<PAGE>
As filed with the Securities and Exchange Commission on February 6, 1997
REGISTRATION NO. 333-18677
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
Pre-Effective
Amendment No. 2
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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 6, 1997
PROSPECTUS
$100,000,000
ST. PAUL BANCORP, INC.
% SENIOR NOTES DUE 2004
The % Senior Notes Due 2004 (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. The Notes will be redeemable, at the Company's option, at any time at
a redemption price equal to the redemption price set forth herein and defined
as the Make-Whole Amount. See "Description of Notes." As of September 30, 1996,
the Company had $34.5 million of outstanding Indebtedness which ranked junior
to the 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
Depositary on or about , 1997, against payment in immediately available
funds.
KEEFE, BRUYETTE & WOODS, INC. ABN AMRO CHICAGO CORPORATION
The date of this Prospectus is February , 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 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.
3
<PAGE>
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>
YEAR ENDED DECEMBER 31,
AT SEPTEMBER 30, ------------------------------------------------------
1996 1995 1994 1993(A) 1992 1991
---------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DA-
TA:
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>
<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>
5
<PAGE>
<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>
- --------
(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".
6
<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
- --------
(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.
7
<PAGE>
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.
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.
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"
9
<PAGE>
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
-------- -------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
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
, 1997 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 may be redeemed at the Company's option at any time, in whole or
in part, upon not less than 30 or more than 60 days' notice as provided in the
Indenture, at a redemption price equal to the Make-Whole Amount. The
redemption price will be paid with interest on the principal amount of the
Notes accrued to and including the Redemption Date. If the Company elects to
redeem less than all of the Notes, the Trustee will select which Notes to
redeem by lot or such other method as it shall deem fair and appropriate.
After the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
13
<PAGE>
The Notes will not otherwise be redeemable prior to maturity. The Company
may also 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.
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
14
<PAGE>
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,
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 from 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
15
<PAGE>
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 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
16
<PAGE>
character specified, in clause (c) of the preceding paragraph with respect to
the Debt 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 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
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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
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,
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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 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
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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 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).
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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 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
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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.
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)
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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).
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus 25 basis points.
"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.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after , 2004, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using
such securities.
"Comparable Treasury Price" means (i) the average of five Reference Treasury
Dealer Quotations for the Redemption Date, after excluding the highest and
lowest of the Reference Treasury Dealer Quotations, or (ii) if the Trustee
obtains fewer than five Reference Treasury Dealer Quotations, the average of
all such Quotations.
"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".
"Make-Whole Amount" means the amount equal to the greater of (i) 100% of the
principal amount of the Notes being redeemed, and (ii) as determined by the
Quotation Agent, the sum of the present value of 100% of the principal amount
that would be payable with respect to the Notes being redeemed on , 2004,
together with the present values of scheduled payments of interest for the
Remaining Life, in each case discounted to the Redemption Date on a semi-
annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate.
"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.
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"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.
"Quotation Agent" means Morgan Stanley & Co. Incorporated and its
successors; provided, however, that if the foregoing shall cease to be a
primary United States Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute another Primary
Treasury Dealer.
"Redemption Date" means the date fixed for redemption.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other
Primary Treasury Dealer selected by the Trustee after consultation with the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by a Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding the Redemption Date.
"Remaining Life" means the period from the Redemption Date to ,
2004.
"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).
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in
the most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and
which establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields for
the two published maturities most closely corresponding to the Remaining Life
shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Redemption Date. The Treasury
Rate shall be calculated on the third Business Day preceding the Redemption
Date.
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.
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.
25
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PRO-
SPECTUS, 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 UNDER-
WRITERS. 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 PROSPEC-
TUS 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 MAK-
ING 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Selected Consolidated Financial Information................................ 5
Recent Developments........................................................ 7
Certain Regulatory Matters................................................. 9
Use of Proceeds............................................................ 11
Capitalization............................................................. 12
Description of Notes....................................................... 13
Underwriting............................................................... 25
Legal Opinions............................................................. 25
Experts.................................................................... 25
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$100,000,000
ST. PAUL BANCORP, INC.
% SENIOR NOTES
DUE 2004
---------------
PROSPECTUS
---------------
KEEFE, BRUYETTE & WOODS, INC.
ABN AMRO CHICAGO
CORPORATION
FEBRUARY , 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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 6th day of
February, 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 and a Supplemental
Indenture thereto dated as of __________, 1997 (together, such Indenture and
Supplemental Indenture are referred to herein as 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.
<PAGE>
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 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. On the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions set forth herein, the Company hereby agrees to issue and sell to the
Underwriters $100,000,000 principal amount of Notes and 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).
-2-
<PAGE>
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 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
-3-
<PAGE>
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.
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.
-4-
<PAGE>
(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.
(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.
-5-
<PAGE>
(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 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.
-6-
<PAGE>
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.
(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
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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.
(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
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<PAGE>
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 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
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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.
(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 and SPAM 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. SPAM has been duly
organized and is validly existing as a real estate investment trust and is in
good standing under the laws of the State of Maryland, with all requisite 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, trust 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
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<PAGE>
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 authorized capital stock of the Company consists of
[___________] shares of common stock, par value $.01 per share ("Common Stock"),
of which [___________] shares are issued and outstanding on the date hereof.
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 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.
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<PAGE>
(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.
(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 July 16, 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
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<PAGE>
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 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.
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<PAGE>
(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 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.
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(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 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 (i) gross negligence,
malfeasance or wilful misconduct of such Underwriter; or (ii) 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
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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 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,
malfeasance 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
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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 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
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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.
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).
-18-
<PAGE>
(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) 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.
-19-
<PAGE>
(iii) The Indenture has been 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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
-20-
<PAGE>
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
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, 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
-21-
<PAGE>
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.
(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
-22-
<PAGE>
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 except for SPIC which has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware.
(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
-23-
<PAGE>
Network Advisors, Inc. have been duly organized and are validly
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 Bank and (G) in the case of The Custom Source
Realty Corporation owned of record and beneficially by
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<PAGE>
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.
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<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 or Underwriters agreed but
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<PAGE>
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, Chicago, Illinois 60707,
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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 Delaware.
13. COUNTERPARTS. This Agreement may be signed in various counterparts
which together shall constitute one and the same instrument.
* * *
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<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:
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<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
============
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<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.
A-1
<PAGE>
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 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>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE dated as of ________________, 1997 ("First
Supplemental Indenture") to the Indenture dated as of ________________, 1997
(the "Indenture") between St. Paul Bancorp, Inc., a Delaware corporation (herein
called the "Company"), and Harris Trust and Savings Bank, a national banking
association duly organized and existing under the laws of the United States of
America (herein called the "Trustee"), having its Corporate Trust Office located
at 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606.
WHEREAS, the Company has heretofore executed and delivered to the Trustee
the Indenture;
WHEREAS, the Company desires in and by this First Supplemental Indenture to
create a first series of securities to be issued under the Indenture, to
designate or otherwise distinguish such series, to specify the particulars
necessary to describe and define the same, and to specify such other provisions
and agreements in respect thereof as are in the Indenture provided or permitted;
and
WHEREAS, all acts and things necessary to make this First Supplemental
Indenture, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done and performed; and the execution and delivery of this First
Supplemental Indenture have been in all respects duly authorized;
NOW, THEREFORE, in consideration of the premises, the sum of one dollar
duly paid by the Trustee to the Company at or before the execution and delivery
of this First Supplemental Indenture, and for other good and valuable
consideration, the receipt thereof is hereby acknowledged, the Company covenants
and agrees to and with the Trustee for the equal and proportionate benefit and
security of the holders of the securities as hereinafter set forth:
ARTICLE I
_____% SENIOR NOTES DUE 2004
Section 1.1. There is hereby created a first series of securities to be
issued under and secured by the Indenture and to be designated as the ____%
Senior Notes Due 2004 (herein called the "Notes").
Section 1.2. The aggregate principal amount of the Notes which may be
authenticated for original issue shall not exceed $100,000,000.
<PAGE>
Section 1.3. The Notes will be represented by one or more global
securities which shall bear a legend to the extent required by Section 2.3 of
the Indenture and shall be deposited with The Depository Trust Company ("DTC"),
which is designated as Depository under the Indenture.
Section 1.4. The maturity of the Notes shall be _____________, 2004.
Section 1.5. The Notes shall bear interest from the date of original
issuance at an interest rate of ____% per annum until paid in full.
Interest will be payable on each Interest Payment Date to the person who is the
Holder as of the close of business on the Regular Record Date. The Regular
Record Date for the Notes shall be the seventh day of the month (whether or not
a Business Day) immediately preceding an Interest Payment Date. Interest will
accrue, at the applicable interest rate as set forth above, from and including
each Interest Payment Date (or, in the case of the first Interest Payment Date
from the date of issuance) to but excluding the next Interest Payment Date. In
the event an Interest Payment Date falls on a day other than a Business Day,
interest will be paid on the next succeeding Business Day and no interest on
such payment shall accrue for the period from and after such Interest Payment
Date to such next succeeding Business Day. The amount of interest payable on
each Interest Payment Date will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Section 1.6. The Notes may be redeemed at the option of the Company, in
whole or in part, at any time, at a Redemption Price equal to the Make-Whole
Amount (as defined below). Article X of the Indenture shall be applicable to
any redemption pursuant to this Section 1.6. The Notes may not be otherwise
redeemed at the option of the Company.
For the purposes of this Section 1.6, the following terms shall have
the following meanings:
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus 25 basis points.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to Remaining Life. If
no United States Treasury security has a maturity which is within a period from
three months before to three months after _________________, 2004, the two most
closely corresponding United
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<PAGE>
States Treasury securities shall be used as the Comparable Treasury Issue, and
the Treasury Rate shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means (i) the average of five Reference
Treasury Dealer Quotations for the Redemption Date, after excluding the highest
and lowest of the Reference Treasury Dealer Quotations, or (ii) if the Trustee
obtains fewer than five Reference Treasury Dealer Quotations, the average of all
such Quotations.
"Make-Whole Amount" means the amount equal to the greater of (i) 100% of
the principal amount of the Notes being redeemed, and (ii) as determined by the
Quotation Agent, the sum of the present value of 100% of the principal amount
that would be payable with respect to the Notes being redeemed on ___________,
2004, together with the present values of scheduled payments of interest for the
Remaining Life, in each case discounted to the Redemption Date on a semi-annual
basis (assuming a 360-day year consisting of 30-day months) at the Adjusted
Treasury Rate.
"Quotation Agent" means Morgan Stanley & Co. and its successors; provided,
however, that if the foregoing shall cease to be a primary United States
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Trustee after consultation with
the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by a Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding the Redemption Date.
"Remaining Life" means the period from the Redemption Date to
__________________, 2004.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to
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<PAGE>
the Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Treasury Rate
shall be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Redemption Date.
Section 1.7. The Notes shall have such other terms and provisions, to the
extent not inconsistent with the foregoing, as are set forth in the Indenture
and the form of Note attached as Exhibit A hereto.
ARTICLE II
MISCELLANEOUS
Section 2.1. Unless otherwise defined herein, all capitalized terms used
in this First Supplemental Indenture have the respective meanings set forth in
the Indenture. This First Supplemental Indenture may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of such counterparts shall together constitute one and the
same instrument. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect.
Section 2.2. Each of the Company and the Trustee makes and reaffirms as
of the date of execution of this First Supplemental Indenture all of its
respective covenants and agreements set forth in the Indenture.
Section 2.3. All covenants and agreements in this First Supplemental
Indenture by the Company or the Trustee shall bind its respective successors and
assigns, whether so expressed or not.
Section 2.4. In case any provision in this First Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions or of the Indenture shall not in any
way be affected or impaired thereby.
Section 2.5. Nothing in this First Supplemental Indenture, expressed or
implied, shall give to any person, other than the parties hereto and their
successors under the Indenture and the
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<PAGE>
Holders of the Securities, any benefit or any legal or equitable right, remedy
or claim under the Indenture.
Section 2.6. If any provision hereof limits, qualifies or conflicts with
a provision of the Trust Indenture Act of 1939, as amended, that is required
under such Act to be a part of and govern this First Supplemental Indenture,
such required provision shall control. If any provision hereof modifies or
excludes any provision of such Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this First Supplemental Indenture
as so modified or shall be excluded, as the case may be.
Section 2.7. This First Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws.
Section 2.8. All provisions of this First Supplemental Indenture shall be
deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as amended and supplemented by this First Supplemental Indenture,
shall be read, taken and construed as one and the same instrument.
[SIGNATURE PAGE TO FOLLOW]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
[SEAL] ST. PAUL BANCORP, INC.
Attest:
By:________________________ By_______________________________
Name: Name:
Title: Title:
[SEAL] HARRIS TRUST AND SAVINGS BANK,
as Trustee
Attest:
By:________________________ By_______________________________
Name: Name:
Title: Title:
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<PAGE>
EXHIBIT A
---------
ST. PAUL BANCORP, INC.
____% SENIOR NOTE DUE 2004
NO. R-1
CUSIP NO. ______________ U.S. $100,000,000
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC" OR THE "DEPOSITORY"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
ST. PAUL BANCORP, INC., a Delaware corporation (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
referred to), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the sum of One Hundred Million Dollars (U.S.$100,000,000) on
______________, 2004, and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) thereon from ____________, 1996, or from and
including the most recent Interest Payment Date (as hereinafter defined) to
which interest has been paid or duly provided for, semi-annually on
______________ and ______________ in each year, commencing ______________, 1997,
through maturity (each an "Interest Payment Date"), until the principal hereof
is paid or has been duly provided for, at the rate of ___% per annum. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in said Indenture, be paid to the Person in whose
name this Note (or one or more Predecessor Securities, as defined in said
Indenture) is registered at the close of business on the __________ or
__________, as the case may be, next preceding each Interest Payment Date. Any
such interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the registered Holder on each Interest Payment Date and may be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on a record date not more
than 15 days and not less than 10 days prior to the date fixed by the Trustee
for payment of such defaulted interest and not less than 10 days after the
receipt by the Trustee from the Company of notice of the proposed payment,
notice of which record date shall be given to
A-1
<PAGE>
Holders of Notes not less than 10 days prior to such record date, or may be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture. Payment of the principal of and interest on this Note will be made at
the office or agency of the Company maintained for that purpose in The City of
_______________, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
provided, however, that at the option of the Company payment of interest may be
made (subject to collection) by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
* * *
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR OF THE
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
DATED: ___________________, 1997
ST. PAUL BANCORP, INC.
By:____________________________
Name:
Title:
[Seal]
ATTEST:
________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated and referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:____________________________
Authorized Signatory
A-3
<PAGE>
[Reverse of Note]
ST. PAUL BANCORP, INC.
____% SENIOR NOTE DUE 2004
This Note is one of a duly authorized issue of debentures, notes or other
evidences of indebtedness (hereinafter called the "Securities") of the Company,
all such Securities issued and to be issued under an Indenture for Debt
Securities (herein, together with all indentures supplemental thereto, called
the "Indenture") dated as of _______________, 1997, between the Company and
Harris Trust and Savings Bank, as Trustee, to which Indenture reference is
hereby made for a specification of the rights and limitation of rights
thereunder of the Holders of the Securities and of the rights, obligations,
duties and immunities of the Trustee and of the Company. As provided in the
Indenture, the Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different sinking,
purchase or analogous funds, if any, may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Note is one of a series designated on the face hereof (the
"Notes").
The Notes are redeemable by the Company prior to maturity as set forth in
the Indenture. The Notes do not provide for any sinking fund.
If any Event of Default with respect to the Notes, as defined in the
Indenture, shall occur and be continuing, the principal of the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding, as defined
in the Indenture, of each series of Securities to be affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of any series at the
time Outstanding, as defined in the Indenture, on behalf of the Holders of all
the Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences
A-4
<PAGE>
with respect to such series. Any such consent or waiver by the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the transfer herefor or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, this Note is transferable on the Securities Register of the Company, upon
surrender of this Note for registration of transfer at the office or agency of
the Company to be maintained for that purpose in The City of _________________,
duly endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Company and the Securities Registrar duly executed by the
Holder herefor or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a like tenor and
of a different authorized denomination, as requested by the Holder surrendering
the same.
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 of the Indenture, 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 issuer receives such notice or
becomes aware of such ineligibility, the Company's election pursuant to Section
3.1 of the Indenture 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
A-5
<PAGE>
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. Except as provided above, owners of beneficial interests in
this permanent global Note will not be entitled to receive physical delivery of
Notes in certificated registered form and will not be considered the Holders
thereof for any purpose under the Indenture.
No recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any indenture supplemental thereto or in this Note,
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 of any successor corporation, either
directly or indirectly through the Company or any successor corporation, under
any rule of law, statute or constitutional provision or by the enforcement of
any assessment, penalty or by any legal or equitable proceeding or otherwise,
all such liability being expressly waived and released by the acceptance hereof
and as a condition of and as part of the consideration for the issue hereof.
The Indenture with respect to any series will be discharged and cancelled
except for certain Sections thereof, subject to the terms of the Indenture, upon
the payment of all the Securities of such series or upon the irrevocable deposit
with the Trustee of cash or Government Obligations (or a combination thereof)
sufficient for such payment in accordance with Article 4 of the Indenture.
Certain terms used in this Note which are defined in the Indenture have the
meanings set forth therein.
This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the person in whose name this Note is
A-6
<PAGE>
registered as the owner hereof for all purposes, whether or not this Note be
overdue and notwithstanding any notation of ownership or other writing hereon,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
A-7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -
___________________ Custodian ______________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
____________________________________________________
Additional abbreviations may also be used though not in the above list.
__________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
____________________________________
(Please Print or Typewrite Name and Address of Assignee)
the within instrument of ST. PAUL BANCORP, INC. and does hereby irrevocably
constitute and appoint _______________________________________________________
_______ Attorney to transfer said instrument on the books of the within-named
Company, with full power of substitution in the premises.
Dated _____________ _________________________
Signature
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration by enlargement or any change whatever.
A-8
<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. 2 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
February 5, 1997
