.
<TABLE>
<CAPTION>
AT
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------ ---------------------------------------------------------------------
1996 1995 1994 1993(a) 1992 1991
------------ ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA:
Assets
Cash and investments $ 294,002 $ 279,399 $ 259,591 $ 478,382 $ 419,299 $ 340,033
Mortgage-backed securities 799,227 975,422 1,126,617 733,649 643,941 717,354
Loans receivable-net of accumulated
provision for loan losses 2,999,549 2,683,890 2,568,381 2,304,319 2,270,198 2,415,540
Other assets 183,430 177,968 176,948 189,026 166,822 190,316
---------- ---------- ---------- ---------- ---------- ----------
Total assets $4,276,208 $4,116,679 $4,131,537 $3,705,376 $3,500,260 $3,663,243
========== ========== ========== ========== ========== ==========
Liabilities and stockholders' equity
Deposits $3,288,096 $3,231,810 $3,232,903 $3,252,618 $2,985,124 $3,004,419
Borrowings 541,253 441,427 492,927 63,970 186,408 334,528
Other liabilities 75,228 59,245 54,310 41,459 41,387 59,232
Subordinated capital notes - - - - - 12,176
Stockholders' equity(b) 371,631 384,197 351,397 347,329 287,341 252,888
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $4,276,208 $4,116,679 $4,131,537 $3,705,376 $3,500,260 $3,663,243
========== ========== ========== ========== ========== ==========
Stockholders' equity per share(c) $16.44 $16.39 $14.97 $14.12 $12.59 $11.20
Tangible book value per share(c) $16.37 $16.33 $14.89 $14.02 $12.45 $11.04
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------------
1996 1995 1995 1994 1993(a) 1992 1991
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Interest income $220,173 $208,453 $278,750 $253,262 $256,937 $278,687 $321,291
Interest expense 127,327 121,226 162,116 135,069 132,982 165,844 222,487
-------- -------- -------- -------- -------- -------- --------
Net interest income 92,846 87,227 116,634 118,193 123,955 112,843 98,804
Provision for loan losses 1,500 1,400 1,900 5,150 10,750 10,625 11,100
-------- -------- -------- -------- -------- -------- --------
Net interest income after
provision for loan losses 91,346 85,827 114,734 113,043 113,205 102,218 87,704
Net gain on assets sold 1,423 967 1,054 524 2,150 3,024 2,680
Income from real estate
operations 1,842 2,069 2,807 3,150 2,969 2,442 2,037
Other operating income 23,395 22,118 29,860 26,097 27,387 22,882 17,930
Other operating expense 72,500 67,530 90,165 87,166 82,747 71,240 64,754
SAIF recapitalization 21,000 - - - - - -
Loss on foreclosed real estate 1,245 968 1,159 2,145 2,516 1,316 1,898
Income taxes 7,860 15,391 20,737 18,991 19,061 20,325 16,507
-------- -------- -------- -------- -------- -------- --------
Net income (d) $ 15,401 $ 27,092 $ 36,394 $ 34,512 $ 41,387 $ 37,685 $ 27,192
======== ======== ======== ======== ======== ======== ========
Primary earnings per share (c)(d) $0.65 $1.11 $1.50 $1.36 $1.62 $1.60 $1.18
===== ===== ===== ===== ===== ===== =====
Dividends declared per share (c)(e) $0.26 $0.18 $0.24 $0.24 $0.22 $0.22 $0.22
===== ===== ===== ====== ===== ===== =====
Primary shares outstanding (c) 23,841,430 24,343,273 24,388,970 25,307,576 25,444,495 23,521,248 22,925,543
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993(a) 1992 1991
---------- -------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
KEY OPERATING RATIOS AND OTHER
DATA (f)
(UNAUDITED)
Interest rate spread 2.75% 2.72% 2.72% 2.76% 3.30% 3.48% 2.95%
Net interest margin 3.07% 2.99% 3.01% 3.15% 3.46% 3.27% 2.84%
Return on average assets (g) 0.49% 0.89% 0.90% 0.88% 1.10% 1.05% 0.76%
Return on average
stockholders' equity (net
worth) (g) 5.35% 9.91% 9.86% 9.72% 12.77% 13.88% 11.15%
Average equity as a
percentage of average assets 9.11% 8.96% 9.10% 9.05% 8.64% 7.57% 6.78%
Weighted average rate on
loans and investment
securities 7.34% 7.28% 7.28% 6.98% 6.96% 7.74% 8.91%
Weighted average cost of funds 4.59% 4.56% 4.56% 4.22% 3.66% 4.26% 5.96%
ASSET QUALITY RATIOS: (f)
(UNAUDITED)
Allowance for loan and lease
losses to total loans
and leases 1.20% 1.50% 1.42% 1.62% 1.98% 2.10% 1.88%
Net loans and leases charged
off to average loans
and leases 0.17% 0.24% 0.21% 0.39% 0.56% 0.34% 0.45%
Nonperforming assets to total
loans and leases and other
real estate owned 0.68% 0.95% 1.07% 1.03% 2.09% 2.07% 3.19%
Allowance for loan and lease
losses to nonperforming
loans and leases 246.60% 279.80% 216.62% 424.72% 156.99% 165.81% 101.49%
CAPITAL RATIOS:
(UNAUDITED)
Tier 1 risk-based capital
ratio 15.43% 16.42% 16.18% 15.33% 15.33% 11.47% 9.27%
Total risk-based capital ratio 16.68% 17.71% 17.47% 16.65% 16.67% 12.82% 11.00%
Tier 1 leverage ratio 8.65% 9.12% 8.95% 8.51% 9.50% 7.71% 6.52%
RATIO OF EARNINGS TO FIXED CHARGES (h)
(UNAUDITED)
Excluding interest on deposits 1.99 2.86 2.94 3.66 6.64 3.81 2.23
Including interest on deposits 1.18 1.35 1.35 1.40 1.45 1.35 1.20
</TABLE>
-6-
<PAGE>
(a) Includes the operations of Elm Financial Services from the acquisition date
of February 23, 1993.
(b) The Company has in place a stock repurchase program which runs until July
15, 1997. Of the 1.125 million shares of common stock authorized to be
repurchased under the program (representing approximately 5% of the
outstanding shares), none had been purchased as of September 30, 1996 and
168,750 shares had been purchased as of January 15, 1997 at an average
price of $22.46 per share. There can be no assurance that any additional
shares authorized to be repurchased under the program will be repurchased,
nor can there be any assurance as to the cost of any additional shares
which may be repurchased in future periods.
(c) Restated for a five-for-four stock split effective on January 14, 1997
(with a record date of December 31, 1996). Also includes a restatement for
a three-for-two stock split on January 4, 1994.
(d) Without the one-time SAIF recapitalization charge, net income would have
been $29,303,000 or $1.23 per primary share for the first nine months of
1996.
(e) Subsequent to the five-for-four stock split, the Company's quarterly cash
dividend rate has been maintained at $0.12 per share, effective with the
dividend declared on January 15, 1997.
(f) Annualized where applicable.
(g) Without the one-time SAIF recapitalization charge, return on average assets
would have been 0.93% and return on average stockholders' equity would have
been 10.17% for the nine months ended September 30, 1996.
(h) On a pro forma basis, giving effect to the $100,000,000 principal amount
of Notes offered hereby and the redemption of the Company's outstanding
8.25% Subordinated Notes due 2000, the ratio of earnings to fixed charges
for the nine months ended September 30, 1996 would be 1.87 excluding
interest on deposits and 1.18 including interest on deposits. See
"Capitalization".
-7-
<PAGE>
RECENT DEVELOPMENTS
-------------------
The Company's net income for the fourth quarter of 1996 was $10.9 million,
which represents an increase of 17% over the $9.3 million during the same
quarter in 1995. Earnings per share increased over 20% to 46 cents for the
current quarter, versus 38 cents per share for the same period a year ago./1/
Net interest income for the fourth quarter of 1996 rose 8% to $31.9 million,
compared to $29.4 million in the same quarter a year ago. Also during the fourth
quarter of 1996, other operating income rose 6% to $9.1 million, compared to
$8.6 million during the same quarter in 1995. These increases were partially
offset by a $1.7 million, or 7%, increase in operating expenses.
Net income for 1996 was $26.3 million, or $1.10 per share. Operating
results for the year included a $21.0 million pretax third quarter charge for a
one-time assessment to recapitalize the Savings Association Insurance Fund
("SAIF"). Excluding the SAIF charge, net income would have been $40.2 million,
or $1.69 per share, which represents a 10% increase over 1995 net income of
$36.4 million, or $1.49 per share. The improvement in operating earnings for the
year reflects the results of the Company's strategy to increase earning assets
and to continue to increase other income. The Company intends to continue this
strategy in 1997, as well as seek opportunities to expand its franchise in the
Chicago area by opening additional in-store or storefront branches.
For the year 1996, the return on average assets was 0.62% (0.95% without
the SAIF charge) versus 0.90% for the year 1995 and the return on average equity
was 6.85% (10.48% without the SAIF charge) versus 9.86% for the year 1995. Also,
at December 31, 1996, stockholders' equity was equivalent to 8.91% of total
assets or $17.04 per share.
Total assets at December 31, 1996 were $4.4 billion which represents an
increase of almost 6% over the $4.1 billion as of December 31, 1995. The
increase in assets during 1996 was primarily in mortgage loans receivable which
increased by $92.0 million and mortgage-backed securities which increased by
$187.6 million. These increases have been funded primarily by a decrease in
investment securities of $27.6 million, an increase in deposits of $105.2
million and an increase in borrowings of $119.8 million. During 1996, the
Company purchased over $600.0 million of 1-4 family adjustable-rate mortgage
loans, of which $190.0 million were purchased in the fourth quarter.
Net interest income for 1996 was $124.7 million, an increase of $8.1
million or 7% over the $116.6 million reported during 1995. The Company reported
an increase in both interest income and interest expense due to the increases in
both interest-earning assets and interest-bearing liabilities. The Company's
average earning assets grew 4.6% or $178.5 million, to $4.1 billion for 1996
from $3.9 billion for 1995. The Company's average interest-bearing liabilities
grew by $161.9 million to $3.8 billion, an increase of 4.5%. At December 31,
1996 the yield on earning assets increased to 7.36% from 7.28% at December 31,
1995. In comparison at December 31, 1996 the rate on interest-bearing
liabilities increased to 4.58% from 4.56%. As a result, the net interest spread
(equal to the yield on earning assets less the rate on interest-bearing
liabilities) increased to 2.78% at December 31, 1996 from 2.72% at December 31,
1995. The net interest margin (net yield on average earning assets) was 3.07%
in 1996, compared to 3.01% during 1995.
Other income rose 6% to $35.7 million for 1996, compared to $33.7 million
during the previous year. The increase in revenues for the year resulted from
higher revenues from discount brokerage operations and ATMs--including the
installation of 261 ATMs in White Hen Pantries during 1996.
Other operating expenses totaled $117.8 million during 1996, including the
$21.0 million SAIF charge recorded during the third quarter of the year.
Without the one-time SAIF charge, other operating expenses would have been $96.8
million, or 7% higher than the $90.2 million of G&A expenses during 1995.
Advertising and occupancy expenses showed the greatest percentage increases for
the year. The benefits from the reduction in deposit insurance premiums
resulting from the SAIF recapitalization will be realized starting in the first
quarter of 1997.
The Company reported nonperforming assets at December 31, 1996 of $12.5
million or 0.29% of total assets, the lowest level since the Company went public
in 1987. This compares with nonperforming assets of $20.6 million (0.48% of
total assets) at September 30, 1996 and $29.2 million (or 0.71% of total assets)
at December 31, 1995. Net loan and REO charge-offs were $7.0 million during
1996, compared to $6.3 million during 1995. At December 31, 1996, the general
valuation allowance for loans was $30.7 million, or 1.09% of total loans
receivable and 322% of nonperforming loans.
The Company's leverage ratio, Tier 1 capital ratio, and total risk-based
capital ratio were 8.80%, 16.02% and 17.27%, respectively, at December 31, 1996,
compared to 8.95%, 16.18% and 17.47% respectively, at December 31, 1995.
_____________________
/1/Per share amounts have been restated to reflect a five-for-four stock
split distributed on January 14, 1997 to stockholders of record as of December
31, 1996.
-8-
<PAGE>
CERTAIN REGULATORY MATTERS
GENERAL
The Company is a "savings and loan holding company" registered with the
Office of Thrift Supervision (the "OTS") and, as such, the Company is subject
to OTS regulations, examinations, supervision and reporting. The Bank is
subject to examination and comprehensive regulation by the OTS. The Bank's
deposits are insured by the Savings Association Insurance Fund ("SAIF") of
the FDIC and the Bank is subject to regulation by the FDIC and by the Board
of Governors of the Federal Reserve System with respect to reserves
maintained against deposits and certain other matters.
RESTRICTIONS ON CAPITAL DISTRIBUTIONS AND TRANSACTIONS BY THE BANK WITH
AFFILIATES
The principal source of funds for the Company's payments of principal
and interest on the Notes (and cash dividends on its common stock) will be
dividends from the Bank and the Company's other subsidiaries. In addition,
at September 30, 1996, the Company had $22.8 million in cash and cash
equivalents.
The OTS has adopted a regulation governing capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt
and other transactions charged to the capital account of a savings
institution. Generally, the regulation creates a safe harbor for specified
levels of capital distributions from institutions meeting at least their
minimum capital requirements, so long as such institutions notify the OTS and
receive no objection to the distribution from the OTS. Institutions that do
not qualify for the safe harbor are required to obtain prior OTS approval
before making any capital distributions. These regulations do not apply to
distributions from direct subsidiaries of the Company, such as Annuity
Network, Inc. and St. Paul Financial Development Corporation.
The Bank is currently a "Tier 1" institution under the OTS regulation
and, under the safe harbor, may make capital distributions of up to the
greater of 100% of its net income during a calendar year plus the amount that
would reduce by one-half its surplus capital ratio (the percentage by which
the institution's capital-to-assets ratio exceeds the ratio of its fully
phased-in capital requirements to its assets) at the beginning of the
calendar year, or 75% of its net income over the most recent four quarter
period.
The OTS has proposed to amend its regulation on capital distributions
such that the Bank would no longer have to obtain approval from the OTS in
order to make a distribution in excess of the safe harbor amount, unless such
distribution would cause the Bank to fail to meet the OTS's prompt corrective
action ("PCA") capital standards for a "well-capitalized" institution. The
OTS would, however, continue to receive prior notice of a distribution and
would retain the authority to prohibit any capital distribution upon a
determination that the making of such distribution would constitute an unsafe
or unsound practice. The Company does not anticipate that adoption of the
proposed regulation would have a material impact on the Bank's ability to
make distributions of capital.
In addition to regulation of capital distributions, there are various
statutory and regulatory limitations on the extent to which the Bank can
finance or otherwise transfer funds to the Company or its non-banking
subsidiaries, whether in the form of loans, extensions of credit, investments
or asset purchases. Such transfers by the Bank to the Company or any non-
banking subsidiary are generally limited to 10% of the Bank's capital and
surplus and, with respect to the Company and all such non-banking
subsidiaries, to an aggregate of 20% of the Bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent
with safe and sound banking practices. The OTS Director may further restrict
these transactions in the interest of safety and soundness.
-9-
<PAGE>
CAPITAL REGULATIONS
The OTS has prescribed capital regulations (the "Capital Regulations") that
establish three capital requirements which must be met by the Bank -- a "core
capital requirement," a "tangible capital requirement" and a "risk-based capital
requirement." The Capital Regulations require thrift institutions to maintain
"core" capital of at least 3% of adjusted total assets, "tangible" capital of at
least 1.5% of adjusted total assets, and "risk-based" capital of at least 8% of
risk-weighted assets. Capital standards for thrifts must be no less stringent
than the capital standards applicable to national banks (a leverage ratio of 4%
of adjusted total assets). Therefore, the Bank believes that it is required to
maintain core capital of at least 4% of adjusted total assets. The Bank exceeded
all of the capital requirements at September 30, 1996.
The OTS has also adopted separate PCA regulations that call for the OTS to
enforce certain restrictions on savings institutions that are classified as
undercapitalized. As of September 30, 1996, the Bank met the requirements of the
OTS to be categorized for PCA purposes as a "well-capitalized institution." An
institution's capital category, however, is determined solely for regulatory
purposes and may not constitute an accurate representation of the institution's
financial condition or prospects.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991,
the OTS recently published regulations to ensure that its risk-based capital
standards take adequate account of concentration of credit risk, risk from
nontraditional activities, and actual performance and expected risk of loss on
multifamily mortgages. These rules allow the regulators to impose, on a case-by-
case basis, an additional capital requirement above the current requirements
where an institution has significant concentration of credit risk or risks from
nontraditional activities. The Bank is currently not subject to any additional
capital requirements under these regulations.
The OTS may establish capital requirements higher than the generally
applicable minimum for a particular savings institution if the OTS determines
the institution's capital was or may become inadequate in view of its particular
circumstances. Individual minimum capital requirements may be appropriate where
the savings institution is receiving special supervisory attention, has a high
degree of exposure to interest rate risk, or poses safety or soundness concerns.
The Bank has no such requirements.
RECENT LEGISLATION
To mitigate the disparity and any competitive disadvantage due to disparate
deposit insurance premium schedules between the Bank Insurance Fund ("BIF") and
SAIF, on September 30, 1996, President Clinton signed legislation to
recapitalize the SAIF. This legislation required members of SAIF, such as the
Bank, to pay a one-time special assessment of 65.7 cents per $100 of deposits as
of March 31, 1995, to fully capitalize SAIF to the desired levels. Beginning in
1997, annual SAIF insurance premiums will drop to about 6.4 cents per $100 of
deposits, while BIF premiums will be 1.3 cents per $100 of deposits. The
Company's third quarter operating results include a $21.0 million pre-tax charge
for the Bank's share of the special assessment. As a result, management expects
future SAIF insurance premiums to be reduced by $5.5 million annually, based
upon current deposit levels.
Recent legislation also eliminated the availability of the percentage-of-
taxable income bad debt method for federal income tax purposes. The Bank will be
required to use the specific charge-off method in the future. Previously, the
Bank had been able to use either the percentage-of-taxable income method or the
specific charge-off method. The legislation also eliminated the recapture of the
base year tax reserve (i.e., tax bad debt reserves established before 1988) if
the Bank were to fail the qualified thrift lender test. As a result of the
legislation, the base year tax reserve becomes subject to recapture if the Bank
ceased to be a bank or made distributions of the tax bad debt reserves to
shareholders. The legislation also requires the Bank to recapture, into taxable
income, $547,000 of additions made to the tax bad debt reserve since 1988. This
recapture will occur over a six year period beginning in 1996, but can be
delayed for two years if the Bank meets recently developed loan origination
tests.
-10-
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to repurchase
or redeem, at par, all of the Company's outstanding 8.25% Subordinated Notes
due 2000 ("Subordinated Notes"), the outstanding principal balance of which
is approximately $34.5 million. The Company expects to repurchase or redeem
the Subordinated Notes within 60 days after the sale of the Notes. The
remainder of the net proceeds will be added to the general funds of the
Company to be available for any general corporate purpose.
-11-
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization including borrowings, of
the Company as of September 30, 1996, and the pro forma capitalization on a
combined basis giving effect to the proposed sale of the Notes and the
application of the estimated net proceeds therefrom, as described in "Use of
Proceeds."
<TABLE>
<CAPTION>
St. Paul Offering Pro Forma
Bancorp Adjustments(1) as Adjusted
--------- -------------- ------------
<S> <C> <C> <C>
(Dollars in thousands)
Borrowings:(2)
Short-term borrowings.................................. $280,499 $ - $280,499
Long-term borrowings................................... 260,754 (33,798) 226,956
Senior notes due 2004
offered hereby....................................... - 100,000 100,000
-------- -------- --------
Total borrowings.................................. $541,253 $ 66,202 $607,455
======== ======== ========
Stockholders' equity:(3)
Preferred stock ($.01 par value); 10,000,000
shares authorized; none issued....................... $ - $ - $ -
Common stock ($.01 par value); 40,000,000 shares
authorized; 25,309,023 shares issued and 22,602,308
shares outstanding................................... 253 - 253
Paid-in capital........................................ 144,851 - 144,851
Retained income........................................ 279,362 (465) 278,897
Less unrealized loss on securities, net of taxes....... (4,393) - (4,393)
Less borrowing by employee stock ownership plan........ (441) - (441)
Less unearned employee stock ownership plan shares
(245,438 shares)..................................... (2,883) - (2,883)
Less treasury stock (2,706,715 shares)................. (45,118) - (45,118)
-------- -------- --------
Total stockholders' equity........................ $371,631 $ (465) $371,166
======== ======== ========
</TABLE>
- ----------------
(1) Adjusted to reflect the sale of $100,000,000 principal amount of
Notes pursuant to the offering made hereby and the application of a
portion of the net proceeds from such sale for repayment or
redemption of all of the Company's outstanding 8.25% Subordinated
Notes due 2000.
(2) For information concerning the Company's borrowings, see Note O to
the Company's Consolidated Financial Statements included in its
Annual Report on Form 10-K for the year ended December 31, 1995,
which document is incorporated herein by reference.
(3) Restated for a five-for-four stock split effective January 14,
1997, based upon a stockholder record date of December 31, 1996.
-12-
<PAGE>
DESCRIPTION OF NOTES
The following sets forth certain general terms and provisions of the
Notes. The Notes are to be issued under an indenture (the "Indenture")
between the Company and Harris Trust and Savings Bank, as trustee (the
"Trustee"). A copy of the form of the Indenture is filed as an exhibit to
the Registration Statement of which this Prospectus is a part. See
"Available Information." The following summaries of certain provisions of
the Notes and the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to all of the provisions of
the Indenture, including the definition therein of certain terms, and the
actual provisions of the Notes. Capitalized terms used herein have the
meanings attributed to them in the Indenture (unless otherwise defined
herein). Section references made herein refer to sections of the Indenture.
GENERAL
The Notes will constitute a single series of debt securities ("Debt
Securities") to be issued under the Indenture. The Notes will be limited to
$100,000,000 in aggregate principal amount, will mature on _________, 2004
and will be unsecured, unsubordinated obligations of the Company.
The Notes will bear interest at the rate set forth on the cover page of
this Prospectus. Interest on the Notes will be payable semi-annually on each
_______________ and ________________ (each an "Interest Payment Date"),
commencing ________________, 1997. Interest payable on each Interest Payment
Date will include interest accrued from _______________, 199_ or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for. Interest payable on any Interest Payment Date will be payable
to the person in whose name a Note (or any predecessor Note) is registered at
the close of business on the _______________ or _______________, as the case
may be, next preceding such Interest Payment Date. Principal of and interest
on the Notes will be payable at the office or agency of the Company
maintained for such purpose in Chicago, Illinois, which initially will be the
office of the Paying Agent, provided that payment of interest may be made
(subject to collection), at the option of the Company, by check mailed to the
person entitled thereto. Interest shall be computed on the basis of a 360-
day year comprised of twelve 30-day months.
The Notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple thereof. No service
charge will be made for any registration of transfer or exchange of Notes,
except in certain circumstances for any tax or other governmental charge that
may be imposed in connection therewith. (Sections 3.1, 3.2 and 3.5)
RANKING
The Notes will be general unsecured obligations and will rank pari passu
with all other unsecured and unsubordinated senior indebtedness of the
Company.
The Company conducts its operations primarily through its subsidiaries.
The rights of the Company and its creditors, including the holders of the
Notes offered hereby, to participate in the assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise will be subject
to the prior claims of the subsidiary's depositors and creditors, except to
the extent that the Company may itself be a creditor with recognized claims
against the subsidiary.
OPTIONAL REDEMPTION
The Notes will not be redeemable prior to maturity. The Company may
purchase Notes in the open market, by tender or by contract. Notes so
purchased may be held, resold or surrendered to the Trustee for cancellation.
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Exchange Act and other securities laws and regulations in
connection with any such purchase.
-13-
<PAGE>
SINKING FUND
There will be no sinking fund payments for the Notes.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Sale or Issuance of Capital Stock or Convertible
Securities of, and Merger or Sale of Assets by, a Bank. The Company will
not: (i) nor will it permit any Bank to, issue, sell, transfer, assign,
pledge or otherwise dispose of any shares of capital stock of any class of a
Bank or any securities convertible or exchangeable into shares of capital
stock of any class of a Bank unless after giving effect to such transaction
and to shares issuable upon conversion or exchange of outstanding securities
convertible or exchangeable into such capital stock (including such
securities, if any, which may be the subject of such transaction), at least
80% of the outstanding shares of capital stock of each class of such Bank
shall be owned at that time by the Company; or (ii) permit a Bank to merge or
consolidate or convey or transfer all or substantially all of its assets,
unless at least 80% of the capital stock of each class (after giving effect
to such transaction and to shares issuable upon conversion or exchange of
outstanding securities convertible or exchangeable into capital stock,
including such securities, if any, which may be issued in such transaction)
of the surviving corporation in the case of a merger or consolidation or of
the transferee corporation in the case of a conveyance or transfer, shall be
owned at that time by the Company. (Section 9.12)
Ownership of Material Subsidiary Stock. The Company will not take any
action which would result in a decrease in the percentage of the outstanding
shares of voting stock of any Material Subsidiary directly or indirectly
owned by the Company, except as a result of (i) the issuance of directors'
qualifying shares; (ii) sales or other dispositions to the Company or to one
or more Material Subsidiaries; (iii) the purchase or retirement of shares
with the proceeds of newly issued shares; or (iv) the sale of capital stock
at a price determined by the Company (which determination may be evidenced by
a resolution of the Company's Board of Directors) to be the fair value
thereof. (Section 9.10)
Limitation on Liens. Except as provided below, the Company will not
issue, assume or guarantee any indebtedness for borrowed money
("indebtedness") secured by a mortgage, encumbrance, security interest,
pledge, lien or charge (a "pledge" or "pledges") of or upon any property of
the Company, whether such property is owned at the date of the Indenture or
thereafter acquired, without effectively providing that the Notes (together
with, if the Company shall so determine, any other indebtedness issued,
assumed by the Company and then existing or thereafter created) shall be
secured equally and ratably with (or prior to) such indebtedness, so long as
such indebtedness shall be so secured.
The foregoing does not apply to: (i) pledges upon any shares of
capital stock or indebtedness acquired by the Company after the date of the
Indenture (A) to secure the payment of all or any part of the purchase price
of such shares of capital stock or indebtedness upon the acquisition thereof
by the Company, or (B) to secure any indebtedness issued, assumed or
guaranteed by the Company prior to, at the time of, or within 360 days after
the acquisition of such shares of capital stock or indebtedness, which
indebtedness is issued, assumed or guaranteed for the purpose of financing or
refinancing all or any part of the purchase price of such shares of capital
stock or indebtedness; (ii) pledges of or upon shares of capital stock or
indebtedness, which pledges exist at the time of acquisition of such shares
or indebtedness by the Company; (iii) pledges of or upon any property of a
corporation, which pledges exist at the time such corporation is merged with
or into or consolidated with the Company or which pledges exist at the time
of a sale or transfer of the properties of a corporation as an entirety or
substantially as an entirety to the Company; (iv) mortgages existing on the
date of the Indenture; and (v) any extension, renewal, substitution,
refinancing, refunding or replacement (or successive extensions, renewals,
substitutions, refinancings, refundings or replacements) (each a
"refinancing") in whole or in part of any pledge existing at the date of the
Indenture or any pledge referred to in clauses (i) through (iv) above,
-14-
<PAGE>
inclusive, provided, however, that the principal amount of indebtedness
secured thereby may not exceed the principal amount of indebtedness so
secured at the time of the refinancing plus the aggregate amount of premiums,
other payments, costs and expenses required to be paid or incurred in
connection with the refinancing, and that the refinancing shall be limited to
all or a part of the shares of capital stock or indebtedness which was
subject to the pledge so extended, renewed, substituted, refinanced, refunded
or replaced.
The Company may, without equally and ratably securing the Debt
Securities, issue, assume or guarantee indebtedness secured by a pledge not
excepted by clauses (i) through (v) above, so long as after giving effect
thereto, the Company will own at least 80% of the capital stock of all of its
Material Subsidiaries then issued and outstanding, free and clear of any
pledge. (Section 9.9)
The Indenture does not contain any provisions other than the foregoing
which will restrict the Company form incurring, assuming or becoming liable
with respect to any indebtedness or other obligations, whether secured or
unsecured, or from paying dividends or making other distributions on its
capital stock or purchasing or redeeming its capital stock. The Indenture
does not contain any financial ratios, or specified levels of net worth or
liquidity to which the Company must adhere. In addition, the Indenture does
not contain any provision which would require that the Company repurchase or
redeem or otherwise modify the terms of any of the Notes upon a change in
control or other events involving the Company which may adversely affect the
creditworthiness of the Notes.
MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS
The Company may merge or consolidate with or into any other corporation
or sell, convey, transfer or otherwise dispose of all or substantially all of
its assets to any Person, if: (a) (i) in the case of a merger or
consolidation, the Company is the surviving corporation, or (ii) in the case
of a merger or consolidation where the Company is not the surviving
corporation and in the case of any such sale, conveyance, transfer or other
disposition, the successor or acquiring corporation is a corporation
organized and existing under the laws of the United States or a State thereof
and such corporation expressly assumes by supplemental indenture all the
obligations of the Company under the Debt Securities and under the Indenture
or such assumption is provided by law; (b) immediately thereafter, giving
effect to such merger or consolidation, or such sale, conveyance, transfer or
other disposition, no Default or Event of Default shall have occurred and be
continuing; and (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such merger or
consolidation, or such sale, conveyance, transfer or other disposition
complies with the Indenture and that all conditions precedent therein
provided for relating to such transaction have been complied with. In the
event of the assumption by a successor corporation of the obligations of the
Company as provided in clause (a)(ii) of the immediately preceding sentence,
such successor corporation shall succeed to and be substituted for the
Company under the Indenture and under the Debt Securities and all obligations
of the Company thereunder shall terminate. (Section 7.1).
TRANSACTIONS WITH AFFILIATES
The Company will not enter into any transaction (including the purchase,
sale or exchange of property or the rendering of any service) with any
Affiliate of the Company or any Subsidiary, other than in the ordinary course
of business and upon fair and reasonable terms taking into account the nature
of the Company's or the Subsidiary's business. (Section 9.11).
CORPORATE EXISTENCE
Subject to the permitted actions described above in "-Mergers,
Consolidations and Transfers of Assets," the Company will at all times do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and rights and franchises; provided, however,
that the Company may abandon or terminate any right or franchise if, in the
determination of the Company, such abandonment or termination is
-15-
<PAGE>
in the best interests of the Company and does not materially adversely affect
the ability of the Company to operate its business or to fulfill its
obligations under the Indenture. (Section 9.4).
WAIVERS OF CERTAIN COVENANTS
The Company may fail or omit in any particular instance to comply with
any of the covenants set forth in the Indenture (other than the covenants
relating to payment of principal, premium and interest, maintaining an office
or agency or preserving its corporate existence) with respect to any series
of Debt Securities if the Company shall have obtained and filed with the
Trustee prior to the time for such compliance the consent in writing of the
Holders of at least a majority in aggregate principal amount of all of the
Debt Securities of such series at the time Outstanding either waiving such
compliance in such instance or generally waiving compliance with such
covenant or covenants, but no such waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon.
(Section 9.13).
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities: (a) a default for 30 days in
the payment of any installment of interest on any Debt Security of such
series; (b) a default in the payment of any principal of, or premium, if any,
on, any such Debt Security of such series at its Maturity, upon redemption
(if applicable) or otherwise; (c) a default for 60 days after written notice
to the Company by the Trustee, or to the Company and the Trustee by the
Holders of at least 33% in principal amount of the Outstanding Debt
Securities of such series, in the performance of, or breach of, any other
covenant or warranty of the Company in respect of the Debt Securities of such
series contained in the Indenture; (d) a default under any agreement or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed (excluding for such purposes
non-recourse indebtedness having in the aggregate an outstanding principal
amount of less than $25 million), whether such indebtedness now exists or
shall hereafter be created, having an outstanding principal amount of $25
million or more in the aggregate, which default shall have resulted in such
indebtedness being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such declaration of
acceleration having been rescinded or annulled within a period of ten days
(or sixty days if the default is not caused by a failure to pay when due
principal or interest on such indebtedness within the applicable grace
period) after there shall have been given, by registered or certified mail,
to the Company by the Trustee, or to the Company and the Trustee by the
Holders of at least 33% in aggregate principal amount of the Outstanding Debt
Securities of such series, a written notice specifying such Event of Default,
and stating that such notice is a "Notice of Default" under the Indenture;
provided, however, that if such default under such agreement or instrument is
remedied or cured by the Company or waived by the holders of such
indebtedness, then such Event of Default by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of the Debt
Securities of that series; (e) certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of
the Company or its subsidiaries; or (f) any other Event of Default provided
in or pursuant to the Officer's Certificate, the applicable resolution of the
Board of Directors, or established in the supplemental indenture under which
such series of Debt Securities is issued. (Section 5.1). No Event of
Default with respect to a particular series of Debt Securities necessarily
constitutes an Event of Default with respect to any other series of Debt
Securities issued under the Indenture.
Within 90 days after the occurrence of any Default with respect to any
series of Debt Securities which is continuing, the Trustee for such series
must give the Holders of Debt Securities of such series notice of all
Defaults of which it has knowledge and that have not been cured or waived.
Nevertheless, except in the case of a Default in payment on the Debt
Securities of any series, the Trustee may withhold notice to the Holders of
Debt Securities of any series of any Default with respect to such series if
and so long as it determines that the withholding of such notice is in the
interest of such Holders; provided, however, that, in the case of any default
or breach of the character specified,in clause (c) of the preceding paragraph
with respect to the Debt
-16-
<PAGE>
Securities of such series, no such notice to Holders shall be given until at
least 60 days after the occurrence thereof. (Section 6.6).
If an Event of Default with respect to any series of Debt Securities at
the time Outstanding shall have occurred and is continuing, the Trustee or
the Holders of at least 33% in aggregate principal amount of the Outstanding
Debt Securities of such series may, by written notice, declare the principal
amount thereof (or, if the Debt Securities of such series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of such series) to be due and payable immediately. (Section
5.2).
The Indenture contains a provision entitling the Trustee to be
indemnified by the Holders of Debt Securities issued thereunder before
proceeding to exercise any right or power vested in the Trustee under the
Indenture at the request of any Holders. (Section 6.2). The Indenture
provides that the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series issued thereunder may, with certain
exceptions, direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, with respect to the Debt Securities of such
series. (Section 5.8). The right of a Holder to institute a proceeding with
respect to the Indenture is subject to certain conditions precedent,
including notice and indemnity to the Trustee, but each Holder has a right to
the receipt of payment of principal, premium, if any, and interest, if any,
at the respective Stated Maturities of the Debt Securities (or, in the case
of a redemption, on the Redemption Date) or to institute suit for the
enforcement thereof, which right shall not be impaired or affected without
the consent of such Holder. (Sections 5.9 and 5.10).
The Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of the Holders of
all such Debt Securities, waive any past Default or Event of Default with
respect to such series and its contingencies, except (a) a Default or Event
of Default in the payment of principal of, premium, if any, or interest, if
any, on any Debt Securities of such series, or (b) in respect of any covenant
or provision of the Indenture that cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of that series
adversely affected. (Sections 5.7 and 8.2).
The Indenture requires the Company to furnish to the Trustee annual
statements as to the fulfillment by the Company of its obligations under the
Indenture. (Section 9.7).
MODIFICATION OF THE INDENTURE
The Company, when authorized by a Board Resolution, and the Trustee may,
at any time and from time to time, without the consent of any Holders of Debt
Securities, modify and amend the Indenture, for any of the following
purposes: (a) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the
Company under the Indenture and in the Debt Securities; (b) to add to the
covenants of the Company for the benefit of the Holders of all or any series
of Debt Securities (and if such covenants are to be for the benefit of less
than all series of Debt Securities, stating that such covenants are expressly
being included solely for the benefit of such series) or to surrender any
right or power conferred by the Indenture upon the Company; (c) to add any
additional Events of Default with respect to all or any series of Debt
Securities; (d) to add to or change any of the provisions of the Indenture to
facilitate the issuance of Debt Securities in global form; (e) to add to,
change or eliminate any of the provisions of the Indenture; provided,
however, that any such addition, change or elimination shall become effective
only when there is no Debt Security Outstanding of any series created prior
to the execution of the supplemental indenture which is entitled to the
benefit of such provision; (f) to secure the Debt Securities; (g) to
establish the form or terms of Debt Securities of any series as permitted by
Sections 2.1 and 3.1 of the Indenture; (h) to evidence and provide for the
acceptance of appointment under the Indenture by a successor Trustee with
respect to the Debt Securities of one or more series and to add to or change
any of the provisions of the Indenture as shall be necessary to provide for
or facilitate the administration of the trusts under the Indenture by more
than one Trustee, pursuant to the requirements of Section 6.11 of the
Indenture; (i) to correct or supplement any provision under the
-17-
<PAGE>
Indenture which may be inconsistent with any other provision under the
Indenture or to make any other provisions with respect to matters or
questions arising under the Indenture, provided, however, such action shall
not adversely affect the interests of the Holders of Debt Securities of any
series issued under the Indenture in any material respect; or to cure any
ambiguity or correct any mistake; or (j) to modify, eliminate or add to the
provisions of the Indenture to the extent necessary to effect the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA") or under any similar federal statute subsequently enacted and to add
to the Indenture such other provisions as may be expressly required under the
TIA. (Section 8.1).
Modifications and amendments to the Indenture may be made by the Company
and the Trustee with the written consent of the Holders of a majority of the
aggregate principal amount of each series of Debt Securities at the time
Outstanding that is adversely affected thereby; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security of such series adversely affected thereby: (i)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security of such series, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal of
an Original Issue Discount Security of such series that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 5.2 of the Indenture, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date); (ii) reduce
the percentage in aggregate principal amount of the Outstanding Debt
Securities of such series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture;
(iii) change any obligation of the Company to maintain an office or agency in
the Place of Payment for the Debt Securities of such series where such Debt
Securities may be presented or surrendered for payment, where such Debt
Securities of such series may be surrendered for registration of transfer or
exchange or where notices and demands to or upon the Company in respect of
the Debt Securities of such series may be served; or (iv) make any change in
Section 5.7 or Section 8.2 of the Indenture except to increase any percentage
or to provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the Holders of each Outstanding
Debt Security of such series adversely affected thereby. (Section 8.2).
SATISFACTION AND DISCHARGE; DEFEASANCE
The Indenture, with respect to any series of Debt Securities (except for
certain specified surviving obligations referred to below), will be
discharged and canceled upon the satisfaction of certain conditions,
including the following: (a) all Debt Securities of such series not
theretofore delivered to the Trustee for cancellation have become due or
payable, will become and due and payable at their Stated Maturity within one
year, or are to be called for redemption within one year; and (b) the deposit
with the Trustee of an amount sufficient to pay the principal, premium, if
any, and interest to the Maturity of all Debt Securities of such series.
Upon any such discharge of the Company's obligations, the Holders of the Debt
Securities of such series shall no longer be entitled to the benefits of the
Indenture, except for the purposes of registration of transfer and exchange
of the Debt Securities or replacement of lost, stolen or mutilated Debt
Securities and shall look only to such deposited funds or obligations for
payment. (Sections 4.1 and 4.2).
The Indenture also provides that the Company may elect:
(a) to be discharged from its obligations with respect to the Debt
Securities of or within a series on and after the date the conditions
described below regarding Section 4.6 of the Indenture are satisfied
(hereinafter "defeasance"). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Debt Securities which shall thereafter
be deemed to be "Outstanding" only for the purposes of Article 4 of the
Indenture, and to have satisfied all its other obligations under such
Debt Securities and the Indenture insofar as such Debt Securities are
concerned (and the Trustee, at the expense of the Company, shall on a
Company Order
-18-
<PAGE>
execute proper instruments acknowledging the same), except the following
which shall survive until otherwise terminated or discharged hereunder:
(i) the rights of Holders of such Debt Securities to receive, solely
from the trust funds described below regarding Section 4.6(a) of the
Indenture, payments in respect of the principal of, premium, if any, and
interest, if any, on such Debt Securities when such payments are due;
(ii) the rights, powers, trusts, duties and immunities of the Trustee
under the Indenture; and (iii) Article 4 of the Indenture. Subject to
compliance with Article 4 of the Indenture, the Company may exercise
this option notwithstanding the prior exercise of its option to effect
covenant defeasance (as defined below) with respect to such Debt
Securities. (Section 4.4).
(b) to be released from its obligations with respect to the Debt
Securities of or within a series under "--Mergers, Consolidations and
Transfers of Assets" and "--Certain Covenants" above and certain other
obligations, and, if specified pursuant to provisions of the Indenture
establishing the terms of such Debt Securities, its obligations under
any other covenants with respect to such Debt Securities on and after
the date the conditions set forth below in the next paragraph are
satisfied (hereinafter "covenant defeasance"), and such Debt Securities
shall thereafter be deemed to be not "Outstanding" for the purpose of
any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders (and the consequences of any thereof) in
connection with such obligations or such other covenants, but shall
continue to be deemed "Outstanding" for all other purposes of the
Indenture. For this purpose, such covenant defeasance means that, with
respect to such Debt Securities, the Company may omit to comply with and
shall have no liability in respect of such obligations or such other
covenants, whether directly or indirectly, by reason of any reference
elsewhere in the Indenture to any such obligation or such other
covenants or by reason of any reference to any such obligation or such
other covenants to any other provision in the Indenture or in any other
document or otherwise and such omission to comply shall not constitute a
Default or an Event of Default under the Indenture or otherwise, as the
case may be, but, except as specified above, the remainder of the
Indenture and such Debt Securities shall be unaffected thereby.
(Section 4.5).
Such defeasance or covenant defeasance will take effect with respect to
any Debt Securities of or within a series at any time prior to the Stated
Maturity or redemption thereof only when:
(a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee (or another trustee satisfying the
eligibility requirements of the Indenture who shall agree to comply
with, and shall be entitled to the benefits of, certain specified
provisions of the Indenture relating to defeasance or covenant
defeasance and liability with respect to trust funds, for purposes of
such provisions also a "Trustee") as trust funds in trust for the
purpose of making the payments referred to in clauses (x) and (y) below,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Debt Securities, with instructions to the
Trustee as to the application thereof, (i) money in an amount, or (ii)
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment
referred to in clause (x) or (y) below, money in an amount or (iii) a
combination thereof in an amount, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge, and which shall be applied by the Trustee to pay
and discharge, (x) the principal of, premium, if any, and interest, if
any, on such Debt Securities on the Maturity of such principal or
installment of principal or interest and (y) any mandatory sinking fund
payments applicable to such Debt Securities on the day on which such
payments are due and payable in accordance with the terms of the
Indenture and such Debt Securities. Before such a deposit the Company
may make arrangements satisfactory to the Trustee for the redemption of
Debt Securities at a future date or dates in accordance with the
Indenture which shall be given effect in applying the foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default
under the Indenture or result in a breach or violation of, or
-19-
<PAGE>
constitute a default under, any other material agreement or instrument
to which the Company is a party or by which it is bound.
(c) No Event of Default of the type described in clause (e) of "--
Events of Default, Notice and Waiver" above with respect to such Debt
Securities shall have occurred and be continuing during the period
commencing on the date of such deposit and ending on the 91st day after
such date (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(d) In the case of an exercise by the Company of its option to
effect a defeasance as described above, the Company shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel to the
effect that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the
date of execution of the Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Debt Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such deposit, defeasance
and discharge had not occurred.
(e) In the case of an exercise by the Company of its option to
effect a covenant defeasance as described above, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to such defeasance as described above or such covenant
defeasance as described above (as the case may be) have been complied
with and an Opinion of Counsel to the effect that either (i) as a result
of a deposit pursuant to subparagraph (a) above and the related exercise
of the Company's option to effect such defeasance as described above or
to affect such covenant defeasance as described above (as the case may
be), registration is not required under the Investment Company Act of
1940, as amended, by the Company, with respect to the trust funds
representing such deposit or by the Trustee for such trust funds or (ii)
all necessary registrations under said Act have been effected.
(g) Such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection therewith
as contemplated by the provisions of the Indenture establishing the
terms of such Debt Securities. (Section 4.6).
PAYMENT AND TRANSFER
Principal of, premium, if any, and interest, if any, on the Debt
Securities of any series are to be payable at the Place of Payment for such
series, which may be the Corporate Trust Office of the Trustee or any other
office or agency maintained by the Company for such purposes, provided that
payment of interest, if any, on Debt Securities may be made at the option of
the Company by check mailed to the persons in whose names such Debt
Securities are registered at the close of business on the day or days
specified in the applicable Prospectus Supplement. (Sections 3.7 and 9.2).
Debt Securities may be transferred or exchanged at the Place of Payment
for such series, which may be the Corporate Trust Office of the Trustee or at
any other office or agency maintained by the Company for such purposes,
subject to the limitations in the Indenture, without the payment of any
service charge except for
-20-
<PAGE>
any tax or governmental charge incidental thereto. (Section 3.5).
SAME-DAY SETTLEMENT
Settlement for the Notes will be made by the underwriters, dealers or
agents in immediately available funds and all applicable payments of
principal, premium and interest on the Notes will be made by the Company in
immediately available funds.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS OR DIRECTORS
The Indenture provides that no recourse under or upon any obligation,
covenant or agreement of or contained in the Indenture or of or contained in
any Note, or for any claim based thereon or otherwise in respect thereof, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past or
present of the Company or of any successor Person. Each Holder, by accepting
the Notes, waives and releases all such liability. (Section 1.13).
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. If an Event of Default has occurred and is
continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it by the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. (Section 6.1).
The Indenture and provisions of the TIA incorporated by reference
therein contain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such claims, as
security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting
interest, it must eliminate such conflict or resign. (Section 6.3).
Harris Trust and Savings Bank is the Trustee under the Indenture. The
Company maintains banking relationships in the ordinary course of business
with the Trustee.
BOOK-ENTRY SYSTEM
The Notes will be represented by one fully registered Global Security
deposited with, or on behalf of, the Depository Trust Company ("DTC") or
other successor depositary (DTC or such other depositary appointed by the
Company is herein referred to as the "Depositary") and registered in the name
of the Depositary or its nominee. The Notes will not be issuable in
definitive form, except under the limited circumstances described herein.
DTC has advised the Company and the Underwriters that it intends to
follow the procedures described below:
The Depositary will act as securities depositary for the Global
Security. The Global Security will be issued as a fully registered
security registered in the name of Cede & Co. (the Depositary's
partnership nominee).
The Depositary is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the
-21-
<PAGE>
Exchange Act. The Depositary holds securities that its participants
("Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). The Depositary is owned by
a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the Depositary's system is also
available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to the Depositary and its
Participants are on file with the Commission.
Purchases of the Notes must be made by or through Direct
Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser
of each Note ("Beneficial Owner") is in turn recorded on the Direct and
Indirect Participant's records. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in
the Notes, except in the event that use of the book-entry system for the
Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by
Participants with the Depositary are registered in the name of the
Depositary's partnership nominee, Cede & Co. The deposit of Notes with
the Depositary and their registration in the name of Cede & Co. effect
no change in beneficial ownership. The Depositary has no knowledge of
the actual Beneficial Owners of the Notes; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts
such Notes are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of Notes and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial
Owners are governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Notes. Under its usual procedures, the Depositary mails
an Omnibus Proxy to the issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Notes are
credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal and interest payments on the Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the payable date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has
reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
Participant and not of the Depositary, the Paying Agent or the Company,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to the Depositary
is the responsibility of the Company or the Paying Agent, disbursement
of such payments to Direct Participants shall be the responsibility of
the Depositary, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
-22-
<PAGE>
So long as the Depositary for the Global Security, or its nominee, is
the registered owner of the Global Security, the Depositary or its nominee,
as the case may be, will be considered the sole owner or Holder of the Notes
represented by the Global Security for all purposes under the Indenture.
Except as set forth below, owners of beneficial interests in the Global
Security will not be entitled to have Notes represented by the Global
Security registered in their names, will not receive or be entitled to
receive physical delivery of Notes in definitive form and will not be
considered the owners or Holders thereof under the Indenture. Accordingly,
each person owning a beneficial interest in the Global Security must rely on
the procedures of the Depositary and, if such person is not a Participant,
those of the Participants through which such person owns its interest, in
order to exercise any rights of a Holder under the Indenture.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Such limits and laws may impair the ability to transfer beneficial interests
in the Global Security.
Principal and interest payments on Notes registered in the name of or
held by the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner or the Holder of the
Global Security representing such Notes. Neither the Company, the Paying
Agent nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
If at any time the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary or if at any time the Depositary shall no
longer be eligible under the Indenture, the Company shall appoint a successor
Depositary with respect to the Notes. If a successor Depositary is not
appointed by the Company within 90 days after it receives such notice or
becomes aware of such ineligibility, the Company will issue certificated
Notes of like tenor, in authorized denominations and in an aggregate
principal amount equal to the principal amount of the Global Security in
exchange for the Global Security. (Section 3.5)
The Company may at any time in its sole discretion determine that the
Notes issued in global form shall no longer be represented by the Global
Security, In such event the Company will issue certificated Notes of like
tenor, in authorized denominations and in an aggregate principal amount equal
to the principal amount of the Global Security in exchange for the Global
Security. (Section 3.5)
CERTAIN DEFINITIONS
The following terms are defined in the Indenture (Sections 1.1, 5.1).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" means (a) the Bank, so long as it is a Subsidiary of the Company,
or any successor thereto so long as such successor is a Subsidiary of the
Company and (b) any bank or savings or depository institution that is or
shall become an Affiliate of the Company.
-23-
<PAGE>
"corporation" includes corporations, associations, partnerships, limited
liability companies, joint stock companies and business trusts.
"Default" means any event which is, or after notice or passage of time,
or both, would be, an Event of Default.
"Event of Default" is defined above under "-Events of Default, Notice
and Waiver".
"Material Subsidiary" means, at any particular time, any Subsidiary
that, together with any Subsidiaries of such Subsidiary (i) accounted for
more than 5% of the consolidated revenue of the Company for its most recently
completed fiscal year, or (ii) owned more than 5% of the consolidated assets
of the Company as at the end of such fiscal year, all as calculated in
accordance with generally accepted accounting principles.
"Maturity", where used with respect to any Debt Security, means the date
on which the principal of such Debt Security or an installment of principal
thereof becomes due and payable as therein or in the Indenture provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President, any Executive Vice President or any Senior Vice
President, signing alone, or by any Vice President signing together with the
Corporate Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company.
"Opinion of Counsel" means a written opinion of legal counsel, who may
be (a) counsel for the Company or (b) other counsel designated by the Company
or the Trustee. Any counsel for the Company may be an employee of the
Company.
"Stated Maturity", when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date
specified in such Debt Security as the fixed date on which the principal of
such Debt Security or such installment of principal or interest is due and
payable.
"Subsidiary" means any corporation or Bank of which the Company at the
time owns or controls, directly or indirectly, more than 50% of the shares of
outstanding stock having general voting power under ordinary circumstances to
elect a majority of the Board of Directors of such corporation (irrespective
of whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening
of any contingency).
-24-
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") among the Company and Keefe, Bruyette & Woods,
Inc. and ABN AMRO Chicago Corporation (the "Underwriters"), the Company has
agreed to sell to the Underwriters and the Underwriters have severally agreed to
purchase, the respective principal amounts of the Notes set forth after their
names below. In the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the Notes offered hereby if any of the Notes are purchased. In the event of a
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
Principal
Underwriter Amount
- ----------- ------------
<S> <C>
Keefe, Bruyette & Woods, Inc............................... $
-----------
ABN AMRO Chicago Corporation............................... $
-----------
Total................................................. $100,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of ___% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of ___% of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act or contribute to payments the Underwriters may be required to
make in respect thereof.
The Notes will not be listed on any securities exchange. The Company has
been advised by the Underwriters that the Underwriters currently intend to make
a market in the Notes, as permitted by applicable laws and regulations. The
Underwriters are not obligated, however, to make a market in the Notes and any
such market-making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Notes.
The Underwriters and their respective affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
LEGAL OPINIONS
The legality of the Notes will be passed upon for the Company by Hogan &
Hartson L.L.P., Washington, D.C., special counsel to the Company. Certain legal
matters with respect to the Notes will be passed upon for the underwriters by
McDermott, Will & Emery, Chicago, Illinois. McDermott, Will & Emery in the past
has represented, and in the future may represent, the Company on other matters.
-25-
<PAGE>
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
-26-
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ST. PAUL BANCORP OR ANY OF THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF ST. PAUL BANCORP SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------------------------
TABLE OF CONTENTS
Page
----
Available Information.......................................................
Incorporation of Certain Documents by Reference.............................
The Company.................................................................
Selected Consolidated Financial Information.................................
Recent Developments.........................................................
Certain Regulatory Matters..................................................
Use of Proceeds.............................................................
Capitalization..............................................................
Description of Notes........................................................
Underwriting................................................................
Legal Opinions..............................................................
Experts.....................................................................
---------------------------
$100,000,000
ST. PAUL BANCORP, INC.
___% Senior Notes
Due 2004
-------------------
PROSPECTUS
-------------------
KEEFE, BRUYETTE & WOODS, INC.
ABN AMRO CHICAGO CORPORATION
____________, 199_
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable by the
Company in connection with the issuance and distribution of the securities being
registered:
Registration Fee............................................. $ 30,303.03
NASD Fees.................................................... 10,500
Printing and Duplicating Expenses............................ 30,000
Legal Fees and Expenses...................................... 15,000
Accounting Fees and Expenses................................. 25,000
Blue Sky Fees and Expenses................................... 2,500
Trustee Fees and Expenses.................................... 5,000
Miscellaneous................................................ 6,696.97
-----------
Total $125,000
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Article IX of the Registrant's Bylaws, as amended (incorporated by
reference to Exhibit 3(ii) of the Registrant's Form 10-K for the
fiscal year ended December 31, 1989).
(b) Section 145 of the Delaware General Corporation Law.
(c) The Registrant has in effect a policy of liability insurance covering
its directors and officers.
ITEM 16. EXHIBITS
1.0 Form of Underwriting Agreement among St. Paul Bancorp, Inc., ABN AMRO
Chicago Corporation and Keefe, Bruyette & Woods, Inc.
4.1 Form of Indenture.
4.2 Form of Supplemental Indenture (including Form of Senior Notes attached
as an exhibit thereto). *
5.0 Opinion of Hogan & Hartson L.L.P. as to the legality of the securities
registered hereunder, including consent of that firm.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
24.0 Power of Attorney (incorporated by reference from signature page of Form
S-3 (333-18677), filed December 23, 1996).
25.0 Statement of Eligibility of the Trustee. *
99.1 Article IX of the Registrant's Bylaws, as amended (incorporated by
reference to Exhibit 3(ii) of the Registrant's Form 10-K for the fiscal
year ended December 31, 1989).
99.2 Section 145 of the Delaware General Corporation Law. *
* Previously filed.
-1-
<PAGE>
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
this registration statement shall be deemed to be a new registration
statement relating to the Securities offered herein, and the offering of
such Securities at that time shall be deemed to be the initial bona fide
offering thereof.
(2) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(3) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to existing provisions or arrangements whereby the
Registrant may indemnify a director, officer or controlling person of the
Registrant against liabilities arising under the Securities Act of 1933, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(4) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(5) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
Subsection (c) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Chicago, State of Illinois, on the 30th day of
January, 1997.
ST. PAUL BANCORP, INC.
By: /s/ Joseph C. Scully
--------------------
Joseph C. Scully
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed by the following persons in
the capacities indicated.
Signature Title
- --------- -----
/s/ Joseph C. Scully Chairman and Chief Executive Officer
- -------------------- (Principal Executive Officer)
Joseph C. Scully
/s/ Patrick J. Agnew President and Chief Operating Officer
- --------------------
Patrick J. Agnew
/s/ Robert N. Parke Senior Vice President and Treasurer
- ------------------- (Principal Financial Officer)
Robert N. Parke
/s/ Paul J. Devitt First Vice President and Controller
- ------------------ (Principal Accounting Officer)
Paul J. Devitt
/s/ William A. Anderson* Director
- -----------------------
William A. Anderson
/s/ John W. Croghan* Director
- -------------------
John W. Croghan
/s/ Dr. Alan J. Fredian* Director
- -----------------------
Dr. Alan J. Fredian
/s/ Kenneth J. James* Director
- --------------------
Kenneth J. James
-3-
<PAGE>
/s/ Dr. Jean C. Murray* Director
- ----------------------
Dr. Jean C. Murray
/s/ John J. Viera* Director
- -----------------
John J. Viera
- -----------------------
* By power-of-attorney.
-4-
<PAGE>
INDEX TO EXHIBITS
Number Description of Exhibit
- ------ ----------------------
1.0 Form of Underwriting Agreement among St. Paul Bancorp, Inc., ABN AMRO
Chicago Corporation and Keefe, Bruyette & Woods, Inc.
4.1 Form of Indenture.
4.2 Form of Supplemental Indenture (including Form of Senior Notes attached
as an exhibit thereto).*
5.0 Opinion of Hogan & Hartson L.L.P. as to the legality of the securities
registered hereunder, including consent of that firm.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
24.0 Power of Attorney (incorporated by reference from signature page of Form
S-3 (333-18677), filed December 23, 1996).
25.0 Statement of Eligibility of the Trustee.*
99.1 Article IX of the Registrant's Bylaws, as amended (incorporated
by reference to Exhibit 3(ii) of the Registrant's Form 10-K for the
fiscal year ended December 31, 1989).
99.2 Section 145 of the Delaware General Corporation Law.*
* Previously filed.
<PAGE>
$100,000,000 AGGREGATE PRINCIPAL AMOUNT OF
____% SENIOR NOTES DUE 2004
ST. PAUL BANCORP, INC.
UNDERWRITING AGREEMENT
----------------------
________, 1997
KEEFE, BRUYETTE & WOODS, INC.
Two World Trade Center
85th Floor
New York, New York 10048
ABN AMRO CHICAGO CORPORATION
208 South LaSalle Street
Chicago, Illinois 60604
Ladies and Gentlemen:
St. Paul Bancorp, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Underwriters") its ____% Senior Notes due 2004 in an
aggregate principal amount of $100,000,000 (the "Notes"). The Notes shall be
issued under an indenture, dated as of _________, 1997 (the "Indenture"),
between the Company and Harris Trust and Savings Bank, as Trustee (the
"Trustee"), and shall be substantially in the form filed as an exhibit to the
Registration Statement referred to in Section 1 hereof.
Prior to the purchase and public offering of the Notes by the Underwriters,
the Company and the Underwriters shall enter into an agreement substantially in
the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Company and the Underwriters and shall specify
such applicable information as is indicated in Exhibit A. The offering of the
Notes will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company confirms the following agreement with the Underwriters,
relating to the purchase and sale of the Notes.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
-------------------------------------
filed with the Securities and Exchange Commission (the "Commission") a
registration statement, and has filed one or more amendments thereto, on Form S-
3 (File No. 333-18677), including in such registration statement and each such
amendment a related prospectus
<PAGE>
subject to completion, in accordance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act") and the Trust Indenture Act of 1939, as amended, and
the rules and regulations of the Commission thereunder (collectively, the "Trust
Indenture Act"), relating to the Notes. Copies of that registration statement as
amended to date have been delivered by the Company to the Underwriters. The
Company satisfies the conditions for the use of Form S-3 in connection with the
offer and sale of the Notes. The Company expects to file the prospectus
containing the information required by Rule 430A under the Act pursuant to Rule
424(b) under the Act. The registration statement as amended at the time when it
becomes effective, including all financial schedules and exhibits thereto, is
referred to in this Agreement as the "Registration Statement", and the
prospectus in the form filed with the Commission as part of the Registration
Statement at the time the Registration Statement becomes effective or, if
applicable, in the form first filed pursuant to Rule 424(b) after the
Registration Statement becomes effective, is referred to in this Agreement as
the "Prospectus." Any registration statement filed by the Company pursuant to
Rule 462(b) under the Act (a "Rule 462(b) Registration Statement") shall be
deemed to be part of the Registration Statement. Any prospectus included in the
Rule 462(b) Registration Statement shall be deemed to be part of the Prospectus.
Any reference herein to the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Prospectus, and any reference to any
amendment of or supplement to the Prospectus or the Registration Statement shall
be deemed to refer to and include any documents filed after the date of such
Prospectus or Registration Statement, as the case may be, under the Securities
Exchange Act of 1934, as amended (together with the rules and regulations of the
Commission promulgated thereunder, the "Exchange Act"), and incorporated by
reference in such Prospectus or Registration Statement, as the case may be. If a
Rule 462(b) Registration Statement is required, such Rule 462(b) Registration
Statement shall have been transmitted to the Commission for filing and have
become effective within the prescribed time period, and, prior to the Closing
Date, the Company shall have provided to the Underwriters evidence of such
filing and effectiveness in accordance with Rule 462(b) under the Act.
2. AGREEMENT TO SELL AND PURCHASE. The Company hereby agrees to issue
------------------------------
and sell to the Underwriters $100,000,000 principal amount of Notes and, on the
basis of the representations, warranties and agreements of the Company herein
contained and subject to the terms and conditions set forth herein, each
Underwriter agrees, severally and not jointly, to purchase from the Company the
principal amount of Notes set forth opposite the name of such Underwriter in
Schedule I hereto (or such principal amount of Notes as such Underwriter shall
be obligated to purchase pursuant to the provisions of Section 9 hereof).
3. TERMS OF PUBLIC OFFERING. The Company is advised by the Underwriters
------------------------
that they have agreed to make a public offering of their respective portions of
the Notes as soon after the Registration Statement has become effective and the
Pricing Agreement has been
-2-
<PAGE>
executed as in the Underwriters' judgment is advisable and to first offer the
Notes upon the terms set forth in the Prospectus.
4. DELIVERY OF THE NOTES AND PAYMENT THEREFOR.
------------------------------------------
(a) Delivery to the Underwriters of the Notes shall be made at 9:00
a.m., Chicago time, on the fourth business day (or the third business day if
required under Rule 15c6-1 under the Act, or unless postponed in accordance with
the provisions of Section 9(b) hereof) following the date of the Pricing
Agreement (the "Closing Date") against payment therefor at the offices of
McDermott, Will & Emery, 227 West Monroe, Chicago, Illinois 60606, or through
the facilities of The Depository Trust Company. The place of closing and the
Closing Date may be varied by agreement between the Underwriters and the
Company.
(b) If the Underwriters and the Company have elected to enter into
the Pricing Agreement after the Registration Statement is effective, the
purchase price to be paid by the several Underwriters for the Notes shall be an
amount equal to the initial public offering price, less an amount to be
determined by agreement between the Underwriters and the Company. The initial
public offering price for the Notes shall be a fixed price to be determined by
agreement between the Underwriters and the Company. The interest rate, the
initial public offering price and the price to be paid by the Underwriters for
the Notes when so determined shall be set forth in the Pricing Agreement. If
such prices shall not have been agreed upon and the Pricing Agreement shall not
have been executed and delivered by all parties thereto by the close of business
on the fourth business day following the date of this Agreement, this Agreement
shall terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Company and the Underwriters and except as
otherwise provided in Section 5(l) and Section 7 hereof. If the Underwriters and
the Company have elected to enter into the Pricing Agreement prior to the
registration statement becoming effective, the initial public offering and the
price to be paid by the several Underwriters for the Notes shall have each been
determined and set forth in the Pricing Agreement, dated the date hereof, and an
amendment to the registration statement and the prospectus will be filed by the
Company before the registration statement becomes effective.
(c) The Notes shall be registered in such names and in such
authorized denominations as the Underwriters shall request prior to 11:00 a.m.,
Chicago time, on the second full business day preceding the Closing Date. The
Notes shall be made available to the Underwriters in definitive form for
inspection and packaging not later than 11:00 a.m., Chicago time, on the
business day next preceding the Closing Date. The Notes shall be delivered to
the Underwriters on the Closing Date, with any transfer taxes thereon duly paid
by the Company, for the respective accounts of the several Underwriters, against
payment of the purchase price therefor by wire transfer of immediately available
funds to the Company, subject to change by written agreement of the Company and
the Underwriters.
-3-
<PAGE>
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
-------------------------
Underwriters as follows:
(a) The Company will endeavor to cause the Registration Statement to
become effective and will advise the Underwriters promptly, and if requested by
the Underwriters will confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment to it
becomes effective, and of the filing of any final prospectus or supplement or
amendment to the Prospectus, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or Prospectus, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Notes
for offering or sale in any jurisdiction, or the initiation or contemplation
known to the Company of any proceeding for such purposes, and (iv) within the
period of time referred to in paragraph (f) below, of the happening of any event
which makes any statement made in the Registration Statement or Prospectus
untrue in any material respect or which requires the making of any additions to
or changes in the Registration Statement or Prospectus in order to make the
statements therein not misleading or of the necessity to amend or supplement the
Prospectus to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. If a Rule 462(b)
Registration Statement is required in connection with the offering and sale of
the Notes, the Company has complied or will comply with the requirements of Rule
111 under the Act relating to the payment of filing fees therefor.
(b) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A under the Act, then following the execution of the Pricing Agreement,
the Company will prepare and file with the Commission in accordance with Rule
430A and Rule 424(b) under the Act copies of an amended Prospectus, or, if
required by Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(c) The Company will furnish to each of the Underwriters, without
charge, one signed copy of the Registration Statement and of each amendment
thereto, including all exhibits thereto, and will also furnish to each of the
Underwriters, without charge, such number of conformed copies of the
Registration Statement, each amendment thereto and documents incorporated
therein by references each Underwriter may reasonably request.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which the
Underwriters shall not previously have been advised or to which any of the
Underwriters promptly after being so advised shall reasonably have objected in
writing.
-4-
<PAGE>
(e) Prior to the effective date of the Registration Statement, the
Company will deliver to each Underwriter, without charge, copies of each form of
prospectus subject to completion in such quantities as such Underwriter has
reasonably requested or may hereafter reasonably request. The Company consents
to the use, prior to the effective date of the Registration Statement, of each
prospectus subject to completion so furnished by the Company in accordance with
the provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Notes are lawfully offered by the several
Underwriters and by all dealers.
(f) On the effective date of the Registration Statement and
thereafter from time to time during such period as in the opinion of counsel for
the Underwriters a prospectus is required by law to be delivered in connection
with offers or sales of the Notes by an Underwriter or a dealer, the Company
will deliver to each Underwriter and dealer, without charge, as many copies of
the Prospectus including all documents from which information is incorporated by
reference (and any amendment or supplement thereto) as they may reasonably
request. During such period, if any event occurs which in the judgment of the
Company, or in the opinions of counsel for the Company and the Underwriters
after discussions among such counsel, should be set forth in the Prospectus in
order to ensure that the Prospectus does not contain an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances at the time the Prospectus is
delivered to a purchaser, not misleading, the Company will forthwith prepare,
submit to the Underwriters, file with the Commission and deliver, without charge
to the Underwriters and dealers (whose names and addresses will be furnished by
the Underwriters to the Company) to whom Notes have been sold by the
Underwriters or to other dealers upon request, an amendment or supplement, as
appropriate (including, if applicable, an appropriate report under the Exchange
Act which is incorporated by reference in the Prospectus), to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented, will
comply with the standards set forth in this sentence. The Company consents to
the use of such Prospectus (and of any amendments or supplements thereto) in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Notes are lawfully offered by the
Underwriters and by all dealers to whom Notes may be sold, both in connection
with the offering or sale of the Notes and for such period of time thereafter as
the Prospectus is required by law to be delivered in connection therewith. In
case any Underwriter is required to deliver a Prospectus more than nine months
after the first date upon which the Notes are offered to the public, the Company
will, upon request but at the expense of such Underwriter, furnish such
Underwriter with reasonable quantities of a Prospectus complying with Section
10(a)(3) of the Act.
(g) The Company will cooperate with the Underwriters and counsel for
the Underwriters in connection with the registration or qualification of the
Notes for offer and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as the Underwriters may
designate and will file such consents to service of process or other documents
as may be necessary in order to effect such registration or
-5-
<PAGE>
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to the service of process in suits,
other than those arising out of the offer and sale of the Notes, in any
jurisdiction where it is not now so subject, or to take any action to amend its
Certificate of Incorporation in order to make the Company's securities eligible
for registration or qualification in any jurisdiction.
(h) The Company will make generally available to its security holders
an earnings statement of the Company and its subsidiaries, which need not be
audited, as soon as practicable but not later than 18 months after the effective
date of the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including Rule 158).
(i) So long as any Notes are outstanding the Company will furnish:
(i) to its Noteholders generally and to the Underwriters (A)
at such time after the end of each fiscal year as provided in this
Indenture, copies of such financial statements of the Company as of
the end of and for such fiscal year, audited by independent public
accountants, as are specified in the Indenture and (B) at such time
after the end of each quarterly fiscal period, except for the last
quarterly fiscal period in each fiscal year, such financial statements
(which need not be audited) of the Company for such period as are
specified in the Indenture, which shall also be made publicly
available; and
(ii) to the Underwriters (A) as soon as available, a copy of
each report of the Company of general interest mailed to any class of
its security holders, (B) copies of all annual reports, quarterly
reports and current reports on Forms 10-K, 10-Q and 8-K or such other
similar forms as may be designated by the Commission or required to be
filed by the Company pursuant to Sections 13, 14 and 15 of the
Exchange Act, which the Company agrees to timely file with the
Commission for so long as may be required for the distribution of the
Notes, (C) a copy of each report required to be filed with the Trustee
pursuant to the Indenture concurrently with such filing, and (D) from
time to time, such other information concerning the Company as any
Underwriter may reasonably request.
If and so long as the Company shall have any subsidiaries, the financial
statements referred to above shall be consolidated to the extent the accounts of
the Company and such subsidiaries are consolidated, and separate financial
statements shall be furnished for each significant subsidiary, as defined in
Regulation S-X of the Commission, whose accounts are not so consolidated.
-6-
<PAGE>
(j) Prior to the Closing Date, the Company will issue no press
release or other public communication and hold no press conference with respect
to the Company's offering of the Notes without the Underwriters' prior written
consent, which consent will not be unreasonably withheld.
(k) The Company will pay, or reimburse if paid by the Underwriters,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance by
it of its obligations under this Agreement and the Pricing Agreement, including,
without limiting the generality of the foregoing, (i) the fees and expenses of
the Trustee and any agent of the Trustee and the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Notes, (ii) the
fees charged by rating agencies in connection with any rating of the Notes, and
(iii) all costs of typesetting, printing, duplicating and filing (and all
preparation therefor) and all costs of distribution (including, without
limitation, postage, air freight charges and charges for counting and packaging)
of the registration statement as originally filed, the Registration Statement,
each prospectus subject to completion, the Prospectus, each amendment and/or
supplement to any of them, this Agreement, the Pricing Agreement, the Indenture,
any Selected Dealers Agreement, and all related documents, (iv) all costs, as
applicable, of furnishing to the Underwriters and dealers copies of the
foregoing materials (provided, however, that any such copies furnished by the
Company more than nine months after the first date upon which the Notes are
offered to the public shall be at the expense of the Underwriters or dealers so
requesting as provided in Section 5(f) above), (v) all costs of the
registrations or qualifications referred to in Section 5(g) above (including
reasonable fees of counsel in connection therewith), (vi) all costs of filings
made by the Underwriters with the National Association of Securities Dealers,
Inc. in connection with the offering of the Notes, (vii) all costs of the
performance by the Company of its other obligations under this Agreement,
including the fees of Company counsel and accountants, (viii) all costs of the
issuance, sale, delivery and performance of the Notes, including any transfer or
other taxes payable in connection with the original issuance of the Notes, and
(ix) all costs of furnishing to the Underwriters copies of all reports and
information required by Section 5(i) above, including costs of shipping and
mailing.
(l) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by the Underwriters
terminating this Agreement pursuant to Section 9 or Section 10 hereof), or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement, the Company agrees to reimburse the
Underwriters for all documented reasonable out-of-pocket expenses including
reasonable legal fees and expenses incurred by them in connection herewith but
without any further obligation of the Company for lost profits or otherwise. If
this Agreement is terminated pursuant to Section 9 or Section 10 hereof, the
Underwriters shall themselves bear any such out-of-pocket expenses incurred by
them.
-7-
<PAGE>
(m) The Company will apply the net proceeds from the sale of the
Notes to be sold by it under this Agreement and the Pricing Agreement for the
purposes set forth in the Prospectus under the caption "Use of Proceeds."
(n) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act which may from time to time be
applicable to the Company.
(o) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
---------------------------------------------
and warrants to each Underwriter that:
(a) Each prospectus subject to completion filed as part of the
Registration Statement as originally filed or as part of any amendment thereto
or filed pursuant to Rule 424(a) under the Act complied in all material respects
when so filed with the provisions of the Act; except that this representation
and warranty does not apply to statements in or omissions from the Registration
Statement or any prospectus subject to completion (or any supplement or
amendment thereto) made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by or on behalf
of such Underwriter specifically for use in the Registration Statement under the
caption "Underwriting." The Commission has not issued any order preventing or
suspending the use of any prospectus subject to completion.
(b) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when the Pricing Agreement is
executed or any post-effective amendment to the Registration Statement shall
become effective, and the Prospectus, and any supplement or amendment thereto
when filed with the Commission, will each comply in all material respects with
the provisions of the Act and the Trust Indenture Act, and will not at any such
time contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. This representation and warranty does not apply to statements in
or omissions from the Registration Statement or the Prospectus (or any
supplement or amendment thereto) (i) in the Statement of Eligibility on Form T-1
of the Trustee under the Trust Indenture Act except statements or omissions in
such Statement of Eligibility made in reliance upon information furnished to the
Trustee by or on behalf of the Company for inclusion therein, or (ii) made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by or on behalf of such Underwriter
specifically for use in the Registration Statement under the caption
"Underwriting."
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed or are filed with the Commission (or, if an
amendment with
-8-
<PAGE>
respect to any such document was filed, when such amendment was filed or became
effective), as the case may be, conformed and will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable, and,
when read together and with the other information in the Registration Statement
and the Prospectus, and any amendment thereof or supplement thereto, none of
such documents contained or will contain an untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by the Underwriters as herein stated expressly for use in
connection with the preparation of the Prospectus as amended or supplemented
relating to the Notes.
(d) Any contract, agreement, instrument, lease or license required to
be described in the Registration Statement or the Prospectus has been properly
described therein. Any contract, agreement, instrument, lease or license
required to be filed as an exhibit to the Registration Statement has been filed
with the Commission as an exhibit to the Registration Statement.
(e) Ernst & Young LLP, the Company's auditors, are independent public
accountants as required by the Act.
(f) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries and the financial information with
respect to the subsidiaries of the Company included in (whether through
incorporation by reference or otherwise) the Registration Statement and the
Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries (including, without limitation, the allowance for
credit losses) as of the dates indicated, and the results of operations, cash
flows and changes in financial position of the Company and its consolidated
subsidiaries for the periods specified. Such financial statements and schedules
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the entire period involved, except to
the extent disclosed therein.
(g) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is duly
registered as a savings and loan holding company under Section 10 of the Home
Owners' Loan Act, as amended, has corporate power and authority to own its
property and conduct its business as described in the Registration Statement and
the Prospectus and is qualified to do business as a foreign corporation in
Illinois. The Company does not own or lease property or transact business in
any other jurisdiction where the ownership of such property or the transaction
of such business would require it to qualify as a foreign corporation under the
laws of such jurisdiction, except where failure to qualify individually or in
the aggregate would not have a material adverse effect on the financial
condition, business or prospects of the Company and any Subsidiary (as defined
below) taken as a whole.
-9-
<PAGE>
(h) The only direct subsidiaries of the Company are St. Paul Federal
Bank For Savings (the "Bank"), Annuity Network, Inc. and St. Paul Financial
Development Corporation. The direct subsidiaries of the Company are collectively
referred to herein as the "Material Subsidiaries." The indirect subsidiaries of
the Company are SPF Insurance Agency, Inc., St. Paul Securities, Inc.,
Investment Network, Inc., Investment Network Advisors, Inc., Managed Properties,
Inc., MPI Illinois Corporation, Community Finance Corporation, St. Paul
Investment Corporation ("SPIC"), St. Paul Asset Management Company ("SPAM"), EFS
Service Corporation, EFS/San Diego Service Corporation, and Custom Source Realty
Corporation (collectively, the "Indirect Subsidiaries"). The Material
Subsidiaries, together with the Indirect Subsidiaries, are hereinafter
collectively referred to as the Subsidiaries and individually as a Subsidiary.
(i) Each Subsidiary except the Bank has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
jurisdiction of incorporation or charter, with full corporate power and
authority to own, lease and operate its properties and conduct its business as
described in the Registration Statement and Prospectus. The Bank is a federal
savings bank duly organized and chartered and in good standing under the laws of
the United States and is duly authorized and has full corporate power and
authority to own, lease and operate its properties and conduct its business as
described in the Registration Statement and Prospectus. Each Subsidiary is duly
qualified to do business as a foreign corporation or association under the
corporation or banking law of, and is in good standing in each jurisdiction in
which the ownership or lease of its properties, or the conduct of its business,
requires such qualification, except where the failure to be so qualified or in
good standing would have a material adverse effect on the business of the
Company and the Subsidiaries taken as a whole.
(j) Each of the Company and each Subsidiary has all necessary and
material authorizations, approvals, licenses, certificates, permits and orders
of and from all governmental regulatory officials and bodies to own its
properties and to conduct its business as described in the Registration
Statement and Prospectus except where failure to have such items would not have
a material adverse effect on the business of the Company and the Subsidiaries
taken as a whole, and is conducting its business in all material respects with
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business including, but not limited to, all applicable federal and
state laws and regulations that relate to or are concerned in any way with the
business of banking. The Bank is a member in good standing of the Federal Home
Loan Bank of Chicago, deposit accounts in the Bank are insured up to applicable
limits by the Federal Deposit Insurance Corporation, and no proceedings for the
termination or revocation of such membership or insurance are pending or
threatened.
(k) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus. All of the issued and outstanding shares of Common
Stock of the Company and all of the issued and outstanding shares of capital
stock of each Subsidiary have been duly authorized, validly issued and are fully
paid and non-assessable and, in the
-10-
<PAGE>
case of the Subsidiaries, are owned of record and beneficially by the Company or
a Subsidiary of the Company as set forth in Exhibit 21 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 (except that St. Paul
Service, Inc. has changed its name to SPF Insurance Agency, Inc., SPIC is owned
by the Bank, all of the outstanding common shares of SPAM ("SPAM Common") are
owned by SPIC and all of the Series A Cumulative Preferred Shares of SPAM (the
"SPAM Preferred") are owned by the Bank and certain officers of the Company),
and, except as set forth in the Registration Statement, are free and clear of
any liens, claims, security interests, pledges, charges, encumbrances,
stockholders' agreements and voting trusts or rights of others. Except as set
forth in the Registration Statement, there are no options, agreements, contracts
or other rights in existence (i) to acquire from the Company any shares of
Common Stock or (ii) to acquire from the Company or any Subsidiary any of the
capital stock of any Subsidiary.
(l) The execution and delivery of this Agreement and the Pricing
Agreement, the consummation of the transactions contemplated herein and in the
Registration Statement and compliance with the terms of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate action
and will not result in any violation of the Certificate of Incorporation or by-
laws of the Company, and will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary under, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties is bound, except where such
would not have any material adverse effect on the financial condition, business
or prospects of the Company and the Subsidiaries taken as a whole, or constitute
a violation of any existing applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or any of their
respective properties except where such would not have any material adverse
effect on the financial condition, business or prospects of the Company and the
Subsidiaries taken as a whole.
(m) The Notes conform to the descriptions thereof contained in the
Prospectus and will be in substantially the form filed as an exhibit to the
Registration Statement, have been duly and validly authorized and, when
authenticated by the Trustee in the manner set forth in the Indenture and
issued, sold and delivered in accordance with this Agreement, the Pricing
Agreement and the Indenture against payment therefor, will have been duly and
validly executed, authenticated, issued and delivered and will constitute valid
and binding obligations of the Company, entitled to the benefits provided by the
Indenture and enforceable against the Company in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the rights of creditors,
and by equitable principles.
-11-
<PAGE>
(n) The Indenture conforms to the description thereof contained in
the Prospectus and will be substantially in the form filed as an exhibit to the
Registration Statement, has been duly and validly authorized and, when executed
and delivered by the Company and the Trustee, will constitute a valid and
binding instrument of the Company, enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the rights of creditors and by equitable principles. Upon execution by the
Company, the Indenture will comply with the Trust Indenture Act and will have
been duly qualified under the Trust Indenture Act at the time the Registration
Statement is declared effective.
(o) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (i) any material adverse change in the
financial condition, business or prospects of the Company and the Subsidiaries
taken as a whole, whether or not arising in the ordinary course of business,
(ii) any transaction entered into, or any liability or obligation incurred, by
the Company or any Subsidiary which is material to the Company and the
Subsidiaries taken as a whole, other than in the ordinary course of business,
(iii) any change in the capital stock (other than the issuance of shares of
Common Stock upon exercise of options under the Company's stock option plans
described in the Registration Statement and the repurchase of Common Stock
pursuant to a repurchase plan announced by the Company on January 17, 1996), or
material increase in the short-term debt or long-term debt of the Company or any
Subsidiary, or (iv) any dividend or distribution of any kind declared, paid or
made by the Company on its capital stock, except for regular quarterly dividends
declared, paid or made by the Company in accordance with past practice.
(p) The Company and the Subsidiaries have good and marketable title
to all properties and assets described in the Prospectus as owned by them, free
and clear of all liens, charges, encumbrances or restrictions, except such as
are referred to in the Prospectus or are not materially significant in relation
to the respective businesses of the Company and the Subsidiaries taken as a
whole; all of the leases and subleases material to the business of the Company
under which the Company or any Subsidiary holds properties described in the
Prospectus are in full force and effect; and neither the Company nor any
Subsidiary has any notice of any material claim of any sort which has been
asserted by anyone adverse to the rights of the Company or such Subsidiary as
owner or as lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or the Subsidiary
to the continued possession of the leased or subleased premises under any such
lease or sublease, except where such notice or claim would not have a material
adverse effect on the financial condition, business or prospects of the Company
and its Subsidiaries taken as a whole.
(q) The Company has no agreement with any security holder as to which
the Company has not obtained a waiver which gives such security holder the right
to require
-12-
<PAGE>
the Company to register under the Act any securities of any nature owned or held
by such person in connection with the transactions contemplated by this
Agreement.
(r) Neither the Company nor any Subsidiary is in default nor will the
performance of this Agreement or the issuance and sale of the Notes result in a
default in the observance of any provision of its charter, certificate or
articles of incorporation or by-laws, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease, license or other agreement or
instrument to which it is a party or by which it or any of its respective
properties are subject or may be bound, the effect of which could be materially
adverse to the financial condition, business or prospects of the Company and the
Subsidiaries taken as a whole. No consent of any party to any material
contract, indenture, mortgage, loan agreement, note, lease, license or other
agreement or instrument to which the Company or any Subsidiary is a party, or by
which it or any of its respective properties or assets are subject or may be
bound, is required for the execution, delivery or performance of this Agreement
or the Indenture or the issuance and sale of the Notes.
(s) No approval, authorization or consent of any court, governmental
authority or agency having jurisdiction over the Company or any Subsidiary is
required in connection with the issuance and sale of the Notes except filings
under the Act and the Trust Indenture Act which have been or will be made before
the Closing Date.
(t) Neither the Commission nor the Blue Sky or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the use of
any prospectus subject to completion, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, suspending the registration or
qualification of the Notes or suspending the qualification of the Indenture, nor
has any of such authorities instituted or, to the knowledge of the Company,
threatened to institute, any proceedings with respect to a Stop Order.
(u) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic or
foreign, or any arbitrator or arbitration panel, now pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary which might result in any material adverse change in the financial
condition, earnings, business or prospects of the Company and its Subsidiaries
taken as a whole; and there is no decree, judgment or order of any kind in
existence against or restraining the Company or any Subsidiary or any of the
officers, employees or directors of either, from taking any actions of any kind
in connection with the business of the Company or any Subsidiary.
(v) The Bank has not received any notice of proceedings and has no
knowledge of any threatened regulatory action relating to revocation or
modification of any licenses, permits, consents, orders, approvals or
authorizations which singly or in the
-13-
<PAGE>
aggregate, if the subject of an unfavorable ruling or finding, would materially
and adversely affect the financial condition, earnings or business of the Bank.
(w) The Company and the Subsidiaries own or possess, or can acquire
on reasonable terms, trademarks, service marks and trade names necessary to
conduct the businesses, in all material respects, now operated by them, and
neither the Company nor any Subsidiary has received any notice of infringement
of or conflict with asserted rights of others with respect to any trademarks,
service marks or trade names which, singly or in the aggregate, if the subject
of any unfavorable decision, ruling or finding, would materially adversely
affect the financial condition, earnings or business of the Company and the
Subsidiaries taken as a whole.
(x) The Company and each of its Subsidiaries has filed all necessary
federal and state income and franchise tax returns and paid all taxes shown as
due thereon or timely filed for extensions thereof. Except as is otherwise
expressly stated in the Registration Statement, the Company has no knowledge of
any tax deficiency which might be asserted against it which would materially and
adversely affect the financial condition, business or prospects of the Company
and the Subsidiaries taken as a whole.
(y) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the best of the Company's knowledge, is imminent which
could reasonably be expected to have a material adverse effect on the financial
condition, business or prospects of the Company and the Subsidiaries taken as a
whole.
(z) The Company has not taken and will not take, directly or
indirectly, any action (and does not know of any action by its directors,
officers or stockholders or by others) designed to or which has constituted or
which might reasonably be expected to cause or result in, under the Exchange Act
or otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Notes.
(aa) At all times since April 30, 1996, SPAM has been organized and
operated in conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code"), and its proposed method of operation will enable it to continue to meet
the requirements for taxation as a real estate investment trust under the Code.
7. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and reasonable expenses
whatsoever (including any investigation and legal or other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted) to which they, or any of them, may
-14-
<PAGE>
become subject, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
prospectus subject to completion or the Prospectus or in any amendment or
supplement thereto or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or allegation thereof which has been made
therein or omitted therefrom in reliance upon and in conformity with information
relating to such Underwriter furnished in writing to the Company by or on behalf
of such Underwriter expressly for use therein; provided, however, that the
indemnification contained in this paragraph with respect to any prospectus
subject to completion shall not inure to the benefit of an Underwriter (or of
any person controlling such Underwriter) with respect to any action or claim
arising from the sale of the Notes by such Underwriter brought by any person who
purchased Notes from such Underwriter if (i) a copy of the Prospectus (as
amended or supplemented if any amendments or supplements thereto shall have been
furnished to the Underwriter prior to the written confirmation of the sale
involved) shall not have been given or sent to such person by or on behalf of
the Underwriter with or prior to the written confirmation of the sale involved
and (ii) the untrue statement or omission of a material fact contained in such
prospectus subject to completion was corrected in the Prospectus (as amended or
supplemented, if amended or supplemented, as aforesaid).
(b) If any action or claim shall be brought against any Underwriter
or any person controlling such Underwriter in respect of which indemnity may be
sought against the Company, such Underwriter shall promptly notify the Company
(the "indemnifying party") in writing, and the indemnifying party shall assume
the defense thereof, including the employment of counsel and the payment of all
fees and expenses. The Underwriter or any such person controlling such
Underwriter shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the indemnifying party has failed to assume the defense and employ counsel, or
(iii) the named parties to any such action (including any impleaded party)
include such Underwriter or controlling person and the Company and such
Underwriter or controlling person shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Company (in which case if such
Underwriter or controlling person notifies the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such Underwriter or controlling person, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for all such Underwriters and controlling persons, which firm shall be
designated in writing by the Underwriters). The indemnifying party shall not be
liable for any settlement of any such action effected without the written
consent of the Company, but
-15-
<PAGE>
if settled with the written consent of the Company, or if there shall be a final
judgment for the plaintiff in any such action and the time for filing all
appeals shall have expired, the indemnifying party agrees to indemnify and hold
harmless the Underwriters and any such controlling persons from and against any
loss or liability by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
respect to (i) information relating to such Underwriter furnished in writing to
the Company by or on behalf of such Underwriter expressly for use in any
prospectus subject to completion or the Registration Statement or the Prospectus
or in any amendment or supplement thereto; or (ii) any gross negligence or
willful misconduct of such Underwriter in connection with such Underwriter's
actions taken pursuant to this Agreement. If any action or claim shall be
brought or asserted against the Company, any of its directors, any such officers
or any such controlling persons based on the Registration Statement, the
Prospectus or any prospectus subject to completion or any amendment or
supplement thereto and in respect of which indemnity may be sought against an
Underwriter, such Underwriter shall have the rights and duties given to the
indemnifying party by Section 7(b) hereof (except that if the Company shall have
assumed the defense thereof, such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any such
controlling persons shall have the rights and duties given to the Underwriters
by Section 7(b) hereof.
(d) (i) If the indemnification of the Underwriters or the
Company provided for in this Section 7 is unavailable as a matter of
law to the Underwriters or the Company, as the case may be, in respect
of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable in damages, liabilities or expenses (i) in such proportion as
is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the
offering of the Notes or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the
-16-
<PAGE>
total underwriting discount received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus (or any
amendment or supplement thereto). The relative fault of the Company on
the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement or the omission or alleged omission relates to
information supplied by the Company on the one hand or by the
Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
(ii) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth in this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
at which the Notes underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Notes set forth opposite their respective
names in Schedule I to this Agreement and not joint.
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any persons
controlling such Underwriter, the Company or its directors or officers (or any
persons controlling the Company), (ii) acceptance of any Notes and payment
therefor hereunder and (iii) any termination of this Agreement. A successor or
assign of an Underwriter, the Company or its directors or officers and their
legal and personal representatives (or of any persons controlling an Underwriter
or the Company) shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 7.
-17-
<PAGE>
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several obligations
-------------------------------------------
of the Underwriters to purchase and pay for the Notes hereunder are subject to
the performance by the Company of its obligations hereunder, and to the
following conditions:
(a) That the Registration Statement shall have become effective not
later than 4:30 p.m., Chicago time, on the date hereof, or at such later date
and time as shall be consented to in writing by the Underwriters and, if the
Underwriters and the Company have elected to rely upon Rule 430A under the Act,
the price of the Notes and any price-related or other information previously
omitted from the Registration Statement pursuant to such Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b) under the
Act within the prescribed time period, and, on or prior to the Closing Date, the
Company shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A.
(b) That subsequent to the effective date of the Registration
Statement, (i) there shall not have occurred any material change, or any
material development involving a prospective change, in or affecting
particularly the business or properties of the Company not contemplated by the
Prospectus, which, in the Underwriters' reasonable opinion, after discussion
with the Company, would materially adversely affect the market for the Notes or
make it unpracticable or inadvisable to proceed with the offering or the
delivery of the Notes, as contemplated herein and in the Prospectus, or to
attempt to enforce contracts for the purchase of Notes, and (ii) the business
and operations of the Company and its Subsidiaries, taken as a whole, shall not
have been materially interfered with by strike, fire, flood, accident or other
calamity (whether or not insured).
(c) That the Underwriters shall have received from Hogan & Hartson
L.L.P., special counsel for the Company, a favorable opinion dated the Closing
Date and satisfactory to the Underwriters and the Underwriters counsel to the
effect that:
(i) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company and are the legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights, and except as may be limited by the
exercise of judicial discretion in applying general principles of
equity (regardless of whether this Agreement and the Pricing
Agreement are considered in a proceeding in equity or at law); it
being understood, however, that the foregoing shall mean only that if
there is a default in performance of an obligation (i) if a failure
to pay or other damage can be shown and (ii) if the defaulting party
can be brought into a court which will hear the case and apply the
governing law, then, subject to the availability of defenses and the
aforesaid exceptions, the court will provide a money damage (or
perhaps injunctive or specific performance)
-18-
<PAGE>
remedy. Notwithstanding the above, such counsel need express no
opinion as to the enforceability of the indemnity and contribution
provisions contained in Section 7 of this Agreement.
(ii) The Notes have been duly and validly authorized by the
Company and, when duly authenticated by the Trustee and issued,
delivered and sold in accordance with this Agreement and the
Indenture, will have been duly and validly executed, authenticated,
issued and delivered and will constitute valid and binding
obligations of the Company, entitled to the benefits provided by the
Indenture (subject to the exceptions hereinafter set forth)
enforceable against the Company in accordance with their terms and
the terms of the Indenture, except as the enforceability thereof may
be limited by bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights, and as such as may be limited
by the exercise of judicial discretion in applying general principles
of equity (regardless of whether the Notes are considered in a
proceeding in equity or at law); it being understood, however, that
the foregoing shall mean only that if there is a default in
performance of an obligation (i) if a failure to pay or other damage
can be shown and (ii) if the defaulting party can be brought into a
court which will hear the case and apply the governing law, then,
subject to the availability of defenses and the aforesaid exceptions,
the court will provide a money damage (or perhaps injunctive or
specific performance) remedy. The Notes conform in all material
respects to the description thereof contained in the Prospectus under
the caption "Description of the Notes" and conform in all material
respects to the applicable provisions of the Indenture.
(iii) The Indenture has been duly qualified under the Trust
Indenture Act, conforms in all material respects to the description
thereof contained in the Prospectus under the caption "Description of
the Notes," has been duly authorized and, when duly executed and
delivered by the Company and the Trustee, will constitute a valid and
binding instrument of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights, and as such as may be limited
by the exercise of judicial discretion in applying general principles
of equity (regardless of whether the Indenture is considered in a
proceeding in equity or at law); it being understood, however, that
the foregoing shall mean only that if there is default in performance
of an obligation (i) if a failure to pay or other damage can be shown
and (ii) if the defaulting party can be brought into a court which
will hear the case and apply the governing law, then, subject to the
availability of defenses and the aforesaid exceptions, the court will
provide a money damage (or perhaps injunctive or specific
performance) remedy.
-19-
<PAGE>
(iv) The Indenture has been qualified under the Trust Indenture
Act.
(v) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no Stop Order suspending
the effectiveness of the Registration Statement has been issued, nor
has any proceeding for the issuance of such an order been initiated
or threatened by the Commission.
(vi) The Registration Statement and the Prospectus (other than
the financial statements, supporting schedules and other financial
and statistical data included therein or omitted therefrom, as to
which no opinion need be rendered) comply in all material respects as
to form with the requirements of the Act and the rules and
regulations of the Commission thereunder and the Indenture complies
in all material respects as to form with the Trust Indenture Act.
(vii) The summaries of the provisions of statutes and
regulations included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 under the caption "Regulation" are,
as of the date of filing of such report, in all material respects
accurate summaries of the information purported to be summarized.
(viii) The documents filed pursuant to the Exchange Act which are
incorporated by reference in the Prospectus (except for any financial
statements, schedules and other financial and statistical data
included in or omitted from such documents, as to which such counsel
need express no opinion), when they were filed with the Commission
(or, if an amendment with respect to any such document was filed,
when such amendment was filed), complied as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
Such counsel shall also state that, on the basis of such counsel's
participation in conferences with officers and other representatives of the
Company, the Company's auditors, the Subsidiaries, the Underwriters, and counsel
for the Underwriters at which the contents of the Registration Statement and the
Prospectus were discussed, (i) no facts have come to such counsel's attention
that have caused them to believe that the Registration Statement, at the time it
became effective with the Commission, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus, at the time the Registration Statement became effective with the
Commission (unless the term "Prospectus" refers to a Rule 424(b) prospectus, in
which case at the time it was filed or transmitted to the Commission for filing)
and at the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
-20-
<PAGE>
misleading (except that they need express no view as to financial statements,
supporting schedules and other financial and statistical data included therein
or omitted therefrom) and (ii) such counsel does not know of any legal or
governmental proceedings pending or threatened against the Company, or any
Subsidiary, required to be described in the Prospectus which are not described
as required, nor of any material contracts of other documents of a character
required to be described in the Registration Statement or to be filed as an
exhibit to the Registration Statement by the Act, which have not been described
or filed (either physically or by incorporation by reference as permitted under
the Act), as required.
In rendering such opinion, counsel for the Company may rely as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and the Subsidiaries. In rendering such opinion, such
counsel also may state that they express no opinion as to the laws of any
jurisdiction other than federal securities laws, federal banking, thrift and
thrift holding company laws and the General Corporation Law of the State of
Delaware. In addition, such counsel may state that they express no opinion as to
the application of any rating agency guidelines or initiatives.
(d) That the Underwriters shall have received from Clifford M.
Sladnick, counsel to the Company, a favorable opinion dated the Closing Date and
satisfactory to the Underwriters and the Underwriters' counsel to the effect
that:
(i) Each of the Company and each Material Subsidiary has been
duly organized and is validly existing as a corporation or federal
savings bank in good standing under the laws of its jurisdiction of
incorporation or charter; has the requisite corporate power to own,
lease and operate its properties and conduct its business as
described in the Registration Statement and each is duly qualified to
do business as a foreign corporation or association under the
corporation or banking law of, and is in good standing as such in,
every jurisdiction wherein the ownership or leasing of its properties
or the conduct of its business requires such qualification, except
where the failure to be qualified or in good standing would not have
a material adverse effect on the financial condition, business or
prospects of the Company and its Subsidiaries taken as a whole. Each
of the Material Subsidiaries is wholly-owned by the Company and the
Material Subsidiaries are the Company's only direct subsidiaries.
(ii) The Company has the authorized capitalization set forth in
the Prospectus. Each outstanding share of Common Stock of the Company
and each outstanding share of capital stock of the Bank is duly
authorized, validly issued, fully paid and non-assessable, has not
been issued and is not owned or held in violation of any preemptive
right of stockholders, and in the case of the Bank is owned of record
and beneficially by the Company and, except as disclosed in the
Registration Statement, is held free and clear of all liens,
-21-
<PAGE>
claims, security interests, pledges, charges, encumbrances,
stockholders' agreements, voting trusts or claims of others. Except
as set forth in the Prospectus, there is no commitment, plan or
arrangement to issue, and no outstanding option, warrant or other
right calling for the issuance or sale of, any share of capital stock
of the Company or of any Material Subsidiary or any security or other
instrument which by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company or of any Material
Subsidiary. Except as described in the Registration Statement, there
are no options, agreements, contracts or other rights in existence to
purchase or acquire from any Material Subsidiary or the Company any
issued and outstanding shares of the Common Stock of any Material
Subsidiary.
(iii) The Bank is a federally chartered savings bank, duly
authorized and with full corporate power to own its properties and
carry on its business in all material respects as described in the
Registration Statement. The Bank is a member in good standing of the
Federal Home Loan Bank of Chicago and is an institution, the deposit
accounts in which are insured to applicable limits by the Federal
Deposit Insurance Corporation, and no proceedings for the termination
or revocation of such membership or insurance are pending or, to the
knowledge of such counsel, threatened.
(iv) The execution, delivery and performance of this Agreement,
the Pricing Agreement and the Indenture, and the execution,
authentication, issuance, sale, delivery and performance of the
Notes, will not violate, conflict with, result in a breach of or
(with or without the giving of notice or the passage of time or both)
constitute a default under, the Company's certificate of
incorporation or by-laws or any material indenture, mortgage, deed of
trust or other instrument or agreement to which the Company or a
Material Subsidiary is a party or by which it is bound, or any order,
rule or regulation applicable to the Company or a Material Subsidiary
of any court or other governmental authority, except where such would
not have a material adverse effect on the financial condition,
business or prospects of the Company and its Subsidiaries taken as a
whole. The foregoing references to orders, rules or regulations shall
not be deemed to include any orders, rules or regulations under
federal or state securities laws, certain matters with respect to
which are addressed elsewhere in this opinion.
(v) Such counsel does not know of (A) any pending or
threatened litigation which would impair the enforceability of this
Agreement or the Pricing Agreement, (B) any pending or threatened
litigation or governmental proceedings against the Company or any
Material Subsidiary required to be described in the Prospectus which
are not so described, or (C) any contracts or documents required to
be described in or filed as a part of the Registration Statement
which are not so described or filed.
-22-
<PAGE>
(vi) The Company meets the requirements for the use of Form S-3
under the Act in connection with the offer and sale of the Notes. The
Registration Statement and the Prospectus comply in all material
respects as to form with the requirements of the Act and the Trust
Indenture Act and, on the basis of such counsel's participation in
conferences with representatives of the Company, the Company's
auditors, the Subsidiaries, the Underwriters and counsel for the
Underwriters at which conferences the contents of the Registration
Statement, the Prospectus and each prospectus subject to completion
and related matters were discussed, nothing has come to the attention
of such counsel that causes such counsel to believe that the
Registration Statement (including the documents incorporated by
reference therein), at the time it became effective, at the time the
Pricing Agreement was executed and at the Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus
(including the documents incorporated by reference therein), at the
time the Registration Statement became effective (or, if applicable,
at the time the Prospectus was first filed with the Commission
pursuant to Rule 424(b)) and at the Closing Date, contained or
contains any untrue statement of any material fact or omitted or
omits to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading,
except in each case as to the financial statements and schedules and
other financial and statistical data contained therein, as to which
such counsel need not express any opinion.
(vii) The statements in the Prospectus in the sections captioned
"The Company," "Recent Developments," "Certain Regulatory Matters,"
and "Description of Notes," in each case insofar as such statements
reflect a summary of the legal matters or the documents referred to
therein, fairly and accurately present the information called for by
the Act in all material respects.
(viii) The Bank's only direct subsidiaries are SPF Insurance
Agency, Inc., St. Paul Securities, Inc., Managed Properties, Inc.,
MPI Illinois Corporation, Community Finance Corporation, SPIC,
EFS/San Diego Service Corporation, and EFS Service Corporation, each
of which is wholly owned by the Bank and each of which has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Illinois.
(ix) Investment Network, Inc. is the sole direct subsidiary of
St. Paul Securities, Inc., Investment Network Advisors, Inc. is the
sole subsidiary of Investment Network, Inc., and each of Investment
Network, Inc. and Investment Network Advisors, Inc. have been duly
organized and are validly
-23-
<PAGE>
existing as a corporation in good standing under the laws of the
State of Illinois.
(x) SPAM, a Maryland real estate investment trust, is the sole
subsidiary of SPIC and has been duly organized and is validly
existing as a real estate investment trust under the laws of the
State of Maryland.
(xi) At all times since April 30, 1996, SPAM has been organized
and operated in conformity with the requirements for qualification as
a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"), and its proposed method of operation
will enable it to continue to meet the requirements for taxation as a
real estate investment trust under the Code.
(xii) The Custom Source Realty Corporation is the sole
subsidiary of St. Paul Financial Development Corporation and has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Illinois.
(xiii) Each of the Subsidiaries has the requisite corporate power
to own, lease and operate its properties and conduct its business as
described in the Registration Statement and each is duly qualified to
do business as a foreign corporation under the corporation law of,
and is in good standing as such in, every jurisdiction wherein the
ownership or leasing of its properties or the conduct of its business
requires such qualification and in which the failure to be qualified
or in good standing would have a material adverse effect on the
business of the Company and its Subsidiaries considered as a whole.
(xiv) Each outstanding share of capital stock of each Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, has
not been issued and is not owned or held in violation of any
preemptive right of stockholders, and is, (A) in the case of the
Material Subsidiaries, owned of record and beneficially by the
Company; (B) in the case of SPF Insurance Agency, Inc., St. Paul
Securities, Inc., Managed Properties, Inc., MPI Illinois Corporation,
Community Finance Corporation, SPIC, EFS/San Diego Services
Corporation, and EFS Service Corporation, owned of record and
beneficially by the Bank; (C) in the case of Investment Network, Inc.
owned of record and beneficially by St. Paul Securities, Inc.; (D) in
the case of Investment Network Advisors, Inc. owned of record and
beneficially by Investment Network, Inc.; (E) in the case of SPAM
Common owned of record and beneficially by SPIC; (F) in the case of
SPAM Preferred owned of record and beneficially by the Bank and
certain officers of the Company and (G) in the case of The Custom
Source Realty Corporation owned of
-24-
<PAGE>
record and beneficially by St. Paul Financial Development
Corporation. Except as disclosed in the Registration Statement each
outstanding share of capital stock of each Subsidiary is held free
and clear of all liens, claims, security interests, pledges, charges,
encumbrances, stockholders' agreements, voting trusts or claims of
others. There is no commitment, plan or arrangement to issue, and no
outstanding option, agreement, contract, warrant or other right
calling for the issuance or sale of, any share of capital stock of
any Subsidiary or any security or other instrument which by its terms
is convertible into, exercisable for or exchangeable for capital
stock of any Subsidiary.
(xv) The summaries of the provisions of statutes and
regulations included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 under the caption "Regulations" are,
as of the date of filing of such report, in all material respects
accurate summaries of the information purported to be summarized and
such summaries, when read together with any superseding information
contained or incorporated by reference in the Prospectus, remain
accurate summaries in all material respects as of the date the
Registration Statement became effective and as of the Closing Date.
(xvi) No authorization, approval or consent of any governmental
authority or agency is required for the execution, delivery or
performance by the Company of this Agreement, the Pricing Agreement
or the Indenture or for the execution, authentication, issuance,
sale, delivery or performance of the Notes, except such as have been
received or as may be required under the Act or state securities
laws.
(e) The favorable opinion dated as of the Closing Date of counsel for
the Trustee, with respect to the status of the Trustee as an Illinois banking
corporation, the due authorization, execution and delivery and enforceability of
the Indenture by and against the Trustee, the due authentication, execution and
delivery of the Notes and such other legal matters as the Underwriters may
require.
(f) That the Underwriters shall have received on the Closing Date an
opinion dated the Closing Date from McDermott, Will & Emery, counsel for the
Underwriters, as to such matters as the Underwriters may reasonably require.
(g) That the Underwriters shall have received letters addressed to
the Underwriters and dated the date hereof and the Closing Date from Ernst &
Young LLP, independent public accountants for the Company, substantially in the
forms heretofore approved by the Underwriters.
-25-
<PAGE>
(h) That (i) no Stop Order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company or any Subsidiary
nor any material increase in the short or long-term debt of the Company and its
Subsidiaries taken as a whole from that set forth or contemplated in the
Registration Statement and Prospectus (except pursuant to the exercise of any
option described in the Registration Statement); (iii) there shall not have
been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as may otherwise be set forth
or contemplated in the Registration Statement and the Prospectus, any material
adverse change in the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole; (iv) the Company and the
Material Subsidiaries shall not have incurred any material liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), other than those reflected in the Registration Statement and
Prospectus, and (v) all of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of such date, and the Underwriters shall have received a certificate, dated
the Closing Date and signed by the President, Vice President or Secretary of the
Company (or such other officers as are acceptable to the Underwriters) to the
effect set forth in this Section 8(h) and in Sections 8(i) and 8(j) hereof.
(i) Within 24 hours after the Registration Statement becomes
effective, or within such longer period as to which the Underwriters shall have
consented, the Notes shall have been qualified for sale or be exempt from such
qualification under the securities laws of such jurisdictions as the
Underwriters shall have designated prior to the time of execution of the Pricing
Agreement, and such qualification or exemption shall continue in effect to and
including the Closing Date.
(j) That the Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of the agreements herein contained
and required to be performed or complied with by it at or prior to the Closing
Date.
9. EFFECTIVE DATE OF AGREEMENT.
---------------------------
(a) This Agreement shall become effective when notice of the
effectiveness of the Registration Statement has been released by the Commission
and the Pricing Agreement has been executed. Until such time as this Agreement
shall have become effective, it may be terminated by the Company by notifying
the Underwriters or by the Underwriters notifying the Company.
(b) If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they have agreed to purchase under this Agreement and
the Pricing Agreement and the aggregate principal amount of Notes which such
defaulting Underwriter
-26-
<PAGE>
or Underwriters agreed but failed or refused to purchase is not more than one-
tenth of the aggregate principal amount of Notes, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the principal
amount of Notes set forth opposite its name in Schedule I bears to the aggregate
principal amount of Notes set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as such non-defaulting Underwriters may
determine, to purchase the Notes which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Notes and the aggregate principal
amount of Notes with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of Notes and arrangements satisfactory to the
non-defaulting Underwriters and the Company for the purchase of such Notes are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company.
In any such case which does not result in termination of this Agreement, either
the non-defaulting Underwriters or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement.
(c) Any notice under this Section 9 may be made by any standard form
of written telecommunication or telephone but shall be subsequently confirmed by
letter.
10. TERMINATION OF AGREEMENT. This Agreement and the Pricing Agreement
------------------------
shall be subject to termination in the Underwriters' absolute discretion,
without liability on the part of any Underwriter to the Company, by notice given
to the Company, if after the date hereof and prior to the Closing Date (i)
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the National Association of Securities Dealers Automated
Quotation System shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in the United States or in Illinois
shall have been declared by either federal or state authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions the effect of which on the financial markets of the United
States is such as to make it, in the Underwriters' judgment, impracticable or
inadvisable to market the Notes or to enforce contracts for the purchase of
Notes. Notice of such cancellation shall be given to the Company by any standard
form of written telecommunication or telephone but shall be subsequently
confirmed by letter.
11. MISCELLANEOUS.
-------------
(a) Except as otherwise provided in Sections 9 and 10 hereof, notice
given pursuant to any of the provisions of this Agreement shall be in writing
and shall be delivered (a) if to the Company, at the office of the Company at
6700 West North Avenue,
-27-
<PAGE>
Chicago, Illinois 60707, Attention: Clifford M. Sladnick, or (b) if to the
Underwriters, at the offices of Keefe, Bruyette & Woods, Inc., Two World Trade
Center, 85th Floor, New York, New York 10048, Attention: Robert J. Stapleton,
and ABN AMRO Chicago Corporation, 208 South LaSalle Street, 4th Floor, Chicago,
Illinois 60604, Attention: Robert C. Douglas or in any case to such other
address as the person to be notified may have requested in writing.
(b) The Agreement herein set forth and the Pricing Agreement are made
solely for the benefit of the Underwriters, the Company, their directors and
officers and other controlling persons referred to in Section 7 hereof and their
respective successors, assigns and personal and legal representatives to the
extent provided herein, and no other person shall acquire or have any right
under or by virtue of this Agreement or the Pricing Agreement. The term
"successors and assigns" as used in this Agreement shall not include a purchaser
from the Underwriters of any of the Notes in his, her or its status as such
purchaser.
12. APPLICABLE LAW. This Agreement and the Pricing Agreement shall be
--------------
governed by and construed in accordance with the laws of the State of Illinois.
13. COUNTERPARTS. This Agreement may be signed in various counterparts
------------
which together shall constitute one and the same instrument.
* * *
-28-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement among the
Company and the Underwriters.
Very truly yours,
ST. PAUL BANCORP, INC.
By:__________________________________
Name:
Title:
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
KEEFE, BRUYETTE & WOODS, INC.
By:__________________________
Name:
Title:
ABN AMRO CHICAGO CORPORATION
By:__________________________
Name:
Title:
-29-
<PAGE>
ST. PAUL BANCORP, INC.
SCHEDULE I
UNDERWRITERS
------------
PRINCIPAL
AMOUNT OF
NAME NOTES
- ---- ---------
Keefe, Bruyette & Woods, Inc............................
ABN AMRO Chicago Corporation............................
Total................................................... $100,000,000
============
-30-
<PAGE>
EXHIBIT A
---------
$100,000,000 AGGREGATE PRINCIPAL AMOUNT OF
_____% SENIOR NOTES DUE 2004
ST. PAUL BANCORP, INC.
PRICING AGREEMENT
-----------------
___________, 1997
KEEFE, BRUYETTE & WOODS, INC.
Two World Trade Center
85th Floor
New York, New York 10048
ABN AMRO CHICAGO CORPORATION
208 South LaSalle Street
Chicago, Illinois 60604
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated _________, 1997
(the "Underwriting Agreement"), relating to the purchase by Keefe, Bruyette &
Woods, Inc. and ABN AMRO Chicago Corporation (collectively, the "Underwriters")
of the above referenced senior notes (the "Notes"), of St. Paul Bancorp, Inc.
(the "Company").
Pursuant to the Underwriting Agreement, the Company agrees with the
Underwriters as follows:
1. The initial public offering price for the Notes shall be 100% of
the principal amount thereof.
2. The purchase price per Note to be paid by the Underwriters shall
be______% (or $_______per $1,000) of the principal amount thereof, being an
amount equal to the initial public offering price set forth above
less______% of the principal amount thereof.
3. The concession which may be offered by the Underwriters to
certain dealers shall not exceed______% of the principal amount of the Notes.
The concession which may be offered by the Underwriters or such dealers to
certain other brokers and dealers shall not exceed______% of the principal
amount of the Notes.
This agreement shall be governed by the laws of the State of Illinois
applicable to agreements made and to be performed in said State.
If the foregoing is in accordance with the understanding of the
Underwriters and the Company, please sign and return to the Company a
counterpart hereof, whereupon
A-1
<PAGE>
this instrument along with all counterparts will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
ST. PAUL BANCORP, INC.
By____________________________________
Name:
Title:
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
KEEFE, BRUYETTE & WOODS, INC.
By:____________________________
Name:
Title:
ABN AMRO CHICAGO CORPORATION
By:____________________________
Name:
Title:
A-2
<PAGE>
EXHIBIT 4.1
==============================================
ST. PAUL BANCORP, INC.
and
HARRIS TRUST AND SAVINGS BANK, Trustee
-------------
INDENTURE
Dated as of _______________, 1997
-------------
Providing for Issuance of
Debt Securities in Series
===============================================
<PAGE>
Reconciliation and tie between Indenture, dated as of ____________, 1996, and
the Trust Indenture Act of 1939, as amended.
Trust Indenture Act Indenture
of 1939 Section Section
310(a)(1) 6.12
(a)(2) 6.12
(a)(3) TIA
(a)(4) Not Applicable
TIA
(a)(5) 6.10; 6.12; TIA
(b) 6.10
(c) Not Applicable
311(a) TIA
(b) TIA
(c) Not Applicable
312(a) 6.8; 6.16
(b) 6.16; TIA
(c) 6.16; TIA
313(a) 6.7; 8.7; TIA
(b) TIA
(c) 1.6; TIA
(d) TIA
314(a) 9.6; 9.7; TIA
(b) Not Applicable
(c)(1) 1.2
(c)(2) 1.2
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.2
(f) Not Applicable
315(a) 6.1; TIA
(b) 6.6
(c) TIA
(d)(1) 6.1; TIA
(d)(2) 6.1; TIA
(d)(3) 6.1; TIA
(e) TIA
316(a)(last sentence) 1.1
(a)(1)(A) 5.2; 5.8
(a)(1)(B) 5.7
(b) 5.9; 5.10
(c) 1.4; TIA
<PAGE>
317(a)(1) 5.3
(a)(2) 5.4
(b) 9.3
318(a) 1.11
(b) TIA
(c) 1.11; TIA
- -----------------------
This reconciliation and tie section does not constitute part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Definitions and Other Provisions of General
Application........................................................ 1
Section 1.1 Definitions....................................... 1
Section 1.2 Compliance Certificates and Opinions.............. 9
Section 1.3 Form of Documents Delivered to Trustee............ 10
Section 1.4 Acts of Holders................................... 11
Section 1.5 Notices, etc., to Trustee and Company............. 12
Section 1.6 Notice to Holders; Waiver......................... 12
Section 1.7 Headings and Table of Contents.................... 13
Section 1.8 Successors and Assigns............................ 13
Section 1.9 Separability...................................... 13
Section 1.10 Benefits of Indenture............................. 13
Section 1.11 Governing Law..................................... 14
Section 1.12 Legal Holidays.................................... 14
Section 1.13 Incorporators, Stockholders, Officers and
Directors of the Company Exempt from
Individual Liability. 14
ARTICLE 2 Security Forms.................................... 15
Section 2.1 Forms Generally................................... 15
Section 2.2 Form of Trustee's Certificate of
Authentication.................................... 15
Section 2.3 Securities in Global Form......................... 15
ARTICLE 3 The Securities.................................... 17
Section 3.1 Amount Unlimited; Issuable in Series.............. 17
Section 3.2 Denominations..................................... 20
Section 3.3 Execution, Authentication, Delivery and Dating.... 20
Section 3.4 Temporary Securities.............................. 23
Section 3.5 Registration, Registration of Transfer and
Exchange.......................................... 24
Section 3.6 Replacement Securities............................ 27
Section 3.7 Payment of Interest; Interest Rights Preserved.... 28
Section 3.8 Persons Deemed Owners............................. 29
Section 3.9 Cancellation...................................... 30
Section 3.10 Computation of Interest........................... 30
Section 3.11 CUSIP Numbers..................................... 30
ARTICLE 4 Satisfaction and Discharge; Defeasance............ 30
Section 4.1 Termination of Company's Obligations Under
-i-
<PAGE>
the Indenture..................................... 30
Section 4.2 Application of Trust Funds........................ 32
Section 4.3 Applicability of Defeasance Provisions............ 32
Section 4.4 Defeasance and Discharge.......................... 32
Section 4.5 Covenant Defeasance............................... 33
Section 4.6 Conditions to Defeasance or Covenant
Defeasance........................................ 33
Section 4.7 Deposited Money and Government Obligations
to be Held in Trust............................... 35
Section 4.8 Transfers and Distribution at Company Request..... 36
ARTICLE 5 Defaults and Remedies............................. 37
Section 5.1 Events of Default................................. 37
Section 5.2 Acceleration; Rescission and Annulment............ 38
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee............................ 39
Section 5.4 Trustee May File Proofs of Claim.................. 40
Section 5.5 Trustee May Enforce Claims Without
Possession of Securities.......................... 40
Section 5.6 Delay or Omission not Waiver...................... 40
Section 5.7 Waiver of Past Defaults........................... 40
Section 5.8 Control by Majority............................... 40
Section 5.9 Limitation on Suits by Holders.................... 41
Section 5.10 Rights of Holders to Receive Payment.............. 42
Section 5.11 Application of Money Collected.................... 42
Section 5.12 Restoration of Rights and Remedies................ 42
Section 5.13 Rights and Remedies Cumulative.................... 42
ARTICLE 6 The Trustee....................................... 43
Section 6.1 Certain Duties and Responsibilities............... 43
Section 6.2 Rights of Trustee................................. 44
Section 6.3 Trustee May Hold Securities....................... 46
Section 6.4 Money Held in Trust............................... 46
Section 6.5 Trustee's Disclaimer.............................. 46
Section 6.6 Notice of Defaults................................ 46
Section 6.7 Reports by Trustee to Holders..................... 47
Section 6.8 Securityholder Lists.............................. 47
Section 6.9 Compensation and Indemnity........................ 47
Section 6.10 Replacement of Trustee............................ 48
Section 6.11 Acceptance of Appointment by Successor............ 50
Section 6.12 Eligibility; Disqualification..................... 51
Section 6.13 Merger, Conversion, Consolidation or
Succession to Business............................ 52
Section 6.14 Appointment of Authenticating Agent............... 52
Section 6.15 Trustee's Application for Instructions from
the Company....................................... 54
-ii-
<PAGE>
Section 6.16 Preservation of Information; Communications
to Holders........................................ 54
ARTICLE 7 Consolidation, Merger or Sale by the Company...... 55
Section 7.1 Consolidation, Merger or Sale of Assets
Permitted......................................... 55
ARTICLE 8 Supplemental Indentures........................... 56
Section 8.1 Supplemental Indentures Without Consent of Holders 56
Section 8.2 With Consent of Holders........................... 57
Section 8.3 Compliance with Trust Indenture Act............... 58
Section 8.4 Execution of Supplemental Indentures.............. 58
Section 8.5 Effect of Supplemental Indentures................. 58
Section 8.6 Reference in Securities to Supplemental Indentures 59
Section 8.7 Notice to Holders................................. 59
ARTICLE 9 Covenants......................................... 59
Section 9.1 Payment of Principal, Premium, if any, and
Interest.......................................... 59
Section 9.2 Maintenance of Office or Agency................... 59
Section 9.3 Money for Securities to Be Held in Trust;
Unclaimed Money................................... 60
Section 9.4 Corporate Existence............................... 62
Section 9.5 Insurance......................................... 62
Section 9.6 Reports by the Company............................ 62
Section 9.7 Annual Review Certificate; Notice of Default...... 63
Section 9.8 Provision of Financial Statements................. 63
Section 9.9 Limitation on Liens............................... 64
Section 9.10 Ownership of Material Subsidiary Stock............ 66
Section 9.11 Transactions with Affiliates...................... 67
Section 9.12 Limitation on Sale or Issuance, etc............... 67
Section 9.13 Waiver of Certain Covenants....................... 68
ARTICLE 10 Redemption........................................ 68
Section 10.1 Applicability of Article......................... 68
Section 10.2 Election to Redeem; Notice to Trustee............ 68
Section 10.3 Selection of Securities to Be Redeemed........... 69
Section 10.4 Notice of Redemption............................. 69
Section 10.5 Deposit of Redemption Price...................... 70
Section 10.6 Securities Payable on Redemption Date............ 70
Section 10.7 Securities Redeemed in Part...................... 71
-iii-
<PAGE>
ARTICLE 11 Sinking Funds.................................... 71
Section 11.1 Applicability of Article......................... 71
Section 11.2 Satisfaction of Sinking Fund Payments with
Securities....................................... 72
Section 11.3 Redemption of Securities for Sinking
Fund............................................. 72
-iv-
<PAGE>
INDENTURE, dated as of _______________, 1997, from ST. PAUL BANCORP, INC.,
a Delaware corporation (the "Company"), and HARRIS TRUST AND SAVINGS BANK, as
Trustee (the "Trustee").
Recitals
--------
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures, notes
or other evidences of indebtedness (the "Securities") to be issued in one or
more series as herein provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act that
are required to be a part of this Indenture and, to the extent applicable, shall
be governed by such provisions.
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
ratable benefit of the Holders of the Securities or of any series thereof, as
follows:
ARTICLE 1
Definitions and Other Provisions
--------------------------------
of General Application
----------------------
Section 1.1 Definitions. (a) For all purposes of this Indenture, except as
-----------
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally
<PAGE>
accepted accounting principles" with respect to any computation required or
permitted hereunder shall mean such principles as are generally accepted at
the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Bank" means (a) St. Paul Federal Bank For Savings, a federally chartered
----
stock savings institution, so long as it is a Subsidiary of the Company, or any
successor thereto so long as such successor is a Subsidiary of the Company; and
(b) any bank or savings or depository institution that is or shall become an
Affiliate of the Company.
"Authenticating Agent" means any authenticating agent appointed by the
--------------------
Trustee pursuant to Section 6.14.
"Board" or "Board of Directors" means the Board of Directors of the
----- ------------------
Company, an Executive Committee thereof or any other duly authorized committee
thereof.
"Board Resolution" means a copy of a resolution of the Board of Directors,
----------------
certified by the Corporate Secretary or an Assistant Secretary of the Company to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or any other
------------
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
3.1, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment or particular location are
authorized or obligated by law, executive order or regulation to close.
-2-
<PAGE>
"Commission" means the Securities and Exchange Commission, as from time to
----------
time constituted, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the Company in the first paragraph of
-------
this Indenture until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" means such
-------
successor corporation.
"Company Order" and "Company Request" mean, respectively, a written order
------------- ---------------
or request signed in the name of the Company by the Chairman of the Board, the
President, any Executive Vice President or any Senior Vice President, signing
alone, by any Vice President signing together with the Treasurer, any Assistant
Treasurer, the Corporate Secretary or any Assistant Secretary of the Company,
or, with respect to Sections 3.3, 3.4, 3.5 and 6.1, any other employee of the
Company named in an Officers' Certificate and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in which at any
----------------------
particular time its corporate trust business shall be principally administered,
which office at the date hereof is located at 311 West Monroe Street, Chicago,
Illinois 60606, Attention: Indenture Trust Division.
"corporation" includes corporations, associations, partnerships, limited
-----------
liability companies, joint stock companies and business trusts.
"Default" means any event which is, or after notice or passage of time, or
-------
both, would be, an Event of Default.
"Depositary", when used with respect to the Securities of or within any
----------
series issuable or issued in whole or in part in global form, means the Person
designated as Depositary by the Company pursuant to Section 3.1 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter shall mean or include each Person
which is then a Depositary hereunder, and if at any time there is more than one
such Person, shall be a collective reference to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America
------ -
as at the time of payment is legal tender for the payment of public and private
debts.
-3-
<PAGE>
"Government Obligations" means securities which are (i) direct obligations
----------------------
of the United States for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States, each of which are not callable or redeemable at the option of the issuer
thereof, and shall also include (A) a depositary receipt issued by a bank or
trust company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depositary receipt,
provided, however, that (except as required by law) such custodian is not
- -------- -------
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
Government Obligation evidenced by such depositary receipt, (B) securities that
are backed by United States government obligations as collateral under an
arrangement by which the interest and principal payments on the collateral
generally flow immediately through to the holder of the security, and (C) money
market funds, so long as such funds are rated Aaa by Moody's (so long as Moody's
is a rating agency) and AAAm by Standard & Poor's (so long as Standard & Poor's
is a rating agency), and any other funds for which the Trustee or an Affiliate
of the Trustee serves as an investment advisor, administrator, shareholder
servicing agent and/or custodian or subcustodian, provided that any shares of
such funds have a credit rating of at least Aaa by Moody's (so long as Moody's
is a rating agency) and AAAm by Standard & Poor's (so long as Standard & Poor's
is a rating agency) and notwithstanding that the Trustee or an Affiliate of the
Trustee charges and collects fees and expenses from such funds for services
rendered. The Company hereby specifically authorizes the Trustee or an
Affiliate of the Trustee to charge and collect all fees and expenses from such
funds for services rendered to such funds.
"Holder" means a Person in whose name a Security is registered on the
------
Register.
"Indenture" means this instrument as originally executed or as it may from
---------
time to time be supplemented, amended or modified by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and, unless the context otherwise requires, shall include the terms of a
particular series of Securities established as contemplated by Section 3.1.
-4-
<PAGE>
"interest", when used with respect to an Original Issue Discount Security
--------
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
---------------------
Stated Maturity of an installment of interest on such Security.
"Material Subsidiary" means, at any particular time, any Subsidiary that,
-------------------
together with any Subsidiaries of such Subsidiary (i) accounted for more than
five percent (5%) of the consolidated income of the Company for its most
recently completed fiscal year, or (ii) owned more than five percent (5%) of the
consolidated assets of the Company as at the end of such fiscal year, all as
calculated in accordance with generally accepted accounting principles.
"Maturity", where used with respect to any Security, means the date on
--------
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board of Directors, the President, any
-------
Executive Vice President, any Senior Vice President, any Vice President, the
Corporate Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of the
---------------------
Board, the President, any Executive Vice President or any Senior Vice President,
signing alone, or by any Vice President signing together with the Corporate
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company.
"Opinion of Counsel" means a written opinion of legal counsel, who may be
------------------
(a) counsel for the Company or (b) other counsel designated by the Company or
the Trustee. Any counsel for the Company may be an employee of the Company.
"Original Issue Discount Security" means any Security which provides for an
--------------------------------
amount less than the stated principal thereof to be due and payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"Outstanding", when used with respect to Securities, means, as of the date
-----------
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
-5-
<PAGE>
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided, however, that,
-------- -------
if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture and such Securities or provisions
therefor satisfactory to the Trustee have been made;
(iii) Securities, except to the extent provided in Sections 4.4 and
4.5, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article 4; and
(iv) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, or whether
sufficient funds are available for redemption or for any other purpose, and for
the purpose of making the calculations required by Section 313 of the Trust
Indenture Act, the principal amount of any Original Issue Discount Securities
that may be counted in making such determination or calculation and that shall
be deemed to be Outstanding for such purpose shall be equal to the amount of
principal thereof that would be (or shall have been declared to be) due and
payable, at the time of such determination, upon a declaration of acceleration
of the maturity thereof pursuant to Section 5.2, and Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making
such calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded
-6-
<PAGE>
and Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
------------
principal of, premium, if any, or interest on any Securities on behalf of the
Company.
"Periodic Offering" means an offering of Securities of a series from time
-----------------
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 3.1
with respect thereto, are to be determined by the Company upon the issuance of
such Securities.
"Person" means any individual, corporation, partnership, joint venture,
------
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Securities of or within
----------------
any series, means the place or places where, subject to the provisions of
Section 9.2, the principal of, premium, if any, and interest on such Securities
are payable as specified as contemplated by Section 3.1.
"Predecessor Security" of any particular Security means every previous
--------------------
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
---------------
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed
----------------
in whole or in part, means the price at which it is to be redeemed pursuant to
this Indenture.
-7-
<PAGE>
"Regular Record Date" for the interest payable on any Interest Payment Date
-------------------
on the Securities of or within any series means the date specified for that
purpose as contemplated by Section 3.1.
"Responsible Officer", when used with respect to the Trustee, shall mean
-------------------
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any senior trust
officer, any trust officer, the controller, any assistant controller, or any
other officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such corporate trust matter is referred because of his knowledge
of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the first recital of
-------- ----------
this Indenture and more particularly means any Security or Securities of the
Company issued, authenticated and delivered under this Indenture.
"Special Record Date" for the payment of any Defaulted Interest on the
-------------------
Securities of any series means a date fixed by the Trustee pursuant to Section
3.7.
"Stated Maturity", when used with respect to any Security or any
---------------
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means any corporation or Bank of which the Company at the time
----------
owns or controls, directly or indirectly, more than 50% of the shares of
outstanding stock having general voting power under ordinary circumstances to
elect a majority of the Board of Directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency).
"Trust Indenture Act" means the Trust Indenture Act of 1939 and any
-------------------
reference herein to such Act or a particular provision thereof shall mean such
Act or provision, as the case may be, as amended or replaced from time to time
or as supplemented from
-8-
<PAGE>
time to time by rules or regulations adopted by the Commission under or in
furtherance of the purposes of such Act or provision, as the case may be.
"Trustee" means the party named as such in the first paragraph of this
-------
Indenture until a successor Trustee replaces it pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" means or includes such
-------
successor Trustee and if, at any time, there is more than one Trustee, "Trustee"
as used with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of that series.
"United States" means, unless otherwise specified with respect to the
-------------
Securities of any series as contemplated by Section 3.1, the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction.
(b) The following terms shall have the meanings specified in the Sections
referred to opposite such term below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
"Act" 1.4(a)
"Bankruptcy Law" 5.1
"covenant defeasance" 4.5
"Custodian" 5.1
"Defaulted Interest" 3.7(b)
"defeasance" 4.4
"Event of Default" 5.1
"Exchange Act" 9.6(a)
"Register" 3.5
"Registrar" 3.5
</TABLE>
Section 1.2 Compliance Certificates and Opinions. Upon any application or
------------------------------------
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
-9-
<PAGE>
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Sections 2.3,
3.3 and 9.7) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Trustee. In any case where
--------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations as to such matters are
erroneous.
-10-
<PAGE>
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders. (a) Any request, demand, authorization,
---------------
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are received by the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 315 of the Trust Indenture
Act) conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Securities held
by any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
-11-
<PAGE>
(e) The Company may, in the circumstances permitted by the Trust Indenture
Act, fix a record date for the determination of Holders entitled to make or give
any request, demand, authorization, direction, notice, consent or waiver or to
take any other Act authorized or permitted to be made, given or taken by the
Holders, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before, on or after such record date, but only
the Holders of record at the close of business on such record date (or their
duly designated proxies) shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date.
Section 1.5 Notices, etc., to Trustee and Company. Any request, demand,
-------------------------------------
authorization, direction, notice, consent, waiver or other Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first class postage prepaid, to the Company
addressed to it at St. Paul Bancorp, Inc., 6700 West North Avenue, Chicago,
Illinois 60635, Attention: Chief Financial Officer or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.6 Notice to Holders; Waiver. Where this Indenture provides for
-------------------------
notice to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder affected by such event, at his address as
it appears in the Register, within the time prescribed for the giving of such
notice.
Neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders of Securities. Any notice mailed to a Holder in
the manner herein
-12-
<PAGE>
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.
If by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice as provided above,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act required or permitted under this Indenture shall be in the English
language.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice. Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
Section 1.7 Headings and Table of Contents. The Article and Section
------------------------------
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 1.8 Successors and Assigns. All covenants and agreements in this
----------------------
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
Section 1.9 Separability. In case any provision of this Indenture or the
------------
Securities shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 1.10 Benefits of Indenture. Nothing in this Indenture or in the
---------------------
Securities, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Registrar, any Paying Agent and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.11 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF ILLINOIS, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. This Indenture is subject to the
Trust Indenture Act and if any provision hereof limits, qualifies
-13-
<PAGE>
or conflicts with a provision of the Trust Indenture Act that is required under
the Trust Indenture Act to be part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded.
Section 1.12 Legal Holidays. Unless otherwise specifically provided for
--------------
with respect to any series of Securities, in any case where any Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity of
any Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or any Security, other
than a provision in the Securities of any series which specifically states that
such provision shall apply in lieu of this Section) payment of principal,
premium, if any, or interest need not be made at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on such date; and no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date, Redemption Date, sinking fund payment date, Stated
Maturity or Maturity, as the case may be.
Section 1.13 Incorporators, Stockholders, Officers and Directors of the
----------------------------------------------------------
Company Exempt from Individual Liability. No recourse under or upon any
- ----------------------------------------
obligation, covenant or agreement of or contained in this Indenture or of or
contained in any Security, or for any claim based thereon or otherwise in
respect thereof, or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or any successor Person, either directly or through the Company or any
successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.
-14-
<PAGE>
ARTICLE 2
Security Forms
--------------
Section 2.1 Forms Generally. The Securities of each series shall be
---------------
in substantially such form (including global form) as shall be established by
delivery to the Trustee of an Officers' Certificate or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture. Such Securities may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as the Company
may deem appropriate and as are not inconsistent with this Indenture, or as may
be required to comply with the rules of any securities exchange, all as
determined by the officers executing such Securities as evidenced by their
execution of the Securities. If temporary Securities of any series are issued
as permitted by Section 3.4, the form thereof also shall be established as
provided in the preceding sentences. If the forms of Securities of any series
are established by an Officers' Certificate, such Officers' Certificate shall be
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 for the authentication and delivery of such
Securities.
The permanent Securities, if any, shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
Section 2.2 Form of Trustee's Certificate of Authentication. The
-----------------------------------------------
Trustee's certificate of authentication shall be in substantially the following
form:
This is one of the Securities of a series issued under the within-mentioned
Indenture.
,
--------------------------------
as Trustee
By:
------------------------
Authorized Signatory
Section 2.3 Securities in Global Form. If Securities of or within a
-------------------------
series are issuable in whole or in part in temporary or permanent global form,
as specified as contemplated by Section
-15-
<PAGE>
3.1, then, notwithstanding clause (8) of Section 3.1(b) and the provisions of
Section 3.2, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced to reflect exchanges. Any
endorsement of a Security in global form to reflect the amount, or any increase
or decrease in the amount, or changes in the rights of Holders, of Outstanding
Securities represented thereby, shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 3.3
or 3.4. Subject to the provisions of Sections 3.3, 3.4 and 3.5, the Trustee
shall deliver and redeliver any Security in global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. Any instructions by the Company with respect to
endorsement or delivery or redelivery of a Security in global form shall be in
writing (which need not comply with Section 1.2 hereof and need not be
accompanied by an Opinion of Counsel).
The provisions of the last paragraph of Section 3.3 shall apply to any
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 1.2 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
or increase in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last paragraph of Section 3.3.
Every Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form:
THIS SECURITY IS A SECURITY ISSUED IN GLOBAL FORM AS CONTEMPLATED BY AND
WITHIN THE MEANING OF THE INDENTURE DATED AS OF __________ ___, 1997,
BETWEEN ST. PAUL BANCORP, INC. AND HARRIS TRUST AND SAVINGS BANK, AS
TRUSTEE (THE "INDENTURE"), AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR
A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED
OR EXCHANGED FOR SECURITIES IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY
SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY
-16-
<PAGE>
SHALL BE A SECURITY ISSUED IN GLOBAL FORM SUBJECT TO THE FOREGOING, EXCEPT
IN SUCH LIMITED CIRCUMSTANCES.
ARTICLE 3
The Securities
--------------
Section 3.1 Amount Unlimited; Issuable in Series. (a) The aggregate
------------------------------------
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued from time to time in
one or more series.
(b) The following matters shall be established and (subject to Section 3.3)
set forth, or determined in the manner provided, in an Officers' Certificate, a
Board Resolution or one or more indentures supplemental hereto:
(1) the title of the Securities of the series (which title shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(which limit shall not pertain to (i) Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 8.6
or 10.7, and (ii) any Securities which, pursuant to the last paragraph of
Section 3.3, are deemed never to have been authenticated and delivered
hereunder);
(3) the date or dates on which the principal of the Securities of the
series is payable or the method of determination thereof;
(4) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which any such interest shall be payable and the Regular
Record Date, if any, for the interest payable on any Security of such
series on any Interest Payment Date;
(5) the place or places where, subject to the provisions of Section
9.2, the principal of, premium, if
-17-
<PAGE>
any, and interest, if any, on Securities of the series shall be payable;
(6) the period or periods within which, the price or prices at which,
and the other terms and conditions upon which, Securities of the series may
be redeemed, in whole or in part, at the option of the Company and, if
other than as provided in Section 10.3, the manner in which the particular
Securities of such series (if less than all Securities of such series are
to be redeemed) are to be selected for redemption;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event or at the option of a
Holder thereof and the period or periods within which, the price or prices
at which, and the other terms and conditions upon which, Securities of the
series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of the Securities of the series which shall be payable
upon declaration of acceleration thereof pursuant to Section 5.2 or the
method by which such portion shall be determined;
(10) if other than as provided in Section 3.7, the Person to whom any
interest on any Security of the series shall be payable, and the extent to
which, or the manner in which (including any certification requirement and
other terms and conditions under which), any interest payable on a
temporary or permanent global Security on an Interest Payment Date will be
paid if other than in the manner provided in Section 2.3 and Section 3.4,
as applicable;
(11) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(12) any deletions from, modifications of or additions to the Events
of Default set forth in Section 5.1 or covenants of the Company set forth
in Article 9 pertaining to the Securities of the series;
-18-
<PAGE>
(13) if other than as provided in Sections 4.4 and 4.5, the means of
defeasance or covenant defeasance as may be specified for the Securities of
or within the series;
(14) if other than the Trustee, the identity of the Registrar and any
Paying Agent;
(15) whether Securities of the series shall be issued in whole or in
part in temporary or permanent global form and, if so, (i) the initial
Depositary for such global Securities and (ii) if other than as provided in
Section 3.4 or 3.5, as applicable, whether and the circumstance under which
beneficial owners of interests in any Securities of the series in temporary
or permanent global form may exchange such interests for Securities of such
series and of like tenor of any authorized form and denomination; and
(16) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture), including without
limitation any terms which may be required by or advisable under United
States laws or regulations or advisable in connection with the marketing of
Securities of the series.
(c) All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, and Stated
Maturity, the date from which interest, if any, shall accrue and except as may
otherwise be provided in or pursuant to an Officers' Certificate or a Board
Resolution pursuant to this Section 3.1 or in an indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the
Holders, for issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.
(d) If any of the terms of the Securities of any series are
established by action taken pursuant to a Board Resolution, a copy of such Board
Resolution shall be certified by the Corporate Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers' Certificate setting forth, or providing the manner for
determining, the terms of the Securities of such series, and, if requested by
the Trustee, an appropriate record of any action taken pursuant thereto in
connection with the issuance of any Securities of such series shall be delivered
to the Trustee prior to the authentication and delivery thereof. With respect
to Securities of a series subject to a Periodic Offering, such Board
-19-
<PAGE>
Resolution or Officers' Certificate may provide general terms for Securities of
such series and provide either that the specific terms of particular Securities
of such series shall be specified in a Company Order or that such terms shall be
determined by the Company, or one or more of the Company's agents designated in
an Officers' Certificate, in accordance with the Company Order as contemplated
by the first proviso of the third paragraph of Section 3.3.
Section 3.2 Denominations. Unless otherwise provided as contemplated by
-------------
Section 3.1, any Securities of a series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating. Securities
----------------------------------------------
shall be executed on behalf of the Company by the Chairman, the President, any
Executive Vice President, any Senior Vice President or the Treasurer and
attested to by the Corporate Secretary or Assistant Secretary of the Company.
The Company's seal shall be affixed to the Securities, or a facsimile of such
seal shall be reproduced on the Securities. The signatures of such officers on
the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time, the Company may deliver Securities of
any series executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and the delivery of such Securities,
and the Trustee in accordance with the Company Order shall authenticate and
deliver such Securities; provided, however, that in the case of Securities
-------- -------
offered in a Periodic Offering, the Trustee shall authenticate and deliver such
Securities from time to time in accordance with such other procedures
(including, without limitation, the receipt by the Trustee of oral or electronic
instructions from the Company or its duly authorized agents, thereafter promptly
confirmed in writing) acceptable to the Trustee as may be specified by or
pursuant to a Company Order delivered to the Trustee prior to the time of the
first authentication of Securities of such series.
If the form or terms of the Securities of a series have been established by
or pursuant to one or more Officers' Certificates or one or more Board
Resolutions as permitted by Sections 2.1 and
-20-
<PAGE>
3.1, in authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 315(a) through (d)
of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion
of Counsel stating,
(1) that the forms and terms of such Securities have been established
in conformity with the provisions of this Indenture; and
(2) that such Securities when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to customary exceptions;
provided, however, that, with respect to Securities of a series subject to a
- -------- -------
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities have been, and the terms of such
Securities (when established in accordance with such procedures as may be
specified from time to time in a Company Order, all as contemplated by and
in accordance with a Board Resolution or an Officers' Certificate pursuant
to Section 3.1, as the case may be) will have been, established in
conformity with the provisions of this Indenture; and
(y) that such Securities, when (1) executed by the Company, (2)
completed, authenticated and delivered by the Trustee in accordance with
this Indenture, and (3) issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company, enforceable in accordance
with their terms, subject to customary exceptions.
With respect to Securities of a series subject to a Periodic Offering, the
Trustee may conclusively rely, as to the authorization by the Company of any of
such Securities, the form and terms thereof and the legality, validity, binding
effect and enforceability thereof, upon such Opinion of Counsel and any other
documents delivered pursuant to Sections 2.1 and 3.1, as
-21-
<PAGE>
applicable, at or prior to the time of the first authentication of Securities of
such series unless and until it has received written notification that such
opinion or other documents have been superseded or revoked. In connection with
the authentication and delivery of Securities of a series subject to a Periodic
Offering, the Trustee shall be entitled to assume that the Company's
instructions to authenticate and deliver such Securities do not violate any
rules, regulations or orders of any governmental agency or commission having
jurisdiction over the Company.
If the form or terms of the Securities of a series have been established by
or pursuant to one or more Officers' Certificates or one or more Board
Resolutions as permitted by Sections 2.1 and 3.1, the Trustee shall have the
right to decline to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will adversely affect the Trustee's own rights,
duties or immunities under this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
If all of the Securities of any series are not to be issued at one time, it
shall not be necessary to deliver the Officers' Certificate or the Board
Resolution otherwise required pursuant to Section 3.1 at or prior to the time of
the authentication of each Security of such series if such Officers' Certificate
or Board Resolution is delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
If the Company shall establish pursuant to Section 3.1 that the Securities
of a series are to be issued in whole or in part in global form, then the
Company shall execute and the Trustee shall, in accordance with this Section and
the Company Order with respect to such series, authenticate and deliver one or
more Securities in global form that (i) shall represent and shall be denominated
in an amount equal to the aggregate principal amount of the initially issued
Outstanding Securities of such series to be represented by such Security or
Securities in global form, (ii) shall be registered in the name of the
Depositary for such Security or Securities in global form or the nominee of such
Depositary, and (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instruction.
Each Depositary designated pursuant to Section 3.1 for a Security in global
form must, at the time of its designation and at all times while it serves as
Depositary, be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and any other applicable statute or regulation. The Trustee
-22-
<PAGE>
shall have no responsibility to determine if the Depositary is so registered.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefits under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the manual signature of one of the authorized signatories of the
Trustee or an Authenticating Agent. Such signature upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered under this Indenture and is entitled to the benefits
of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.9 together with a written statement (which need not comply
with Section 1.2 and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued and sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
Section 3.4 Temporary Securities. Pending the preparation of definitive
--------------------
Securities of any series, the Company may execute and, upon Company Order, the
Trustee shall authenticate and deliver temporary Securities of such series which
are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor and form, of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities. In the case of Securities of any series, such
temporary Securities may be in global form.
Except in the case of temporary Securities in global form, each of which
shall be exchanged in accordance with the provisions thereof, if temporary
Securities of any series are issued, the Company will cause permanent Securities
of such series to be prepared without unreasonable delay. After preparation of
such permanent Securities, the temporary Securities shall be exchangeable for
such permanent Securities of like tenor upon surrender of the temporary
Securities of such series at the office or agency of the Company pursuant to
Section 9.2 in a Place of Payment for such series, without charge to the Holder.
Upon
-23-
<PAGE>
surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of permanent Securities of the same
series of authorized denominations and of like tenor. Until so exchanged, the
temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as permanent Securities of such series except as
otherwise specified as contemplated by Section 3.1.
Section 3.5 Registration, Registration of Transfer and Exchange. The
---------------------------------------------------
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency to be maintained by the Company in accordance with
Section 9.2 in a Place of Payment, a register (the "Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and the registration of transfers of
Securities. The Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee is
hereby initially appointed "Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency maintained pursuant to Section 9.2 in a Place of Payment
for that series, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series (except a Security in
global form) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount containing
identical terms and provisions, upon surrender of the Securities to be exchanged
at such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in certificated form in the
circumstances described below, a Security in global form representing all or a
portion of the Securities of a series may not be transferred except as a whole
by the Depositary for such series to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor
-24-
<PAGE>
Depositary for such series or a nominee of such successor Depositary.
If at any time the Depositary for the Securities of a series notifies the
Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities of
such series shall no longer be eligible under Section 3.3, the Company shall
appoint a successor Depositary with respect to the Securities of such series.
If a successor Depositary for the Securities of such series is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, the Company's election pursuant to Section
3.1(b)(15) shall no longer be effective with respect to the Securities of such
series and the Company shall execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of certificated Securities of such
series of like tenor, shall authenticate and deliver Securities of such series
of like tenor in certificated form, in authorized denominations and in an
aggregate principal amount equal to the principal amount of the Security or
Securities of such series of like tenor in global form in exchange for such
Security or Securities in global form.
The Company may at any time in its sole discretion determine that
Securities of a series issued in global form shall no longer be represented by
such a Security or Securities in global form. In such event, the Company shall
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of certificated Securities of such series of like tenor, shall
authenticate and deliver, Securities of such series of like tenor in
certificated form, in authorized denominations and in an aggregate principal
amount equal to the principal amount of the Security or Securities of such
series of like tenor in global form in exchange for such Security or Securities
in global form.
If specified by the Company pursuant to Section 3.1 with respect to a
series of Securities, the Depositary for such series may surrender a Security in
global form of such series in exchange in whole or in part for Securities of
such series in certificated form on such terms as are acceptable to the Company
and such Depositary. Thereupon, the Company shall execute, and the Trustee
shall authenticate and deliver, without service charge,
(i) to each Person specified by such Depositary a new certificated
Security or Securities of the same series of like tenor, of any
authorized denomination as requested by such Person in aggregate
principal amount equal to and in exchange for such Person's beneficial
interest in the Security in global form; and
-25-
<PAGE>
(ii) to such Depositary a new Security in global form of like tenor in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Security in global form and the aggregate principal amount of
certificated Securities delivered to Holders thereof.
Upon the exchange of a Security in global form for Securities in
certificated form, such Security in global form shall be cancelled by the
Trustee. Securities in certificated form issued in exchange for a Security in
global form pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depositary for such Security in global
form, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the Persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or upon any
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration or transfer or for
exchange shall (if so required by the Company, the Registrar or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or for any
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration or transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 8.6 or 10.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of,
or exchange any Securities for a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities of
like tenor and of the series of which such Security is a part selected for
redemption under Section 10.3 and ending at the close of business on the day of
such mailing or (ii) to register the transfer of or exchange any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
-26-
<PAGE>
Section 3.6 Replacement Securities. If a mutilated Security is
----------------------
surrendered to the Trustee, together with, in proper cases, such security or
indemnity as may be required by the Company or the Trustee to save each of them
and any agent of either of them harmless, the Company shall execute and the
Trustee shall authenticate and deliver a replacement Security of the same series
and principal amount and date of maturity, if the Trustee's requirements are
met.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver in lieu of any such destroyed, lost or stolen Security a replacement
Security of the same series and principal amount, containing identical terms and
provisions as the destroyed, lost or stolen Security.
In case any such mutilated, destroyed lost or stolen Security has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee or the Registrar) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Interest; Interest Rights Preserved. (a) Unless
----------------------------------------------
otherwise specified as contemplated by Section 3.1, interest, if any, on any
Security which is payable, and is
-27-
<PAGE>
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest at the office or agency maintained for such purpose pursuant
to Section 9.2; provided, however, that, at the option of the Company, interest
-------- -------
on any series of Securities that bear interest may be paid (i) by check mailed
to the address of the Person entitled thereto as it shall appear on the Register
of Holders of Securities of such series, or (ii) to the extent specified as
contemplated by Section 3.1, by wire transfer to an account maintained by the
Person entitled thereto as specified in the Register of Holders of Securities of
such series.
(b) Unless otherwise specified as contemplated by Section 3.1, any
interest on any Security of any series which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of his having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause (1) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Securities of
-28-
<PAGE>
such series at his address as it appears in the Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered at
the close of business on a specified date in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause (2), such manner of payment shall
be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section and Section
3.5, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.8 Persons Deemed Owners. Prior to due presentment of any
---------------------
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Sections 3.5 and 3.7) interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such global Security, and such Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such global
Security for all purposes whatsoever. None of the Company, the Trustee or any
agent of the Company or the Trustee shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Security in
-29-
<PAGE>
global form, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Section 3.9 Cancellation. The Company at any time may deliver Securities
------------
to the Trustee for cancellation. The Registrar and any Paying Agent shall
forward to the Trustee any Securities surrendered to them for replacement, for
registration of transfer, or for exchange or payment. The Trustee shall cancel
all Securities surrendered for replacement, for registration of transfer, or for
exchange, payment, redemption or cancellation and may dispose of cancelled
Securities and issue a certificate of destruction to the Company. The Company
may not issue new Securities to replace Securities that it has paid or delivered
to the Trustee for cancellation, except as expressly permitted in the terms of
Securities for any particular series or as permitted pursuant to the terms of
this Indenture.
Section 3.10 Computation of Interest. Except as otherwise specified as
-----------------------
contemplated by Section 3.1, interest on any Securities of a series that bear
interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
Section 3.11 CUSIP Numbers. The Company in issuing the Securities may use
-------------
"CUSIP" numbers (in addition to the other identification numbers printed on the
Securities), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided, however, that any such notice
-------- -------
may state that no representation is made as to the correctness of such "CUSIP"
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such "CUSIP" numbers.
ARTICLE 4
Satisfaction and Discharge; Defeasance
--------------------------------------
Section 4.1 Termination of Company's Obligations Under the Indenture.
--------------------------------------------------------
Except as otherwise specified as contemplated by Section 3.1, this Indenture
shall upon a Company Request cease to be of further effect with respect to
Securities of or within any series (except as to any surviving rights of
registration of transfer or exchange of such Securities and replacement of such
Securities which may have been destroyed, lost, stolen or mutilated, as herein
expressly provided for) and the Trustee, at the expense of the Company, shall
execute proper instruments
-30-
<PAGE>
acknowledging satisfaction and discharge of this Indenture with respect to such
Securities when:
(1) either
(A) all such Securities previously authenticated and delivered
(other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
3.6, and (ii) such Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust, as
provided in Section 9.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
cancelled or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose, an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal, premium, if
any, and interest, with respect thereto, to the date of such deposit
(in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to such Securities; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for
-31-
<PAGE>
relating to the satisfaction and discharge of this Indenture as to such
series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to
any series of Securities, the obligation of the Company to the Trustee and any
predecessor Trustee under Section 6.9, the obligations of the Company to any
Authenticating Agent under Section 6.14 and, if money shall have been deposited
with the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of Section
9.3 shall survive.
Section 4.2 Application of Trust Funds. Subject to the provisions of the
--------------------------
last paragraph of Section 9.3, all money deposited with the Trustee pursuant to
Section 4.1 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal, premium, if any, and any interest for whose payment such money has
been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.
Section 4.3 Applicability of Defeasance Provisions. Unless otherwise
--------------------------------------
specified as contemplated by Section 3.1, the provisions of Sections 4.4 and
4.5, together with the provisions of Sections 4.6 through 4.8 inclusive, shall
be applicable to the Securities of or within a series.
Section 4.4 Defeasance and Discharge. The Company, at its option, shall
------------------------
be deemed to have been discharged from its obligations with respect to the
Securities of or within a series on and after the date the conditions set forth
in Section 4.6 are satisfied (hereinafter "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Securities which shall thereafter be
deemed to be "Outstanding" only for the purposes this Article 4, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, shall on a Company Order execute proper instruments acknowledging the
same), except the following which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of such Securities to receive,
solely from the trust funds described in Section 4.6(a) and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest, if any, on such Securities when such payments are due; (b) the
rights, powers,
-32-
<PAGE>
trusts, duties and immunities of the Trustee hereunder; and (c) this Article 4.
Subject to compliance with this Article 4, the Company may exercise its option
under this Section notwithstanding the prior exercise of its option under
Section 4.5 with respect to such Securities.
Section 4.5 Covenant Defeasance. The Company, at its option, shall be
-------------------
released from its obligations under Sections 7.1, 9.4, 9.5, 9.8, 9.9, 9.10,
9.11, 9.12 and 9.13 and, if specified pursuant to Section 3.1, its obligations
under any other covenants, with respect to such Securities on and after the date
the conditions set forth in Section 4.6 are satisfied (hereinafter "covenant
defeasance"), and such Securities shall thereafter be deemed to be not
"Outstanding" for the purposes of any request, demand, authorization, direction,
notice, consent, waiver or other Act of Holders (and the consequences of any
thereof) in connection with Sections 7.1, 9.4, 9.5, 9.8, 9.9, 9.10, 9.11, 9.12
and 9.13 or such other covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to such Securities, the Company may omit to comply with
and shall have no liability in respect of any term, provision, condition or
limitation set forth in any such Section or such other covenants, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
Section or such other covenants or by reason of any reference in any such
Section or such other covenants to any other provision herein or in any other
document or otherwise and such omission to comply shall not constitute a Default
or an Event of Default under Section 5.1(3) or 5.1(7) or otherwise, as the case
may be, but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.
Section 4.6 Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of Section 4.4 or Section 4.5
to any Securities of or within a series:
(a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee (or another trustee satisfying the
requirements of Section 6.12 who shall agree to comply with, and shall be
entitled to the benefits of, the provisions of Sections 4.3 through 4.8
inclusive and the last paragraph of Section 9.3 applicable to the Trustee,
for purposes of such Sections also a "Trustee") as trust funds in trust for
the purpose of making the payments referred to in clauses (x) and (y) of
this Section 4.6(a), specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, with instructions
-33-
<PAGE>
to the Trustee as to the application thereof, (A) money in an amount, or
(B) Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment referred to in
clause (x) or (y) of this Section 4.6(a), money in an amount or (C) a
combination thereof in an amount, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee to pay and
discharge, (x) the principal of, premium, if any, and interest, if any, on
such Securities on the Maturity of such principal or installment of
principal or interest and (y) any mandatory sinking fund payments
applicable to such Securities on the day on which such payments are due and
payable in accordance with the terms of this Indenture and such Securities.
Before such a deposit the Company may make arrangements satisfactory to the
Trustee for the redemption of Securities at a future date or dates in
accordance with Article 10 which shall be given effect in applying the
foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default under
this Indenture or result in a breach or violation of, or constitute a
default under, any other material agreement or instrument to which the
Company is a party or by which it is bound.
(c) No Default or Event of Default under Section 5.1(5) or 5.1(6) with
respect to such Securities shall have occurred and be continuing during the
period commencing on the date of such deposit and ending on the 91st day
after such date (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(d) In the case of an exercise by the Company of its option under
Section 4.4, the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of execution of this Indenture,
there has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that,
the Holders of such Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the
-34-
<PAGE>
same amount and in the same manner and at the same times, as would have
been the case if such deposit, defeasance and discharge had not occurred.
(e) In the case of an exercise by the Company of its option under
Section 4.5, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Securities will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 4.4 or the covenant defeasance
under Section 4.5 (as the case may be) have been complied with and an
Opinion of Counsel to the effect that either (i) as a result of a deposit
pursuant to subsection (a) above and the related exercise of the Company's
option under Section 4.4 or Section 4.5 (as the case may be), registration
is not required under the Investment Company Act of 1940, as amended, by
the Company, with respect to the trust funds representing such deposit or
by the Trustee for such trust funds or (ii) all necessary registrations
under said Act have been effected.
(g) Such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection therewith as
contemplated by Section 3.1.
Section 4.7 Deposited Money and Government Obligations to be Held in
--------------------------------------------------------
Trust. Subject to the provisions of the last paragraph of Section 9.3, all
money and Government Obligations (or other property as may be provided pursuant
to Section 3.1) (including the proceeds thereof) deposited with the Trustee
pursuant to Section 4.6 in respect of any Securities of or within any series
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of such Securities of
all sums due and to become due thereon in respect of principal, premium, if any,
and interest, if any, but such money need not be segregated from other funds
except to the extent required by law.
-35-
<PAGE>
Section 4.8 Transfers and Distribution at Company Request. To the extent
---------------------------------------------
permitted by the Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 76, as amended or interpreted by the Financial
Accounting Standards Board from time to time, or any successor thereto
("Standard No. 76"), or to the extent permitted by the Commission, the Trustee
shall, from time to time, take one or more of the following actions as specified
in a Company Request:
(a) The Trustee shall retransfer, reassign and deliver to the Company
any securities deposited with the Trustee pursuant to Section 4.6(a),
provided that the Company shall, in substitution therefor, simultaneously
transfer, assign and deliver to the Trustee other Government Obligations
appropriate to satisfy the Company's obligations in respect of the relevant
Securities.
(b) The Trustee (and any Paying Agent) shall promptly pay to the
Company upon a Company Request any excess money or securities held by them
at any time, including, without limitation, any assets deposited with the
Trustee pursuant to Section 4.6(a) exceeding those necessary for the
purposes of Section 4.6(a).
The Trustee shall not take the actions described in subsections (a) and (b) of
this Section 4.8 unless it shall have first received a written report of Ernst &
Young, or another nationally recognized independent public accounting firm, (i)
expressing their opinion that the contemplated action is permitted by Standard
No. 76 or the Commission, for transactions accounted for as extinguishment of
debt under the circumstances described in paragraph 3.c of Standard No. 76 or
any successor provision, and (ii) verifying the accuracy, after giving effect to
such action or actions, of the computations which demonstrate that the amounts
remaining to be earned on any Government Obligations deposited with the Trustee
pursuant to Section 4.6(a) will be, when taken together with any money deposited
with the Trustee pursuant to Section 4.6(a), sufficient for purposes of Section
4.6(a).
ARTICLE 5
Defaults and Remedies
---------------------
Section 5.1 Events of Default. An "Event of Default" occurs with respect
-----------------
to the Securities of any series if (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or
-36-
<PAGE>
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) the Company defaults in the payment of interest on any Security of
that series when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Security of that series when the same becomes due
and payable at its Maturity or on redemption or otherwise, or in the
payment of a mandatory sinking fund payment when and as due by the terms of
the Securities of that series;
(3) the Company defaults in the performance of, or breaches, any
covenant or warranty of the Company in this Indenture with respect to any
Security of that series (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and such default or breach continues for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
33% in principal amount of the Outstanding Securities of that series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
(4) the Company defaults under the terms of any agreement or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed (excluding for such
purposes non recourse indebtedness having in the aggregate an outstanding
principal amount of less than $25,000,000), whether such indebtedness now
exists or shall hereafter be created, having an outstanding principal
amount of $25,000,000 or more in the aggregate, and such indebtedness shall
be accelerated so that the same shall be or become due and payable prior to
the date on which the same would otherwise become due and payable and such
acceleration is not rescinded or annulled within ten days (or sixty (60)
days if the default is not caused by a failure to pay when due principal or
interest on such indebtedness within the applicable grace period) after
there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
33% in aggregate principal amount of the Outstanding Securities of that
series, a written notice specifying such
-37-
<PAGE>
default and stating that such notice is a "Notice of Default" hereunder (it
being understood however, that, subject to the provisions of Section 6.1,
the Trustee shall not be deemed to have knowledge of such default under
such agreement or instrument unless a Responsible Officer of the Trustee
shall have received written notice thereof from the Company, from any
Holder, from the holder of any such indebtedness or from the trustee under
any such agreement or instrument); provided, however, that if such default
-------- -------
under such agreement or instrument is remedied or cured by the Company or
waived by the holders of such indebtedness, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been thereupon
remedied, cured or waived without further action upon the part of either
the Trustee or any of the Holders of the Securities of that series;
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law (A) commences a voluntary case as to itself, (B) consents to the entry
of an order for relief against it in an involuntary case, (c) consents to
the appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its
creditors;
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company in an
involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the
Company; and the order or decree remains unstayed and in effect for 90
days;
(7) a court or agency or supervisory authority of competent
jurisdiction over the Company or a Bank shall enter a decree or order for
the appointment of a conservator or receiver or liquidator in any
insolvency proceedings, readjustment of debt, marshalling of assets and
liabilities or similar proceedings relating to a Bank or all or
substantially all of its property, or for the winding-up or liquidation of
its affairs or a Bank shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of its debt,
marshalling of assets and liabilities or similar proceedings relating to
the Bank or all or substantially all of its property or a Bank shall file a
petition to take advantage of any applicable insolvency or reorganization
statute as to its affairs or voluntarily suspend payment of all or
substantially all of its obligations; or
-38-
<PAGE>
(8) any other Event of Default provided as contemplated by Section 3.1
with respect to Securities of that series.
The term "Bankruptcy Law" means title 11, U.S. Code, or any similar federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
Section 5.2 Acceleration; Rescission and Annulment. If an Event of
--------------------------------------
Default with respect to the Securities of any series at the time Outstanding
occurs and is continuing, the Trustee or the Holders of at least 33% in
aggregate principal amount of all of the Outstanding Securities of that series,
by written notice to the Company (and, if given by the Holders, to the Trustee),
may declare the principal amount (or, if the Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all the Securities of that series
to be due and payable and upon any such declaration such principal amount (or,
in the case of Original Issue Discount Securities, such specified amount) shall
be immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of that series, by written notice to the Trustee, may
rescind and annul such declaration and its consequences if all existing Defaults
and Events of Default with respect to Securities of that series, other than the
non-payment of the principal amount (or, in the case of Original Discount
Securities, such specified amount) of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 5.7. No such rescission shall affect any subsequent
Default or impair any right consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company covenants that if:
- -------
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
-39-
<PAGE>
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal, premium, if any, and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium, if any, and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim. The Trustee may file such
--------------------------------
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Holders of Securities allowed
in any judicial proceedings relating to the Company, its creditors or its
property.
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto.
Section 5.6 Delay or Omission not Waiver. No delay or omission by the
----------------------------
Trustee or any Holder of any Securities to exercise any right or remedy accruing
upon an Event of Default shall impair any such right or remedy or constitute a
waiver of or an acquiescence in any such Event of Default.
Section 5.7 Waiver of Past Defaults. The Holders of a majority in
-----------------------
aggregate principal amount of Outstanding Securities of any series by notice to
the Trustee may waive on behalf of the Holders of all Securities of such series
a past Default or Event of Default with respect to that series and its
consequences except (i) a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on any Security of such series or
(ii) in respect of a covenant or provision hereof
-40-
<PAGE>
which pursuant to Section 8.2 cannot be amended or modified without the consent
of the Holder of each Outstanding Security of such series adversely affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture.
Section 5.8 Control by Majority. The Holders of a majority in aggregate
-------------------
principal amount of the Outstanding Securities of each series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on it
with respect to Securities of that series; provided, however, that (a) the
-------- -------
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, (b) subject to the provisions of Article 6, the Trustee may refuse to
follow any direction that is unduly prejudicial to the rights of the Holders of
Securities of such series not joining in such direction, it being understood
that the Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders or that would in the good
faith judgment of the Trustee have a substantial likelihood of involving the
Trustee in personal liability and (c) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Section 5.9 Limitation on Suits by Holders. No Holder of any Security of
------------------------------
any series shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(1) the Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of at least 33% in aggregate principal amount of the
Outstanding Securities of that series shall have made a written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense to be,
or which may be, incurred by the Trustee in pursuing the remedy;
-41-
<PAGE>
(4) the Trustee for 60 days after its receipt of such notice, request
and the offer of indemnity has failed to institute any such proceedings;
and
(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series has not given
to the Trustee a direction inconsistent with such written request.
No one or more Holders of the Securities of any series shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 5.10 Rights of Holders to Receive Payment. Notwithstanding any
------------------------------------
other provision of this Indenture, the right of any Holder of a Security to
receive payment of principal of, premium, if any, and, subject to Sections 3.5
and 3.7, interest on such Security, on or after the respective due dates
expressed in such Security (or, in case of redemption, on the Redemption Date),
or, subject to Section 5.9, to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 5.11 Application of Money Collected. If the Trustee collects any
------------------------------
money pursuant to this Article, it shall pay out the money in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premiums, if any, or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.9;
-----
Second: to Holders of Securities of a series in respect of which or
------
for the benefit of which such money has been collected for amounts due and
unpaid on such Securities for principal of, premium, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any,
and interest, respectively; and
-42-
<PAGE>
Third: to the Company.
-----
Section 5.12 Restoration of Rights and Remedies. If the Trustee or any
----------------------------------
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.13 Rights and Remedies Cumulative. Except as otherwise provided
------------------------------
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in the last paragraph of Section 3.6, no right or remedy
herein conferred upon or reserved to the Trustee or the Holders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
ARTICLE 6
The Trustee
-----------
Section 6.1 Certain Duties and Responsibilities. (a) With respect to
-----------------------------------
Securities of any series, except during the continuance of an Event of Default
with respect to the Securities of such series,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any
-43-
<PAGE>
such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing with
respect to the Securities of any series, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture with respect to the
Securities of such series, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
------
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it with respect to the Securities of
any series in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding
Securities of such series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
-44-
<PAGE>
Section 6.2 Rights of Trustee. Subject to the provisions of the Trust
-----------------
Indenture Act:
(a) The Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(b) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or a Company Order (other than
delivery of any Security to the Trustee for authentication and delivery
pursuant to Section 3.3, which shall be sufficiently evidenced as provided
therein) and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution.
(c) Whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate.
(d) Before the Trustee acts or refrains from acting, the Trustee may
consult with counsel of its selection and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts
-45-
<PAGE>
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney, at the Company's expense.
(g) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney
appointed with due care by it hereunder.
(h) The Trustee shall not be charged with knowledge of any Default or
Event of Default with respect to the Securities of any series for which it
is acting as Trustee unless either (i) a Responsible Officer of the Trustee
shall have "actual knowledge" of the Default or Event of Default, or (ii)
written notice of such Default or Event of Default shall have been given to
the Trustee by the Company or by any Holder of Securities of that series or
any other series, or, in the event of a default pursuant to Section 5.1(4),
by the holder of any other indebtedness of the Company or by the trustee of
any other agreement or instrument to which the Company is a party. As used
herein, the term "actual knowledge" means the actual fact or state of
knowing, without any duty to make any investigation or inquiry with regard
thereto.
(i) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers conferred on it by this Indenture.
(j) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
Section 6.3 Trustee May Hold Securities. The Trustee, any Paying Agent,
---------------------------
any Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company,
an Affiliate or Subsidiary with the same rights it would have if it were not
Trustee, Paying Agent, Registrar or such other agent.
Section 6.4 Money Held in Trust. Money held by the Trustee in trust
-------------------
hereunder need not be segregated from other funds except
-46-
<PAGE>
to the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Company.
Section 6.5 Trustee's Disclaimer. The recitals contained herein and in
--------------------
the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or adequacy of this Indenture or the Securities. The Trustee shall
not be accountable for the Company's use of the proceeds from the Securities or
for monies paid over to the Company pursuant to the Indenture.
Section 6.6 Notice of Defaults. If a Default occurs and is continuing
------------------
with respect to the Securities of any series and if it is known to the Trustee,
as contemplated by Section 6.2(h), the Trustee shall, within 90 days after it
occurs, transmit, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, notice of all uncured or unwaived Defaults known to it;
provided, however, that, except in the case of a Default in payment on the
- -------- -------
Securities of any series, the Trustee may withhold the notice if and so long as
the board of directors, the executive committee or a trust committee of its
directors and/or its Responsible Officers in good faith determines that
withholding such notice is in the interests of Holders of Securities of that
series; provided further, however, that, in the case of any default or breach of
-------- ------- -------
the character specified in Section 5.1(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
Section 6.7 Reports by Trustee to Holders. Within 60 days after each
-----------------------------
January 31 of each year commencing with the first January 31 after the first
issuance of Securities pursuant to this Indenture, the Trustee shall transmit by
mail to all Holders of Securities as provided in Section 313(c) of the Trust
Indenture Act a brief report dated as of such January 31, if required by Section
313(a) of the Trust Indenture Act. The Trustee also shall comply with Sections
313(b) and 313(d) of the Trust Indenture Act. A copy of each such report shall,
at the time of such transmission to Holders, be filed by the Trustee with the
Company. The Company will notify the Trustee when any series of Securities are
listed on any stock exchange.
Section 6.8 Securityholder Lists. The Trustee shall preserve in as
--------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders of Securities of each series. If the
Trustee is not the
-47-
<PAGE>
Registrar, the Company shall furnish to the Trustee semiannually on or before
the last day of June and December in each year, and at such other times as the
Trustee may request in writing, a list, in such form and as of such date as the
Trustee may reasonably require, containing all the information in the possession
of the Registrar, the Company or any of its Paying Agents other than the Trustee
as to the names and addresses of Holders of Securities of each series.
Section 6.9 Compensation and Indemnity. (a) The Company shall pay to the
--------------------------
Trustee from time to time such compensation as shall be agreed between the
Company and the Trustee for all services rendered by it hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it in connection
with the performance of its duties under this Indenture, except any such expense
as may be attributable to its negligence or bad faith. Such expenses shall
include the reasonable compensation and expenses of the Trustee's agents and
counsel.
(b) The Company shall indemnify the Trustee for and hold it harmless
against, any loss or liability incurred by it without negligence or bad faith on
its part arising out of or in connection with its acceptance or administration
of the trust or trusts hereunder. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld or delayed.
(c) The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
(d) To secure the payment obligations of the Company pursuant to this
Section, the Trustee shall have a lien prior to the Securities of any series on
all money or property held or collected by the Trustee, except that held in
trust to pay principal, premium, if any, and interest on particular Securities.
(e) When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(5) or Section 5.1(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the
-48-
<PAGE>
services are intended to constitute expenses of administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.
(f) The provisions of this Section shall survive the termination of this
Indenture.
Section 6.10 Replacement of Trustee. (a) The resignation or removal of
----------------------
the Trustee and the appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in
Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
any series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 6.11 shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series may remove the Trustee with respect to that
series by so notifying the Trustee and the Company and may appoint a successor
Trustee for such series with the Company's consent.
(d) If at any time:
(1) the Trustee fails to comply with Section 310(b) of the Trust
Indenture Act with respect to the Securities of a series after written
request therefor by the Company or by any Holder of a Security of such
series who has been a bona fide Holder of a Security of such series for at
least six months, or
(2) the Trustee with respect to the Securities of any series shall
cease to be eligible under Section 310(a) of the Trust Indenture Act and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security of such series who has been a bona fide Holder of
a Security of such series for at least six months; or
(3) the Trustee with respect to the Securities of any series becomes
incapable of acting, is adjudged a bankrupt or an insolvent or a receiver
or public officer takes charge of the Trustee or its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
-49-
<PAGE>
then, in any such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee with respect to all Securities, or (ii) subject to Section
315(e) of the Trust Indenture Act, any Holder who has been a bona fide Holder of
a Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities of such series and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to Securities of one or more
series, the Company, by or pursuant to Board Resolution, shall promptly appoint
a successor Trustee with respect to the Securities of that or those series (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 6.11. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 6.11, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
Section 6.11 Acceptance of Appointment by Successor. (a) In case of the
--------------------------------------
appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment.
Thereupon, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee, without further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor Trustee,
such
-50-
<PAGE>
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and such successor Trustee shall execute and deliver an
indenture supplemental hereto wherein such successor Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, such successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates, (ii) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (iii) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
-51-
<PAGE>
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under the
Trust Indenture Act and this Article.
(e) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series in the manner
provided for notices to the Holders of Securities in Section 1.6. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
Section 6.12 Eligibility; Disqualification. There shall at all times be a
-----------------------------
Trustee hereunder which shall be eligible to act as Trustee under Section 310(a)
of the Trust Indenture Act. If a corporation publishes reports of condition at
least annually, pursuant to law or the requirements of Federal, State,
Territorial or District of Columbia supervising or examining authority, then for
the purposes of Section 310(a)(2) of the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect specified in this Article.
Section 6.13 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 6.14 Appointment of Authenticating Agent. The Trustee may appoint
-----------------------------------
an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be
-52-
<PAGE>
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue, exchange, registration of transfer or partial
redemption thereof, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instrument shall be promptly furnished to the Company.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and, except as may
otherwise be provided pursuant to Section 3.1, shall at all times be a bank or
trust company or corporation organized and doing business and in good standing
under the laws of the United States of America or of any State or the District
of Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less that $1,500,000 and subject to
supervision or examination by Federal or State authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the
-53-
<PAGE>
Trustee for such series and to the Company. The Trustee for any series of
Securities may at any time terminate the agency of an Authenticating Agent by
giving written notice of termination to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee for such
series may appoint a successor Authenticating Agent which shall be acceptable to
the Company and shall give notice of such appointment to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve in the manner set forth in Section 1.6. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent herein. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation as may be agreed to in writing with the Company,
including reimbursement of its reasonable expenses for its services under this
Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Securities of a series issued under the within-mentioned
Indenture.
, as Trustee
---------------------
By
---------------------------
as Authenticating Agent
By
---------------------------
Authorized Signatory
Section 6.15 Trustee's Application for Instructions from the Company. Any
-------------------------------------------------------
application by the Trustee for written instructions from the Company may, at the
option of the Trustee, set forth in writing any action proposed to be taken or
omitted by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be
-54-
<PAGE>
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
15 Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
Section 6.16 Preservation of Information; Communications to Holders. (a)
------------------------------------------------------
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
(b) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 312(b) of the Trust
Indenture Act.
ARTICLE 7
Consolidation, Merger or Sale by the Company
--------------------------------------------
Section 7.1 Consolidation, Merger or Sale of Assets Permitted. The
-------------------------------------------------
Company may merge or consolidate with or into any other corporation or sell,
convey, transfer or otherwise dispose of all or substantially all of its assets
to any Person, if (i) (A) in the case of a merger or consolidation, the Company
is the surviving corporation or (B) in the case of a merger or consolidation
where the Company is not the surviving corporation and in the case of any such
sale, conveyance, transfer or other disposition, the successor or acquiring
corporation is a corporation organized and existing under the laws of the United
States or a State thereof and such corporation expressly assumes by supplemental
indenture all the obligations of the Company under the Securities and under this
Indenture or such assumption is provided by law, (ii) immediately thereafter,
giving effect to such merger or consolidation, or such sale, conveyance,
transfer or other disposition, no Default or Event of Default shall have
occurred and be continuing, and (iii) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel
-55-
<PAGE>
each stating that such merger or consolidation, or such sale, conveyance,
transfer or other disposition complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with. In the event of the assumption by a successor corporation of the
obligations of the Company as provided in clause (i)(B) of the immediately
preceding sentence, such successor corporation shall succeed to and be
substituted for the Company hereunder and under the Securities and all such
obligations of the Company shall terminate.
ARTICLE 8
Supplemental Indentures
-----------------------
Section 8.1 Supplemental Indentures Without Consent of Holders. Without
--------------------------------------------------
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into indentures
supplemental hereto, in form reasonably satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series), or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default with respect to all or any
series of Securities; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to facilitate the issuance of Securities
in global form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture; provided, however, that any such addition, change or elimination
-------- -------
shall become effective only when there is no Security Outstanding of any
series created prior to the execution of such supplemental
-56-
<PAGE>
indenture which is entitled to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11;
(9) to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under this
Indenture, provided, however, such action shall not adversely affect the
-------- -------
interests of the Holders of Securities of any series in any material
respect; or to cure any ambiguity or correct any mistake; or
(10) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act or under any similar Federal
statute subsequently enacted, and to add to this Indenture such other
provisions as may be expressly required under the Trust Indenture Act.
Section 8.2 With Consent of Holders. With the written consent of the
-----------------------
Holders of a majority of the aggregate principal amount of the Outstanding
Securities of each series adversely affected by such supplemental indenture, the
Company and the Trustee may enter into an indenture or indentures supplemental
hereto to add any provisions to or to change or eliminate any provisions of this
Indenture or of any other indenture supplemental hereto or to modify the rights
of the Holders of Securities of each such series; provided, however, that
-------- -------
without the consent of the Holder of each Outstanding Security of such series
adversely affected thereby, an amendment under this Section may not:
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the
-57-
<PAGE>
redemption thereof, or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2, or impair the
right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date);
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture;
(3) change any obligation of the Company to maintain an office or
agency in the places and for the purposes specified in Section 9.2; or
(4) make any change in Section 5.7 or this Section 8.2 except to
increase any percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holders
of each Outstanding Security of such series adversely affected thereby.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture, which has expressly been included solely for the
benefit of one or more particular series of Securities, or that modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It is not necessary under this Section 8.2 for the Holders to consent to
the particular form of any proposed supplemental indenture, but it is sufficient
if they consent to the substance thereof.
Section 8.3 Compliance with Trust Indenture Act. Every supplemental
-----------------------------------
indenture executed pursuant to this Article shall comply with the requirements
of the Trust Indenture Act as then in effect.
Section 8.4 Execution of Supplemental Indentures. In executing, or
------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the
-58-
<PAGE>
modification thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 315 of the Trust Indenture Act)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.5 Effect of Supplemental Indentures. Upon the execution of any
---------------------------------
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 8.6 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
Section 8.7 Notice to Holders. Promptly after the execution by the
-----------------
Company and the Trustee of any supplemental indenture under Section 8.2 with
respect to the Securities of any series, the Company shall transmit to all
Holders of such Securities a notice, in accordance with Section 1.6, setting
forth in general terms the substance of such supplemental indenture.
ARTICLE 9
Covenants
---------
Section 9.1 Payment of Principal, Premium, if any, and Interest. The
---------------------------------------------------
Company covenants and agrees for the benefit of the Holders of each series of
Securities that it will duly and punctually pay the principal of, premium, if
any, and interest on the Securities of that series in accordance with the terms
of the Securities of such series and this Indenture. An installment of
-59-
<PAGE>
principal or interest shall be considered paid on the date it is due if the
Trustee or Paying Agent holds on that date money designated for and sufficient
to pay the installment.
Section 9.2 Maintenance of Office or Agency. The Company will maintain in
-------------------------------
each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location and any change in the
location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
-------- -------
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
Unless otherwise specified as contemplated by Section 3.1, the Company
hereby initially designates as the Place of Payment for each series of Debt
Securities, the City of Chicago, Illinois.
Unless otherwise specified as contemplated by Section 3.1, the Trustee
shall initially serve as Paying Agent.
Section 9.3 Money for Securities to Be Held in Trust; Unclaimed Money. If
---------------------------------------------------------
the Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal, premium, if any, or interest so becoming due
until such sums shall be paid to such
-60-
<PAGE>
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee in writing of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect to
any series of Securities, it will, prior to or on each due date of the
principal, and premium, if any, or interest on any Securities of such series,
deposit with a Paying Agent a sum sufficient to pay the principal, and premium,
if any, or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company promptly will notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any Default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal, premium, if any, or interest on the Securities; and
(3) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by a Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of any
-61-
<PAGE>
principal, premium or interest on any Security of any series and remaining
unclaimed for two years after such principal, premium, if any, or interest has
become due and payable shall be paid to the Company on a Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
-------- -------
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of Chicago, Illinois, or cause to be mailed to such
Holder, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 9.4 Corporate Existence . Subject to Article 7, the Company will
--------------------
at all times do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises;
provided, however, that nothing in this Section 9.4 shall prevent the
- -------- -------
abandonment or termination of any right or franchise of the Company if, in the
determination of the Company, such abandonment or termination is in the best
interests of the Company and does not materially adversely affect the ability of
the Company to operate its business or to fulfill its obligations hereunder.
Section 9.5 Insurance. The Company covenants and agrees that it will
---------
maintain, and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations or through a
program of self-insurance in such amounts and covering such risks as, in the
determination of the Company, are consistent with sound business practice for
corporations engaged in the same or a similar business similarly situated.
Section 9.6 Reports by the Company. The Company covenants:
----------------------
(a) to file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13
-62-
<PAGE>
or Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with
the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants provided for in
this Indenture, as may be required from time to time by such rules and
regulations; and
(c) to transmit to all Holders of Securities, within 30 days after the
filing thereof with the Trustee, in the manner and to the extent provided
in Section 313(c) of the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to subsections (a) and (b) of this Section 9.6, as may be required
by rules and regulations prescribed from time to time by the Commission.
Section 9.7 Annual Review Certificate; Notice of Default. The Company
--------------------------------------------
covenants and agrees to deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company, a brief certificate from the principal
executive officer, principal financial officer or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture. For purposes of this Section 9.7, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture. The Company shall file
with the Trustee written notice of the occurrence of any Event of Default within
45 Business Days of its becoming aware of any such Event of Default.
Section 9.8 Provision of Financial Statements. If the Company is not
---------------------------------
required to file with the Commission periodic reports and other information
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act, the Company shall
furnish without cost to each Holder and file with the Trustee (i) within 135
days after the end of each fiscal year, annual reports containing the
-63-
<PAGE>
information required to be contained in Items 1, 2, 3, 6, 7, 8 and 9 of Form 10-
K promulgated under the Exchange Act, or substantially the same information
required to be contained in comparable items of any successor form, (ii) within
60 days after the end of each of the first three fiscal quarters of each fiscal
year, quarterly reports containing the information required to be contained in
Form 10-Q promulgated under the Exchange Act, or substantially the same
information required to be contained in any successor form, and (iii) promptly
from the time after the occurrence of an event required to be therein reported,
such other reports containing information required to be contained in Form 8-K
promulgated under the Exchange Act, or substantially the same information
required to be contained in any successor form.
Section 9.9 Limitation on Liens. (a) The Company will not issue, assume
-------------------
or guarantee any indebtedness for borrowed money (referred to in this Section
9.9 as "indebtedness") secured by a mortgage, encumbrance, security interest,
pledge, lien or charge (referred to in this Section 9.9 as a "pledge" or
"pledges") of or upon any property of the Company whether such property is owned
at the date of this Indenture or thereafter acquired, without making effective
provision whereby the Securities (together with, if the Company shall so
determine, any other indebtedness issued, assumed or guaranteed by the Company
and then existing or thereafter created) shall be secured by such pledge equally
and ratably with (or, at the option of the Company, prior to) such indebtedness,
so long as such indebtedness shall be so secured; provided, however, that the
-------- -------
foregoing shall not apply to any of the following:
(1) pledges upon any shares of capital stock or indebtedness acquired
by the Company after the date of this Indenture (A) to secure the payment
of all or any part of the purchase price of such shares of capital stock or
indebtedness upon the acquisition thereof by the Company, or (B) to secure
any indebtedness issued, assumed or guaranteed by the Company prior to, at
the time of, or within 360 days after the acquisition of such shares of
capital stock or indebtedness, which indebtedness is issued, assumed or
guaranteed for the purpose of financing or refinancing all or any part of
the purchase price of such shares of capital stock or indebtedness;
(2) pledges of or upon shares of capital stock or indebtedness, which
pledges exist at the time of acquisition of such shares or indebtedness by
the Company;
(3) pledges of or upon any property of a corporation, which pledges
exist at the time such corporation is merged
-64-
<PAGE>
with or into or consolidated with the Company or which pledges exist at the
time of a sale or transfer of the properties of a corporation as an
entirety or substantially as an entirety to the Company;
(4) mortgages existing on the date of execution of this Indenture;
and
(5) any extension, renewal, substitution, refinancing, refunding or
replacement (or successive extensions, renewals, substitutions,
refinancings, refundings or replacements) (each a "refinancing") in whole
or in part of any pledge existing at the date of the Indenture or any
pledge referred to in the foregoing clauses (1) through (4), inclusive,
provided, however, that the principal amount of indebtedness secured
-------- -------
thereby shall not exceed the principal amount of indebtedness so secured at
the time of the refinancing plus the aggregate amount of premiums, other
payments, costs and expenses required to be paid or incurred in connection
with the refinancing, and that the refinancing shall be limited to all or a
part of the shares of capital stock or indebtedness which was subject to
the pledge so extended, renewed, substituted, refinanced, refunded or
replaced.
(b) Notwithstanding the provisions of subsection (a) of this Section, the
Company may, without equally and ratably securing the Securities, issue, assume
or guarantee indebtedness secured by a pledge not excepted by clauses (1)
through (5), so long as after giving effect thereto, the Company will own at
least 80% of the capital stock of all of its Material Subsidiaries then issued
and outstanding, free and clear of any pledge.
Section 9.10 Ownership of Material Subsidiary Stock. The Company
--------------------------------------
covenants that it will not take any action which would result in a decrease in
the percentage of the outstanding shares of voting stock of any Material
Subsidiary directly or indirectly owned by the Company, except as the result of
(1) the issuance of directors' qualifying shares, (2) the declaration and
payment of patronage refunds, (3) the purchase or retirement of shares with the
proceeds of newly issued shares, or (4) the sale of capital stock at a price
determined by the Company (which determination may be evidenced by a resolution
of the Company's Board of Directors) to be the fair value thereof.
Section 9.11 Transactions with Affiliates. The Company covenants that it
----------------------------
will not enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or
-65-
<PAGE>
the rendering of any service, with any Affiliate of the Company or any
Subsidiary except in the ordinary course of business and upon fair and
reasonable terms taking into account the nature of the Company's or the
Subsidiary's business.
Section 9.12 Limitation on Sale or Issuance of Capital Stock or
--------------------------------------------------
Convertible Securities of and Merger or Sale of Assets by, a Bank. The Company
- -----------------------------------------------------------------
covenants that it will not:
(1) nor will it permit any Bank to, issue, sell, transfer, assign,
pledge or otherwise dispose of any shares of capital stock of any class of
a Bank or any securities convertible or exchangeable into shares of capital
stock of any class of a Bank unless after giving effect to such transaction
and to shares issuable upon conversion or exchange of outstanding
securities convertible or exchangeable into such capital stock (including
such securities, if any, which may be the subject of such transaction), at
least 80% of the outstanding shares of capital stock of each class of such
Bank shall be owned at that time by the Company; or
(2) permit a Bank to merge or consolidate or convey or transfer all
or substantially all of its assets, unless at least 80% of the capital
stock of each class (after giving effect to such transaction and to shares
issuable upon conversion or exchange of outstanding securities convertible
or exchangeable into capital stock, including such securities, if any,
which may be issued in such transaction) of the surviving corporation in
the case of a merger or consolidation or of the transferee corporation in
the case of a conveyance or transfer, shall be owned at that time by the
Company.
Section 9.13 Waiver of Certain Covenants. The Company may fail or omit in
---------------------------
any particular instance to comply with the covenants set forth in this Article
IX (other than Sections 9.1, 9.2 and 9.4) with respect to any series of
Securities if the Company shall have obtained and filed with the Trustee prior
to the time for such compliance the consent in writing of the Holders of at
least a majority in aggregate principal amount of all of the Securities of such
series at the time Outstanding either waiving such compliance in such instance
or generally waiving compliance with such covenant or covenants, but no such
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon.
-66-
<PAGE>
ARTICLE 10
Redemption
----------
Section 10.1 Applicability of Article. Securities of any series which are
------------------------
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 3.1
for Securities of any series) in accordance with this Article.
Section 10.2 Election to Redeem; Notice to Trustee. The election of the
-------------------------------------
Company to redeem any Securities shall be evidenced by or pursuant to a Board
Resolution or an Officers' Certificate. In the case of any redemption at the
election of the Company of less than all the Securities of any series, the
Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date, of the principal amount of Securities of
such series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities (a) prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities, or (b) pursuant to an election of the Company which is subject to a
condition specified in the terms at such Securities, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with such
restriction or condition.
Section 10.3 Selection of Securities to Be Redeemed. Unless otherwise
--------------------------------------
specified as contemplated by Section 3.1, if less than all the Securities of a
series with the same original issue date, interest rate and Stated Maturity are
to be redeemed, the Trustee, not more than 45 days prior to the Redemption Date,
shall select the Securities of the series to be redeemed in such manner as the
Trustee shall deem fair and appropriate. The Trustee shall make the selection
from the Securities of the series that are Outstanding and that have not
previously been called for redemption and may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Registrar in writing
of the Securities selected by the Trustee for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
-67-
<PAGE>
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
Section 10.4 Notice of Redemption. Unless otherwise specified as
--------------------
contemplated by Section 3.1, notice of redemption shall be given in the manner
provided in Section 1.6 not less than 30 days nor more than 60 days prior to the
Redemption Date to the Holders of the Securities of any series to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of a series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Security or Securities to be redeemed;
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the Holder will receive, without a
charge, a new Security or Securities of such series of authorized
denominations for the principal amount thereof remaining unredeemed;
(5) the Place or Places of Payment where such Securities maturing
after the Redemption Date are to be surrendered for payment for the
Redemption Price;
(6) that Securities of the series called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(7) that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Security, or the portion thereof, to be redeemed
and, if applicable, that interest thereon will cease to accrue on and after
said date;
(8) that the redemption is for a sinking fund, if such is the case;
and
-68-
<PAGE>
(9) if applicable, the CUSIP number for the Securities of the series
called for redemption.
Notice of redemption of Securities to be redeemed shall be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
Section 10.5 Deposit of Redemption Price. On or prior to any Redemption
---------------------------
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 9.3) an amount of money sufficient to pay on the Redemption
Date the Redemption Price of, and (unless the Redemption Date shall be an
Interest Payment Date) interest accrued to the Redemption Date on, all
Securities or portions thereof which are to be redeemed on that date.
Section 10.6 Securities Payable on Redemption Date. Notice of redemption
-------------------------------------
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that installments of interest on Securities whose Stated
- -------- -------
Maturity is prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 10.7 Securities Redeemed in Part. Upon surrender of a Security
---------------------------
that is redeemed in part at any Place of Payment therefor (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
that Security, without service charge, a new Security or Securities of the same
series, the same form and the same Maturity in any authorized denomination equal
in
-69-
<PAGE>
aggregate principal amount to the unredeemed portion of the principal of the
Security surrendered.
ARTICLE 11
Sinking Funds
-------------
Section 11.1 Applicability of Article. The provisions of this Article
------------------------
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 3.1 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". Except as otherwise specified by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 11.2. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 11.2 Satisfaction of Sinking Fund Payments with Securities. The
-----------------------------------------------------
Company (a) may deliver Outstanding Securities of a series (other than any such
Securities previously called for redemption), and (b) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited.
--------
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 11.3 Redemption of Securities for Sinking Fund. Not less than 60
-----------------------------------------
days prior to each sinking fund payment date for any series of Securities
(unless a shorter period shall be satisfactory to the Trustee), the Company
shall deliver to the Trustee an Officers' Certificate specifying the amount of
the
-70-
<PAGE>
next ensuing sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by payment of cash
and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 11.2 and shall also
deliver to the Trustee any Securities to be so credited and not theretofore
delivered to the Trustee. Not less than 30 days before each such sinking fund
payment date (unless a shorter period shall be satisfactory to the Trustee), the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 10.3 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 10.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 10.5, 10.6 and 10.7.
----------------------
This Indenture may be executed with counterpart signature pages or in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ST. PAUL BANCORP, INC.
By:
---------------------------------
Name:
Title:
HARRIS TRUST AND SAVINGS BANK, as Trustee
By:
---------------------------------
Name:
Title:
-71-
<PAGE>
HOGAN & HARTSON
L.L.P.
COLUMBIA SQUARE
555 THIRTEENTH STREET, NW
WASHINGTON, DC 20004-1109
TEL (202) 637-5600
FAX (202) 637-5910
January 30, 1997
Board of Directors
St. Paul Bancorp, Inc.
6700 West North Avenue
Chicago, Illinois 06035
Ladies and Gentlemen:
We are acting as special counsel to St. Paul Bancorp, Inc., a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission relating to an offering of up to $100,000,000 in principal amount of
Senior Notes due 2004 (the "Notes"). This opinion letter is furnished to you at
your request to enable you to fulfill the requirements of Item 601 (b)(5) of
Regulation S-K, 17 C.F.R. (S) 229.601(b)(5), in connection with the Registration
Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The form of Indenture, filed as Exhibit 4.1 to the Registration
Statement (the "Indenture").
3. The Form of Supplemental Indenture (including the form of senior
notes to be issued pursuant thereto and referred to below as the
"Supplemental Indenture") filed as Exhibit 4.2 to the
Registration Statement.
4. The Restated Certificate of Incorporation of the Company, as
certified by the Secretary of the Company on the date hereof as
then being complete, accurate and in effect.
<PAGE>
HOGAN & HARTSON L.L.P
Board of Directors
St. Paul Bancorp, Inc.
January 30, 1997
Page 2
5. The Bylaws of the Company, as certified by the Secretary of the
Company on the date hereof as then being complete, accurate and
in effect.
6. The proposed form of Underwriting Agreement among the Company and
the several Underwriters to be named therein, for whom Keefe,
Bruyette & Woods, Inc. and ABN AMRO Chicago Corporation will act
as representatives, filed as Exhibit 1.0 to the Registration
Statement (the "Underwriting Agreement").
7. Resolutions of the Board of Directors of the Company adopted on
December 16, 1996, as certified by the Secretary of the Company
on the date hereof as then being complete, accurate and in effect
relating to the issuance and sale of the Notes and arrangements
in connection therewith.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
General Corporation Law of the State of Delaware and the contract law of the
State of Illinois (but not including any statutes, ordinances, administrative
decisions, rules or regulations of any political subdivision of the State of
Illinois). We express no opinion herein as to any other laws, statutes,
regulations, or ordinances.
Based upon, subject to and limited by the foregoing, we are of the
opinion that following (i) final action of the Board of Directors of the Company
(or a duly appointed pricing committee thereof) approving the price of the
Notes; (ii) due execution and delivery by the Company of the Underwriting
Agreement, the Indenture, Supplemental Indenture and the Notes; (iii)
effectiveness of the Registration Statement; (iv) issuance of the Notes pursuant
to the terms of the Underwriting Agreement, and the Indenture and Supplemental
Indenture; and (v) receipt by the Company of the consideration for the Notes
specified in the resolutions of the Board of Directors, the Notes will
constitute binding obligations of the Company enforceable in accordance with
their terms, except as may be limited
<PAGE>
HOGAN & HARTSON L.L.P
Board of Directors
St. Paul Bancorp, Inc.
January 30, 1997
Page 3
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including, without limitation, the effect of statutory and
other law regarding fraudulent conveyances, fraudulent transfers and
preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether the Notes are considered in a proceeding in
equity or at law).
The opinion expressed above shall be understood to mean only that if
there is a default in performance of an obligation, (i) if a failure to pay or
other damage can be shown and (ii) if the defaulting party can be brought into a
court which will hear the case and apply the governing law, then, subject to the
availability of defenses, and to the exceptions set forth above, the court will
provide a money damage (or perhaps injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in part or otherwise be referred to, nor filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5.0
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Consolidated Financial Information" and "Experts" in Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-18677) and related Prospectus of St.
Paul Bancorp, Inc. for the registration of $100,000,000 of Senior Notes and to
the incorporation by reference therein of our report dated January 17, 1996,
with respect to the consolidated financial statements of St. Paul Bancorp, Inc.
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
January 30, 1997
