<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
THE ST. PAUL COMPANIES, INC. ST. PAUL CAPITAL L.L.C.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
</TABLE>
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<TABLE>
<S> <C>
MINNESOTA DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
41-0518860 41-1806290
(I.R.S. Employer (I.R.S. Employer
Identification Number) Identification Number)
</TABLE>
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PATRICK A. THIELE
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL, MN 55102
(612) 221-7911
(Name, address, including zip code, and telephone number, including area code,
of registrants' principal executive offices and agent for service)
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COPIES TO:
<TABLE>
<S> <C>
ANDREW I. DOUGLASS DONALD R. CRAWSHAW
Senior Vice President and General Counsel Sullivan & Cromwell
The St. Paul Companies, Inc. 125 Broad Street
385 Washington Street New York, NY 10004
St. Paul, MN 55102 (212) 558-4000
(612) 221-7911
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED (1)(2) PER SECURITY (4) PRICE (4) REGISTRATION FEE
<S> <C> <C> <C> <C>
St. Paul Capital L.L.C.
Convertible Preferred Securities
(2); The St. Paul Companies,
Inc. Series C Convertible
Preferred Stock (1)(5); The St.
Paul Companies, Inc. Depositary
Shares (1)(5); The St. Paul
Companies, Inc. Common Stock
(1)(5); The St. Paul Companies,
Inc. Stock Purchase Rights
(1)(5); The St. Paul Companies,
Inc. Convertible Subordinated
Debentures (3)(5); The St. Paul
Companies, Inc. Guarantee with
respect to St. Paul Capital
L.L.C. Convertible Preferred
Securities (5).................. $175,000,000 $50 $175,000,000 $60,346
<FN>
(1) There are being registered hereunder such presently indeterminate number of
shares of The St. Paul Companies, Inc. Common Stock into which the St. Paul
Capital L.L.C. Convertible Preferred Securities or The St. Paul Companies,
Inc. Series C Convertible Preferred Stock, as the case may be, may be
converted or exchanged (through The St. Paul Companies, Inc. Convertible
Subordinated Debentures).
(2) Includes $25,000,000 of St. Paul Capital L.L.C. Convertible Preferred
Securities which may be sold pursuant to an over-allotment option granted
to the Underwriters.
(3) The St. Paul Companies, Inc. Convertible Subordinated Debentures will be
issued by The St. Paul Companies, Inc. to evidence the investment by St.
Paul Capital L.L.C. in The St. Paul Companies, Inc. Convertible
Subordinated Debentures of substantially all of the proceeds from (i) the
offer and sale of the St. Paul Capital L.L.C. Convertible Preferred
Securities and (ii) other capital contributions to St. Paul Capital L.L.C.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(5) No separate consideration will be received for The St. Paul Companies, Inc.
Guarantee, The St. Paul Companies, Inc. Convertible Subordinated
Debentures, The St. Paul Companies, Inc. Series C Convertible Preferred
Stock, The St. Paul Companies, Inc. Depositary Shares, The St. Paul
Companies, Inc. Common Stock or The St. Paul Companies, Inc. Stock Purchase
Rights.
</TABLE>
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<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 SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 7, 1995
- PREFERRED SECURITIES
[LOGO] ST. PAUL CAPITAL L.L.C.
- % CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES
("CONVERTIBLE MIPS-SM-"*)
(LIQUIDATION PREFERENCE $50 PER SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY, AND CONVERTIBLE INTO
COMMON STOCK OF,
THE ST. PAUL COMPANIES, INC.
---------
The - % Convertible Monthly Income Preferred Securities (the "Preferred
Securities") representing preferred limited liability company interests offered
hereby are being issued by St. Paul Capital L.L.C. ("St. Paul Capital"), a
Delaware limited liability company. All of the common limited liability company
interests of St. Paul Capital (the "Common Securities") are owned directly or
indirectly by The St. Paul Companies, Inc., a Minnesota corporation ("The St.
Paul" or the "Company"). St. Paul Capital was formed solely for the purpose of
issuing securities and investing the proceeds from the issuance thereof in debt
securities of The St. Paul. The proceeds from the offering of the Preferred
Securities will be used by St. Paul Capital to purchase from The St. Paul its
- % Convertible Subordinated Debentures due - (the "Convertible
Subordinated Debentures") having the terms described herein.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions from St. Paul Capital at an annual rate of - % of the
liquidation preference of $50 per Preferred Security, accruing from the date of
original issuance and payable monthly in arrears on the last day of each
calendar month of each year, commencing - , 1995 ("dividends"). See
"Description of Securities Offered -- Preferred Securities -- Dividends". The
preferred limited liability company interests represented by the Preferred
Securities will have a preference with respect to cash distributions and amounts
payable on liquidation over the Common Securities owned directly or indirectly
by The St. Paul.
(CONTINUED ON NEXT PAGE)
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SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN MATERIAL RISKS
TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
PREFERRED SECURITIES AND THE CONVERTIBLE SUBORDINATED DEBENTURES MAY BE DEFERRED
AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
----------------
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>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING ST. PAUL CAPITAL
OFFERING PRICE COMMISSION (1) (2)(3)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Preferred Security.......................... $ 50.00 - (2) $ 50.00
Total(4)........................................ $ - - (2) $ -
<FN>
- --------------------------
(1) St. Paul Capital and The St. Paul have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used by St. Paul Capital to purchase
convertible subordinated debentures of The St. Paul, the Underwriting
Agreement provides that The St. Paul will pay to the Underwriters, as
compensation ("Underwriters' Compensation"), $ - per Preferred Security
(or $ - in the aggregate). See "Underwriting".
(3) Expenses of the offering which are payable by The St. Paul are estimated to
be $ - .
(4) St. Paul Capital and The St. Paul have granted the Underwriters an option
for 30 days to purchase up to an additional - Preferred Securities at
the initial public offering price per Preferred Security solely to cover
over-allotments. The St. Paul will pay to the Underwriters, as
Underwriters' Compensation, $ - per Preferred Security purchased pursuant
to this option. If such option is exercised in full, the total initial
public offering price, underwriting commission and proceeds to St. Paul
Capital will be $ - , $ - , and $ - , respectively. See
"Underwriting".
</TABLE>
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The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about - , 1995.
- --------------------------
* MIPS is a registered servicemark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC.
---------
The date of this Prospectus is - , 1995.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
In the event of the liquidation of St. Paul Capital, holders of the
Preferred Securities will be entitled to receive for each Preferred Security a
liquidation preference of $50 plus accumulated and unpaid dividends to the date
of payment, subject to certain limitations. See "Description of Securities
Offered -- Preferred Securities -- Liquidation Rights".
Each Preferred Security is convertible in the manner described herein at the
option of the holder, at any time prior to the Conversion Expiration Date (as
hereinafter defined), into shares of Common Stock, without par value, of The St.
Paul ("St. Paul Common Stock") at the rate of - shares of St. Paul Common
Stock for each Preferred Security (equivalent to a conversion price of $ - per
share of St. Paul Common Stock), subject to adjustment in certain circumstances.
Whenever The St. Paul issues shares of St. Paul Common Stock upon conversion of
Preferred Securities, The St. Paul will issue, together with each share of St.
Paul Common Stock, one Stock Purchase Right (as defined herein) entitling the
holder thereof, under certain circumstances, to purchase shares of Series A
Junior Participating Preferred Stock, without par value, of The St. Paul. See
"Description of Securities Offered -- Preferred Securities -- Conversion Rights"
and "Description of St. Paul Capital Stock". The last reported sale price of St.
Paul Common Stock, which is listed under the symbol "SPC" on the New York Stock
Exchange ("NYSE"), on - , 1995 was $ - per share. See "Market Prices of St.
Paul Common Stock". On and after - , St. Paul Capital may, at its option,
cause the conversion rights of holders of the Preferred Securities to expire.
St. Paul Capital may exercise this option only if for 20 trading days within any
period of 30 consecutive trading days, including the last trading day of such
period, the Current Market Price (as defined herein) of St. Paul Common Stock
exceeds 120% of the conversion price of the Preferred Securities, subject to
adjustment in certain circumstances. In order to exercise its conversion
expiration option, St. Paul Capital must issue a press release announcing the
date upon which conversion rights will expire (the "Conversion Expiration
Date"), prior to the opening of business on the second trading day after a
period in which the condition in the preceding sentence has been met, but in no
event prior to - . The Conversion Expiration Date shall be a date not less
than 30 and not more than 60 days following the date of the press release
described above. See "Description of Securities Offered -- Preferred Securities
- -- Conversion Rights".
The Preferred Securities are also subject to exchange in the manner
described herein, in whole but not in part, into depositary shares (the
"Depositary Shares"), each representing ownership of 1/ - th of a share of
Series C Cumulative Convertible Preferred Stock, par value $ - per share, of
The St. Paul ("St. Paul Series C Convertible Preferred Stock"), deposited with
the Depositary (as defined herein) upon a vote of the holders of a majority of
the aggregate liquidation preference of all outstanding Preferred Securities
following the failure of holders of Preferred Securities to receive dividends in
full for 15 consecutive months (including any such failure caused by the
deferral of interest payments on the Convertible Subordinated Debentures). Each
Depositary Share will entitle the holder thereof to all proportional rights and
preferences of the St. Paul Series C Convertible Preferred Stock (including
dividend, voting, conversion and liquidation rights and preferences). The St.
Paul Series C Convertible Preferred Stock will have dividend and conversion
features substantially similar to those of the Preferred Securities (adjusted
proportionately per Depositary Share) but will not be subject to mandatory
redemption. See "Description of Securities Offered -- Preferred Securities --
Optional Exchange for Depositary Shares", "-- Description of St. Paul Series C
Convertible Preferred Stock" and "-- Description of Depositary Shares".
In the event that, at any time after the Conversion Expiration Date, less
than 5% of the Preferred Securities remain outstanding, such Preferred
Securities shall be redeemable at the option of St. Paul Capital, in whole but
not in part, at a redemption price equal to the liquidation preference for such
Preferred Securities plus accumulated and unpaid dividends (whether or not
earned or declared). The Preferred Securities have no maturity date, although
they are subject to mandatory redemption upon the
2
<PAGE>
repayment at maturity or as a result of acceleration of the Convertible
Subordinated Debentures and St. Paul Capital is subject to dissolution in the
event of a Special Event (as defined herein), as described below. See
"Description of Securities Offered -- Preferred Securities -- Redemption".
Under certain circumstances following the occurrence of a Special Event, The
St. Paul may cause St. Paul Capital to be dissolved and cause the Convertible
Subordinated Debentures to be distributed to the holders of the Preferred
Securities. If Convertible Subordinated Debentures are so distributed, The St.
Paul will use its best efforts to have such Convertible Subordinated Debentures
listed on the same exchange on which the Preferred Securities are then listed.
See "Description of Securities Offered -- Preferred Securities -- Special Event
Distribution" and "-- Description of the Convertible Subordinated Debentures".
The St. Paul will irrevocably and unconditionally guarantee, on a
subordinated basis and to the extent set forth herein, the payment of dividends
by St. Paul Capital on the Preferred Securities (but only if and to the extent
declared from funds of St. Paul Capital legally available therefor), the
redemption price (including all accumulated and unpaid dividends) payable with
respect to the Preferred Securities and payments on liquidation with respect to
the Preferred Securities (but only to the extent of the assets of St. Paul
Capital available for distribution to holders of the Preferred Securities) (the
"Guarantee"). The Guarantee will be unsecured, will be subordinate to all other
liabilities of The St. Paul and will rank PARI PASSU (I.E., on a parity) with
the most senior preferred or preference stock now or hereafter issued by The St.
Paul. Given such subordination, if The St. Paul is unable to make timely
payments on the Convertible Subordinated Debentures, there is a substantial
likelihood that it would also be unable to make timely payments on the
Guarantee. See "Description of Securities Offered -- Description of the
Guarantee".
St. Paul Capital's ability to pay amounts due on the Preferred Securities is
solely dependent upon The St. Paul's ability to make payments on the Convertible
Subordinated Debentures. Interest payment periods on the Convertible
Subordinated Debentures are monthly but may be extended by The St. Paul for up
to 60 months (a "deferral of interest payments"), in which event monthly
dividend payments on the Preferred Securities by St. Paul Capital would be
deferred (but would continue to compound monthly). Prior to the end of any such
deferral of interest payments, The St. Paul may further defer interest payments,
provided that all such deferrals may not exceed 60 months in the aggregate, and
provided further that no such deferral may extend the stated maturity date of
the Convertible Subordinated Debentures. After The St. Paul has paid all accrued
and unpaid interest (including compound interest) following a deferral of
interest payments, it may again defer interest payments for up to 60 months,
subject to the preceding sentence. At the end of such deferral of interest
payments, The St. Paul is required to pay all accrued and unpaid interest
(including compound interest) and upon such repayment St. Paul Capital would be
able to pay all accumulated and unpaid dividends on the Preferred Securities
(including Additional Dividends, as defined herein). If The St. Paul does not
make interest payments on the Convertible Subordinated Debentures, St. Paul
Capital would not be able to declare or pay dividends on the Preferred
Securities. The Guarantee is a full and unconditional guarantee from the time of
its issuance, but does not apply to any payment of dividends unless and until
such dividends are declared. The failure of holders of the Preferred Securities
to receive dividends in full for 15 consecutive months (including any such
failure caused by a deferral of interest payments on the Convertible
Subordinated Debentures) would trigger the right of such holders to obtain
Depositary Shares representing St. Paul Series C Convertible Preferred Stock in
the manner described herein. See "Description of Securities Offered -- Preferred
Securities -- Dividends -- Description of the Guarantee" and "-- Description of
the Convertible Subordinated Debentures".
The Convertible Subordinated Debentures are subordinate in right of payment
to all Senior Indebtedness (as defined under "Description of Securities Offered
- -- Description of the Convertible Subordinated Debentures -- Subordination") of
The St. Paul. As of - , 1995, The St. Paul had approximately $ - million of
indebtedness constituting Senior Indebtedness and no indebtedness or other
obligations that would rank equally with the Convertible Subordinated
Debentures.
3
<PAGE>
Application will be made to list the Preferred Securities on the NYSE,
subject to notice of issuance, under the symbol " - ".
The Preferred Securities will be represented by a global certificate or
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global certificate or
certificates. See "Description of Securities Offered -- Preferred Securities --
Book-Entry-Only Issuance -- The Depository Trust Company".
--------------
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE FOR THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AND ST. PAUL COMMON STOCK AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
4
<PAGE>
AVAILABLE INFORMATION
The St. Paul is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by The St. Paul may be inspected and copied at the
public reference facilities maintained by the Commission in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Seven World Trade Center, 7th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material may also be inspected and
copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
The St. Paul and St. Paul Capital have filed with the Commission a
registration statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement.
No separate financial statements of St. Paul Capital have been included
herein. The St. Paul and St. Paul Capital do not consider that such financial
statements would be material to holders of Preferred Securities as St. Paul
Capital is a newly organized special purpose entity, has no operating history
and no independent operations and is not engaged in, and does not propose to
engage in, any activity other than as described under "St. Paul Capital".
Further, The St. Paul believes that financial statements of St. Paul Capital are
not material to the holders of the Preferred Securities as the Preferred
Securities have been structured to provide a guarantee by The St. Paul of the
Preferred Securities such that the holders of the Preferred Securities with
respect to the payment of dividends and amounts upon liquidation, dissolution
and winding-up are at least in the same position VIS-A-VIS the assets of The St.
Paul as a preferred stockholder of The St. Paul. See "St. Paul Capital" and
"Description of Securities Offered -- Preferred Securities", "-- Description of
the Guarantee" and "-- Description of the Convertible Subordinated Debentures".
The St. Paul beneficially owns directly or indirectly all of the Common
Securities of St. Paul Capital. The preferred limited liability company
interests represented by the Preferred Securities will have a preference with
respect to cash distributions and amounts payable on liquidation over the Common
Securities owned directly or indirectly by The St. Paul.
Each holder of Preferred Securities will be furnished annually with The St.
Paul's Annual Report to Shareholders, containing audited consolidated financial
statements of The St. Paul, as soon as such report is available after the end of
The St. Paul's fiscal year.
5
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-3021) pursuant
to the Exchange Act are incorporated herein by reference:
1. The St. Paul's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. The St. Paul's Current Report on Form 8-K, dated January 24, 1995.
3. The descriptions of the St. Paul Common Stock and Stock Purchase
Rights contained in The St. Paul's Registration Statements on Form 8-A, each
dated October 17, 1991.
All documents filed by The St. Paul with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering described herein shall hereby be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The St. Paul will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference into this
Prospectus, other than exhibits to such information (unless such exhibits are
specifically incorporated by reference in such documents). Requests should be
directed to The St. Paul Companies, Inc., 385 Washington Street, St. Paul,
Minnesota 55102, Attention: Bruce A. Backberg, Vice President and Corporate
Secretary, telephone (612) 221-7911.
6
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO)
APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. UNLESS
OTHERWISE SPECIFIED, REFERENCES HEREIN TO THE "COMPANY" OR "THE ST. PAUL" REFER
TO THE ST. PAUL COMPANIES, INC. AND ITS CONSOLIDATED SUBSIDIARIES. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS.
THE ST. PAUL COMPANIES, INC.
The St. Paul is a management company principally engaged, through its
subsidiaries, in three industry segments: property-liability insurance
underwriting (primarily through its wholly-owned subsidiary, St. Paul Fire and
Marine Insurance Company), insurance brokerage (primarily through its brokerage
subsidiary, Minet) and investment banking-asset management (through its 77
percent stake in The John Nuveen Company). As a management company, The St. Paul
oversees the operations of its subsidiaries and provides them with capital,
management and administrative services. According to "Fortune" magazine's most
recent rankings, in terms of total assets, The St. Paul was the 25th largest
diversified financial company in the United States at December 31, 1993. At
March 23, 1995, The St. Paul and its subsidiaries employed approximately 12,900
persons.
The St. Paul's primary business is insurance underwriting, which accounted
for 88% of consolidated revenues in 1994. Insurance brokerage and investment
banking-asset management operations accounted for 7% and 5% of consolidated
revenues, respectively, in 1994.
The Company's principal executive offices are located at 385 Washington
Street, St. Paul, Minnesota 55102, and its telephone number is (612) 221-7911.
ST. PAUL CAPITAL L.L.C.
St. Paul Capital is a limited liability company formed under the laws of
Delaware and is managed by The St. Paul and The St. Paul's wholly-owned
subsidiary St. Paul Capital Holdings, Inc. ("St. Paul Holdings" and,
collectively with The St. Paul, the "Managing Members"), in their capacity as
the members of St. Paul Capital that own all of the Common Securities, which are
nontransferable. All of the Common Securities are and will be beneficially owned
directly or indirectly by the Company. The Managing Members are the sole
managing members of St. Paul Capital. St. Paul Capital's principal executive
offices are located at 385 Washington Street, St. Paul, Minnesota 55102,
telephone: (612) 221-7911. The principal executive offices of the Managing
Members are located at 385 Washington Street, St. Paul, Minnesota 55102,
telephone: (612) 221-7911.
Pursuant to St. Paul Capital's Amended and Restated Limited Liability
Company Agreement (the "L.L.C. Agreement"), the Managing Members have unlimited
liability for the debts, obligations and liabilities of St. Paul Capital in the
same manner as a general partner of a Delaware limited partnership (which do not
include obligations to holders of Preferred Securities in their capacity as
such), to the extent not fully satisfied and discharged by St. Paul Capital.
That liability on the part of such members is for the benefit of, and is
enforceable by, the liquidating trustee of St. Paul Capital in the event of its
dissolution and is for the benefit of third parties to whom St. Paul Capital
owes such debts, obligations and liabilities. The holders of Preferred
Securities, in their capacity as members of St. Paul Capital, are not liable for
the debts, obligations or liabilities of St. Paul Capital (subject to their
obligation to repay any funds wrongfully distributed to them).
St. Paul Capital exists exclusively for the purposes of issuing its
Preferred Securities and Common Securities and investing the proceeds thereof,
together with substantially all the capital contributed by the Managing Members
in respect of the Common Securities, in the Convertible Subordinated Debentures,
and may engage in no other activities now or in the future. The payment by St.
Paul Capital of dividends due on the Preferred Securities is solely dependent on
its receipt of interest payments on the
7
<PAGE>
Convertible Subordinated Debentures. To the extent that aggregate interest
payments on the Convertible Subordinated Debentures exceed aggregate dividends
on the Preferred Securities and such dividends have been paid in full, St. Paul
Capital may at times have excess funds, which shall be distributed to the
Company.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN MATERIAL RISKS
TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
PREFERRED SECURITIES AND THE CONVERTIBLE SUBORDINATED DEBENTURES MAY BE DEFERRED
AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
[GRAPHIC]
1. ST. PAUL CAPITAL. The issuer of the Preferred Securities is a special
purpose Delaware limited liability company formed by The St. Paul and its
wholly-owned subsidiary St. Paul Holdings for the exclusive purposes of issuing
the Preferred Securities (which will constitute all of St. Paul Capital's
preferred limited liability company interests) and investing the proceeds
thereof, together with substantially all the capital contributed by the Managing
Members in respect of the Common Securities, in the Convertible Subordinated
Debentures. The Managing Members will own 100% of the Common Securities of St.
Paul Capital. St. Paul Capital will be taxed as a partnership for federal income
tax purposes.
2. PREFERRED SECURITIES. The Preferred Securities issued by St. Paul Capital
are preferred limited liability company interests that are convertible into St.
Paul Common Stock. Distributions on Preferred Securities are not eligible for
the dividends received deduction for federal income tax purposes.
3. PREFERRED SECURITIES PROCEEDS INVESTED IN CONVERTIBLE SUBORDINATED
DEBENTURES OF THE ST. PAUL. Proceeds of Preferred Securities will be used by St.
Paul Capital to purchase Convertible Subordinated Debentures of The St. Paul
having a maturity of 30 years from date of issue and the same economic terms as
the Preferred Securities. The St. Paul may elect to defer interest payments on
the Convertible Subordinated Debentures for up to 60 months, but only if The St.
Paul neither declares nor
8
<PAGE>
pays any dividends on its capital stock during such deferral period. If The St.
Paul defers interest payments on the Convertible Subordinated Debentures, St.
Paul Capital would be unable to pay dividends on the Preferred Securities.
4. REPAYMENT OF CONVERTIBLE SUBORDINATED DEBENTURES. The St. Paul repays the
Convertible Subordinated Debentures in cash or the Convertible Subordinated
Debentures are converted into St. Paul Common Stock.
5. OWNERSHIP OF COMMON SECURITIES AND GUARANTEE. The Managing Members own
100% of the Common Securities of St. Paul Capital. The St. Paul guarantees, on
an unsecured and subordinated basis, (a) the payment of dividends (but only if
and to the extent declared from funds legally available therefor) on the
Preferred Securities, (b) the payment of the redemption price payable with
respect to the Preferred Securities (but only to the extent that funds of St.
Paul Capital are legally available therefor) and (c) payments on liquidation
with respect to the Preferred Securities (but only to the extent that assets of
St. Paul Capital are available for distribution to holders of Preferred
Securities).
THE OFFERING
<TABLE>
<S> <C>
Securities Offered................ - of St. Paul Capital's - % Convertible Monthly
Income Preferred Securities, liquidation preference of
$50 per security. Additionally, St. Paul Capital and The
St. Paul have granted the Underwriters an option for 30
days to purchase up to an additional - Preferred
Securities at the initial public offering price solely
to cover over-allotments, if any.
Dividends......................... Dividends on the Preferred Securities will be cumulative
from the date of original issuance of the Preferred
Securities and will be payable at the annual rate of
- % of the liquidation preference of $50 per
Preferred Security. Dividends will be paid monthly in
arrears on the last day of each calendar month,
commencing - , 1995. The proceeds from the offering
of the Preferred Securities will be invested in the
Convertible Subordinated Debentures. Interest payment
periods on the Convertible Subordinated Debentures are
monthly but may be extended from time to time by The St.
Paul for up to 60 months, in which event St. Paul
Capital would be unable to make monthly dividend
payments on the Preferred Securities during the period
of any such extension. During such period, interest on
the Convertible Subordinated Debentures will compound
monthly and Additional Dividends (as defined below) will
continue to accumulate on the Preferred Securities.
Selection of such an extended interest payment period is
referred to herein as a "deferral of interest payments".
"Additional Dividends", as used herein, means amounts
payable upon any dividend arrearages on the Preferred
Securities in order to provide, in effect, monthly
compounding on such dividend arrearages. See "Dividend
Deferral Provisions" below. The failure of holders of
the Preferred Securities to receive dividends in full
(including arrearages) for 15 consecutive months would
trigger the right of such holders to obtain depositary
shares (the "Depositary Shares"), each representing
1/ - th of a share of St. Paul Series C Cumulative
Convertible Preferred Stock, par value $ - per share
("St. Paul Series C Convertible Preferred Stock"), upon
the affirmative vote or written consent of
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
the holders of a majority of the aggregate liquidation
preference of the outstanding Preferred Securities, as
described below under "Optional Exchange for Depositary
Shares". See "Investment Considerations -- Option to
Defer Payment of Dividends," "Investment Considerations
-- Tax Consequences of Deferral of Interest Payments on
Convertible Subordinated Debentures," "Description of
Securities Offered -- Description of the Convertible
Subordinated Debentures -- Option to Defer Interest
Payments" and "Description of Securities Offered --
Preferred Securities -- Optional Exchange for Depositary
Shares".
Dividend Deferral Provisions...... The St. Paul has the right, at any time and from time to
time, to defer interest payments on the Convertible
Subordinated Debentures. Monthly dividends on the
Preferred Securities would be deferred by St. Paul
Capital (but would continue to accrue Additional
Dividends) during any such deferral of interest pay-
ments. The St. Paul will have the right during any such
deferral of interest payments to make partial payments
of interest and at the end of such periods may pay all
interest then accrued and unpaid (together with compound
interest). Upon a partial payment of interest by The St.
Paul, St. Paul Capital may pay partial PRO RATA
dividends to holders of Preferred Securities, and upon
the payment of all accrued and unpaid interest on the
Convertible Subordinated Debentures, may pay in full all
accumulated and unpaid dividends (including Additional
Dividends). Prior to the end of such deferral of
interest payments, The St. Paul may further defer
interest payments, provided that all such deferrals may
not exceed 60 months in the aggregate nor extend beyond
the stated maturity of the Convertible Subordinated
Debentures. After The St. Paul has paid all accrued and
unpaid interest (including compound interest) following
a deferral of interest payments, it may again defer
interest payments for up to 60 months, subject to the
preceding sentence. St. Paul Capital will give written
notice of The St. Paul's deferral of interest payments
to the holders of Preferred Securities no later than the
last date on which it would be required to notify the
NYSE of the record or payment date of the related
dividend, which is currently 10 days prior to such
record or payment date. See "Investment Considerations
-- Option to Defer Payment of Dividends," "Description
of Securities Offered -- Preferred Securities --
Dividends" and "Description of Securities Offered --
Description of the Convertible Subordinated Debentures
-- Option to Defer Interest Payments". Should a deferral
of interest payments occur, St. Paul Capital, except in
very limited circumstances, will continue to accrue
income for United States income tax purposes, which will
be allocated to holders of Preferred Securities in
advance of any corresponding cash distribution. See
"Investment Considerations -- Tax Consequences of
Deferral of Interest Payments on Convertible
Subordinated Debentures" and "Certain Federal Income Tax
Considerations -- Potential Deferral of Interest
Payment".
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Liquidation Preference............ $50 per Preferred Security, plus an amount equal to any
accumulated and unpaid dividends (whether or not earned
or declared).
Conversion into St. Paul Common
Stock............................ Each Preferred Security is convertible in the manner
described below at the option of the holder, at any time
prior to the Conversion Expiration Date (as defined
below), into shares of St. Paul Common Stock, without
par value (the "St. Paul Common Stock"), at the rate of
- shares of St. Paul Common Stock for each Preferred
Security (equivalent to a conversion price of $ - per
share of St. Paul Common Stock), subject to adjustment
in certain circumstances. A holder of a Preferred
Security wishing to exercise its conversion right shall
surrender such Preferred Security, together with an
irrevocable conversion notice, to the Conversion Agent
(as defined herein) acting on behalf of the holders of
Preferred Securities, which shall exchange the Preferred
Security for a portion of the Convertible Subordinated
Debentures held by St. Paul Capital and immediately
convert such Convertible Subordinated Debentures and any
accrued and unpaid interest thereon into St. Paul Common
Stock. A holder of Preferred Securities should not
recognize gain or loss upon the exchange through the
Conversion Agent of Preferred Securities for a
proportionate share of the Convertible Subordinated
Debentures held by St. Paul Capital. Except to the
extent attributable to accrued but unpaid interest on
the Convertible Subordinated Debentures, a holder should
not recognize gain or loss upon the exchange through the
Conversion Agent of Convertible Subordinated Debentures
for St. Paul Common Stock. See "Certain Federal Income
Tax Considerations -- Exchange of Preferred Securities
for St. Paul Stock". On and after - , and provided
that St. Paul Capital is current in the payment of
dividends on the Preferred Securities, St. Paul Capital
may, at its option, cause the conversion rights of
holders of the Preferred Securities to expire. St. Paul
Capital may exercise this option only if for 20 trading
days within any period of 30 consecutive trading days,
including the last trading day of such period, the
Current Market Price (as herein defined) of St. Paul
Common Stock exceeds 120% of the conversion price of the
Preferred Securities, subject to adjustment in certain
circumstances. In order to exercise its conversion
expiration option, St. Paul Capital must issue a press
release for publication on the Dow Jones News Service
announcing the Conversion Expiration Date prior to the
opening of business on the second trading day after a
period in which the condition in the preceding sentence
has been met, but in no event prior to - . The press
release shall announce the Conversion Expiration Date
and provide the current conversion price and Current
Market Price of the Preferred Securities, in each case
as of the close of business on the trading day next
preceding the date of the press release. Written notice
will be given by first-class mail to each holder of
Preferred Securities not more than four business days
after
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
issuance of the press release. The Conversion Expiration
Date shall be a date not less than 30 and not more than
60 days following the date of such press release or, if
St. Paul Capital has not exercised its conversion
expiration option, the earlier of the date of an
Exchange Election referred to below under "Optional
Exchange for Depositary Shares" or two business days
prior to the scheduled date for the mandatory redemption
of the Preferred Securities. See "Description of
Securities Offered -- Preferred Securities -- Conversion
Rights".
Whenever The St. Paul issues shares of Common Stock upon
conversion of Preferred Securities, The St. Paul will
issue, together with each such share of Common Stock,
one Stock Purchase Right (as defined herein) entitling
the holder thereof, under certain circumstances, to
purchase Series A Preferred Stock of The St. Paul (or
other securities in lieu thereof) pursuant to the
Shareholder Protection Rights Agreement, dated as of
December 4, 1989, as amended (the "Rights Agreement"),
between The St. Paul and First Chicago Trust Company of
New York, as Rights Agent. The Stock Purchase Rights
will expire on December 19, 1999, subject to extension
to December 18, 2002 under certain circumstances or
earlier redemption by The St. Paul.
Redemption........................ If at any time following the Conversion Expiration Date,
less than 5% of the Preferred Securities remain
outstanding, such Preferred Securities shall be
redeemable at the option of St. Paul Capital, as a whole
but not in part, at a redemption price of $ - per
Preferred Security together with accumulated and unpaid
dividends (whether or not earned or declared) (the
"Redemption Price"). The Preferred Securities have no
maturity date, although they are subject to mandatory
redemption upon the repayment at maturity (on - ) or
as a result of acceleration of the Convertible
Subordinated Debentures. See "Description of Securities
Offered -- Description of the Convertible Subordinated
Debentures -- Events of Default". The Preferred
Securities are not otherwise redeemable for any reason,
including in the event that St. Paul Capital should
become subject to federal or state taxation. To the
extent that such taxation or other events cause St. Paul
Capital to have insufficient funds to pay full dividends
on the Preferred Securities, the holders will have
available to them the exchange option described below.
Upon the occurrence of certain Tax Events (as defined
herein) St. Paul Capital may be dissolved and the
Convertible Subordinated Debentures distributed to
holders of the Preferred Securities. See "-- Special
Event Distribution".
Special Event Distribution........ Upon the occurrence of a Tax Event (as defined herein),
the Managing Members may, and upon the occurrence of an
Investment Company Event (as defined herein) the
Managing Members shall, dissolve St. Paul Capital and
cause the Convertible Subordinated Debentures to be
distributed to the holders of the Preferred Securities
in connection with the liquidation of St. Paul Capital.
In the case of a Special Event that is a Tax Event (as
defined herein), however, the Managing Members
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
may elect to cause the Preferred Securities to remain
outstanding. See "Description of Securities Offered --
Preferred Securities -- Special Event Distribution" and
"-- Description of the Convertible Subordinated
Debentures".
Optional Exchange for Depositary
Shares........................... Upon the failure of holders of the Preferred Securities
to receive, for 15 consecutive months, the full amount
of dividend payments (including any arrearages and
including any such failure caused by a deferral of
interest payments on the Convertible Subordinated
Debentures) the holders of a majority of the aggregate
liquidation preference of Preferred Securities then out-
standing, voting as a class at a special meeting of
members called for such purpose or by written consent,
may, at their option, direct the Conversion Agent to
exchange all (but not less than all) of the Preferred
Securities for Convertible Subordinated Debentures held
by St. Paul Capital, and to immediately exchange the
Convertible Subordinated Debentures and any accrued and
unpaid interest thereon on behalf of such holders for
Depositary Shares, each representing a 1/ - th interest
in a
share of St. Paul Series C Convertible Preferred Stock
at the Exchange Price (as defined under "Description of
Securities Offered -- Preferred Securities --
Dividends"). Each Depositary Share will entitle the
holder thereof to a proportionate share in all rights
and preferences of the St. Paul Series C Convertible
Preferred Stock (including dividend, voting, conversion
and liquidation rights and preferences). The St. Paul
Series C Convertible Preferred Stock will have dividend,
conversion and other terms substantially similar to the
terms of the Preferred Securities (adjusted
proportionately per Depositary Share), except that,
among other things, the holders of St. Paul Series C
Convertible Preferred Stock will have the right to elect
two additional directors of The St. Paul whenever
dividends on the St. Paul Series C Convertible Preferred
Stock are in arrears for 18 months (including for this
purpose any arrearage with respect to the Preferred
Securities) and the St. Paul Series C Convertible
Preferred Stock will not be subject to mandatory
redemption. A holder of Preferred Securities should not
recognize gain or loss upon the exchange through the
Conversion Agent of Preferred Securities for a
proportionate share of the Convertible Subordinated
Debentures held by St. Paul Capital. Except to the
extent attributable to accrued but unpaid interest on
the Convertible Subordinated Debentures, a holder should
not recognize gain or loss upon the exchange through the
Conversion Agent of Convertible Subordinated Debentures
for Depository Shares. See "Certain Federal Income Tax
Considerations -- Exchange of Preferred Securities for
St. Paul Stock". If the Preferred Securities are
exchanged for Depositary Shares, The St. Paul will use
its best efforts to have the Depositary Shares listed on
the NYSE or any other exchange on which the Preferred
Securities may then be listed. See "Description of
Securities Offered -- Description of St. Paul Series C
Convertible Preferred Stock" and "Description of
Securities Offered --
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Description of Depositary Shares" for a description of
the principal terms of the St. Paul Series C Convertible
Preferred Stock and the Depositary Shares, respectively.
Guarantee......................... Pursuant to a Guarantee Agreement (the "Guarantee"), The
St. Paul will irrevocably and unconditionally agree, on
a subordinated basis, to guarantee the payment in full
of (a) the dividends (including any Additional Dividends
thereon) payable by St. Paul Capital on the Preferred
Securities, if and to the extent declared from funds of
St. Paul Capital legally available therefor, (b) the
redemption price (including all accumulated and unpaid
dividends) of the Preferred Securities, to the extent
funds of St. Paul Capital are legally available
therefor, and (c) payments on liquidation with respect
to the Preferred Securities, to the extent the assets of
St. Paul Capital are available for distribution to
holders of the Preferred Securities. A holder of
Preferred Securities may enforce The St. Paul's
obligations under the Guarantee directly against The St.
Paul, and The St. Paul waives any right to require that
an action be brought against St. Paul Capital or any
other person before proceeding against The St. Paul. The
Guarantee will be unsecured and will be subordinated to
all liabilities of The St. Paul and will rank PARI PASSU
(I.E., on a parity) with the most senior preferred
shares hereafter issued by The St. Paul and PARI PASSU
with any guarantee now or hereafter entered into by The
St. Paul in respect of any preferred or preference stock
of any affiliate of The St. Paul. On the bankruptcy,
liquidation or winding-up of The St. Paul, its
obligations under the Guarantee will rank junior to all
its other liabilities and, therefore, funds may not be
available for payment under the Guarantee. See
"Investment Considerations -- Subordinate Obligations
Under Guarantee and Convertible Subordinated
Debentures," "Investment Considerations -- Dependence on
Subordinated Debenture Payments" and "Description of
Securities Offered -- Description of the Guarantee".
Voting Rights..................... Generally, holders of the Preferred Securities will not
have any voting rights. However, upon an Event of
Default under the Convertible Subordinated Debentures
(as described under "Description of Securities Offered
-- Description of the Convertible Subordinated
Debentures -- Events of Default"), a failure by St. Paul
Capital to pay dividends in full (including any
arrearages) on the Preferred Securities for 15
consecutive months (including any such failure caused by
a deferral by The St. Paul of interest payments on the
Convertible Subordinated Debentures) or a default by The
St. Paul under the Guarantee, the holders of the
Preferred Securities will be entitled to appoint and
authorize a special trustee (the "Special Trustee") to
enforce St. Paul Capital's rights under the Convertible
Subordinated Debentures, enforce The St. Paul's
obligations under the Guarantee and, to the extent
permitted by law, declare and pay dividends on the
Preferred Securities to the extent funds are legally
available therefor. The St. Paul has agreed to execute
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
and deliver such documents as may be necessary or
appropriate for the Special Trustee to enforce such
rights and obligations. In addition, if for any reason
(including a deferral by The St. Paul of interest
payments on the Convertible Subordinated Debentures)
holders of Preferred Securities fail to receive, for 15
consecutive months, the full amount of dividend payments
(including any arrearages), the holders of the Preferred
Securities will be entitled to call a special meeting of
members for the purpose of deciding whether to exchange
all Preferred Securities then outstanding for Depositary
Shares, as described above under "Optional Exchange for
Depositary Shares". See "Description of Securities
Offered -- Preferred Securities -- Dividends".
Use of Proceeds................... The proceeds to be received by St. Paul Capital from the
sale of the Preferred Securities will be invested in the
Convertible Subordinated Debentures of The St. Paul,
which, after paying the expenses associated with this
Offering, will use such funds for general corporate
purposes, which may include possible acquisitions and
the reduction of short-term indebtedness. Pending such
use, the net proceeds may be temporarily invested in
short-term debt obligations. See "Use of Proceeds".
Convertible Subordinated
Debentures....................... The Convertible Subordinated Debentures will have a
maturity of 30 years and will bear interest at the rate
of - % per annum, payable monthly in arrears. The St.
Paul has the right to select an interest payment period
or periods longer than one month (during which period or
periods interest will compound monthly), provided that
any such deferral of interest payments will not exceed
60 months and provided further that a deferral of
interest payments may not extend the stated maturity of
the Convertible Subordinated Debentures. Accordingly,
dividend payments on the Preferred Securities may not be
deferred beyond the stated maturity of the Convertible
Subordinated Debentures. If The St. Paul defers interest
payments longer than one month, it will be prohibited
from paying dividends on any of its capital stock and
making certain other restricted payments until monthly
interest payments are resumed and all accumulated and
unpaid interest (including any interest payable to
effect monthly compounding) on the Convertible Subor-
dinated Debentures is brought current. The St. Paul will
have the right to make partial payments of such interest
during a deferral of interest payments. The failure by
The St. Paul to make interest payments during a deferral
of interest payments would not constitute a default or
an event of default under The St. Paul's currently
outstanding indebtedness. The Convertible Subordinated
Debentures are convertible into shares of St. Paul
Common Stock at the option of the holders thereof and
are exchangeable for Depositary Shares representing St.
Paul Series C Convertible Preferred Stock as described
above under "Optional Exchange for Depositary Shares".
St. Paul Capital will covenant not to convert
Convertible Subordinated
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Debentures except pursuant to a notice of conversion
delivered to the Conversion Agent by a holder of
Preferred Securities. The payment of the principal and
interest on the Convertible Subordinated Debentures will
be subordinate in right of payment to all Senior
Indebtedness (as defined under "Description of
Securities Offered -- Description of the Convertible
Subordinated Debentures -- Subordination") of The St.
Paul. As of - , 1995, The St. Paul had $ - million
of indebtedness constituting Senior Indebtedness and no
indebtedness or other obligations that would rank
equally with the Convertible Subordinated Debentures.
See "Investment Considerations -- Subordinate
Obligations Under Guarantee and Convertible Subordinated
Debentures" and "Investment Considerations -- Dependence
on Subordinated Debenture Payments". While the Preferred
Securities are outstanding, St. Paul Capital will not
have the ability to amend the Indenture (as defined
below) or the terms of the Convertible Subordinated
Debentures in a way that adversely affects the holders
of the Preferred Securities, or to waive an event of
default under the Indenture without the consent of
holders of 66 2/3% in aggregate liquidation preference
of the Preferred Securities then outstanding. See
"Description of Securities Offered -- Description of the
Convertible Subordinated Debentures -- Modification of
Indenture".
</TABLE>
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SUMMARY FINANCIAL AND OPERATING DATA
The following table presents selected financial, operating and balance sheet
data for each of the five fiscal periods set forth below. The data are derived
from the Company's audited consolidated financial statements. The table should
be read in conjunction with "Overview of 1994 Results" and the consolidated
financial statements and the notes thereto incorporated by reference in this
Prospectus. Numbers of shares and per share figures reflect a two-for-one stock
split in June 1994.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Premiums earned......................... $ 3,412,081 $ 3,178,338 $ 3,143,246 $ 3,146,238 $ 2,893,959
Net investment income................... 694,594 661,106 666,374 675,604 669,989
Insurance brokerage fees and
commissions............................ 303,152 283,680 280,836 284,702 256,354
Investment banking-asset management..... 211,789 241,730 218,825 175,610 126,607
Realized gains(1)....................... 41,974 58,254 155,735 38,008 9,864
Other................................... 37,695 37,064 33,676 31,538 48,464
----------- ----------- ----------- ----------- -----------
Total revenues...................... 4,701,285 4,460,172 4,498,692 4,351,700 4,005,237
----------- ----------- ----------- ----------- -----------
Insurance losses and loss adjustment
expenses............................... 2,461,698 2,303,738 2,690,046 2,365,569 2,119,776
Policy acquisition, operating and
administrative expenses(2)............. 1,636,428 1,593,063 1,998,156 1,422,511 1,352,034
Interest expense........................ 39,581 40,765 35,553 35,559 29,522
Income tax expense...................... 120,750 94,997 7,458 122,999 112,635
Cumulative net benefit of accounting
changes, net of taxes.................. 0 0 76,483 0 0
----------- ----------- ----------- ----------- -----------
Net income (loss)....................... $ 442,828 $ 427,609 $ (156,038) $ 405,062 $ 391,270
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Fully diluted net income per common
share.................................. $4.93 $4.73 $(1.94) $4.50 $4.16
Cash dividends declared per common
share.................................. $1.50 $1.40 $1.36 $1.30 $1.20
BALANCE SHEET DATA:
Total assets............................ $17,495,820 $17,149,196 $15,392,054 $14,744,717 $13,907,293
Total debt.............................. 622,624 639,729 566,717 486,779 473,829
Change in unrealized appreciation of
investments, net of taxes(3)........... (574,896) 525,175 (23,815) 55,093 (67,558)
Common shareholders' equity............. 2,732,934 3,005,128 2,202,499 2,532,841 2,196,371
Book value per common share............. 32.46 35.47 26.18 29.78 26.00
Number of common shares outstanding..... 84,202,417 84,714,676 84,118,554 85,042,484 84,468,058
UNDERWRITING OPERATIONS:
GAAP underwriting result................ $ (113,008) $ (150,255) $ (566,886) $ (163,782) $ (120,730)
Statutory combined ratio:(4)............
Loss and loss expense ratio........... 72.1 72.5 85.6 75.2 73.2
Underwriting expense ratio............ 30.2 32.0 32.2 29.4 30.0
----------- ----------- ----------- ----------- -----------
Combined ratio........................ 102.3 104.5 117.8 104.6 103.2
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Combined ratio including policyholders'
dividends.............................. 102.3 104.7 118.2 105.0 104.2
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
- ------------------------------
(1) 1992 realized gains include $98 million from the sale of a minority
interest in The John Nuveen Company.
(2) 1992 operating and administrative expenses include a $365 million
write-down of the goodwill associated with the Company's investment in
Minet.
(3) The change for 1993 includes an increase of $502 million due to the
adoption of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".
(4) The combined ratio is not derived from the audited consolidated financial
statements.
</TABLE>
17
<PAGE>
INVESTMENT CONSIDERATIONS
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD PARTICULARLY
CONSIDER THE FOLLOWING MATTERS:
SUBORDINATE OBLIGATIONS UNDER GUARANTEE AND CONVERTIBLE SUBORDINATED DEBENTURES
The St. Paul's obligations under the Convertible Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of The St.
Paul. The St. Paul's obligations under the Guarantee are subordinate to all
liabilities of The St. Paul and will rank PARI PASSU (I.E., on a parity) with
the most senior preferred shares hereafter issued by The St. Paul and PARI PASSU
with any guarantee now or hereafter entered into by The St. Paul in respect of
any preferred or preference stock of any affiliate of The St. Paul. There are no
terms of the Preferred Securities, the Convertible Subordinated Debentures or
the Guarantee that limit The St. Paul's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Convertible
Subordinated Debentures and the Guarantee, or the ability of its subsidiaries to
incur additional indebtedness. The Guarantee guarantees payment to the holders
of the Preferred Securities of accumulated and unpaid monthly dividends, amounts
payable on redemption, and amounts payable on liquidation of St. Paul Capital.
In each case, however, such amount is guaranteed only to the extent that St.
Paul Capital has funds on hand legally available therefor and payment thereof
does not otherwise violate applicable law. If The St. Paul were to default on
its obligation to pay interest or amounts payable on redemption or maturity of
the Convertible Subordinated Debentures, St. Paul Capital would lack legally
available funds for the payment of dividends or amounts payable on redemption of
the Preferred Securities, and in such event holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts. On the
bankruptcy, liquidation or winding-up of The St. Paul, its obligations under the
Guarantee would rank junior to all of its liabilities and, therefore, funds
might not be available in such circumstances for payment pursuant to the
Guarantee. See "Description of Securities Offered -- Description of the
Guarantee" and "Description of Securities Offered -- Description of the
Convertible Subordinated Debentures -- Subordination".
DEPENDENCE ON SUBORDINATED DEBENTURE PAYMENTS
St. Paul Capital's ability to pay amounts due on the Preferred Securities is
solely dependent upon The St. Paul's ability to make payments on the Convertible
Subordinated Debentures as and when required. Since The St. Paul is also the
Guarantor of the Preferred Securities, in the event that St. Paul Capital were
unable to make payments on the Preferred Securities as and when required, there
is a substantial likelihood that The St. Paul would be unable to make payments
on the Guarantee as and when required.
OPTION TO DEFER PAYMENT OF DIVIDENDS
The St. Paul has the right to extend interest payment periods on the
Convertible Subordinated Debentures for up to 60 months, and, as a consequence,
monthly dividends on the Preferred Securities would be deferred (but Additional
Dividends will continue to accumulate monthly) by St. Paul Capital during any
such deferral of interest payments. In the event that The St. Paul exercises
this right, neither The St. Paul nor any direct or indirect majority-owned
subsidiary of The St. Paul (excluding The John Nuveen Company ("Nuveen") and
Nuveen's consolidated subsidiaries) shall declare or pay any dividend on, or
redeem, purchase, otherwise acquire or make a liquidation payment with respect
to, any of its common or preferred stock or make any guarantee payment with
respect to the foregoing (other than payments under the Guarantee or dividend or
guarantee payments to The St. Paul from a direct or indirect majority-owned
subsidiary), during any such deferral period and until all dividend arrearages
have been paid in full. No deferral of interest payments may extend the stated
maturity of the Convertible Subordinated Debentures. See "Description of
Securities Offered -- Description of the Convertible Subordinated Debentures --
Option to Defer Interest Payments".
TAX CONSEQUENCES OF DEFERRAL OF INTEREST PAYMENTS ON CONVERTIBLE SUBORDINATED
DEBENTURES
Should a deferral of interest payments occur, St. Paul Capital, except in
very limited circumstances, will continue to accrue income for United States
federal income tax purposes which will be allocated to
18
<PAGE>
holders of record of Preferred Securities in advance of any corresponding cash
distribution. As a result, such holders will include such interest in gross
income for United States federal income tax purposes in advance of the receipt
of cash and will not receive the cash related to such income if such a holder
disposes of its Preferred Securities prior to the record date for payment of
dividends. See "Certain Federal Income Tax Considerations -- Potential Deferral
of Interest Payment".
TAX CONSEQUENCES OF AN EXCHANGE FOR DEPOSITARY SHARES
In the event that a deferral of interest payments or the failure to pay
interest continues for more than 15 months, the holders of a majority of the
aggregate liquidation preference of the Preferred Securities then outstanding
may cause the exchange of all of the Preferred Securities for Depositary Shares
representing interests in St. Paul Series C Convertible Preferred Stock at the
Exchange Price. For a discussion of the taxation of such an exchange to holders,
including the possibility that holders who exchange their Preferred Securities
for Depositary Shares will be subject to additional income tax to the extent
accrued but unpaid interest on the Convertible Subordinated Debentures is
converted into accumulated and unpaid dividends on the St. Paul Series C
Convertible Preferred Stock represented by Depositary Shares received in
exchange for the Preferred Securities, see "Certain Federal Income Tax
Considerations -- Exchange of Preferred Securities for St. Paul Stock".
EXPIRATION OF CONVERSION RIGHTS
On and after - , St. Paul Capital may, subject to certain conditions, at
its option, cause the conversion rights of holders of Preferred Securities to
expire, provided that St. Paul Capital is current in the payment of dividends on
the Preferred Securities and the Current Market Price (as defined herein) of St.
Paul Common Stock exceeds 120% of the conversion price of the Preferred
Securities for a specified period. See "Description of Securities Offered --
Preferred Securities -- Expiration of Conversion Rights".
UNCERTAINTY OF DEDUCTIBILITY OF INTEREST ON THE CONVERTIBLE SUBORDINATED
DEBENTURES
The offering of the Preferred Securities and the issuance of the related
Convertible Subordinated Debentures is a relatively novel type of financing
transaction. The Company's ability to deduct the interest on the Convertible
Subordinated Debentures depends upon whether the Convertible Subordinated
Debentures are characterized as debt instruments for federal income tax
purposes, taking all the relevant facts and circumstances into account. The
Company believes that the Convertible Subordinated Debentures are debt
instruments for federal income tax purposes and that interest on the Convertible
Subordinated Debentures will, therefore, be deductible by the Company. There is
no clear authority on the appropriate characterization for federal income tax
purposes of instruments such as the Convertible Subordinated Debentures when
they are issued in connection with an offering of securities such as the
Preferred Securities. If the interest on the Convertible Subordinated Debentures
is not deductible by the Company, the Company would have significant additional
income tax liabilities. Nondeductability of such interest would constitute a Tax
Event. Upon the occurrence of a Tax Event, the Managing Members may cause St.
Paul Capital to be dissolved and cause the Convertible Subordinated Debentures
to be distributed to the holders of the Preferred Securities in connection with
the liquidation of St. Paul Capital. See "Description of Securities Offered --
Preferred Securities -- Special Event Distribution" and "-- Description of the
Convertible Subordinated Debentures".
19
<PAGE>
USE OF PROCEEDS
St. Paul Capital will invest the proceeds from the Offering in the
Convertible Subordinated Debentures. The St. Paul, after payment of the
Underwriters' Compensation and other expenses of the Offering, will use the net
proceeds of $ - ($ - if the Underwriters' over-allotment option is exercised
in full) from the sale of the Convertible Subordinated Debentures to St. Paul
Capital for general corporate purposes, which may include possible acquisitions
and the reduction of short-term indebtedness accruing interest at rates ranging
between 6% and 7%. Pending such use, the net proceeds may be temporarily
invested in short-term debt obligations. As of - , 1995, The St. Paul had
$ - of short-term indebtedness outstanding.
RATIO OF EARNINGS TO FIXED CHARGES OF THE COMPANY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1994 1993 1992(1) 1991 1990
--------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges....................................... 9.99 8.96 -- 9.06 9.26
--- --- --- --- ---
Ratio of earnings to combined fixed charges and preferred stock
dividends............................................................... 7.73 6.99 -- 7.06 7.19
<FN>
- ------------------------
(1) The 1992 loss was inadequate to cover "fixed charges" by $229.6 million,
and "combined fixed charges and preferred stock dividends" by $248.0
million.
</TABLE>
Earnings consist of income before income taxes plus fixed charges, net of
capitalized interest. Fixed charges consist of interest expense before reduction
for capitalized interest and one-third of rental expense, which is considered to
be representative of an interest factor.
20
<PAGE>
CAPITALIZATION
The following table sets forth the debt and capitalization of The St. Paul
at December 31, 1994, and as adjusted to reflect the consummation of the
offering made hereby, assuming no exercise of the Underwriters' over-allotment
option. The table should be read in conjunction with the consolidated financial
statements of The St. Paul incorporated by reference herein. See "Use of
Proceeds," "Selected Financial and Operating Data," and "Description of
Securities Offered -- Preferred Securities".
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------------------
ACTUAL AS ADJUSTED
------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Commercial paper.................................................................. $ 275,635 $ 275,635
Medium-term notes................................................................. 204,433 204,433
9 3/8% notes...................................................................... 99,971 99,971
Guaranteed ESOP debt.............................................................. 36,112 36,112
Pound sterling loan notes......................................................... 6,473 6,473
------------- --------------
Total debt.................................................................... 622,624 622,624
------------- --------------
------------- --------------
Convertible preferred stock of subsidiary......................................... -- -
Preferred Stock:
Series B convertible preferred stock, 1,450,000 shares authorized; 1,012,496
shares issued and outstanding.................................................... 146,102 146,102
Guaranteed obligation -- PSOP..................................................... (141,567) (141,567)
------------- --------------
Net convertible preferred stock............................................... 4,535 4,535
------------- --------------
Common shareholders' equity:
Common stock, without par value, 240,000,000 shares authorized; 84,202,417 shares
issued and outstanding........................................................... 445,222 445,222
Retained earnings................................................................. 2,362,286 2,362,286
Guaranteed obligation -- ESOP..................................................... (44,410) (44,410)
Unrealized appreciation of investments............................................ 13,948 13,948
Unrealized loss on foreign currency translation................................... (44,112) (44,112)
------------- --------------
Total common shareholders' equity............................................. 2,732,934 2,732,934
------------- --------------
Total capitalization.......................................................... $ 3,360,093 -
------------- --------------
------------- --------------
</TABLE>
21
<PAGE>
MARKET PRICES OF ST. PAUL COMMON STOCK
St. Paul Common Stock is traded on the NYSE under the symbol "SPC". At
- , 1995, there were - holders of record of St. Paul Common Stock and
- shares outstanding. The following table sets forth the high and low sale
prices for St. Paul Common Stock, as reported by the NYSE, for the periods
indicated. All amounts presented reflect the effect of a two-for-one stock split
in 1994.
<TABLE>
<CAPTION>
CASH
DIVIDEND
CALENDAR YEAR HIGH LOW DECLARED
- --------------------------------------------------------------------------------- ------- ------- -----------
<S> <C> <C> <C>
1993:
1st Quarter.................................................................... $41 5/8 $37 3/4 $ .35
2nd Quarter.................................................................... 41 7/16 39 1/4 .35
3rd Quarter.................................................................... 46 11/16 40 5/16 .35
4th Quarter.................................................................... 48 1/2 43 1/4 .35
1994:
1st Quarter.................................................................... $44 3/8 $38 13/16 $ .375
2nd Quarter.................................................................... 41 11/16 37 7/8 .375
3rd Quarter.................................................................... 44 1/2 39 1/2 .375
4th Quarter.................................................................... 45 1/8 40 .375
1995:
1st Quarter.................................................................... $51 $43 1/2 $ .40
2nd Quarter (through - ).................................................... - - --
</TABLE>
Cash dividends paid in 1993 and 1994 were $1.39 per share and $1.48 per
share, respectively. For the price of the St. Paul Common Stock as of a recent
date, see the cover page of this Prospectus.
THE ST. PAUL'S DIVIDEND POLICY
The St. Paul has declared a cash dividend of $.40 per share in the first
quarter of 1995, having paid a cash dividend of $.375 per share in respect of
each quarter of 1994. All amounts have been adjusted to reflect a two-for-one
stock split in 1994. The levels of future payments will be determined by The St.
Paul's Board of Directors based on such considerations as the level of earnings
from operations, capital requirements and the financial condition and prospects
of The St. Paul. The St. Paul and its majority-owned subsidiaries would also be
prohibited from paying dividends on St. Paul Common Stock at any time during a
deferral of interest payments with respect to the Convertible Subordinated
Debentures, when there is an Event of Default (as defined under "Description of
Securities Offered -- Description of the Convertible Subordinated Debentures --
Events of Default") under the Convertible Subordinated Debentures or when The
St. Paul has failed to make a payment required under the Guarantee. See
"Description of Securities Offered -- Description of the Guarantee -- Certain
Covenants of The St. Paul".
22
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following table presents selected financial, operating and balance sheet
data for each of the five fiscal periods set forth below. The data are derived
from the Company's audited consolidated financial statements. The table should
be read in conjunction with "Overview of 1994 Results" and the consolidated
financial statements and the notes thereto incorporated by reference in this
Prospectus. Numbers of shares and per share figures reflect a two-for-one stock
split in June 1994.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Premiums earned......................... $ 3,412,081 $ 3,178,338 $ 3,143,246 $ 3,146,238 $ 2,893,959
Net investment income................... 694,594 661,106 666,374 675,604 669,989
Insurance brokerage fees and
commissions............................ 303,152 283,680 280,836 284,702 256,354
Investment banking-asset management..... 211,789 241,730 218,825 175,610 126,607
Realized gains(1)....................... 41,974 58,254 155,735 38,008 9,864
Other................................... 37,695 37,064 33,676 31,538 48,464
----------- ----------- ----------- ----------- -----------
Total revenues...................... 4,701,285 4,460,172 4,498,692 4,351,700 4,005,237
----------- ----------- ----------- ----------- -----------
Insurance losses and loss adjustment
expenses............................... 2,461,698 2,303,738 2,690,046 2,365,569 2,119,776
Policy acquisition, operating and
administrative expenses(2)............. 1,636,428 1,593,063 1,998,156 1,422,511 1,352,034
Interest expense........................ 39,581 40,765 35,553 35,559 29,522
Income tax expense...................... 120,750 94,997 7,458 122,999 112,635
Cumulative net benefit of accounting
changes, net of taxes.................. 0 0 76,483 0 0
----------- ----------- ----------- ----------- -----------
Net income (loss)....................... $ 442,828 $ 427,609 $ (156,038) $ 405,062 $ 391,270
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Fully diluted net income per common
share.................................. $4.93 $4.73 $(1.94) $4.50 $4.16
Cash dividends declared per common
share.................................. $1.50 $1.40 $1.36 $1.30 $1.20
BALANCE SHEET DATA:
Total assets............................ $17,495,820 $17,149,196 $15,392,054 $14,744,717 $13,907,293
Total debt.............................. 622,624 639,729 566,717 486,779 473,829
Change in unrealized appreciation of
investments, net of taxes(3)........... (574,896) 525,175 (23,815) 55,093 (67,558)
Common shareholders' equity............. 2,732,934 3,005,128 2,202,499 2,532,841 2,196,371
Book value per common share............. 32.46 35.47 26.18 29.78 26.00
Number of common shares outstanding..... 84,202,417 84,714,676 84,118,554 85,042,484 84,468,058
UNDERWRITING OPERATIONS:
GAAP underwriting result................ $ (113,008) $ (150,255) $ (566,886) $ (163,782) $ (120,730)
Statutory combined ratio:(4)............
Loss and loss expense ratio........... 72.1 72.5 85.6 75.2 73.2
Underwriting expense ratio............ 30.2 32.0 32.2 29.4 30.0
----------- ----------- ----------- ----------- -----------
Combined ratio........................ 102.3 104.5 117.8 104.6 103.2
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Combined ratio including policyholders'
dividends.............................. 102.3 104.7 118.2 105.0 104.2
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
- ------------------------------
(1) 1992 realized gains include $98 million from the sale of a minority
interest in The John Nuveen Company.
(2) 1992 operating and administrative expenses include a $365 million
write-down of the goodwill associated with the Company's investment in
Minet.
(3) The change for 1993 includes an increase of $502 million due to the
adoption of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".
(4) The combined ratio is not derived from the audited consolidated financial
statements.
</TABLE>
23
<PAGE>
OVERVIEW OF 1994 RESULTS
In 1994, a year marked by highly competitive market conditions in the
property-liability insurance industry, the Company achieved its best
underwriting result since 1988 and recorded its second consecutive year of
record earnings. The primary contributor to pretax earnings in 1994 was the
underwriting segment, where fundamental improvements in underwriting performance
offset catastrophe losses that were the third-worst in the Company's history.
The St. Paul's insurance brokerage operation, Minet continued to make progress
in realigning its business structure, while a difficult market environment
resulted in a decline in the earnings for Nuveen after its record results in the
prior year.
Net income of $443 million in 1994 was the highest annual total in the
Company's history, surpassing 1993's previous record of $428 million. Net income
in 1993 included an income tax benefit of $15 million, or $0.17 per share,
resulting from the impact of an increase in the statutory federal tax rate on
The St. Paul's deferred tax asset.
The Company's operating earnings, which exclude after-tax realized
investment gains, were $414 million in 1994, compared with earnings of $387
million in 1993 and a loss of $334 million in 1992.
Consolidated revenues increased 5% in 1994 to $4.7 billion from $4.5 billion
in 1993, as increases in premiums earned, net investment income and insurance
brokerage fees and commissions more than offset declines in investment
banking-asset management revenues and realized gains.
The St. Paul's consolidated assets totaled $17.5 billion at the end of 1994,
compared with total assets of $17.1 billion at year-end 1993. A $1.2 billion
underlying increase in total assets was partially offset by an $848 million
decline in unrealized appreciation on the Company's fixed maturity portfolio,
due to rising interest rates in 1994. The St. Paul adopted Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," as of December 31, 1993, and began
recording its fixed maturity portfolio at estimated market value on the balance
sheet. At that time, with interest rates at a 20-year low, the market value of
that portfolio exceeded its amortized cost by $763 million. The year-end 1994
market value was $85 million below amortized cost. The adoption of SFAS No. 115
had no effect on net income.
UNDERWRITING
Consolidated written premiums of $3.6 billion in 1994 grew 14% over 1993
premiums of $3.2 billion. Premium growth was centered in The St. Paul's Personal
& Business Insurance operation, which included the results of Economy Fire &
Casualty Company ("Economy"), acquired in August 1993, for a full twelve months,
and in the Reinsurance operation, as a result of price increases, higher
retentions and new business.
The following table sets forth The St. Paul's consolidated GAAP underwriting
results and combined ratios for the years ended December 31, 1994, 1993 and
1992, respectively, and illustrates the fundamental improvement in underwriting
performance after factoring out the impact of catastrophes in each year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Actual:
GAAP underwriting loss........................................................... $ (113) $ (150) $ (567)
Combined ratio................................................................... 102.3 104.5 117.8
Adjustment:
Catastrophe losses............................................................... $ (105) $ (62) $ (305)
Impact on combined ratio......................................................... 3.1 1.9 9.7
--------- --------- ---------
Excluding catastrophe losses:
GAAP underwriting loss........................................................... $ (8) $ (88) $ (262)
Combined ratio................................................................... 99.2 102.6 108.1
--------- --------- ---------
</TABLE>
24
<PAGE>
In 1994, an earthquake in California, winter ice storms and summer hail
storms resulted in increased catastrophe losses over 1993, a year in which major
catastrophes were relatively few. Hurricane Andrew was the most significant
catastrophe in 1992, severely impacting results in the underwriting segment.
The St. Paul's Reinsurance and Specialized Commercial operations have been
the primary contributors to the improvement in noncatastrophe underwriting
performance since 1992. In both operations, The St. Paul has undertaken a
variety of pricing and underwriting actions designed to reduce the volatility of
underwriting results and further improve the quality of the book of business.
The Company's successful efforts to restrain expense growth throughout the
underwriting segment have also played a major role in improved underwriting
results. The St. Paul's underwriting expense ratio improved 1.8 points in 1994
to 30.2 from 32.0 in 1993, due to improved organizational efficiency and the
acquisition of Economy. The Company continued to restructure its principal
insurance underwriting subsidiary St. Paul Fire and Marine Insurance Company in
1994, an effort that began in 1993 with the goal of creating a more efficient
and customer-focused organization by streamlining the processes through which
The St. Paul acquires business and provides service to customers. In 1993, the
Company recorded restructuring charges of $21 million, primarily consisting of
severance and relocation expenses. The St. Paul incurred no additional
restructuring charges in 1994.
Pretax earnings in the underwriting segment of $561 million increased 11%
over 1993 pretax income of $507 million, reflecting improved underwriting
results and increased investment income. Pretax investment income totaled $675
million in 1994, compared with $646 million and $642 million in 1993 and 1992,
respectively. The increase in 1994 reflected the inclusion of Economy for a full
year. For several years prior to 1994, investment income levels were stagnant
due to a sustained period of falling interest rates.
25
<PAGE>
UNDERWRITING RESULTS BY OPERATION
The following table summarizes written premiums, underwriting results and
combined ratios for each of The St. Paul's underwriting operations for the last
three years. Several reclassifications have been made to the 1993 and 1992
information to conform to the 1994 presentation.
<TABLE>
<CAPTION>
% OF 1994 YEAR ENDED DECEMBER 31,
WRITTEN -------------------------------
PREMIUMS 1994 1993 1992
------------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Specialized Commercial
Written premiums.................................................... 30% $ 1,086 $ 1,000 $ 1,058
Underwriting result................................................. $ (89) $ (116) $ (244)
Combined ratio...................................................... 107.1 111.9 123.2
--------- --------- ---------
Personal & Business Insurance
Written premiums.................................................... 21% $ 747 $ 486 $ 350
Underwriting result................................................. $ (35) $ (29) $ (63)
Combined ratio...................................................... 104.6 105.8 117.7
--------- --------- ---------
Medical Services
Written premiums.................................................... 19% $ 690 $ 710 $ 712
Underwriting result................................................. $ 118 $ 133 $ 152
Combined ratio...................................................... 80.3 80.0 78.6
--------- --------- ---------
Commercial
Written premiums.................................................... 11% $ 418 $ 380 $ 499
Underwriting result................................................. $ (54) $ (58) $ (123)
Combined ratio...................................................... 112.6 115.4 123.9
--------- --------- ---------
Total Fire and Marine
Written premiums.................................................. 81% $ 2,941 $ 2,576 $ 2,619
Underwriting result............................................... $ (60) $ (70) $ (278)
Combined ratio.................................................... 101.0 102.6 110.5
--------- --------- ---------
Reinsurance
Written premiums.................................................... 14% $ 513 $ 431 $ 343
Underwriting result................................................. $ (22) $ (18) $ (241)
Combined ratio...................................................... 105.1 103.1 166.3
--------- --------- ---------
International
Written premiums.................................................... 5% $ 169 $ 172 $ 180
Underwriting result................................................. $ (31) $ (62) $ (48)
Combined ratio...................................................... 117.6 135.9 132.1
--------- --------- ---------
Total
Written premiums.................................................. 100% $ 3,623 $ 3,179 $ 3,142
Underwriting result............................................... $ (113) $ (150) $ (567)
Combined ratio:
Loss and loss expense ratio..................................... 72.1 72.5 85.6
Underwriting expense ratio...................................... 30.2 32.0 32.2
--------- --------- ---------
Combined ratio.................................................. 102.3 104.5 117.8
--------- --------- ---------
Combined ratio including policyholders' dividends................. 102.3 104.7 118.2
--------- --------- ---------
</TABLE>
Figures are on a GAAP basis, except for combined ratios, which are not derived
from the GAAP financial statements.
26
<PAGE>
INSURANCE BROKERAGE
The St. Paul's insurance brokerage subsidiary, Minet, provides insurance and
reinsurance broking and risk advisory services for major corporations and large
professional organizations worldwide. In recent years, Minet's operating results
have been negatively impacted by excess capacity in worldwide insurance markets
and the increasing trend away from commissions and toward fees as a basis of
determining prices for services performed. Minet's pretax loss of $10 million in
1994 represented a slight improvement over 1993 losses of $13 million. Brokerage
fees and commissions increased 7% to $316 million in 1994, reflecting growth in
Minet's reinsurance and wholesale brokerage operations and additional revenues
contributed by several newly acquired specialty brokerage firms. Expenses
increased in 1994 as a result of the expansion of retail specialty broking
teams.
INVESTMENT BANKING-ASSET MANAGEMENT
Nuveen, in which The St. Paul held a 77% interest at December 31, 1994
comprises The St. Paul's investment banking-asset management segment. Nuveen
markets tax-exempt open-end and closed-end (exchange-traded) managed fund shares
and provides investment advice to and administers the business affairs of its
family of managed funds. Nuveen also underwrites and trades municipal bonds and
tax-exempt unit investment trusts ("UITs") and provides pricing and surveillance
services to its UITs. Rising interest rates, declining municipal new issue
volume and increased investor uncertainty resulting from the increase in
interest rates caused Nuveen's total revenues to decline 10% in 1994 to $220
million from $246 million in 1993. Revenues in 1992 were $221 million.
Investment advisory fees earned on managed assets increased slightly over 1993.
Distribution revenues fell by $23 million, or 70%, from 1993 due to the decline
in the value of municipal bonds and interests in UITs held for future sale and
the decline in new investment product sales in 1994. The increase in 1993
revenues resulted primarily from growth in asset management fees. Total assets
under management fell to $29.7 billion at the end of 1994, compared with $32.7
billion at the end of 1993 and $27.3 billion at the end of 1992.
Nuveen's pretax earnings in 1994 of $95 million were the third highest in
its history. Earnings in 1993 and 1992 were $112 million and $98 million,
respectively. The St. Paul's consolidated results include Nuveen's earnings to
the extent of the Company's ownership percentage. The St. Paul's portion of
Nuveen's earnings in each of those years was $72 million, $83 million and $82
million, respectively.
27
<PAGE>
BUSINESS
GENERAL DESCRIPTION
The St. Paul is incorporated as a general business corporation under the
laws of the State of Minnesota. The St. Paul Companies, Inc. and its
subsidiaries comprise one of the oldest insurance organizations in the United
States, dating back to 1853. The St. Paul is a management company principally
engaged, through its subsidiaries, in three industry segments:
property-liability insurance underwriting (primarily through St. Paul Fire and
Marine Insurance Company), insurance brokerage (primarily through The St. Paul's
brokerage subsidiary, Minet) and investment banking-asset management (through
the Company's 77 percent stake in Nuveen). As a management company, The St. Paul
oversees the operations of its subsidiaries and provides them with capital,
management and administrative services. According to "Fortune" magazine's most
recent rankings, in terms of total assets, The St. Paul was the 25th largest
diversified financial company in the United States at December 31, 1993. At
March 23, 1995, The St. Paul and its subsidiaries employed approximately 12,900
persons.
The St. Paul's primary business is insurance underwriting, which accounted
for 88% of consolidated revenues in 1994. Insurance brokerage and investment
banking-asset management operations accounted for 7% and 5% of consolidated
revenues, respectively, in 1994.
The St. Paul depends primarily on dividends from its subsidiaries to pay
dividends to its shareholders, service its debt and pay expenses. Various state
laws and regulations limit the amount of dividends The St. Paul may receive from
St. Paul Fire and Marine Insurance Company. In 1995, approximately $312 million
will be available for dividends free from such restrictions. During 1994, The
St. Paul received cash dividends of approximately $201 million from St. Paul
Fire and Marine Insurance Company.
The following table lists the sources of The St. Paul's consolidated
revenues for each of the last three years:
<TABLE>
<CAPTION>
PERCENTAGE OF
CONSOLIDATED REVENUES
-------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Insurance Underwriting Operations:
Fire and Marine:
Specialized Commercial......................................................... 21.6% 22.7% 23.4%
Personal & Business............................................................ 15.7 10.9 7.6
Medical Services............................................................... 13.6 15.4 16.0
Commercial..................................................................... 8.1 9.4 12.0
----- ----- -----
Total Fire and Marine........................................................ 59.0 58.4 59.0
Reinsurance.................................................................... 10.3 8.9 8.0
International.................................................................. 3.3 4.0 2.9
Net Investment Income.......................................................... 14.4 14.5 14.3
Realized Investment Gains...................................................... 0.7 1.1 1.3
Other.......................................................................... 0.6 0.7 0.5
----- ----- -----
Total Insurance Underwriting................................................. 88.3 87.6 86.0
Insurance Brokerage.............................................................. 7.4 7.2 7.3
Investment Banking -- Asset Management........................................... 4.7 5.5 4.9
Parent Company and Eliminations.................................................. (0.4) (0.3) 1.8
----- ----- -----
Total........................................................................ 100.0% 100.0% 100.0%
----- ----- -----
----- ----- -----
</TABLE>
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<PAGE>
INSURANCE UNDERWRITING OPERATIONS
The St. Paul's insurance underwriting business is conducted through three
principal operations. The St. Paul conducts its U.S. direct insurance
underwriting operations under the name St. Paul Fire and Marine ("Fire and
Marine"). Fire and Marine underwrites property and liability insurance and
provides insurance-related products and services to commercial, professional and
individual customers throughout the United States. The St. Paul's reinsurance
business operates under the name St. Paul Re, which underwrites reinsurance for
North American and international insurance companies. The St. Paul's
International Underwriting division offers primary property-liability insurance
coverages in the United Kingdom and in other selected international markets,
primarily Canada and Western Europe.
The primary sources of the underwriting operations' revenues are premiums
earned from insurance and reinsurance policies and income earned from the
investment portfolio. According to the most recent industry statistics published
in "Best's Review" with respect to property-liability insurers doing business in
the United States, The St. Paul's underwriting operations ranked 15th on the
basis of 1993 written premiums.
SPECIALIZED COMMERCIAL. This is the largest of Fire and Marine's
operations, based on written premiums, and includes a number of individual
underwriting operations organized according to market segments or along product
lines. Specialized Commercial, in general, provides coverage for damage to the
customer's property (fire, inland marine and auto), liability for bodily injury
or damage to the property of others (general liability, auto liability and
excess), workers' compensation insurance, and various professional liability
coverages. Operations serving particular market segments consist of the
following: Construction, Technology, Financial Services, National Accounts
(large businesses), and Public Sector Services (government entities). The
following operations are organized along specific product lines: The Surety
operation underwrites surety bonds, primarily for construction contractors,
which guarantee that third parties will be indemnified against the
nonperformance of contractual obligations. Based on estimated 1994 premium data,
Fire and Marine's surety operation is the second-largest underwriter of surety
bonds in the United States. The Ocean Marine operation provides a variety of
property and liability insurance related to ocean and inland waterways traffic,
including cargo and hull property protection. The Professional Liability
operation markets errors and omissions coverage for lawyers, insurance agents
and other nonmedical professionals, including directors and officers. The
Surplus Lines operation underwrites products liability insurance, umbrella and
excess liability coverages, property insurance for high-risk classes of
business, and coverages for unique, sometimes one-of-a-kind risks. The Special
Property operation provides property insurance programs for large commercial
accounts.
Specialized Commercial also includes the results of Fire and Marine's
participation in insurance pools and associations, which provide specialized
underwriting skills and risk management services for the classes of business
that they underwrite. These pools and associations serve to increase the
underwriting capacity of the participating companies for insurance policies
where the concentration of risk is so high or the amount so large that a single
company could not prudently accept the entire risk.
Management's strategies for 1995 vary among specialty areas, based on
expected market conditions. In Ocean Marine, Surplus Lines, and Public Sector
Services, The St. Paul expects moderate growth as a result of current favorable
market conditions. In the Financial Services, Professional Liability and
Technology sectors, efforts will focus on developing new products that offer
innovative coverages and superior service, while in the Construction, Surety and
National Accounts sectors, The St. Paul's objective will be to deliver
high-quality loss control and claim service and innovative coverage options to
customers; the Company does not expect significant growth in these areas.
PERSONAL & BUSINESS INSURANCE. This operation provides property and
liability insurance coverages for individuals and small-business owners. For
individuals, a variety of monoline and package policies are offered to protect
personal property such as homes, automobiles and boats, as well as to provide
coverage for personal liability. For small-business owners, Personal & Business
Insurance markets general commercial property and liability coverages for
offices, retailers and family restaurants. Economy, a personal insurance
underwriter, is included in this operation and is in the process of being
29
<PAGE>
fully integrated into Fire and Marine's existing personal insurance operations.
The personal and small commercial market environment is becoming increasingly
competitive, making significant premium growth unlikely. Consequently,
management's focus in 1995 will be on improving operating efficiency, including
further integrating Economy with The St. Paul's other personal lines operations,
while maintaining high customer satisfaction. The Company intends to lower its
expense ratio in this sector as a result of reduced headcount and improved
operating efficiencies.
MEDICAL SERVICES. Medical Services underwrites professional liability,
property and general liability insurance for the health care industry delivery
system. Fire and Marine is the largest medical liability insurer in the United
States, with premium volume representing approximately 12% of the United States
market in 1993 based on premium data published in "Best's Review". While Medical
Services premium volume declined slightly in 1994, underwriting profit exceeded
$100 million for the fifth consecutive year. The Company has identified
objectives in several areas: increasing physicians and surgeons professional
liability market share in states where Medical Services has either not offered
this coverage or has not focused on developing significant market share;
continued expansion in the long-term care industry; and opportunities arising
from the consolidations, mergers and acquisitions that mark the current evolving
health care delivery system. Premium volume is expected to increase, and The St.
Paul expects Medical Services to continue to make a strong profit contribution
in 1995.
COMMERCIAL. Fire and Marine's Commercial underwriting operation offers
property and liability insurance to midsize commercial enterprises. Coverages
marketed include package, general liability, umbrella and excess liability,
commercial auto and fire, inland marine and workers' compensation. Commercial
premiums increased approximately 10% in 1994, and the underwriting loss declined
slightly from 1993. Commercial will continue to pursue new business while
seeking to maintain its underwriting discipline. After the recent restructuring
of this operation, the Company's objective is to maintain a favorable loss ratio
and to reduce the expense ratio, thereby improving results in this line.
REINSURANCE. St. Paul Re underwrites reinsurance in both domestic and
international insurance markets (referred to as "assumed reinsurance").
Reinsurance is an agreement between insurance companies to transfer risks.
According to data published by the Reinsurance Association of America, St. Paul
Re ranked as the eighth largest U.S. reinsurance underwriter based on written
premium volume for the first nine months of 1994. The Company expects additional
premium growth as a result of its agreement in late 1994 to purchase the book of
international property-liability reinsurance from a reinsurance underwriting
subsidiary of the CIGNA Corporation. Management intends to achieve growth
without sacrificing pricing adequacy by targeting certain specific initiatives.
A significant contributor to premium growth in 1995 will be accounts taken on as
a result of the purchase of the international book of business from CIGNA. The
opportunity for new and renewal accounts offered by this book fits well with St.
Paul Re's strategy to expand the scope and characteristics of its international
business.
INTERNATIONAL UNDERWRITING. The International Underwriting operation
includes primary insurance written outside the United States, mainly the United
Kingdom, Canada, Spain and the Republic of Ireland. It also includes insurance
written for foreign operations of multinational corporations based in the United
States, and insurance written to cover exposures in the United States for
foreign-based companies. This operation offers a range of commercial and
personal lines products and services tailored to meet the unique needs of
customers located outside the United States. The Company's plan includes
expanding by product line and geographically, especially in Europe. In Canada,
International will pursue several specialty niche markets. In the United
Kingdom, new business initiatives will focus on specific customer groups in both
the commercial and personal market sectors. The reduction of underwriting losses
for mature operations is an objective, along with new product introduction.
30
<PAGE>
PRINCIPAL MARKETS AND METHODS OF DISTRIBUTION
Fire and Marine's business is produced primarily through approximately 6,300
independent insurance agencies and national insurance brokers. Fire and Marine
maintains 12 regional offices in major cities throughout the United States and
90 additional service offices in the United States to respond to the needs of
agents, brokers and policyholders.
INSURANCE BROKERAGE OPERATIONS
The St. Paul's insurance brokerage segment, Minet, provides insurance and
reinsurance broking and risk advisory services for major corporations and large
professional organizations worldwide. According to the most recent rankings in
terms of total 1993 revenues by "Business Insurance," Minet is the tenth largest
international insurance brokerage organization in the world. Based in London,
Minet has 131 offices throughout North America, Europe, Africa, Asia and
Australia.
Minet operates through six business units, each focusing on distinct client
groups. GLOBAL PROFESSIONAL SERVICES provides insurance brokerage services to
the world's largest accounting firms, as well as law firms, law societies and
insurance companies. INTERNATIONAL RETAIL serves clients in Asia, Africa,
Australia and Europe. Retail brokers act on behalf of organizations such as
corporations and partnerships by providing risk management services and
procuring insurance coverages. INTERNATIONAL BROKING, through its wholesale
broking operations, provides access to Lloyd's of London and other markets for
the purpose of assembling underwriting capacity for specialized insurance
programs for clients throughout the world. Wholesale brokers act on behalf of
retail brokers by procuring specialty insurance coverages. Minet's NORTH
AMERICAN operations include retail brokerage and advisory services for
professional clients and major industrial and service corporations. This
business unit includes Minet's U.S. wholesale brokerage network, Swett &
Crawford, which, according to the most recent rankings in terms of total 1993
revenues by "Business Insurance", is the largest wholesale insurance broker in
the United States. REINSURANCE provides facultative and treaty intermediary
services to insurance companies throughout the world. MINET RISK SERVICES
provides consulting and actuarial services to clients worldwide, and also
provides management services to captive insurance companies.
Minet in recent years has expanded the scope of its specialty brokerage
operations by acquiring several small, specialized brokers throughout the world
to complement its existing worldwide client base and market network. The focus
will remain on developing new business opportunities in specialty market niches
where Minet has the expertise to offer value-added services. Minet will continue
to form new specialty broker teams and selectively pursue acquisitions that
complement existing operations. Expense containment initiatives will remain a
vital component of the Company's efforts toward achieving profitability.
INVESTMENT BANKING -- ASSET MANAGEMENT OPERATIONS
Nuveen is The St. Paul's investment banking-asset management subsidiary. The
St. Paul and St. Paul Fire and Marine Insurance Company currently hold a
combined 77% interest in Nuveen after selling a minority interest by means of an
initial public offering in 1992. Through John Nuveen & Co. Incorporated, a
wholly-owned subsidiary, Nuveen markets tax-exempt, open-end and closed-end
(exchange-traded) managed funds. Nuveen also underwrites and trades municipal
bonds and tax-exempt UITs. Nuveen markets its funds and UITs to individuals
through registered representatives associated with unaffiliated national and
regional broker-dealers and other financial organizations. Through its Municipal
Finance Department, the firm also serves state and local governments and their
authorities by financing community projects through both negotiated and
competitive financings.
Nuveen Advisory Corp., a wholly-owned subsidiary of John Nuveen & Co.
Incorporated, is investment adviser to the Nuveen-sponsored open-end mutual
funds and exchange-traded funds. Nuveen Institutional Advisory Corp., also a
wholly-owned subsidiary, is investment adviser to other Nuveen-sponsored
exchange-traded funds and also provides investment management services to trust
funds established by public utilities for the decommissioning of nuclear power
plants.
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<PAGE>
As the leading sponsor of tax-free UITs, Nuveen currently sponsors trusts
with assets of $16.8 billion in 50 different national, state and insured
portfolios. Nuveen also manages 21 tax-free, open-end mutual funds and money
market funds with net assets of approximately $6 billion in national, state,
insured and money market portfolios. In addition, Nuveen manages 70
exchange-traded funds with approximately $24 billion in net assets, which are
traded on national stock exchanges. Nuveen has its principal office in Chicago
and maintains regional sales offices in other cities across the United States.
Nuveen is a recognized market leader in municipal investing. The Company
expects that assets under management will begin to grow again as the volatility
in the municipal market subsides and Nuveen begins to offer new investment
products once again.
INVESTMENTS
Investments are an integral part of The St. Paul's insurance business. The
following table shows the composition and carrying value of The St. Paul's
investment portfolio for the last three years, followed by more information
about each of the major investment classes.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities(1)................................................... $ 8,829 $ 9,148 $ 7,722
Equities.............................................................. 531 549 494
Real estate........................................................... 528 489 435
Venture capital....................................................... 330 298 231
Short-term investments................................................ 898 725 639
Other investments..................................................... 47 48 56
--------- --------- ---------
Total investments................................................. $ 11,163 $ 11,256 $ 9,577
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------
(1) The carrying values for 1994 and 1993 represent market value. The amortized
costs for 1994 and 1993 were $8.9 billion and $8.4 billion, respectively.
The carrying value for 1992 is stated at amortized cost.
</TABLE>
FIXED MATURITIES. Fixed maturities constituted 79% of The St. Paul's
investment portfolio at December 31, 1994. The St. Paul determines the mix of
its investment in taxable and tax-exempt securities based on its current and
projected tax position and the relationship between taxable and tax-exempt
investment yields. As of December 31, 1994, taxable bonds accounted for 55% of
total fixed maturities, up from 51% in 1993. Fixed maturity purchases in 1994
were predominantly intermediate-term, investment-grade taxable securities.
Beginning December 31, 1993, the fixed maturities portfolio was carried on The
St. Paul's balance sheet at estimated market value, with unrealized appreciation
and depreciation (net of taxes) recorded in common shareholders' equity. At
December 31, 1994, the pretax unrealized depreciation on the portfolio totaled
$85 million.
The fixed maturities portfolio is managed conservatively to provide
reasonable return while limiting exposure to risks. Approximately 95% of the
fixed maturities portfolio is rated at investment grade levels (I.E., BBB or
better). Nonrated securities comprise the remainder of the portfolio. Most of
these are nonrated municipal bonds which, in management's view, would be
considered of investment-grade quality if rated.
EQUITIES. Equity holdings comprised 5% of The St. Paul's investments at
December 31, 1994, and consist of a diversified portfolio of common stocks,
which are held with the primary objective of achieving capital appreciation.
This portfolio provided $21 million of realized investment gains and $13 million
of dividend income in 1994, and its carrying value at December 31, 1994 included
$30 million of unrealized appreciation.
REAL ESTATE. The St. Paul's real estate holdings, which comprised 5% of
total investments at December 31, 1994, consist primarily of a diversified
portfolio of commercial office and warehouse buildings distributed throughout
the United States. This portfolio produced $28 million of pretax investment
income in 1994. The St. Paul does not invest in real estate mortgages.
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<PAGE>
VENTURE CAPITAL. Securities of small to medium-size companies spanning a
variety of industries comprised The St. Paul's investments in venture capital,
which accounted for 3% of total investments at December 31, 1994. These
investments are in the form of limited partnership interests or direct equity
investments, and their carrying value at December 31, 1994 included $69 million
of unrealized appreciation.
OTHER INVESTMENTS. The St. Paul's portfolio also includes short-term
securities and other miscellaneous investments, which in the aggregate comprised
8% of total investments at December 31, 1994.
LOSS RESERVES
Loss reserves are The St. Paul's largest liability. Reserves are established
on an undiscounted basis and reflect the Company's estimates of the total losses
and loss adjustment expenses it will ultimately have to pay under insurance and
reinsurance policies. These include losses that have been incurred but not yet
settled, and losses that have been incurred but not yet reported.
Reserve estimates reflect such variables as past loss experience, social
trends in damage awards, changes in judicial interpretation of legal liability
and policy coverages, and inflation. The St. Paul takes into account not only
monetary increases in the cost of what it insures, but also changes in societal
factors that influence jury verdicts and case law and, in turn, claim costs.
Due to the nature of many insurance coverages offered, which involve claims
that may not be settled for many years after they are incurred, subjective
judgments as to the Company's ultimate exposure to losses are an integral and
necessary component of the loss reserving process. Reserves are continually
reviewed, using a variety of statistical and actuarial techniques to analyze
current claim costs, frequency and severity data, and prevailing economic,
social and legal factors. Previously established reserves are adjusted as loss
experience develops and new information becomes available. These adjustments are
reflected in the financial results for the periods in which they were made.
Management believes that the reserves currently established for losses and Loss
Adjustment Expenses ("LAE") are adequate to cover their eventual costs.
The following table presents a reconciliation of beginning and ending loss
reserves for 1994, 1993 and 1992.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Loss and LAE reserves at beginning of year, as reported............... $ 9,185 $ 8,813 $ 8,246
Less reinsurance recoverables on unpaid losses at beginning of year... (1,545) (1,606) (1,558)
--------- --------- ---------
Net loss and LAE reserves at beginning of year...................... 7,640 7,207 6,688
Economy reserves at acquisition....................................... -- 280 --
Provision for losses and LAE for claims incurred:
Current year........................................................ 2,790 2,527 2,941
Prior years......................................................... (328) (223) (251)
--------- --------- ---------
Total incurred.................................................... 2,462 2,304 2,690
Losses and LAE payments for claims incurred:
Current year........................................................ (667) (580) (708)
Prior years......................................................... (1,566) (1,547) (1,452)
--------- --------- ---------
Total paid........................................................ (2,233) (2,127) (2,160)
Unrealized foreign exchange loss (gain)............................... 21 (24) (11)
--------- --------- ---------
Net loss and LAE reserves at end of year.......................... 7,890 7,640 7,207
Plus reinsurance recoverables on unpaid losses at end of year......... 1,533 1,545 1,606
--------- --------- ---------
Loss and LAE reserves at end of year, as reported................. $ 9,423 $ 9,185 $ 8,813
--------- --------- ---------
--------- --------- ---------
</TABLE>
33
<PAGE>
ST. PAUL CAPITAL
St. Paul Capital is a limited liability company formed under the laws of
Delaware and is managed by The St. Paul and The St. Paul's wholly-owned
subsidiary St. Paul Holdings, in their capacity as the members of St. Paul
Capital that own all of the Common Securities, which are nontransferable. All of
the Common Securities are and will be beneficially owned directly or indirectly
by the Company. The Managing Members are the sole managing members of St. Paul
Capital. St. Paul Capital's principal executive offices are located at 385
Washington Street, St. Paul, Minnesota 55102, telephone: (612) 221-7911. The
principal executive offices of the Managing Members are located at 385
Washington Street, St. Paul, Minnesota 55102, telephone: (612) 221-7911.
Pursuant to the L.L.C. Agreement, the members of St. Paul Capital that own
Common Securities have unlimited liability for the debts, obligations and
liabilities of St. Paul Capital in the same manner as a general partner of a
Delaware limited partnership (which do not include obligations to holders of
Preferred Securities in their capacity as such), to the extent not fully
satisfied and discharged by St. Paul Capital. That liability on the part of such
members is for the benefit of, and is enforceable by, the liquidating trustee of
St. Paul Capital in the event of its dissolution and is for the benefit of third
parties to whom St. Paul Capital owes such debts, obligations and liabilities.
The holders of Preferred Securities, in their capacity as members of St. Paul
Capital, are not liable for the debts, obligations or liabilities of St. Paul
Capital (subject to their obligation to repay any funds wrongfully distributed
to them).
St. Paul Capital exists for the sole purpose of issuing its Preferred
Securities and investing the proceeds thereof, together with substantially all
the capital contributed by the Managing Members in respect of the Common
Securities, in the Convertible Subordinated Debentures, and may engage in no
other activities now or in the future. The payment by St. Paul Capital of
dividends due on the Preferred Securities is solely dependent on its receipt of
interest payments on the Convertible Subordinated Debentures. To the extent that
aggregate interest payments on the Convertible Subordinated Debentures exceed
aggregate dividends on the Preferred Securities and such dividends have been
paid in full, St. Paul Capital may at times have excess funds, which shall be
distributed to the Company.
DESCRIPTION OF SECURITIES OFFERED
The securities offered hereby are - % Convertible Monthly Income
Preferred Securities of St. Paul Capital with a liquidation preference of $50
per security. The Preferred Securities are convertible at any time prior to the
Conversion Expiration Date, at the option of the holder and in the manner
described herein, into shares of St. Paul Common Stock at an initial conversion
rate of - shares of St. Paul Common Stock for each Preferred Security
(equivalent to a conversion price of $ - per share of St. Paul Common Stock),
subject to adjustment in certain circumstances. The Preferred Securities are
guaranteed, to the extent described herein, by The St. Paul as to dividends, the
Redemption Price and cash and other distributions payable on liquidation. In
certain circumstances, the holders of a majority of the aggregate liquidation
preference of the Preferred Securities then outstanding can direct the
Conversion Agent to exchange all of the Preferred Securities for all of the
Convertible Subordinated Debentures and immediately thereafter to exchange the
Convertible Subordinated Debentures and any accrued and unpaid interest thereon,
on behalf of such holders, for Depositary Shares, each representing a 1/ - th
interest in a share of St. Paul Series C Convertible Preferred Stock.
The following is a description of the material terms of the Preferred
Securities; the St. Paul Series C Convertible Preferred Stock and the Depositary
Shares representing such stock for which the Preferred Securities may be
exchanged; the Guarantee pursuant to which The St. Paul will guarantee, to the
extent described therein, certain payments with respect to the Preferred
Securities; the Convertible Subordinated Debentures and the Indenture pursuant
to which the Convertible Subordinated Debentures will be issued (the
"Indenture"); and the St. Paul Common Stock into which the Preferred Securities
may be converted.
34
<PAGE>
PREFERRED SECURITIES
THE FOLLOWING SUMMARY OF THE PRINCIPAL TERMS AND PROVISIONS OF THE PREFERRED
SECURITIES DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO, THE L.L.C. AGREEMENT, THE FORM OF WHICH HAS BEEN
FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART.
GENERAL
All of the Common Securities of St. Paul Capital are and will be
beneficially owned directly or indirectly by The St. Paul at all times while the
Preferred Securities are outstanding. The L.L.C. Agreement authorizes and
creates the Preferred Securities, which represent preferred limited liability
company interests in St. Paul Capital. The preferred limited liability company
interests represented by the Preferred Securities will have a preference with
respect to cash distributions and amounts payable on liquidation and redemption
over the Common Securities of St. Paul Capital. The Preferred Securities, as
preferred limited liability company interests, do not have a par value. The
L.L.C. Agreement does not permit the issuance of other limited liability company
interests without the prior approval of holders of not less than 66 2/3% of the
aggregate liquidation preference of the Preferred Securities then outstanding.
Holders of Preferred Securities will have no preemptive rights.
St. Paul Capital is and will be managed by the Managing Members at all times
while the Preferred Securities are outstanding and the Managing Members are and
will be the sole managing members of St. Paul Capital. Holders of the Preferred
Securities will not have the right to remove or replace the Managing Members.
DIVIDENDS
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions from St. Paul Capital, accruing from the date of original
issuance and payable monthly in arrears on the last day of each calendar month
of each year, commencing - , 1995 ("dividends"). The dividends payable on
each Preferred Security will be fixed at a rate per annum of $ - or - % of
the liquidation preference of $50. The amount of dividends payable for any
period will be computed on the basis of twelve 30-day months and a 360-day year
and, for any period shorter than a full month, will be computed on the basis of
the actual number of days elapsed in such period. Payment of dividends is
limited to the funds held by St. Paul Capital and legally available for
distribution. See "-- Description of the Convertible Subordinated Debentures --
Interest" and "-- Description of the Guarantee -- General".
Dividends on the Preferred Securities must be declared monthly and paid on
the last day of each calendar month to the extent that St. Paul Capital has
funds legally available for the payment of such dividends and cash on hand
sufficient to make such payments. It is anticipated that St. Paul Capital's
funds will be limited principally to payments received under the Convertible
Subordinated Debentures in which St. Paul Capital will invest the proceeds from
the offering made hereby. If The St. Paul fails to make interest payments on the
Convertible Subordinated Debentures, St. Paul Capital would not have sufficient
funds to pay dividends on the Preferred Securities. The payment of dividends (if
and to the extent declared) is guaranteed by The St. Paul as and to the extent
set forth under "-- Description of the Guarantee". The Guarantee is a full and
unconditional guarantee from the time of its issuance, but does not apply to any
payment of dividends unless and until such dividends are declared.
The St. Paul has the right under the Indenture to defer, from time to time,
interest payments on the Convertible Subordinated Debentures for up to 60
months. Monthly dividends on the Preferred Securities would be deferred (but
Additional Dividends would continue to accumulate monthly) by St. Paul Capital
during any such deferral of interest payments. St. Paul Capital will give
written notice of The St. Paul's deferral of interest payments to the holders of
Preferred Securities no later than the last date on which it would be required
to notify the NYSE of the record or payment date of the related dividend, which
is currently 10 days prior to such record or payment date. See "Investment
Considerations -- Option to Defer Payment of Dividends," "Description of
Securities Offered -- Preferred Securities --
35
<PAGE>
Additional Dividends" and "-- Description of the Convertible Subordinated
Debentures -- Option to Defer Interest Payments". Any failure by The St. Paul to
make interest payments on the Convertible Subordinated Debentures in the absence
of a deferral would constitute an Event of Default under the Indenture. The
failure of holders of Preferred Securities to receive dividends on the Preferred
Securities in full (including arrearages) for 15 consecutive months (including
any such failure caused by a deferral of interest payments on the Convertible
Subordinated Debentures) would trigger the right of holders of a majority of the
aggregate liquidation preference of the Preferred Securities then outstanding,
voting as a class at a special meeting of members called for such purpose or by
written consent, to direct the conversion and exchange agent for the Preferred
Securities (the "Conversion Agent") to exchange all of the Preferred Securities
then outstanding for Convertible Subordinated Debentures, and immediately
thereafter, to exchange such Convertible Subordinated Debentures and any accrued
and unpaid interest thereon, on behalf of the holders, for Depositary Shares,
each representing 1/ - th of a share of St. Paul Series C Convertible
Preferred Stock, at the Exchange Price. "Exchange Price" means one Depositary
Share for each $ - principal amount of Convertible Subordinated Debentures
(which rate of exchange is equivalent to each of (i) one Depositary Share for
each Preferred Security, (ii) one share of St. Paul Series C Convertible
Preferred Stock for each $ - principal amount of Convertible Subordinated
Debentures and (iii) one share of St. Paul Series C Convertible Preferred Stock
for each - Preferred Securities). See "-- Optional Exchange for Depositary
Shares".
Dividends declared on the Preferred Securities will be payable to the
holders thereof as they appear on the books and records of St. Paul Capital on
the relevant record dates, which will be one Business Day (as defined below)
prior to the relevant payment dates. Subject to any applicable laws and
regulations and the L.L.C. Agreement, each such payment will be made as
described under "-- Book-Entry-Only Issuance -- The Depository Trust Company"
below. In the event that any date on which dividends are payable on the
Preferred Securities is not a Business Day, then payment of the dividend payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay). If such
Business Day is in the next succeeding calendar year, however, the payment will
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. A "Business Day" means any day other
than a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
ADDITIONAL DIVIDENDS
St. Paul Capital shall be required to declare and pay additional dividends
on the Preferred Securities upon any dividend arrearages in respect of the
Preferred Securities in order to provide, in effect, monthly compounding on such
dividend arrearages. The amounts payable to effect such monthly compounding on
dividend arrearages in respect of the Preferred Securities are referred to
herein as "Additional Dividends".
CERTAIN RESTRICTIONS ON ST. PAUL CAPITAL
If accumulated and unpaid dividends have not been paid in full on the
Preferred Securities, St. Paul Capital may not:
(i) pay, or declare and set aside for payment, any dividends on any
other limited liability company interests, including the Common Securities;
or
(ii) redeem, purchase, or otherwise acquire any other limited liability
company interests, including the Common Securities;
until, in each case, such time as all accumulated and unpaid dividends on all of
the Preferred Securities shall have been paid in full for all dividend periods
terminating on or prior to the date of such payment or the date of such
redemption, purchase, or acquisition, as the case may be.
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If accumulated and unpaid dividends have been paid in full on the Preferred
Securities for all prior whole dividend periods, then holders of Preferred
Securities will not be entitled to receive or share in any dividends paid,
declared or set aside for payment on any other limited liability company
interest in St. Paul Capital, including the Common Securities.
CONVERSION RIGHTS
GENERAL. The Preferred Securities will be convertible at any time prior to
the Conversion Expiration Date, at the option of the holder thereof and in the
manner described below, into shares of St. Paul Common Stock at an initial
conversion rate of - shares of St. Paul Common Stock for each Preferred
Security (equivalent to a conversion price of $ - per share of St. Paul Common
Stock), subject to adjustment as described below under "-- Conversion Price
Adjustments". Whenever The St. Paul issues shares of St. Paul Common Stock upon
conversion of Preferred Securities, The St. Paul will issue, together with each
such share of St. Paul Common Stock, one right entitling the holder thereof,
under certain circumstances, to purchase Series A Preferred Stock of The St.
Paul (or other securities in lieu thereof) pursuant to the Rights Agreement, or
any similar rights issued to holders of Common Stock of The St. Paul in addition
thereto or in replacement therefor (such rights, together with any additional or
replacement rights, being collectively referred to as the "Stock Purchase
Rights"), whether or not such Stock Purchase Rights shall be exercisable at such
time, but only if such Stock Purchase Rights are issued and outstanding and held
by other holders of St. Paul Common Stock (or are evidenced by outstanding share
certificates representing Common Stock) at such time and have not expired or
been redeemed. The Stock Purchase Rights will expire on December 19, 1999,
subject to extension to December 18, 2002 under certain circumstances or earlier
redemption by The St. Paul. A holder of a Preferred Security wishing to exercise
its conversion right shall surrender such Preferred Security, together with an
irrevocable conversion notice, to the Conversion Agent which shall, on behalf of
such holder, exchange the Preferred Security for a portion of the Convertible
Subordinated Debentures and immediately convert such Convertible Subordinated
Debentures and any accrued and unpaid interest thereon into St. Paul Common
Stock. The St. Paul's delivery upon conversion of the fixed number of shares of
St. Paul Common Stock into which the Convertible Subordinated Debentures are
convertible (together with the cash payment, if any, in lieu of fractional
shares) shall be deemed to satisfy The St. Paul's obligation to pay the
principal amount at maturity of the portion of Convertible Subordinated
Debentures so converted and any unpaid interest accrued on such Convertible
Subordinated Debentures at the time of such conversion. For a discussion of the
taxation of such an exchange to holders, including the possibility that holders
who exchange their Preferred Securities for St. Paul Common Stock may be subject
to additional income tax to the extent accrued but unpaid interest on the
Convertible Subordinated Debentures is converted into accumulated and unpaid
dividends on the St. Paul Common Stock received upon conversion of the Preferred
Securities, see "Certain Federal Income Tax Considerations -- Exchange of
Preferred Securities for St. Paul Stock". Holders may obtain copies of the
required form of the conversion notice from the Conversion Agent. Conversion
rights will terminate at the close of business on the Conversion Expiration
Date.
Holders of Preferred Securities on a dividend payment record date will be
entitled to receive the dividend payable on such securities on the corresponding
dividend payment date notwithstanding the conversion of such Preferred
Securities on or after such dividend payment record date and on or prior to such
dividend payment date. Except as provided in the immediately preceding sentence,
St. Paul Capital will make no payment or allowance for accumulated and unpaid
dividends, whether or not in arrears, on converted Preferred Securities. The St.
Paul will make no payment or allowance for dividends on the shares of St. Paul
Common Stock issued upon such conversion. Each conversion will be deemed to have
been effected immediately prior to the close of business on the day on which
notice was received by St. Paul Capital.
No fractional shares of St. Paul Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid in cash.
EXPIRATION OF CONVERSION RIGHTS. On and after - , and provided St. Paul
Capital is current in the payment of dividends on the Preferred Securities, St.
Paul Capital may, at its option, cause the
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conversion rights of holders of Preferred Securities to expire. St. Paul Capital
may exercise this option only if for 20 trading days within any period of 30
consecutive trading days, including the last trading day of such period, the
Current Market Price of St. Paul Common Stock exceeds 120% of the conversion
price of the Preferred Securities, subject to adjustment in certain
circumstances. In order to exercise its conversion expiration option, St. Paul
Capital must issue a press release for publication on the Dow Jones News Service
announcing the Conversion Expiration Date prior to the opening of business on
the second trading day after a period in which the condition in the preceding
sentence has been met, but in no event prior to - . The press release shall
announce the Conversion Expiration Date and provide the current conversion price
and Current Market Price of St. Paul Common Stock, in each case as of the close
of business on the trading day next preceding the date of the press release.
Notice of the expiration of Conversion Rights will be given by first-class
mail to the holders of the Preferred Securities not more than four Business Days
after St. Paul Capital issues the press release. The Conversion Expiration Date
will be a date selected by St. Paul Capital not less than 30 nor more than 60
days after the date on which St. Paul Capital issues the press release
announcing its intention to terminate conversion rights of Preferred Security
holders. In the event that St. Paul Capital does not exercise its conversion
expiration option, the Conversion Expiration Date with respect to the Preferred
Securities will be the earlier of the date of an Exchange Election referred to
below under "-- Optional Exchange for Depositary Shares," and two Business Days
preceding the date set for mandatory redemption of the Preferred Securities.
The term "Current Market Price" of St. Paul Common Stock for any day means
the last reported sale price, regular way on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the NYSE Consolidated
Transaction Tape, or, if the St. Paul Common Stock is not listed or admitted to
trading on the NYSE on such day, on the principal national securities exchange
on which the St. Paul Common Stock is listed or admitted to trading, if the St.
Paul Common Stock is listed on a national securities exchange, or the National
Market System of the National Association of Securities Dealers, Inc., or, if
the St. Paul Common Stock is not quoted or admitted to trading on such quotation
system, on the principal quotation system on which the St. Paul Common Stock may
be listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the St. Paul Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE member
firm selected from time to time by the Board of Directors of The St. Paul for
that purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors.
CONVERSION PRICE ADJUSTMENTS -- GENERAL. The conversion price will be
subject to adjustment in certain events including, without duplication: (i) the
payment of dividends (and other distributions) payable exclusively in St. Paul
Common Stock on any class of capital stock of The St. Paul; (ii) the issuance to
all holders of St. Paul Common Stock of rights or warrants entitling holders of
such rights or warrants to subscribe for or purchase St. Paul Common Stock at
less than the Current Market Price; (iii) subdivisions and combinations of St.
Paul Common Stock; (iv) the payment of dividends (and other distributions) to
all holders of St. Paul Common Stock consisting of evidences of indebtedness of
The St. Paul, securities or capital stock, cash, or assets (including
securities, but excluding those rights, warrants, dividends, and distributions
referred to in clause (iii) and dividends and distributions paid exclusively in
cash); (v) the payment of dividends (and other distributions) on St. Paul Common
Stock paid exclusively in cash, excluding (A) cash dividends that do not exceed
the per share amount of the immediately preceding regular cash dividend (as
adjusted to reflect any of the events referred to in clauses (i) through (vi) of
this sentence), and (B) cash dividends if the annualized per share amount
thereof does not exceed 15% of the last sale price of St. Paul Common Stock, as
reported on the NYSE Consolidated Transaction Tape, on the trading day
immediately preceding the date of declaration of such dividend; and (vi) payment
in respect of a tender or exchange offer (other than an odd-lot offer) by
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The St. Paul or any subsidiary of The St. Paul for St. Paul Common Stock in
excess of 10% of the Current Market Price of St. Paul Common Stock on the
trading day next succeeding the last date tenders or exchanges may be made
pursuant to such tender or exchange offer.
The St. Paul from time to time may reduce the conversion price by any amount
selected by The St. Paul for any period of at least 20 days, in which case The
St. Paul shall give at least 15 days' notice of such reduction. The St. Paul
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors deems advisable to avoid or
diminish any income tax to holders of St. Paul Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain Federal Income Tax
Considerations -- Adjustment of Conversion Price".
No adjustment of the conversion price will be made upon the issuance of any
shares of St. Paul Common Stock pursuant to any present or future plan providing
for the reinvestment of dividends or interest payable on securities of The St.
Paul and the investment of additional optional amounts in shares of St. Paul
Common Stock under any such plan, or the issuance of any shares of St. Paul
Common Stock or options or rights to purchase such shares pursuant to any
present or future employee benefit plan or program of The St. Paul or pursuant
to any option, warrant, right, or exercisable, exchangeable or convertible
security outstanding as of the date the Preferred Securities were first
designated. There shall also be no adjustment of the conversion price in case of
the issuance of any St. Paul Common Stock (or securities convertible into or
exchangeable for St. Paul Common Stock), except as specifically described above.
If any action would require adjustment of the conversion price pursuant to more
than one of the anti-dilution provisions, only one adjustment shall be made and
such adjustment shall be the amount of adjustment that results in the highest
absolute value to holders of the Preferred Securities. No adjustment in the
conversion price will be required unless such adjustment would require an
increase or decrease of at least 1% of the conversion price, but any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment.
CONVERSION PRICE ADJUSTMENTS -- MERGER, CONSOLIDATION OR SALE OF ASSETS OF
THE ST. PAUL. In the event that The St. Paul is a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the assets of The St. Paul, recapitalization or
reclassification of St. Paul Common Stock or any compulsory share exchange (each
of the foregoing being referred to as a "Transaction")), in each case, as a
result of which shares of St. Paul Common Stock shall be converted into the
right (i) in the case of any Transaction other than a Transaction involving a
Common Stock Fundamental Change (as defined below), to receive securities, cash
or other property, each Preferred Security shall thereafter be convertible into
the kind and amount of securities, cash and other property receivable upon the
consummation of such Transaction by a holder of that number of shares of St.
Paul Common Stock into which a Preferred Security was convertible immediately
prior to such Transaction, or (ii) in the case of a Transaction involving a
Common Stock Fundamental Change, to receive common stock of the kind received by
holders of St. Paul Common Stock (but in each case after giving effect to any
adjustment discussed below relating to a Fundamental Change if such Transaction
constitutes a Fundamental Change). The holders of Preferred Securities will have
no voting rights with respect to any Transaction described in this section.
If any Fundamental Change occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each Preferred
Security shall be convertible solely into common stock of the kind received by
holders of St. Paul Common Stock as a result of such Common Stock Fundamental
Change.
The conversion price in the case of any transaction involving a Fundamental
Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined below),
the conversion price of the Preferred Security will thereupon become the
lower of (A) the conversion price in effect immediately prior to such
Non-Stock Fundamental Change, but after giving effect to any other prior
adjustments, and (B) the result obtained by multiplying the greater of the
Applicable Price (as
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defined below) or the then applicable Reference Market Price (as defined
below) by a fraction of which the numerator will be $ - and the
denominator will be an amount per Preferred Security determined by the
Managing Members in their sole discretion, after consultation with an
investment banking firm, to be the equivalent of the hypothetical redemption
price that would have been applicable if the Preferred Securities had been
redeemable during such period; and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of the Preferred Securities in effect immediately prior to such Common
Stock Fundamental Change, but after giving effect to any other prior
adjustments, will thereupon be adjusted by multiplying such conversion price
by a fraction of which the numerator will be the Purchaser Stock Price (as
defined below) and the denominator will be the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which (A)
100% of the value of the consideration received by a holder of St. Paul
Common Stock is common stock of the successor, acquiror, or other third
party (and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the St. Paul Common Stock will have been exchanged
for, converted into, or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror, or other third party, the
conversion price of the Preferred Securities in effect immediately prior to
such Common Stock Fundamental Change will thereupon be adjusted by
multiplying such conversion price by a fraction of which the numerator will
be one and the denominator will be the number of shares of common stock of
the successor, acquiror, or other third party received by a holder of one
share of St. Paul Common Stock as a result of such Common Stock Fundamental
Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Preferred Security would become convertible into the
securities, cash, or property receivable by a holder of the number of shares of
St. Paul Common Stock into which such Preferred Security was convertible
immediately prior to such Transaction. This change could substantially lessen or
eliminate the value of the conversion privilege associated with the Preferred
Securities. For example, if The St. Paul were acquired in a cash merger, each
Preferred Security would become convertible solely into cash and would no longer
be convertible into securities whose value would vary depending on the future
prospects of The St. Paul and other factors.
The foregoing conversion price adjustments are designed, in "Fundamental
Change" transactions where all or substantially all the St. Paul Common Stock is
converted into securities, cash, or property and not more than 50% of the value
received by the holders of St. Paul Common Stock consists of stock listed or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the National Market System of the National Association of
Securities Dealers, Inc. (E.G., a Non-Stock Fundamental Change, as defined
below), to increase the securities, cash, or property into which each Preferred
Security is convertible.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of St. Paul Common Stock (measured as described in the
definition of Applicable Price below) is lower than the then applicable
conversion price of a Preferred Security but greater than or equal to the
"Reference Market Price" (initially $ - , but subject to adjustment in certain
events as described below), the conversion price will be adjusted as described
above with the effect that each Preferred Security will be convertible into
securities, cash or property of the same type received by the holders of St.
Paul Common Stock in the transaction but in an amount per Preferred Security
determined by The St. Paul in its sole discretion, after consultation with an
investment banking firm, to be the equivalent of the hypothetical redemption
price that would have been applicable if the Preferred Securities had been
redeemable during such period.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of St. Paul Common Stock (measured as described in the
definition of Applicable Price) is lower than both
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the Applicable Conversion Price of a Preferred Security and the Reference Market
Price, the conversion price will be adjusted as described above but calculated
as though such initial value had been the Reference Market Price.
In a Fundamental Change transaction where all or substantially all the St.
Paul Common Stock is converted into securities, cash, or property and more than
50% of the value received by the holders of St. Paul Common Stock consists of
listed or National Market System traded common stock (E.G., a Common Stock
Fundamental Change, as defined below), the foregoing adjustments are designed to
provide in effect that (a) where St. Paul Common Stock is converted partly into
such common stock and partly into other securities, cash, or property, each
Preferred Security will be convertible solely into a number of shares of such
common stock determined so that the initial value of such shares (measured as
described in the definition of "Purchaser Stock Price" below) equals the value
of the shares of St. Paul Common Stock into which such Preferred Security was
convertible immediately before the transaction (measured as aforesaid) and (b)
where St. Paul Common Stock is converted solely into such common stock, each
Preferred Security will be convertible into the same number of shares of such
common stock receivable by a holder of the number of shares of St. Paul Common
Stock into which such Preferred Security was convertible immediately before such
transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of the St. Paul Common Stock receive only cash, the
amount of cash received by the holder of one share of St. Paul Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the Closing Prices for the St. Paul Common
Stock during the ten trading days prior to and including the record date for the
determination of the holders of St. Paul Common Stock entitled to receive such
securities, cash, or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, the date upon which the holders of the St. Paul Common Stock shall
have the right to receive such securities, cash, or other property (such record
date or distribution date being hereinafter referred to as the "Entitlement
Date"), in each case as adjusted in good faith by The St. Paul to appropriately
reflect any of the events referred to in clauses (i) through (vi) of the first
paragraph under "-- Conversion Price Adjustments -- General".
The term "Closing Price" means on any day the reported last sale price on
such day or in case no sale takes place on such day, the average of the reported
closing bid and asked prices in each case on the NYSE Consolidated Transaction
Tape or, if the stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which such stock is listed or
admitted to trading or if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any NYSE member firm, selected by the Managing Members for that
purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of The St. Paul) of the consideration received by holders of St. Paul
Common Stock consists of common stock that for each of the ten consecutive
trading days prior to the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the National Market System of the National Association of
Securities Dealers, Inc.; provided, however, that a Fundamental Change shall not
be a Common Stock Fundamental Change unless either (i) The St. Paul continues to
exist after the occurrence of such Fundamental Change and the outstanding
Preferred Securities continue to exist as outstanding Preferred Securities or
(ii) not later than the occurrence of such Fundamental Change, the outstanding
Preferred Securities are converted into or exchanged for shares of convertible
preferred stock of an entity succeeding to the business of The St. Paul, which
convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Preferred Securities.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the St. Paul Common Stock shall be exchanged for,
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converted into, acquired for, or constitute solely the right to receive
securities, cash, or other property (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization, or otherwise), provided, that, in the case of a plan involving
more than one such transaction or event, for purposes of adjustment of the
conversion price, such Fundamental Change shall be deemed to have occurred when
substantially all of the St. Paul Common Stock shall be exchanged for, converted
into, or acquired for or constitute solely the right to receive securities,
cash, or other property, but the adjustment shall be based upon the highest
weighted average per share consideration that a holder of St. Paul Common Stock
could have received in such transaction or event as a result of which more than
50% of the St. Paul Common Stock shall have been exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash, or
other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the Entitlement Date, as adjusted in good faith by
The St. Paul to appropriately reflect any of the events referred to in clauses
(i) through (vi) of the first paragraph under "-- Conversion Price Adjustments
- -- General".
The term "Reference Market Price" shall initially mean $ - (which is an
amount equal to 66 2/3% of the reported last sale price for the St. Paul Common
Stock on the NYSE Consolidated Transaction Tape on - , 1995), and in the
event of any adjustment to the conversion price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be adjusted
so that the ratio of the Reference Market Price to the conversion price after
giving effect to any such adjustment shall always be the same as the ratio of
$ - to the initial conversion price of the Preferred Securities.
OPTIONAL EXCHANGE FOR DEPOSITARY SHARES
Upon the occurrence of an Exchange Event (as defined below), the holders of
a majority of the aggregate liquidation preference of Preferred Securities then
outstanding, voting as a class at a special meeting of members called for such
purpose or by written consent, may, at their option, direct the Conversion Agent
to exchange all (but not less than all) of the Preferred Securities for
Convertible Subordinated Debentures and to immediately exchange such Convertible
Subordinated Debentures and any accrued and unpaid interest thereon, on behalf
of such holders, for Depositary Shares, each representing ownership of a
1/ - th of a share of St. Paul Series C Convertible Preferred Stock at the
Exchange Price. If the Preferred Securities are exchanged for Depositary Shares,
the L.L.C. Agreement provides that The St. Paul will use its best efforts to
have the Depositary Shares listed on the NYSE or other exchange on which the
Preferred Securities may then be listed.
Each Depositary Share will entitle the holder thereof to all proportional
rights and preferences of the St. Paul Series C Convertible Preferred Stock
(including dividend, voting, conversion, redemption and liquidation rights and
preferences). The St. Paul Series C Convertible Preferred Stock issued upon any
such exchange will have terms substantially similar to the terms of the
Preferred Securities (adjusted proportionately per Depositary Share), except
that, among other things, the holders of St. Paul Series C Convertible Preferred
Stock will have the right to elect two additional directors of The St. Paul
whenever dividends on the St. Paul Series C Convertible Preferred Stock are in
arrears for 18 months (including for this purpose any arrearage with respect to
the Preferred Securities) and will not be subject to mandatory redemption. See
"-- Description of St. Paul Series C Convertible Preferred Stock" and "--
Description of Depositary Shares". The terms of the St. Paul Series C
Convertible Preferred Stock provide that all accumulated and unpaid dividends
(including any Additional Dividends) on the Preferred Securities that are not
paid at the time of making an Exchange Election shall be treated as accumulated
and unpaid dividends on the St. Paul Series C Convertible Preferred Stock. See
"-- Description of St. Paul Series C Convertible Preferred Stock". For a
discussion of the taxation of such an exchange to holders, including the
possibility that holders who exchange their Preferred Securities for Depositary
Shares representing St. Paul Series C Convertible Preferred Stock may be subject
to additional income tax to the extent
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accrued but unpaid interest on the Convertible Subordinated Debentures is
converted into accumulated and unpaid dividends on the St. Paul Series C
Convertible Preferred Stock represented by the Depositary Shares received in
exchange for the Preferred Securities, see "Certain Federal Income Tax
Considerations -- Exchange of Preferred Securities for St. Paul Stock".
The failure of holders of Preferred Securities to receive, for 15
consecutive months, the full amount of dividend payments (including arrearages)
on the Preferred Securities, including any such failure caused by a deferral of
interest payments on the Convertible Subordinated Debentures, will constitute an
"Exchange Event". As soon as practicable, but in no event later than 30 days
after the occurrence of an Exchange Event, the Managing Members will, upon not
less than 15 days' written notice by first-class mail to the holders of
Preferred Securities, convene a meeting of such holders (an "Exchange Election
Meeting") for the purpose of acting on the matter of whether to cause the
Conversion Agent to exchange all Preferred Securities then outstanding for
Depositary Shares representing St. Paul Series C Convertible Preferred Stock in
the manner described above. If the Managing Members fail to convene such
Exchange Election Meeting within such 30-day period, the holders of at least 10%
of the outstanding Preferred Securities will be entitled to convene such
Exchange Election Meeting. Upon the affirmative vote of the holders of Preferred
Securities representing not less than a majority of the aggregate liquidation
preference of the Preferred Securities then outstanding at an Exchange Election
Meeting or, in the absence of such meeting, upon receipt by St. Paul Capital of
written consents signed by the holders of a majority of the aggregate
liquidation preference of the outstanding Preferred Securities, an election to
exchange all outstanding Preferred Securities on the basis described above (an
"Exchange Election") will be deemed to have been made.
Holders of Preferred Securities, by purchasing such Preferred Securities,
will be deemed to have agreed to be bound by these optional exchange provisions
in regard to the exchange of such Preferred Securities for Depositary Shares
representing St. Paul Series C Convertible Preferred Stock on the terms
described above.
REDEMPTION
If at any time following the Conversion Expiration Date, less than 5% of the
Preferred Securities offered hereby remain outstanding, such Preferred
Securities shall be redeemable at the option of St. Paul Capital, in whole but
not in part, at a redemption price of $ - per Preferred Security together with
accumulated and unpaid dividends (whether or not earned or declared), including
any Additional Dividends (the "Redemption Price").
Upon repayment by The St. Paul of the Convertible Subordinated Debentures,
including as a result of the acceleration of the Convertible Subordinated
Debentures upon the occurrence of an "Event of Default" described under "--
Description of the Convertible Subordinated Debentures -- Events of Default",
the Preferred Securities shall be subject to mandatory redemption, in whole but
not in part, by St. Paul Capital and the proceeds from such repayment will be
applied to redeem the Preferred Securities at the Redemption Price. In the case
of such acceleration, the Preferred Securities will only be redeemed when
repayment of the Convertible Subordinated Debentures has actually been received
by St. Paul Capital. The Preferred Securities are not otherwise redeemable for
any reason, including in the event that St. Paul Capital should become subject
to federal or state taxation. To the extent that such taxation or other events
cause St. Paul Capital to have insufficient funds to pay full dividends on the
Preferred Securities, the holders will have available to them the exchange
option described above. Upon the occurrence of certain Tax Events (as defined
herein), St. Paul Capital may be dissolved and the Convertible Subordinated
Debentures distributed to holders of Preferred Securities. See "-- Special Event
Dissolution".
SPECIAL EVENT DISTRIBUTION
If a Tax Event (as defined below) shall occur and be continuing, the
Managing Members may, and if an Investment Company Event (as defined below, and
collectively with a Tax Event, "Special Events") shall occur and be continuing,
the Managing Members shall, dissolve St. Paul Capital and cause the Convertible
Subordinated Debentures to be distributed to the holders of the Preferred
Securities in
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liquidation of St. Paul Capital, within 90 days following the occurrence of such
Special Event, provided that The St. Paul has reasonably determined that holders
will not recognize gain or loss for United States federal income tax purposes as
a result of such distribution. In the case of a Tax Event, however, the Managing
Members may elect to cause the Preferred Securities to remain outstanding.
"Tax Event" means that the Managing Members shall have obtained an opinion
of nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to or change in an interpretation or application of
such laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after
such date) or (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
generally accepted position on the date of issuance of the Preferred Securities,
which amendment or change is effective or such interpretation or pronouncement
is announced on or after the date of issuance of the Preferred Securities, there
is a substantial risk that (i) St. Paul Capital is taxable as a corporation for
United States federal income tax purposes or is otherwise subject to United
States federal income tax with respect to interest received on the Convertible
Subordinated Debentures, (ii) interest payable by The St. Paul to St. Paul
Capital on the Convertible Subordinated Debentures will not be deductible for
United States federal income tax purposes or (iii) St. Paul Capital is subject
to more than a DE MINIMIS amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in official interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that St. Paul Capital is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after the date of issuance of the
Preferred Securities; provided, that no Investment Company Event shall be deemed
to have occurred if the Managing Members obtain a written opinion of nationally
recognized independent counsel experienced in practice under the 1940 Act to the
effect that The St. Paul or St. Paul Capital has taken reasonable measures, in
its discretion, to avoid such Change in 1940 Act Law so that in the opinion of
such counsel, notwithstanding such Change in 1940 Act Law, St. Paul Capital is
not required to be registered as an "investment company" within the meaning of
the 1940 Act. The Indenture provides that if Convertible Subordinated Debentures
are so distributed, The St. Paul will use its best efforts to have such
Convertible Subordinated Debentures listed on the NYSE or other exchange on
which the Preferred Securities may then be listed.
After the date fixed for any distribution of the Convertible Subordinated
Debentures, upon dissolution of St. Paul Capital by the election of the Managing
Members following the occurrence of a Special Event, (i) the Preferred
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as the record holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Convertible Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing Preferred Securities not held by DTC or its nominee will be deemed
to represent Convertible Subordinated Debentures having a principal amount equal
to the aggregate of the stated liquidation preference of, and accrued and unpaid
dividends on, such Preferred Securities until such certificates are presented to
The St. Paul or its agent for transfer or reissuance.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution, or
winding-up of St. Paul Capital, the holders of Preferred Securities at the time
outstanding will be entitled to receive a liquidation preference of $50 per
Preferred Security plus all accumulated and unpaid dividends (whether or not
earned or declared), including any Additional Dividends thereon, to the date of
payment (the "Liquidation Distribution") out of the assets of St. Paul Capital
legally available for distribution to members prior to any distribution by St.
Paul Capital on its other limited liability company interests, including the
Common Securities.
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If, upon any liquidation of St. Paul Capital, the holders of Preferred
Securities are paid in full the aggregate Liquidation Distribution to which they
are entitled, then such holders will not be entitled to receive or share in any
other assets of St. Paul Capital thereafter available for distribution to any
other holders of limited liability company interests in St. Paul Capital,
including the Common Securities.
Pursuant to the L.L.C. Agreement, St. Paul Capital shall be dissolved and
its affairs shall be wound up upon the earliest to occur of: (i) the expiration
of the period fixed for the life of St. Paul Capital; (ii) the bankruptcy,
retirement, resignation, expulsion, dissolution, winding up or liquidation of
either Managing Member; (iii) the election of the Managing Members, with the
approval of the holders of 66 2/3% of the Preferred Securities; (iv) the entry
of a judicial decree of dissolution; (v) the election of the Managing Members in
connection with a Special Event; (vi) the redemption of all outstanding
Preferred Securities; or (vii) upon the written consent of all members of St.
Paul Capital.
MERGER, CONSOLIDATION OR SALE OF ASSETS OF ST. PAUL CAPITAL
The Managing Members are authorized and directed to conduct St. Paul
Capital's affairs and to operate St. Paul Capital in such a way that St. Paul
Capital will not be deemed to be an "investment company" required to be
registered under the 1940 Act or taxed as a corporation for federal income tax
purposes and so that the Convertible Subordinated Debentures will be treated as
indebtedness of The St. Paul for federal income tax purposes. In this
connection, the Managing Members are authorized to take any action not
inconsistent with applicable law, the Certificate of Formation of St. Paul
Capital or the L.L.C. Agreement that does not adversely affect the interests of
the holders of the Preferred Securities and that the Managing Members determine
in their sole discretion to be necessary or desirable for such purposes.
St. Paul Capital may not consolidate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets substantially as an
entirety to any entity, except as described below. St. Paul Capital may, in
order to avoid federal income tax or 1940 Act consequences adverse to The St.
Paul or St. Paul Capital or to the holders of the Preferred Securities, without
the consent of the holders of the Preferred Securities, consolidate, merge with
or into, or be replaced by a limited liability company, limited partnership or
trust organized as such under the laws of any state of the United States of
America; PROVIDED, that (i) such successor entity either (x) expressly assumes
all of the obligations of St. Paul Capital under the Preferred Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank, with respect to participation in the profits
or assets of the successor entity, at least as high as the Preferred Securities
rank with respect to participation in the profits or assets of St. Paul Capital,
(ii) The St. Paul expressly acknowledges such successor entity as the holder of
the Convertible Subordinated Debentures, (iii) such merger, consolidation, or
replacement does not cause the Preferred Securities (or any Successor
Securities) to be delisted by any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation or replacement does not cause the Preferred Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (v) such merger, consolidation or
replacement does not adversely affect the powers, preferences and other special
rights of the holders of the Preferred Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (vi) prior to such merger,
consolidation or replacement The St. Paul has received an opinion of nationally
recognized independent counsel to St. Paul Capital experienced in such matters
to the effect that (x) such successor entity will be treated as a partnership
for federal income tax purposes, (y) following such merger, consolidation or
replacement, The St. Paul and such successor entity will be in compliance with
the 1940 Act without registering thereunder as an investment company and (z)
such merger, consolidation or replacement will not adversely affect the limited
liability of the holders of the Preferred Securities.
VOTING RIGHTS
Except as provided below and under "-- Description of the Guarantee --
Amendments and Assignment," "-- Description of the Convertible Subordinated
Debentures -- Modification of the Indenture" and as otherwise required by law
and provided by the L.L.C. Agreement, the holders of the Preferred Securities
will have no voting rights.
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If (i) St. Paul Capital fails to pay dividends in full (including any
arrearages) on the Preferred Securities for 15 consecutive months (including any
such failure caused by a determination by The St. Paul to defer interest
payments on the Convertible Subordinated Debentures as described under "--
Description of the Convertible Subordinated Debentures -- Option to Defer
Interest Payments"); (ii) an Event of Default (as defined under "-- Description
of the Convertible Subordinated Debentures -- Events of Default") occurs and is
continuing with respect to the Convertible Subordinated Debentures; or (iii) The
St. Paul is in default under any of its payment obligations under the Guarantee
(as described under "-- Description of the Guarantee"), then the holders of the
Preferred Securities will be entitled to appoint and authorize a Special Trustee
to enforce St. Paul Capital's rights under the Convertible Subordinated
Debentures, enforce the rights of the holders of Preferred Securities under the
Guarantee and, to the extent permitted by law, declare and pay dividends on the
Preferred Securities. For purposes of determining whether St. Paul Capital has
failed to pay dividends in full for 15 consecutive months, dividends shall be
deemed to remain in arrears, notwithstanding any partial payments in respect
thereof, until all accumulated and unpaid dividends have been or
contemporaneously are paid. Not later than 30 days after such right to appoint a
Special Trustee arises and upon not less than 15 days' written notice by
first-class mail to the holders of Preferred Securities, the Managing Members
will convene a meeting to elect a Special Trustee. If the Managing Members fail
to convene such meeting within such 30-day period, the holders of 10% of the
aggregate liquidation preference of the Preferred Securities then outstanding
will be entitled to convene such meeting. In the event that, at any such
meeting, holders of less than a majority in aggregate liquidation preference of
Preferred Securities entitled to vote for the appointment of a Special Trustee
vote for such appointment, no Special Trustee shall be appointed. Any Special
Trustee so appointed shall vacate office immediately if St. Paul Capital (or The
St. Paul pursuant to the Guarantee) shall have paid in full all accumulated and
unpaid dividends (and any Additional Dividends) on the Preferred Securities or
such Event of Default or default, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special Trustee, The St. Paul will
retain all rights as obligor under the Convertible Subordinated Debentures,
including the right to defer interest payments as provided under "-- Description
of the Convertible Subordinated Debentures -- Option to Defer Interest
Payments", and any such deferral would not constitute a default under the
Indenture or enable a holder of Preferred Securities to require the payment of a
dividend that has not theretofore been declared.
In furtherance of the foregoing, and without limiting the powers of any
Special Trustee so appointed and for the avoidance of any doubt concerning the
powers of the Special Trustee, any Special Trustee, in its own name and as
trustee of an express trust, may institute a proceeding, including, without
limitation, any suit in equity, an action at law or other judicial or
administrative proceeding, to enforce St. Paul Capital's creditor rights
directly against The St. Paul to the same extent as St. Paul Capital and on
behalf of St. Paul Capital, and may prosecute such proceeding to judgment or
final decree, and enforce the same against The St. Paul and collect, out of the
property, wherever situated, of The St. Paul the monies adjudged or decreed to
be payable in the manner provided by law.
If any proposed amendment to the L.L.C. Agreement provides for, or the
Managing Members otherwise propose to effect, (x) any action that would
materially adversely affect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the L.L.C. Agreement or
otherwise (including, without limitation, the authorization or issuance of any
additional limited liability company interests in St. Paul Capital), or (y) the
dissolution, winding-up or termination of St. Paul Capital (other than in
connection with the exchange of Depositary Shares representing St. Paul Series C
Convertible Preferred Stock for Preferred Securities upon the occurrence of an
Exchange Event or as described under "-- Merger, Consolidation or Sale of Assets
of St. Paul Capital"), then the holders of outstanding Preferred Securities will
be entitled to vote on such amendment or action of the Managing Members (but not
on any other amendment or action), and such amendment or action shall not be
effective except with the approval of the holders of at least 66 2/3% or more of
the aggregate liquidation preference of the Preferred Securities then
outstanding; PROVIDED, HOWEVER, that no such approval shall be required if the
dissolution, winding-up or termination of St. Paul Capital is proposed or
initiated pursuant to the L.L.C. Agreement.
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The rights attached to the Preferred Securities will be deemed to be
materially adversely affected by the creation or issue of, and a vote of the
holders of Preferred Securities will be required for the creation or issue of,
any limited liability company interests in St. Paul Capital other than the
interests represented by the Preferred Securities and the interests of the
Managing Members.
So long as any Convertible Subordinated Debentures are held by St. Paul
Capital, the Managing Members shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Special Trustee or
exercising any trust or power conferred on the Special Trustee with respect to
the Convertible Subordinated Debentures, (ii) waive any past default, which is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Convertible Subordinated Debentures
shall be due and payable, (iv) consent to any amendment, modification or
termination of the Convertible Subordinated Debentures or of the Indenture
without, in each case, obtaining the prior approval of the holders of at least
66 2/3% or more of the aggregate liquidation preference of the Preferred
Securities then outstanding, PROVIDED, HOWEVER, that where a consent under the
Indenture would require the consent of each holder affected thereby, no such
consent shall be given by the Managing Members without the prior consent of each
holder of the Preferred Securities. The Managing Members shall not revoke any
action previously authorized or approved by a vote of holders of Preferred
Securities, without the approval of holders of Preferred Securities representing
66 2/3% or more of the aggregate liquidation preference of the Preferred
Securities then outstanding. The Managing Members shall notify all holders of
Preferred Securities of any notice of default received from the Trustee with
respect to the Convertible Subordinated Debentures.
Any required approval of holders of Preferred Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. St. Paul Capital will cause a notice of any meeting at which holders of
Preferred Securities are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken, to be mailed to each holder of
record of Preferred Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any matter on which such holders are entitled
to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary for the Preferred Securities. The
information in this section concerning DTC and DTC's book-entry system is based
upon information obtained from DTC. The Preferred Securities will be issued only
as fully-registered securities registered in the name of Cede & Co. (as nominee
for DTC). One or more fully-registered global Preferred Security certificates
will be issued, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
DTC 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. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
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"). Access to
the DTC 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").
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Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
a Preferred Security (a "Beneficial Owner") is in turn to be recorded on the
Direct or Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in Preferred Securities 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 Preferred Securities, except upon a resignation of DTC,
upon the occurrence of an Event of Default under the Convertible Subordinated
Debentures or upon a decision by St. Paul Capital to discontinue the book-entry
system for the Preferred Securities.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities 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 notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices with respect to the Preferred Securities shall be sent to
Cede & Co.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to St. Paul Capital 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
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Dividend payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, St. Paul Capital or The St. Paul, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of dividends to DTC is the responsibility of St. Paul Capital,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
St. Paul Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained, certificates representing the Preferred
Securities will be printed and delivered. If an Event of Default occurs under
the Convertible Subordinated Debentures or if St. Paul Capital decides to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary), certificates representing the Preferred Securities will
be printed and delivered.
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TRANSFER AGENT, REGISTRAR AND PAYING, CONVERSION AND EXCHANGE AGENT
The Chase Manhattan Bank (National Association) will act as Transfer Agent,
Registrar and Paying, Conversion and Exchange Agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be affected without
charge by or on behalf of St. Paul Capital, but upon payment (with the giving of
such indemnity as St. Paul Capital may require) in respect of any tax or other
government charges which may be imposed in relation to it.
DESCRIPTION OF ST. PAUL SERIES C CONVERTIBLE PREFERRED STOCK
AS DESCRIBED UNDER "-- PREFERRED SECURITIES -- OPTIONAL EXCHANGE FOR
DEPOSITARY SHARES" ABOVE, THE PREFERRED SECURITIES MAY BE EXCHANGED IN CERTAIN
CIRCUMSTANCES (FOLLOWING A PRIOR EXCHANGE FOR CONVERTIBLE SUBORDINATED
DEBENTURES HELD BY ST. PAUL CAPITAL) FOR DEPOSITARY SHARES REPRESENTING ST. PAUL
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK, PAR VALUE $ - PER SHARE. THE
FOLLOWING DESCRIPTION OF THE PRINCIPAL TERMS OF THE ST. PAUL SERIES C
CONVERTIBLE PREFERRED STOCK DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE ST. PAUL'S AMENDED AND RESTATED ARTICLES OF
INCORPORATION, AS AMENDED (THE "RESTATED ARTICLES"), AND THE CERTIFICATE OF
DESIGNATION OF THE ST. PAUL SERIES C CONVERTIBLE PREFERRED STOCK (THE
"CERTIFICATE OF DESIGNATION"), FORMS OF WHICH HAVE BEEN FILED AS EXHIBITS TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART.
The Board of Directors of The St. Paul has designated, and The St. Paul will
keep available, - shares ( - shares if the Underwriters' over-allotment
option is exercised in full) of St. Paul Series C Convertible Preferred Stock
for issuance upon exchange of the Preferred Securities for Depositary Shares,
each representing 1/ - th of a share of St. Paul Series C Convertible
Preferred Stock (as described under "-- Preferred Securities -- Optional
Exchange for Depositary Shares" above). At the time the Preferred Securities are
issued, all corporate action required in connection with the issuance of the St.
Paul Series C Convertible Preferred Stock and the deposit thereof with the
Depositary (as hereinafter defined) upon the making of an Exchange Election will
have been taken. The terms of the St. Paul Series C Convertible Preferred Stock
- -- including as to dividends, conversion and liquidation preference -- are
substantially similar to those of the Preferred Securities (adjusted
proportionately per Depositary Share) with the following principal exceptions:
(a) Accumulated and unpaid dividends (including any Additional Dividends
thereon) on the Preferred Securities, if any, at the time of the making of
an Exchange Election will become accumulated and unpaid dividends on the St.
Paul Series C Convertible Preferred Stock;
(b) If dividends are not paid on the St. Paul Series C Convertible
Preferred Stock for 18 monthly dividend periods (including for this purpose
any arrearage with respect to the Preferred Securities), the number of
directors of The St. Paul shall be increased by two persons and the holders
of the St. Paul Series C Convertible Preferred Stock will be entitled to
elect the persons to fill such positions; and
(c) Dividends on the St. Paul Series C Convertible Preferred Stock are
not subject to a deferral option, however, such dividends need not be
declared even if The St. Paul has funds legally available therefor and cash
on hand sufficient to pay dividends. In the event that The St. Paul fails to
declare dividends on the St. Paul Series C Convertible Preferred Stock, no
dividends would be payable on any other securities of The St. Paul ranking
pari passu with or junior to the St. Paul Series C Convertible Preferred
Stock.
If at any time following the Conversion Expiration Date, less than 5% of the
shares of St. Paul Series C Convertible Preferred Stock issued following an
Exchange Election remain outstanding, such shares of St. Paul Series C
Convertible Preferred Stock shall be redeemable, in whole but not in part, at
the option of The St. Paul at a redemption price of $ - per share (equivalent
to a redemption price of $ - per Depositary Share) together with accumulated
and unpaid dividends (whether or not earned or declared).
The St. Paul Series C Convertible Preferred Stock will rank senior to the
St. Paul Common Stock and the Series A Preferred Stock of The St. Paul with
respect to the payment of dividends and amounts upon liquidation, dissolution
and winding-up. The St. Paul Series C Convertible Preferred Stock will rank PARI
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PASSU (I.E., on a parity) with the Series B Preferred Stock of The St. Paul with
respect to the payment of dividends and amounts upon liquidation, dissolution or
winding-up. In the event dividends are not paid in full on either the Series B
Preferred Stock or the St. Paul Series C Convertible Preferred Stock, the
holders of the Series B Preferred Stock and the St. Paul Series C Convertible
Preferred Stock will share ratably with respect to any dividend payment in
proportion to the respective amounts of the accumulated and unpaid dividends due
on such preferred stock. Dividends on the St. Paul Series C Convertible
Preferred Stock will, upon declaration, become contractual obligations of The
St. Paul. See "Description of St. Paul Capital Stock -- Preferred Shares".
In the event of a voluntary or involuntary bankruptcy, liquidation,
dissolution or winding-up of The St. Paul, the holders of St. Paul Series C
Convertible Preferred Stock are entitled to receive out of the net assets of The
St. Paul, but before any distribution is made on any class of securities ranking
junior to the St. Paul Series C Convertible Preferred Stock, $ - per share
(equivalent to $ - per Depositary Share) in cash plus accumulated and unpaid
dividends (whether or not earned or declared) to the date of final distribution
to such holders. After payment of the full amount of the liquidation
distribution to which they are entitled, the holders of shares of St. Paul
Series C Convertible Preferred Stock will not be entitled to any further
participation in any distribution of assets of The St. Paul. In the event that
the assets available for distribution are insufficient to pay in full the
liquidation preference to the holders of the St. Paul Series C Convertible
Preferred Stock and any PARI PASSU (I.E., on a parity) preferred stock, the
holders of such preferred stock will share in the remaining assets, based on the
proportion of their liquidation preference to the entire amount of unpaid
liquidation preference.
So long as the Convertible Subordinated Debentures are exchangeable for the
Depositary Shares representing the St. Paul Series C Convertible Preferred
Stock, The St. Paul may not authorize or issue any other preferred stock ranking
senior to the St. Paul Series C Convertible Preferred Stock without the approval
of the holders of not less than 66 2/3% of the aggregate liquidation preference
of the Preferred Securities then outstanding. However, no such vote shall be
required for the issuance by The St. Paul of additional preferred stock ranking
PARI PASSU or junior to the St. Paul Series C Convertible Preferred Stock as to
the payment of dividends and amounts upon liquidation, dissolution and
winding-up.
DESCRIPTION OF DEPOSITARY SHARES
THE FOLLOWING SUMMARY OF THE TERMS OF THE DEPOSIT AGREEMENT (AS DEFINED
BELOW), DEPOSITARY SHARES AND DEPOSITARY RECEIPTS (AS DEFINED BELOW), DOES NOT
PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY, THE
PROVISIONS OF THE DEPOSIT AGREEMENT, THE FORM OF WHICH HAS BEEN FILED AS AN
EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART.
The St. Paul will cause to be issued receipts ("Depositary Receipts") for
Depositary Shares, each of which will represent 1/ - th of a share of St. Paul
Series C Convertible Preferred Stock. The shares of St. Paul Series C
Convertible Preferred Stock represented by Depositary Shares will be deposited
under a Deposit Agreement (the "Deposit Agreement") among The St. Paul and The
Chase Manhattan Bank (National Association) (the "Depositary") for the benefit
of the holders from time to time of the Depositary Receipts. Subject to the
terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, in proportion to the applicable fraction of a share of St. Paul Series
C Convertible Preferred Stock represented by such Depositary Share, to all the
rights and preferences of the St. Paul Series C Convertible Preferred Stock
represented thereby (including dividend, voting, conversion and liquidation
rights and preferences). The proportionate liquidation preference of each
Depositary Share will be $ - plus accumulated and unpaid dividends to the date
of payment, subject to certain limitations.
GENERAL
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Upon an Exchange Election by the holders of a
majority in aggregate liquidation preference of the Preferred Securities and
immediately following (i) the exchange by the Conversion Agent of all (but not
less than all) outstanding Preferred Securities for Convertible Subordinated
Debentures, (ii) the issuance of the St. Paul Series C Convertible Preferred
Stock and (iii) the delivery of such St. Paul Series C Convertible Preferred
Stock to the Depositary, The St. Paul will cause the Depositary to issue, on
behalf of The St. Paul, the Depositary Shares to the Conversion Agent, for the
account of the holders,
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in exchange for such Convertible Subordinated Debentures. Following an Exchange
Election, copies of the forms of Deposit Agreement and Depositary Receipt may be
obtained from The St. Paul or the Depositary, upon request, at the principal
office of the Depositary at which at any particular time its depositary business
may be administered (the "Depositary's Office"), which as of the date hereof is
4 Chase MetroTech Center, Brooklyn, New York 11245, Attention: Corporate Trust
Administration.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all dividends or other cash distributions
received in respect of the St. Paul Series C Convertible Preferred Stock to the
record holders of Depositary Shares in such amounts of such dividend or
distribution as are applicable to the number of such Depositary Shares owned by
such holders, subject to certain obligations of holders to file proofs,
certificates and other information and to pay certain charges and expenses to
the Depositary.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto in such amounts, as nearly as practicable, of such property
(including securities) received by it as are applicable to the number of such
Depositary Shares owned by such holders, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Depositary, unless The St. Paul determines that it
is not feasible to make such distribution, in which case The St. Paul may sell
such property and distribute the net proceeds from such sale to such holders.
WITHDRAWAL OF ST. PAUL SERIES C CONVERTIBLE PREFERRED STOCK
Upon surrender of Depositary Receipts representing at least - Depositary
Shares at the Depositary's Office, a holder is entitled to delivery at such
office, to or upon his order, of the number of whole shares of the St. Paul
Series C Convertible Preferred Stock and any money or other property represented
by such Depositary Shares. Holders of Depositary Shares will be entitled to
receive whole shares of the St. Paul Series C Convertible Preferred Stock on the
basis of one share of St. Paul Series C Convertible Preferred Stock for each
- Depositary Shares, but holders of such whole shares of St. Paul Series C
Convertible Preferred Stock will not thereafter be entitled to receive
Depositary Shares therefor. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of St. Paul Series C Convertible
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
VOTING THE ST. PAUL SERIES C CONVERTIBLE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the St. Paul
Series C Convertible Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to St. Paul Series C Convertible Preferred
Stock. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for the St. Paul Series C Convertible
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of St. Paul Series C Convertible
Preferred Stock (or fraction thereof) represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the amount
of St. Paul Series C Convertible Preferred Stock (or fractions thereof)
represented by such Depositary Shares in accordance with such instructions, and
The St. Paul will agree to take all reasonable action that may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of St. Paul Series C Convertible
Preferred Stock to the extent it does not receive specific instructions from the
holders of Depositary Shares representing those shares of St. Paul Series C
Convertible Preferred Stock.
CONVERSION OF ST. PAUL SERIES C CONVERTIBLE PREFERRED STOCK
The Depositary Receipts may be surrendered by holders thereof, at the
holders' option, at any time and from time to time, to the Depositary at the
Depositary's Office or at such other office or to such agents as the Depositary
may designate for such purpose with written instructions to the Depositary to
instruct The St. Paul to cause conversion of the whole or fractional shares of
St. Paul Series C Convertible Preferred Stock represented by the Depositary
Shares evidenced by such Receipts into whole shares of St. Paul Common Stock,
and The St. Paul has agreed that upon receipt of such instructions and any
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amounts payable in respect thereof, it will cause the delivery of (i) a
certificate or certificates evidencing the number of whole shares of St. Paul
Common Stock into which the St. Paul Series C Convertible Preferred Stock
represented by the Depositary Shares evidenced by such Depositary Receipt or
Receipts have been converted, and (ii) any money or other property to which the
holder is entitled. If the Depositary Shares represented by a Depositary Receipt
are to be converted in part only, a new Depositary Receipt or Receipts will be
issued for any Depositary Shares not to be converted.
On and after - , and provided that The St. Paul is current in the payment
of dividends on the St. Paul Series C Convertible Preferred Stock, The St. Paul
may, at its option, cause the conversion rights of holders of Depositary Shares
representing St. Paul Series C Convertible Preferred Stock to expire. The St.
Paul may exercise this option only if for 20 trading days within any period of
30 consecutive trading days, including the last trading day of such period, the
Current Market Price of St. Paul Common Stock exceeds 120% of the conversion
price of the Depositary Shares, subject to adjustment in certain circumstances.
In order to exercise its conversion expiration option, The St. Paul must issue a
press release announcing the Conversion Expiration Date and give notice by
first-class mail to holders of Depositary Shares in the manner provided for
holders of Preferred Securities under "-- Description of Preferred Securities --
Expiration of Conversion Rights". The Conversion Expiration Date will be a date
selected by The St. Paul which is not less than 30 and not more than 60 days
after the date on which The St. Paul issues the press release announcing its
intention to terminate conversion rights of holders of Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between The St. Paul and the Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least
66 2/3% of the Depositary Shares then outstanding. Each holder of a Depositary
Share at the time any amendment becomes effective will be deemed to have
consented and agreed to such amendment.
The Deposit Agreement may be terminated by The St. Paul or by the Depositary
if (i) all outstanding Depositary Shares have been redeemed, (ii) there has been
a final distribution in respect of the St. Paul Series C Convertible Preferred
Stock in connection with any liquidation, dissolution or winding up of The St.
Paul and such distribution has been distributed to the holders of Depositary
Receipts or (iii) each share of St. Paul Series C Convertible Preferred Stock
shall have been converted into shares of St. Paul Common Stock.
CHARGES OF DEPOSITARY
The St. Paul will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Depositary arrangements, the initial
deposit of the St. Paul Series C Convertible Preferred Stock, the redemption of
shares of St. Paul Series C Convertible Preferred Stock and the issuance of
shares of St. Paul Common Stock upon conversion. The St. Paul will pay the fees
and reasonable expenses of the Depositary in connection with the performance of
its duties under the Deposit Agreement. Holders of Depositary Receipts will pay
any other transfer or other taxes and governmental charges. If, at the request
of a holder of Depositary Receipts, the Depositary incurs charges or other
expenses for which it is not otherwise liable under the Deposit Agreement, such
holder will be liable for such charges and expenses.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to The St. Paul notice
of its election to do so, and The St. Paul may at any time remove the
Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary, which successor Depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50 million. In the event The
St. Paul fails to appoint such successor Depositary within such sixty (60) day
period, the Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary.
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MISCELLANEOUS
The Depositary will, with the approval of The St. Paul, appoint a Registrar
for registration of the Depositary Receipts or Depositary Shares in accordance
with any requirements of any applicable stock exchange in which the Receipts or
the Depositary Shares are listed. The Registrar will maintain books at the
Depositary's Office for the registration and registration of transfer of
Depositary Receipts or at such other place as is approved by The St. Paul and of
which the holders of Depositary Receipts are given reasonable notice.
The St. Paul will deliver to the Depositary and the Depositary will forward
to holders of Depositary Shares all notices and reports required by law, the
rules of any national securities exchange upon which the St. Paul Series C
Convertible Preferred Stock, the Depositary Shares or the Depositary Receipts
are listed or by The St. Paul's Amended and Restated Articles of Incorporation
(including the Certificate of Designation) or Bylaws to be furnished by The St.
Paul to holders of St. Paul Series C Convertible Preferred Stock.
Neither the Depositary nor The St. Paul will be liable if either is by law
or certain other circumstances beyond its control prevented from or delayed in
performing its obligations under the Deposit Agreement. Neither the Depositary
nor any agent of the Depositary nor The St. Paul assumes any obligation or will
be subject to any liability under the Deposit Agreement to holders of Depositary
Receipts other than to use its best judgment and act in good faith in the
performance of such duties as are specifically set forth in the Deposit
Agreement. Neither The St. Paul nor the Depositary will be obligated to appear
in, prosecute or defend any legal proceeding in respect of any Depositary Shares
or any St. Paul Series C Convertible Preferred Stock unless satisfactory
indemnity is furnished. The St. Paul and the Depositary may rely on advice of
counsel or accountants, or information provided by persons presenting St. Paul
Series C Convertible Preferred Stock for deposit, holders of Depositary Shares
or other persons believed to be authorized or competent and on documents
believed to be genuine.
DESCRIPTION OF THE GUARANTEE
THE FOLLOWING IS A DESCRIPTION OF THE PRINCIPAL TERMS AND PROVISIONS OF THE
GUARANTEE AGREEMENT (THE "GUARANTEE"), WHICH WILL BE EXECUTED AND DELIVERED BY
THE ST. PAUL FOR THE BENEFIT OF THE HOLDERS FROM TIME TO TIME OF THE PREFERRED
SECURITIES. THE FOLLOWING DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH AGREEMENT, THE FORM OF WHICH HAS BEEN FILED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART.
GENERAL
Pursuant to the Guarantee, The St. Paul will irrevocably and unconditionally
agree, on a subordinated basis and to the extent set forth therein, to pay in
full to the holders of the Preferred Securities, the Guarantee Payments (as
defined below) (except to the extent previously paid by St. Paul Capital), as
and when due, regardless of any defense, right of set-off or counterclaim that
St. Paul Capital may have or assert. The following payments, to the extent not
paid by St. Paul Capital, are the "Guarantee Payments": (a) any accumulated and
unpaid dividends (including any Additional Dividends thereon) that have been
theretofore declared on the Preferred Securities from monies legally available
therefor; (b) the Redemption Price payable with respect to Preferred Securities
called for redemption by St. Paul Capital out of funds legally available
therefor; and (c) upon a liquidation of St. Paul Capital, the lesser of (i) the
Liquidation Distribution and (ii) the amount of assets of St. Paul Capital
available for distribution to holders of Preferred Securities in liquidation of
St. Paul Capital. The St. Paul's obligation to make a Guarantee Payment may be
satisfied by The St. Paul's direct payment of the required amounts to the
holders of Preferred Securities or by The St. Paul's causing St. Paul Capital to
pay such amounts to such holders.
If The St. Paul fails to make interest payments on the Convertible
Subordinated Debentures purchased by St. Paul Capital, St. Paul Capital will
have insufficient funds to pay dividends on the Preferred Securities. The
Guarantee does not cover payment of dividends when St. Paul Capital does not
have sufficient funds to pay such dividends.
Because the Guarantee is a guarantee of payment and not of collection,
holders of the Preferred Securities may proceed directly against The St. Paul as
guarantor, rather than having to proceed against
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St. Paul Capital before attempting to collect from The St. Paul. A holder of
Preferred Securities may enforce such obligations directly against The St. Paul,
and The St. Paul waives any right or remedy to require that any action be
brought against St. Paul Capital or any other person or entity before proceeding
against The St. Paul. Such obligations will not be discharged except by payment
of the Guarantee Payments in full.
CERTAIN COVENANTS OF THE ST. PAUL
Under the Guarantee, The St. Paul will covenant and agree that, so long as
any Preferred Securities are outstanding, neither The St. Paul nor any direct or
indirect majority owned subsidiary of The St. Paul (excluding Nuveen and its
consolidated subsidiaries) shall declare or pay any dividend or distribution on,
or redeem, purchase or otherwise acquire or make a liquidation payment with
respect to, any of its capital stock (other than as a result of a
reclassification of capital stock or the exchange or conversion of one class or
series of capital stock for another class or series of capital stock) or make
any guarantee payments with respect to the foregoing (other than payments under
the Guarantee or dividends or guarantee payments to The St. Paul by a direct or
indirect majority owned subsidiary), if at such time The St. Paul has exercised
its option to defer interest payments on the Convertible Subordinated Debentures
and such deferral is continuing, The St. Paul is in default with respect to its
payment or other obligations under the Guarantee or there shall have occurred
any event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Convertible Subordinated Debentures.
The St. Paul will covenant to take all actions necessary to ensure the
compliance of its subsidiaries with the above covenant.
The St. Paul will also covenant that, so long as Preferred Securities remain
outstanding, it will (i) not cause or permit any Common Securities of St. Paul
Capital to be transferred, (ii) maintain direct or indirect 100% ownership of
all outstanding securities of St. Paul Capital other than (x) the Preferred
Securities and (y) any other securities issued by St. Paul Capital (other than
the Common Securities) so long as the issuance thereof to persons other than The
St. Paul or any of its subsidiaries would not cause St. Paul Capital to become
an "investment company" required to be registered under the Investment Company
Act of 1940, as amended, (iii) cause at least 21% of the total value of St. Paul
Capital and at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of St. Paul Capital to be represented by Common Securities,
(iv) not voluntarily dissolve, wind up or liquidate St. Paul Capital (other than
in connection with the exchange of all outstanding Preferred Securities for
Depositary Shares in the manner described under "-- Preferred Securities --
Optional Exchange for Depositary Shares") or either of the Managing Members, (v)
cause The St. Paul and St. Paul Holdings to remain the Managing Members of St.
Paul Capital and timely perform all of their respective duties as Managing
Members of St. Paul Capital (including the duty to declare and pay dividends on
the Preferred Securities as described under " -- Preferred Securities --
Dividends") and (vi) use reasonable efforts to cause St. Paul Capital to remain
a limited liability company and otherwise continue to be treated as a
partnership for U.S. federal income tax purposes; PROVIDED that The St. Paul may
permit St. Paul Capital to consolidate or merge with or into or convey, transfer
or lease its properties and assets substantially as an entirety to another
entity upon the terms and subject to the conditions set forth under " --
Preferred Securities -- Merger, Consolidation or Sale of Assets of St. Paul
Capital" above.
As a part of the Guarantee, The St. Paul will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Preferred Securities into or for St. Paul Common Stock or Depositary Shares
representing St. Paul Series C Convertible Preferred Stock, as described in "--
Preferred Securities -- Conversion Rights," and "-- Optional Exchange for
Depositary Shares".
SUBORDINATION
The St. Paul's obligations under the Guarantee to make Guarantee Payments
will constitute an unsecured obligation of The St. Paul that will rank (i)
subordinate and junior in right of payment to all liabilities of The St. Paul
and the Convertible Subordinated Debentures, and (ii) PARI PASSU (I.E., on a
parity) with the most senior preferred shares now or hereafter issued by The St.
Paul and with any guarantee now or hereafter entered into by The St. Paul in
respect of any preferred or preference stock of any affiliate of The St. Paul
and (iii) senior to St. Paul Common Stock and any other class or series of
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capital stock issued by The St. Paul or any of its affiliates which by its
express terms ranks junior in the payment of dividends and amounts on
liquidation, dissolution, and winding-up to the Preferred Securities ("Junior
Stock"). On the bankruptcy, liquidation or winding-up of The St. Paul, its
obligations under the Guarantee will rank junior to all its other liabilities
and, therefore, funds may not be available for payment under the Guarantee. As
of - , 1995, The St. Paul had approximately $ - million of indebtedness or
other obligations constituting Senior Indebtedness and no indebtedness that
would rank equally with the Guarantee.
AMENDMENTS AND ASSIGNMENT
The terms of the Guarantee may be amended only with the prior approval of
the holders of not less than 66 2/3% of the aggregate liquidation preference of
the Preferred Securities then outstanding. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth in "--
Preferred Securities -- Voting Rights". All provisions contained in the
Guarantee will bind the successors, assigns, receivers, trustees and
representatives of The St. Paul and will inure to the benefit of the holders of
the Preferred Securities. Except in connection with any merger or consolidation
of The St. Paul with or into another entity or any sale, transfer or lease of
The St. Paul's assets to another entity complying with the provisions under "--
Consolidation, Merger or Sale of Assets" below, The St. Paul may not assign its
rights or delegate its obligations under the Guarantee without the prior
approval of the holders of not less than 66 2/3% of the aggregate liquidation
preference of the Preferred Securities then outstanding.
TERMINATION
The St. Paul's obligation to make Guarantee Payments under the Guarantee
will terminate as to each holder of Preferred Securities and be of no further
force and effect upon (a) full payment of the Redemption Price of such holder's
Preferred Securities, (b) full payment of the amounts payable to such holder
upon liquidation of St. Paul Capital, (c) the distribution of St. Paul Common
Stock to such holder in respect of the conversion of all of such holder's
Preferred Securities into St. Paul Common Stock or (d) the distribution of
Depositary Shares representing St. Paul Series C Convertible Preferred Stock to
such holder in respect of the exchange of the Convertible Subordinated
Debentures for St. Paul Series C Convertible Preferred Stock. Notwithstanding
the foregoing, The St. Paul's obligation to make Guarantee Payments will
continue to be effective or will be reinstated, as the case may be, as to a
holder if at any time such holder must restore payment of any sums paid under
the Preferred Securities or under the Guarantee for any reason whatsoever. The
St. Paul will indemnify each holder and hold it harmless from and against any
loss it may suffer in such circumstances.
CONSOLIDATION, MERGER OR SALE OF ASSETS
The Guarantee provides that The St. Paul may merge or consolidate with or
into another entity, may permit another entity to merge or consolidate with or
into The St. Paul and may sell, transfer or lease all or substantially all of
its assets to another entity if (i) at such time no Event of Default (as defined
in the Indenture) shall have occurred and be continuing, or would occur as a
result of such merger, consolidation or sale, transfer or lease and (ii) the
survivor of such merger or consolidation or entity to which The St. Paul's
assets are sold, transferred or leased is an entity organized under the laws of
the United States or any state thereof, becomes a managing member of St. Paul
Capital and causes a wholly-owned subsidiary to become the only other managing
member of St. Paul Capital, assumes all of The St. Paul's obligations under the
Guarantee and has a net worth equal to at least 10% of the total contributions
to St. Paul Capital.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
DESCRIPTION OF THE CONVERTIBLE SUBORDINATED DEBENTURES
THE FOLLOWING SUMMARY OF PRINCIPAL TERMS AND PROVISIONS OF THE CONVERTIBLE
SUBORDINATED DEBENTURES IN WHICH ST. PAUL CAPITAL WILL INVEST THE PROCEEDS OF
THE ISSUANCE AND SALE OF THE PREFERRED SECURITIES AND SUBSTANTIALLY ALL OF THE
CAPITAL CONTRIBUTED TO ST. PAUL CAPITAL BY THE MANAGING MEMBERS (THE "MANAGING
MEMBERS PAYMENT") DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE
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INDENTURE AMONG THE ST. PAUL, ST. PAUL CAPITAL AND THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), AS TRUSTEE (THE "TRUSTEE"), THE FORM OF WHICH HAS BEEN
FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A
PART. ALL OF THE CONVERTIBLE SUBORDINATED DEBENTURES WILL BE ISSUED UNDER THE
INDENTURE.
GENERAL
The Convertible Subordinated Debentures will be limited in aggregate
principal amount to the sum of the aggregate amount of the proceeds received by
St. Paul Capital from the offering made hereby and the Managing Members Payment
less 1% of such sum.
The entire principal amount of the Convertible Subordinated Debentures will
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as defined below), on the earliest of - or the
date upon which St. Paul Capital is dissolved, wound-up, liquidated or
terminated.
The Convertible Subordinated Debentures will be issued only in fully
registered form, without coupons, in denominations of $ - and any integral
multiple thereof. No service charge will be made for any registration of
transfer or exchange of Convertible Subordinated Debentures, but The St. Paul
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
INTEREST
The Convertible Subordinated Debentures will bear interest at the rate of
- % per annum from the original date of issuance, payable monthly in arrears
on the last day of each calendar month of each year (each an "Interest Payment
Date"), commencing - , 1995. Interest will compound monthly and will accrue
at the annual rate of - % on any interest installment not paid when due.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full monthly interest period, will be computed on the basis of the actual number
of days elapsed in such period. In the event that any date on which interest is
payable on the Convertible Subordinated Debentures is not a Business Day, then a
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay). If such Business Day is in the next succeeding
calendar year, however, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date.
OPTION TO DEFER INTEREST PAYMENTS
The St. Paul shall have the right at any time and from time to time during
the term of the Convertible Subordinated Debentures to defer interest payments
for up to 60 months during which period interest will compound monthly (provided
that a deferral of interest payments may not extend the stated maturity of the
Convertible Subordinated Debentures) and during which The St. Paul shall have
the right to make partial payments of interest or at the end of which period The
St. Paul must pay all interest then accrued and unpaid (together with Additional
Interest); PROVIDED THAT, during any such deferral of interest payments neither
The St. Paul nor any direct or indirect majority-owned subsidiary of The St.
Paul (excluding Nuveen and Nuveen's consolidated subsidiaries) shall declare or
pay any dividend on, or redeem, purchase, acquire for value or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payments with respect to the foregoing (other than payments under the
Guarantee or dividend or guarantee payments to The St. Paul from a direct or
indirect majority-owned subsidiary). Prior to the termination of any such
deferral of interest payments, The St. Paul may further defer interest payments,
provided that such deferral of interest payments together with any extensions
thereof may not exceed 60 months. The failure by The St. Paul to make interest
payments during a deferral of interest payments would not constitute a default
or an event of default under The St. Paul's currently outstanding indebtedness.
The St. Paul shall give St. Paul Capital, as holder of the Convertible
Subordinated Debentures, and the Trustee notice of its deferral of interest
payments no later than the last date on which St. Paul Capital would be required
to notify the NYSE of the record or payment date of the related dividend, which
currently is 10 days prior to such record or payment date. St. Paul Capital
shall give written notice of The St. Paul's deferral of interest payments to the
holders of the Preferred Securities.
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ADDITIONAL INTEREST
The St. Paul shall be required to pay any interest upon interest that has
not been paid on the Convertible Subordinated Debentures monthly. Accordingly,
in such circumstance, The St. Paul will pay interest upon interest in order to
provide for monthly compounding on the Convertible Subordinated Debentures (the
amounts of interest payable to effect monthly compounding on the Convertible
Subordinated Debentures being referred to herein as "Additional Interest").
MANDATORY REDEMPTION
If St. Paul Capital redeems Preferred Securities in accordance with the
terms thereof, The St. Paul will redeem Convertible Subordinated Debentures in a
principal amount equal to the aggregate stated liquidation preference of the
Preferred Securities so redeemed, together with any accrued and unpaid interest
thereon, including Additional Interest, if any. Any payment pursuant to this
provision shall be made prior to 12:00 noon, New York City time, on the date of
such redemption or at such other time on such earlier date as the parties
thereto shall agree. The Convertible Subordinated Debentures are not entitled to
the benefit of any sinking fund or, except as set forth above, any other
provision for mandatory prepayment.
SUBORDINATION
The Indenture provides that the Convertible Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined below) of The St. Paul.
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior
Indebtedness will be entitled to receive payment in full of all amounts due on
or to become due on or in respect of all Senior Indebtedness, before the holders
of the Convertible Subordinated Debentures are entitled to receive any payment
(including any payment to holders of the Convertible Subordinated Debentures
made in respect of any other debt subordinated to the Convertible Subordinated
Debentures) on account of the principal of or interest on the Convertible
Subordinated Debentures or on account of any purchase, redemption or other
acquisition of the Convertible Subordinated Debentures by the Company.
The Company may not make any payments on the account of the Convertible
Subordinated Debentures or account of the purchase or redemption or other
acquisition of the Convertible Subordinated Debentures, if there has occurred
and is continuing a default in the payment of the principal of (or premium, if
any) or interest on any Senior Indebtedness (a "Senior Payment Default"). In
addition, if any default (other than a Senior Payment Default), or any event
which after notice or lapse of time (or both) would become a default, with
respect to certain Senior Indebtedness, permitting after notice or lapse of time
(or both) the holders thereof (or a trustee or agent on behalf of the holders
thereof) to accelerate the maturity thereof has occurred and is continuing (a
"Senior Nonmonetary Default"), and the Company and the Trustee have received
written notice thereof from the holder of such certain Senior Indebtedness, then
the Company may not make any payments on the account of the Convertible
Subordinated Debentures or account of the purchase or redemption or other
acquisition of the Convertible Subordinated Debentures, for a period (a
"blockage period") commencing on the date the Company and the Trustee receive
such written notice and ending on the earlier of (i) 179 days after such date
and (ii) the date, if any, on which the Senior Indebtedness to which such
default relates is discharged or such default is waived in writing or otherwise
cured or ceases to exist and any acceleration of certain Senior Indebtedness to
which such Senior Nonmonetary Default relates is rescinded or annulled.
In any event, not more than one blockage period may be commenced during any
period of 360 consecutive days, and there must be a period of at least 181
consecutive days in each period of 360 consecutive days when no blockage period
is in effect. Following the commencement of a blockage period, the holders of
such certain Senior Indebtedness will be precluded from commencing a subsequent
blockage period until the conditions set forth in the preceding sentence are
satisfied. No Senior Nonmonetary Default that existed or was continuing on the
date of commencement of any blockage
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period with respect to such certain Senior Indebtedness initiating such blockage
period will be, or can be, made the basis for the commencement of a subsequent
blockage period, unless such default has been cured for a period of not less
than 90 consecutive days.
By reason of such subordination, in the event of any proceeding of the type
described in the preceding paragraph involving The St. Paul, creditors of The
St. Paul who are holders of Senior Indebtedness and general unsecured creditors
of The St. Paul may recover more, ratably, than the holder or holders of the
Convertible Subordinated Debentures.
The term "Senior Indebtedness" is defined to mean the principal of, premium,
if any, interest on, and any other payment due pursuant to any of the following,
whether Incurred (as defined in the Indenture) on or prior to the date of
execution of the Indenture or thereafter Incurred:
(a) all obligations of The St. Paul for money borrowed;
(b) all obligations of The St. Paul evidenced by notes, debentures,
bonds or other securities, including obligations Incurred in connection with
the acquisition of property, assets or businesses;
(c) all capital lease obligations of The St. Paul;
(d) all reimbursement obligations of The St. Paul with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of The St. Paul;
(e) all obligations of The St. Paul issued or assumed as the deferred
purchase price of property or services, including all obligations under
master lease transactions pursuant to which The St. Paul or any of its
subsidiaries have agreed to be treated as owner of the subject property for
federal income tax purposes (but excluding trade accounts payable, accrued
liabilities resulting from the sale of extended service plans, or accrued
liabilities arising in the ordinary course of business);
(f) all payment obligations of The St. Paul under interest rate swap or
similar agreements or foreign currency hedge, exchange or similar agreements
at the time of determination, including any such obligations Incurred by The
St. Paul solely to act as a hedge against increases in interest rates that
may occur under the terms of other outstanding variable or floating rate
Indebtedness of The St. Paul;
(g) all obligations of The St. Paul under secured inventory financing
credit lines;
(h) all obligations of the type referred to in clauses (a) through (g)
above of another person and all dividends of another person, the payment of
which, in either case, The St. Paul has assumed or guaranteed, or for which
The St. Paul is responsible or liable, directly or indirectly, jointly or
severally, as obligor, guarantor or otherwise;
(i) all compensation payable to the Trustee; and
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(j) all amendments, modifications, renewals, extensions, refinancings,
replacements and refundings by The St. Paul of any such Indebtedness (as
defined in the Indenture) referred to in clauses (a) through (i) above (and
of any such amended, modified, renewed, extended, refinanced, refunded or
replaced indebtedness or obligations);
PROVIDED, HOWEVER, that the following shall not constitute the Senior
Indebtedness: (a) any Indebtedness owed to a Subsidiary of The St. Paul, (b) any
Indebtedness which by the terms of the instrument creating or evidencing the
same expressly provides that such Indebtedness is not superior in right of
payment to the Convertible Subordinated Debentures or (c) any Indebtedness
Incurred in violation of the Indenture. Such Senior Indebtedness shall continue
to be Senior Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Indebtedness.
As of - , 1995, Senior Indebtedness of The St. Paul aggregated
approximately $ - million. The Indenture does not limit The St. Paul's ability
to incur Senior Indebtedness.
CERTAIN COVENANTS OF THE ST. PAUL
The St. Paul will also covenant in the Indenture that neither it nor any
direct or indirect majority-owned subsidiary of The St. Paul (excluding Nuveen
and Nuveen's consolidated subsidiaries) will declare or pay any dividend on, or
redeem, purchase, acquire for value or make a liquidation payment with respect
to, any of its capital stock (other than as a result of a reclassification of
capital stock on the exchange or conversion of one class or series of capital
stock for another class or series of capital stock) or make any guarantee
payments with respect to the foregoing (other than payments under the Guarantee
or dividends or guarantee payments to The St. Paul from a majority-owned
subsidiary) if at such time (i) there shall have occurred any event that, with
the giving of notice or the lapse of time or both would constitute an Event of
Default (as defined below) under the Convertible Subordinated Debentures, (ii)
The St. Paul shall be in default with respect to its payment or other
obligations under the Guarantee or (iii) The St. Paul shall have given notice of
its selection of an extended interest payment period as provided in the
Convertible Subordinated Debentures and such deferral of interest payments or
any extension thereof shall be continuing. The St. Paul will also covenant for
the benefit of the holders of the Convertible Subordinated Debentures that, so
long as the Preferred Securities remain outstanding, it will (i) not cause or
permit any Common Securities of St. Paul Capital to be transferred, (ii)
maintain direct or indirect ownership of all outstanding securities of St. Paul
Capital other than (x) the Preferred Securities and (y) any other securities
issued by St. Paul Capital (other than the Common Securities) so long as the
issuance thereof to persons other than The St. Paul or any of its subsidiaries
would not cause St. Paul Capital to become an "investment company" required to
be registered under the Investment Company Act of 1940, as amended, (iii) cause
at least 21% of the total value of St. Paul Capital and at least 21% of all
interests in the capital, income, gain, loss, deduction and credit of St. Paul
Capital to be represented by Common Securities, (iv) not voluntarily dissolve,
wind-up or liquidate St. Paul Capital (other than in connection with the
exchange of all outstanding Preferred Securities for Depositary Shares in the
manner described under "-- Preferred Securities -- Optional Exchange for
Depositary Shares") or either of the Managing Members, (v) cause The St. Paul
and St. Paul Holdings to remain the Managing Members of St. Paul Capital and to
timely perform all of their respective duties as Managing Members of St. Paul
Capital (including the duty to declare and pay dividends on the Preferred
Securities as described under "-- Preferred Securities -- Dividends"), (vi) use
reasonable efforts to cause St. Paul Capital to remain a limited liability
company and otherwise continue to be treated as a partnership for U.S. federal
income tax purposes; PROVIDED that The St. Paul may permit St. Paul Capital to
consolidate or merge with or into or convey, transfer or lease its properties
and assets substantially as an entirety to another entity upon the terms and
subject to the conditions set forth under "-- Preferred Securities -- Merger,
Consolidations or Sale of Assets of St. Paul Capital" above, and (vii) to
deliver Depositary Shares representing shares of St. Paul Series C Convertible
Preferred Stock or St. Paul Common Stock upon an election by the holders of the
Preferred Securities to exchange or convert the Convertible Subordinated
Debentures.
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EVENTS OF DEFAULT
If one or more of the following events (each an "Event of Default") shall
occur and be continuing:
(a) failure to pay any principal of the Convertible Subordinated
Debentures when due;
(b) failure to pay any interest on the Convertible Subordinated
Debentures, including any Additional Interest, when due and such failure
continues for a period of 10 days; provided that a valid extension of the
interest payment period by The St. Paul shall not constitute a default in
the payment of interest for this purpose;
(c) failure by The St. Paul to deliver shares of St. Paul Series C
Convertible Preferred Stock or St. Paul Common Stock upon an election by
holders of Preferred Securities to exchange or convert such Preferred
Securities;
(d) failure by The St. Paul to perform in any material respect any other
covenant in the Indenture for the benefit of the holders of Convertible
Subordinated Debentures continued for a period of 60 days (or, in the case
of the covenants described under "-- Certain Covenants of The St. Paul," 10
days) after written notice to The St. Paul from any holder of Convertible
Subordinated Debentures or Preferred Securities;
(e) the dissolution, winding-up, liquidation or termination of St. Paul
Capital (except in the event of a Special Event); or
(f) certain events of bankruptcy, insolvency or liquidation of The St.
Paul;
then either the Trustee or the holders of at least 25% in aggregate principal
amount of the Convertible Subordinated Debentures then outstanding will have the
right to declare the principal of and the interest on the Convertible
Subordinated Debentures (including any Additional Interest) and any other
amounts payable under the Convertible Subordinated Debentures to be forthwith
due and payable and to enforce the holders' other rights as creditors with
respect to the Convertible Subordinated Debentures; PROVIDED, HOWEVER, that if
upon an Event of Default, the Trustee or the holders of at least 25% in
aggregate principal amount of the Convertible Subordinated Debentures then
outstanding fail to declare the payment of all amounts on the Convertible
Subordinated Debentures to be immediately due and payable, the holders of at
least 25% in aggregate liquidation preference of Preferred Securities then
outstanding shall have such right; PROVIDED, FURTHER, HOWEVER, that after such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding Convertible
Subordinated Debentures, or the holders of the Preferred Securities if they
accelerated such payment, may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
For information as to waiver of defaults, see "-- Modification of the
Indenture". St. Paul Capital is the initial holder of the Convertible
Subordinated Debentures. However, while the Preferred Securities are
outstanding, St. Paul Capital has agreed not to waive an Event of Default under
the Indenture without the consent of holders of 66 2/3% in aggregate liquidation
preference of the Preferred Securities then outstanding. Additionally, under the
terms of the Preferred Securities, the holders of outstanding Preferred
Securities will have the rights described above under "-- Preferred Securities
- -- Voting Rights", including the right to appoint a Special Trustee, which
Special Trustee shall be authorized to exercise the right of St. Paul Capital,
as the holder of at least 25% aggregate principal amount of the Convertible
Subordinated Debentures, to accelerate the principal amount of the Convertible
Subordinated Debentures and accrued interest (including any Additional Interest)
thereon and to enforce the other rights of Holders of the Convertible
Subordinated Debentures as creditors under the Convertible Subordinated
Debentures. A default under any other indebtedness of The St. Paul or St. Paul
Capital would not constitute an Event of Default under the Convertible
Subordinated Debentures.
Subject to the provision of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any holders of Convertible Subordinated
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Debentures, unless such holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the holders of a majority in aggregate principal amount of the Convertible
Subordinated Debentures then outstanding will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee.
No holder of any Subordinated Debenture will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or trustee, or for any remedy thereunder, unless such holder shall have
previously given to the Trustee written notice of a continuing Event of Default
and, if St. Paul Capital is not the sole holder of Convertible Subordinated
Debentures, unless also the holders of at least 25% in aggregate principal
amount of the Convertible Subordinated Debentures then outstanding shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the holders of a majority in aggregate principal amount of the outstanding
Convertible Subordinated Debentures a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a holder of a Subordinated
Debenture for enforcement of payment of the principal of or interest on such
Subordinated Debenture on or after the respective due dates expressed in such
Subordinated Debenture or of the right to convert such Subordinated Debenture in
accordance with the Indenture.
The St. Paul will be required to furnish to the Trustee annually a statement
as to the performance by The St. Paul of certain of its obligations under the
Indenture and as to any default of such performance.
CONVERSION OF THE CONVERTIBLE SUBORDINATED DEBENTURES
The Convertible Subordinated Debentures and any accrued interest thereon
will be convertible into St. Paul Common Stock at the option of the holders of
the Convertible Subordinated Debentures at any time on or before the close of
business on the maturity date thereof at the initial conversion price set forth
on the cover page of this Prospectus subject to the conversion price adjustments
described under "-- Preferred Securities -- Conversion Rights". St. Paul Capital
will covenant not to convert Convertible Subordinated Debentures except pursuant
to a notice of conversion delivered to the Conversion Agent by a holder of
Preferred Securities. Upon surrender of Preferred Securities to the Conversion
Agent for conversion, St. Paul Capital will distribute $ - principal amount of
the Convertible Subordinated Debentures to the Conversion Agent on behalf of the
holder of every Preferred Security so converted, whereupon the Conversion Agent
will convert such Convertible Subordinated Debentures and any accrued interest
thereon to St. Paul Common Stock on behalf of such holder. The St. Paul's
delivery to the holders of the Convertible Subordinated Debentures (through the
Conversion Agent) of the fixed number of shares of St. Paul Common Stock into
which the Convertible Subordinated Debentures are convertible (together with the
cash payment, if any, in lieu of fractional shares) will be deemed to satisfy
The St. Paul's obligation to pay the principal amount of the Convertible
Subordinated Debentures, and the accrued and unpaid interest attributable to the
period from the last date to which interest has been paid or duly provided for.
EXCHANGE OF THE CONVERTIBLE SUBORDINATED DEBENTURES
The Convertible Subordinated Debentures and any accrued interest thereon
will be exchangeable for Depository Shares representing St. Paul Series C
Convertible Preferred Stock upon an Exchange Event on or before the close of
business on the maturity date thereof at the rate of 1/ - th of a share of St.
Paul Series C Convertible Preferred Stock for each $ - principal amount of the
Convertible Subordinated Debentures (equivalent to an exchange rate of one
Depositary Share for each $ - principal of amount of the Convertible
Subordinated Debentures). Accumulated and unpaid dividends (including Additional
Dividends) on the Preferred Securities will be treated as accumulated and unpaid
dividends on the St. Paul Series C Convertible Preferred Stock.
MODIFICATION OF THE INDENTURE
The Indenture may be amended by The St. Paul, St. Paul Capital and the
Trustee with the consent of the holders of 66 2/3% in aggregate principal amount
of the outstanding Convertible Subordinated
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Debentures PROVIDED, that no such modification or amendment may, without the
consent of the holder of each outstanding Subordinated Debenture affected
thereby, (a) change the Maturity of the principal of, or any installment of
interest on, any Subordinated Debenture, (b) reduce the principal amount of, or
interest on, any Subordinated Debenture, (c) change the place or currency of
payment of principal of, or interest on, any Subordinated Debenture, (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Subordinated Debenture, (e) adversely affect the right to convert
or exchange Convertible Subordinated Debentures, (f) modify the subordination
provisions in a manner adverse to the holders of the Convertible Subordinated
Debentures, (g) reduce the above-stated percentage of outstanding Convertible
Subordinated Debentures necessary to modify or amend the Indenture or (h) reduce
the percentage of aggregate principal amount of outstanding Convertible
Subordinated Debentures necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults; and PROVIDED
FURTHER that, so long as any of the Preferred Securities remain outstanding, no
such amendment may be made that adversely affects the holders of Preferred
Securities, and no termination of the Indenture may occur, and no Event of
Default or compliance with any covenant under the Indenture may be waived by the
holders of the Convertible Subordinated Debentures, without the prior consent of
the holders of at least 66 2/3% of the aggregate liquidation preference of the
Preferred Securities then outstanding unless and until the Convertible
Subordinated Debentures and all accrued and unpaid interest thereon have been
paid in full.
GOVERNING LAW
The Indenture and the Convertible Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee
should it become a creditor of The St. Paul, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Convertible Subordinated
Debentures, it must eliminate such conflict or resign.
The St. Paul and St. Paul Capital have agreed in the Indenture to indemnify
and hold harmless the Trustee against any losses or damages it may suffer as
Trustee.
The Chase Manhattan Bank (National Association), the Trustee under the
Indenture, also serves as the trustee under an indenture with The St. Paul dated
as of March 31, 1990 and has from time to time engaged in lending and other
transactions with, or performed services for, The St. Paul in the ordinary
course of business.
DESCRIPTION OF ST. PAUL CAPITAL STOCK
The following descriptions of the Common Stock and undesignated shares of
the Company are stated in general terms and are in all respects subject to, and
are qualified in their entirety by, reference to the applicable provisions of
the Company's Amended and Restated Articles of Incorporation, as amended, and
Bylaws, as amended, forms of which have been incorporated by reference as
exhibits to the Registration Statement of which this Prospectus forms a part.
COMMON STOCK
The St. Paul is authorized to issue 240,000,000 shares of Common Stock,
without par value per share. Each share of Common Stock is entitled to
participate PRO RATA in distributions upon liquidation, subject to the rights of
holders of undesignated shares, and to one vote on all matters submitted to a
vote of shareholders. The holders of Common Stock may receive cash dividends as
declared by the Board of Directors out of funds legally available therefor,
subject to the rights of any holders of undesignated shares. The outstanding
shares of Common Stock are, and the shares offered hereby when issued will be,
fully paid and nonassessable. Holders of Common Stock have no preemptive or
similar equity preservation rights, and cumulative voting of shares in the
election of directors is prohibited. The holders
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of more than 50% of the outstanding shares of Common Stock have the voting power
to elect all directors and, except as is discussed at "Certain St. Paul Charter
and By-law Provisions", to approve mergers, sales of assets and other corporate
transactions.
Each holder of Common Stock is entitled to such dividends as may be declared
by the Board of Directors of the Company out of funds legally available
therefor. The St. Paul Companies, Inc. is a holding company, and its primary
source for the payment of dividends is dividends from its subsidiaries. Various
state laws and regulations limit the amount of dividends that may be paid to the
Company by its insurance subsidiaries. As of - , 1995, $ - million was
available for the payment of dividends to the Company free from such
restrictions.
The transfer agent and registrar for St. Paul's Common Stock is First
Chicago Trust Company of New York.
UNDESIGNATED SHARES
The Board of Directors of the Company is authorized, without further action
by the shareholders, to establish from the 5,000,000 undesignated shares
authorized by the Amended and Restated Articles of Incorporation, one or more
classes and series, to designate each such class and series, to fix the relative
rights and preferences of each such class and series and to issue such shares.
Such rights and preferences may be superior to the Company's Common Stock as to
dividends, distributions of assets (upon liquidation or otherwise) and voting
rights. Undesignated shares may be convertible into shares of any other series
or class of stock, including Common Stock, of the Company, if the Board of
Directors so determines.
Pursuant to such authority, the Board of Directors has designated -
shares of Preferred Stock as St. Paul Series C Convertible Preferred Stock. For
a description of the St. Paul Series C Convertible Preferred Stock, see
"Description of Securities Offered -- Description of St. Paul Series C
Convertible Preferred Stock".
STOCK PURCHASE RIGHTS, SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
Pursuant to its authority to issue undesignated shares, the Board of
Directors of the Company has also adopted resolutions authorizing 50,000 shares
of Series A Junior Participating Preferred Stock, without par value (the "Series
A Preferred Stock"), and 1,450,000 shares of Series B Convertible Preferred
Stock (the "Series B Preferred Stock").
Shares of the Series A Preferred Stock are purchasable upon the exercise of
the Company's Stock Purchase Rights, upon the terms and conditions set forth in
the Rights Agreement. The Stock Purchase Rights will expire on December 19,
1999, subject to extension to December 18, 2002 under certain circumstances or
earlier redemption by The St. Paul.
Each share of Series A Preferred Stock, if and when issued, would be fully
paid and nonassessable. The holders of Series A Preferred Stock would be
entitled to 1,000 votes for each share held of record on all matters voted upon
by shareholders and would not be able to cumulate votes for the election of
directors. Subject to preferential rights, if any, of any undesignated shares,
if and when designated and issued by the Board of Directors, each outstanding
share of Series A Preferred Stock would be entitled to receive distributions and
dividends equal to 1,000 times the aggregate per share amounts declared on the
Common Stock. Upon liquidation of the Company, the holders of Series A Preferred
Stock would be entitled to receive (prior to holders of Common Stock or other
junior ranking stock) an aggregate amount per share equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, subject
to a maximum of $100 per share plus accrued and unpaid dividends, if any. There
are no redemption, sinking fund, conversion or preemptive rights with respect to
the Series A Preferred Stock. All shares of Series A Preferred Stock have equal
rights and preferences.
The Series B Preferred Stock has been issued to the Savings Plus Preferred
Stock Ownership Plan Trust established by the Company. All outstanding shares of
Series B Preferred Stock are fully paid and nonassessable. Each share of
outstanding Series B Preferred Stock is entitled to the number of votes
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equal to the number of shares of Common Stock into which such share of Series B
Preferred Stock could have been converted on the record date for determining the
holders of Common Stock entitled to vote on a particular matter. Currently, each
share of Series B Preferred Stock is entitled to four votes per share. Holders
of outstanding shares of Series B Preferred Stock are entitled to receive when,
as and if declared by the Board of Directors, cumulative quarterly cash
dividends at the annual rate of $11.724 per share in preference and in priority
over the Common Stock and Series A Preferred Stock. Upon liquidation, each share
of Series B Preferred Stock would have a preference of $100 per share over the
Common Stock and Series A Preferred Stock. The Series B Preferred Stock is
redeemable by the Company at the following redemption prices per share which
apply if redemption occurs during the twelve month period ending on and
including December 31 on each of the following years:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE PER SHARE
- -------------------------------------------- ----------------------------
<S> <C>
1995........................................ $ 149.52
1996........................................ $ 148.22
1997........................................ $ 146.92
1998........................................ $ 145.62
1999 and thereafter......................... $ 144.30
</TABLE>
plus accumulated and unpaid dividends, without interest, to and excluding the
date fixed for redemption. The Series B Preferred Stock may be converted, at any
time and from time to time, at the option of the holder into the number of
shares of Common Stock of the Company determined by dividing $144.30 for each
share of Series B Preferred to be converted by the then effective conversion
price per share of Common Stock. Currently, each share of Series B Preferred
Stock is convertible into four shares of Common Stock. There are no sinking fund
provisions or preemptive rights with respect to the Series B Preferred Stock.
CERTAIN ST. PAUL CHARTER AND BY-LAW PROVISIONS
In addition to the Rights Agreement, the Company's Amended and Restated
Articles of Incorporation and By-Laws contain provisions that may discourage a
third party from seeking to acquire the Company or to commence a proxy contest
or other takeover-related action.
Article V of the Company's Amended and Restated Articles of Incorporation
requires the affirmative vote of the holders of at least two-thirds of the
voting power of all voting shares of the Company for the approval, authorization
or adoption of any plan of merger; plan of exchange; sale, lease, transfer or
other disposition of all or substantially all of the Company's property and
assets not in the usual and regular course of business; or dissolution of the
Company. The affirmative vote of at least one-half of the voting power of all
voting shares is required for amendments to the Company's Amended and Restated
Articles of Incorporation, except for amendments to Article V, for which the
affirmative vote of at least two-thirds of all voting shares is required.
The Company's By-Laws contain certain procedural requirements with respect
to the nomination of directors by stockholders that require, among other things,
delivery of notice by such stockholders to the corporate secretary of the
Company not later than 60 days prior to the date of the stockholders meeting at
which such nomination is to be considered, PROVIDED, HOWEVER, that in the event
that less than 70 days' notice or prior disclosure of the date of this meeting
is given or made to shareholders, notice by the shareholders to be timely must
be so received not later than the close of business on the 10th day following
the date on which such notice of the date of the meeting was mailed or such
public disclosure was made. The By-Laws do not provide that a meeting of the
Board of Directors may be called by stockholders.
The effect of these provisions may be to deter attempts either to obtain
control of the Company or to acquire a substantial amount of its stock, even if
such a proposed transaction were at a significant premium over the
then-prevailing market value of the Common Stock, or to deter attempts to remove
the Board of Directors and management of the Company, even though some or a
majority of the holders of Common Stock may believe such actions to be
beneficial.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Preferred
Securities and represents the opinion of Sullivan & Cromwell, special tax
counsel to The St. Paul and St. Paul Capital, insofar as it relates to matters
of law and legal conclusions. This section is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change. Subsequent changes may cause tax
consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion is directed only to holders of Preferred
Securities who are individual citizens or residents of the United States who
hold the Preferred Securities as capital assets, and has only limited
application to corporations, estates, trusts and non-resident aliens.
Accordingly, each prospective purchaser of Preferred Securities should consult,
and should depend on, his or her own tax advisor in analyzing the federal,
state, local and foreign tax consequences of the purchase, ownership or
disposition of Preferred Securities.
INCOME FROM PREFERRED SECURITIES
In the opinion of Sullivan & Cromwell, St. Paul Capital will be a
partnership for federal income tax purposes. Accordingly, each holder of St.
Paul Capital Preferred Securities (a "Preferred Securityholder") will be
required to include in gross income the Preferred Securityholder's distributive
share of the net income of St. Paul Capital. Such income will generally not
exceed the dividends received on such Preferred Securities, except in limited
circumstances as described below under "Potential Deferral of Interest Payment".
No portion of such income will be eligible for the dividends received deduction.
DISPOSITION OF PREFERRED SECURITIES
Gain or loss will be recognized on a sale of Preferred Securities, including
a redemption for cash, equal to the difference between the amount realized and
the Preferred Securityholder's tax basis for the Preferred Securities sold. Gain
or loss recognized by a Preferred Securityholder on the sale or exchange of a
Preferred Security held for more than one year will generally constitute
long-term capital gain or loss. The adjusted tax basis of the Preferred
Securities sold will generally equal the amount paid for the Preferred
Securities, plus accrued but unpaid income, if any, allocated to such Preferred
Securityholder, reduced by any cash or other property distributed to such
Preferred Securityholder by St. Paul Capital.
RECEIPT OF CONVERTIBLE SUBORDINATED DEBENTURES UPON LIQUIDATION OF ST. PAUL
CAPITAL
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Distribution", Convertible
Subordinated Debentures may be distributed to Preferred Securityholders in
liquidation of St. Paul Capital. Under current United States federal income tax
law, such a distribution would be treated as a non-taxable exchange. Each
Preferred Securityholder would have an aggregate tax basis in the Convertible
Subordinated Debentures equal to such holder's aggregate tax basis in its
Preferred Securities. A holder's holding period in the Convertible Subordinated
Debentures so received in liquidation of St. Paul Capital would include the
period for which the Preferred Securities were held by such holder.
ST. PAUL CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES
The Managing Members of St. Paul Capital will furnish each Preferred
Securityholder with a Schedule K-1 each year setting forth such Preferred
Securityholder's allocable share of income for the prior calendar year. The
Managing Members are required to furnish such Schedule K-1 as soon as
practicable following the end of the year, but in any event prior to March 31.
Any person who holds Preferred Securities as a nominee for another person is
required to furnish to St. Paul Capital (a) the name, address and taxpayer
identification number of the beneficial owner and the nominee; (b) information
as to whether the beneficial owner is (i) a person that is not a United States
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person, (ii) a foreign government, an international organization or any
wholly-owned agency or instrumentality of either the foregoing or (iii) a
tax-exempt entity; (c) the amount and description of Preferred Securities held,
acquired or transferred for the beneficial owner; and (d) certain information
including the dates of acquisitions and transfers, means of acquisitions and
transfers, and acquisition cost for purchases, as well as the amount of net
proceeds from sales. Brokers and financial institutions are required to furnish
additional information, including whether they are United States persons and
certain information on Preferred Securities they acquire, hold or transfer for
their own accounts. A penalty of $50 per failure (up to a maximum of $100,000
per calendar year) is imposed by the Code for failure to report such information
to St. Paul Capital. The nominee is required to supply the beneficial owners of
the Preferred Securities with the information furnished to St. Paul Capital.
POTENTIAL DEFERRAL OF INTEREST PAYMENTS
Under the Indenture, The St. Paul has the option to defer interest payments
on the Convertible Subordinated Debentures for up to 60 months. In the event
that interest payments are deferred, St. Paul Capital will continue to accrue
income equal to the amount of the interest payment due at the end of the
deferred interest payment period, on an economic basis over the length of the
deferred interest payment period.
Accrued income will be allocated to holders of record on the Business Day
preceding the last day of each calendar month without any corresponding cash
distribution at that time. As a result, holders of record during a deferral of
interest payments will include interest in gross income in advance of the
receipt of cash, and any such holders who dispose of Preferred Securities prior
to the record date for the payment of dividends following such deferral of
interest will include interest in gross income but will not receive any cash
related thereto from St. Paul Capital. The tax basis of a Preferred Security
will be increased by the amount of any interest that is included in income
without a receipt of cash, and will be decreased again when and if such cash is
subsequently received from St. Paul Capital.
EXCHANGE OF PREFERRED SECURITIES FOR ST. PAUL STOCK
A Preferred Securityholder should not recognize gain or loss upon the
exchange, through the Conversion Agent, of Preferred Securities for a
proportionate share of the Convertible Subordinated Debentures held by St. Paul
Capital. Except to the extent attributable to accrued but unpaid interest on the
Convertible Subordinated Debentures, a Preferred Securityholder should not
recognize gain or loss upon the conversion, through the Conversion Agent, of
Convertible Subordinated Debentures for St. Paul Common Stock or Depository
Shares representing St. Paul Series C Convertible Preferred Stock. A Preferred
Securityholder will recognize gain, however, upon the receipt of cash in lieu of
a fractional share of St. Paul Common Stock or Depository Shares representing
St. Paul Series C Convertible Preferred Stock equal to the amount of cash
received less the Preferred Securityholder's tax basis in such fractional share.
A Preferred Securityholder's tax basis in the St. Paul Common Stock or the
Depository Shares representing St. Paul Series C Convertible Preferred Stock
received upon exchange and conversion should generally be equal to the Preferred
Securityholder's tax basis in the Preferred Securities delivered to the
Conversion Agent for exchange plus any accrued but unpaid interest on the
Convertible Subordinated Debentures included in the Preferred Securityholder's
income as a result of the exchange, minus the basis allocated to any fractional
share for which cash is received. A Preferred Securityholder's holding period in
the St. Paul Common Stock or the Depository Shares representing St. Paul Series
C Convertible Preferred Stock received upon exchange and conversion should
generally begin on the date the Preferred Securityholder acquired the Preferred
Securities delivered to the Conversion Agent for exchange.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
St. Paul Capital (and, thus, Preferred Securityholders) as having received a
constructive distribution from The St. Paul in the event the conversion ratio of
the Convertible Subordinated Debentures were adjusted if (i) as a result of such
adjustment, the proportionate interest of St. Paul Capital in the assets or
earnings and profits of The St. Paul were increased and (ii) the adjustment was
not made pursuant to a bona fide, reasonable
66
<PAGE>
antidilution formula. An adjustment in the conversion ratio would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the stock into
which the Convertible Subordinated Debentures are convertible. Thus, under
certain circumstances, a reduction in the conversion price for the Convertible
Subordinated Debentures is likely to be taxable to St. Paul Capital as a
dividend to the extent of the current or accumulated earnings and profits of The
St. Paul. Preferred Securityholders would be required to include their allocable
share of such constructive dividend in gross income but would not receive any
cash related thereto. In addition, the failure to fully adjust the conversion
price of the Convertible Subordinated Debentures to reflect distributions of
stock dividends with respect to the St. Paul Common Stock may result in a
taxable dividend to the holders of the St. Paul Common Stock.
Similarly, under Section 305 of the Code, adjustments to the conversion
price of the St. Paul Series C Convertible Preferred Stock, which may occur
under certain circumstances, may result in deemed dividend income to holders of
the Depository Shares representing St. Paul Series C Convertible Preferred Stock
if such adjustments are not made pursuant to a bona fide, reasonable
antidilution formula, and failure to make such adjustments to the conversion
price of the St. Paul Series C Convertible Preferred Stock may result in deemed
dividend income to holders of the St. Paul Common Stock.
UNITED STATES ALIEN HOLDERS
Ownership of Preferred Securities by nonresident aliens, foreign
corporations and other foreign persons raises tax considerations unique to such
persons and may have substantially adverse tax consequences to them. Therefore,
prospective investors who are foreign persons or which are foreign entities are
urged to consult with their U.S. tax advisors as to whether an investment in
Preferred Securities represents an appropriate investment in light of those
unique tax considerations and possible adverse tax consequences.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
noncorporate United States holders of the proceeds of the sale of Preferred
Securities, St. Paul Series C Convertible Preferred Stock or St. Paul Common
Stock within the United States and "backup withholding" at a rate of 31% will
apply to such payments if the United States holder fails to provide an accurate
taxpayer identification number.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
67
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, St. Paul
Capital has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co. and J.P Morgan Securities Inc.
are acting as representatives, has severally agreed to purchase from St. Paul
Capital, the respective number of Preferred Securities set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF PREFERRED
UNDERWRITER SECURITIES
- ------------------------------------------------------------------------ --------------------
<S> <C>
Goldman, Sachs & Co.....................................................
J.P. Morgan Securities Inc..............................................
----------
Total...............................................................
----------
----------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Preferred Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus, and in part to certain securities dealers at such price less
a concession of $ - per Preferred Security. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ - per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used by St. Paul Capital to purchase the Convertible
Subordinated Debentures of The St. Paul, the Underwriting Agreement provides
that The St. Paul will pay as Underwriters' Compensation a commission of $ -
per Preferred Security.
The St. Paul and St. Paul Capital have granted the Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of - additional Preferred Securities solely to cover
over-allotments, if any. If the Underwriters exercise their over-allotment
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of
Preferred Securities to be purchased by each of them, as shown in the foregoing
table, bears to the Preferred Securities offered.
The St. Paul and St. Paul Capital have agreed not to offer, sell, contract
to sell, or otherwise dispose of any shares of St. Paul Common Stock, any other
capital stock of The St. Paul, any other security convertible into or
exercisable or exchangeable for St. Paul Common Stock or any such other capital
stock or debt securities substantially similar to the Convertible Subordinated
Debentures for a period of 180 days after the date of this Prospectus without
the prior written consent of the representatives, except for (a) the Preferred
Securities offered hereby, (b) St. Paul Common Stock or St. Paul Series C
Convertible Preferred Stock issued or delivered upon conversion or exchange of
the Convertible Subordinated Debentures, (c) securities issued or delivered upon
conversion, exchange or exercise of any other securities of The St. Paul
outstanding on or delivered upon conversion, exchange or exercise of any other
securities of The St. Paul outstanding on the date of this Prospectus, (d)
securities issued pursuant to The St. Paul's stock option or other benefit or
incentive plans maintained for its officers, directors or employees, or (e)
securities issued in connection with mergers, acquisitions or similar
transactions.
Certain of the Underwriters are customers of, or engage in transactions
with, and from time to time have performed services for, The St. Paul and its
subsidiaries and associated companies in the ordinary course of business.
68
<PAGE>
Prior to this Offering, there has been no public market for the Preferred
Securities. Application will be made to list the Preferred Securities, subject
to notice of issuance, on the New York Stock Exchange, subject to notice of
issuance thereof, under the symbol " - ".
The St. Paul and St. Paul Capital have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
VALIDITY OF THE SECURITIES
The validity of the Preferred Securities, the Convertible Subordinated
Debentures, the Guarantee, the St. Paul Common Stock, the Stock Purchase Rights
and the St. Paul Series C Convertible Preferred Stock issuable upon conversion
or exchange of the Convertible Subordinated Debentures will be passed upon for
The St. Paul by Andrew I. Douglass, Senior Vice President and General Counsel of
The St. Paul, St. Paul, Minnesota, and for the Underwriters by Sullivan &
Cromwell, New York, New York. Certain matters of Delaware law will be passed on
by Richards, Layton & Finger, Wilmington, Delaware, special Delaware counsel to
The St. Paul and St. Paul Capital. Sullivan & Cromwell may rely on Mr. Douglass
as to all matters of Minnesota law, Mr. Douglass may rely upon Sullivan &
Cromwell as to all matters of New York law and each of Mr. Douglass and Sullivan
& Cromwell may rely on Richards, Layton & Finger as to the matters of Delaware
law relating to the validity of the Preferred Securities covered by such firm's
opinion. In addition, certain matters as to United States taxation will be
passed upon by Sullivan & Cromwell as special tax counsel to the Company and St.
Paul Capital. At - , 1995, Mr. Douglass beneficially owned - shares of St.
Paul Common Stock and held options to purchase - shares of St. Paul Common
Stock. Sullivan & Cromwell have from time to time rendered certain legal
services to The St. Paul.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1994
and 1993, and for each of the years in the three-year period ended December 31,
1994, and the related financial statement schedules, are incorporated by
reference herein from the Company's Annual Report on Form 10-K. Such
consolidated financial statements and related financial statement schedules have
been audited by KPMG Peat Marwick LLP, independent certified public accountants,
as stated in their reports incorporated by reference herein, and have been
incorporated by reference herein in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing. The reports of KPMG
Peat Marwick LLP on the December 31, 1994, consolidated financial statements and
related financial statement schedules refer to changes in the method of
accounting for certain investments, reinsurance, income taxes and postretirement
benefits other than pensions.
69
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE FIRST
DEFINED TERM DEFINED
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1940 Act................................................................................................ 44
Additional Dividends.................................................................................... 9
Additional Interest..................................................................................... 57
Applicable Price........................................................................................ 41
Beneficial Owner........................................................................................ 48
blockage period......................................................................................... 57
Business Day............................................................................................ 36
Certificate of Designation.............................................................................. 49
Change in 1940 Act Law.................................................................................. 44
Closing Price........................................................................................... 41
Code.................................................................................................... 65
Commission.............................................................................................. 5
Common Securities....................................................................................... 1
Common Stock Fundamental Change......................................................................... 41
Company................................................................................................. 1
Conversion Agent........................................................................................ 36
Conversion Expiration Date.............................................................................. 2
Convertible MIPS........................................................................................ 1
Convertible Subordinated Debentures..................................................................... 1
Current Market Price.................................................................................... 38
deferral of interest payments........................................................................... 3
Deposit Agreement....................................................................................... 50
Depositary.............................................................................................. 50
Depositary Receipts..................................................................................... 50
Depositary Shares....................................................................................... 2
Depositary's Office..................................................................................... 51
Direct Participants..................................................................................... 47
dividends............................................................................................... 1
DTC..................................................................................................... 3
Economy................................................................................................. 24
Entitlement Date........................................................................................ 41
Event of Default........................................................................................ 60
Exchange Act............................................................................................ 5
Exchange Election....................................................................................... 43
Exchange Election Meeting............................................................................... 43
Exchange Event.......................................................................................... 43
Exchange Price.......................................................................................... 36
Fire and Marine......................................................................................... 29
Fundamental Change...................................................................................... 41
Guarantee............................................................................................... 3
Guarantee Payments...................................................................................... 53
Indenture............................................................................................... 34
Indirect Participants................................................................................... 47
Interest Payment Date................................................................................... 55
Investment Company Event................................................................................ 44
LAE..................................................................................................... 33
Junior Stock............................................................................................ 55
L.L.C. Agreement........................................................................................ 7
Liquidation Distribution................................................................................ 44
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
PAGE FIRST
DEFINED TERM DEFINED
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Managing Members Payment................................................................................ 55
Managing Members........................................................................................ 7
Non-Stock Fundamental Change............................................................................ 42
Nuveen.................................................................................................. 18
NYSE.................................................................................................... 2
Participants............................................................................................ 47
Preferred Securities.................................................................................... 1
Preferred Securityholder................................................................................ 65
Purchaser Stock Price................................................................................... 42
Redemption Price........................................................................................ 12
Reference Market Price.................................................................................. 42
Registration Statement.................................................................................. 5
Restated Articles....................................................................................... 49
Rights Agreement........................................................................................ 12
Senior Indebtedness..................................................................................... 58
Senior Nonmonetary Default.............................................................................. 57
Senior Payment Default.................................................................................. 57
Series A Preferred Stock................................................................................ 63
Series B Preferred Stock................................................................................ 63
SFAS.................................................................................................... 24
Special Event........................................................................................... 43
Special Trustee......................................................................................... 14
St. Paul Capital........................................................................................ 1
St. Paul Common Stock................................................................................... 2
St. Paul Holdings....................................................................................... 7
St. Paul Series C Convertible Preferred Stock........................................................... 2
Convertible Subordinated Debentures..................................................................... 1
Stock Purchase Rights................................................................................... 37
Successor Securities.................................................................................... 45
Tax Event............................................................................................... 44
The St. Paul............................................................................................ 1
Transaction............................................................................................. 39
Trustee................................................................................................. 56
UITs.................................................................................................... 27
Underwriters' Compensation.............................................................................. 1
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE ST. PAUL AND ST. PAUL CAPITAL SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 5
Incorporation of Certain Documents by
Reference..................................... 6
Prospectus Summary............................. 7
Investment Considerations...................... 18
Use of Proceeds................................ 20
Ratio of Earnings to Fixed Charges of the
Company....................................... 20
Capitalization................................. 21
Market Prices of St. Paul Common Stock......... 22
The St. Paul's Dividend Policy................. 22
Selected Financial and Operating Data.......... 23
Overview of 1994 Results....................... 24
Business....................................... 28
St. Paul Capital............................... 34
Description of Securities Offered.............. 34
Description of St. Paul Capital Stock.......... 62
Certain St. Paul Charter and By-Law
Provisions.................................... 64
Certain Federal Income Tax Considerations...... 65
Underwriting................................... 68
Validity of the Securities..................... 69
Experts........................................ 69
Index of Defined Terms......................... 70
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- PREFERRED SECURITIES
ST. PAUL CAPITAL L.L.C.
- % CONVERTIBLE MONTHLY INCOME
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY, AND CONVERTIBLE
INTO COMMON STOCK OF,
THE ST. PAUL COMPANIES, INC.
--------------
[LOGO]
--------------
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
REPRESENTATIVES OF THE UNDERWRITERS
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1).
The following statement sets forth the estimated amounts of expenses, other
than the underwriting discount, to be borne by The St. Paul in connection with
the distribution of the securities registered hereby. The amounts set forth in
this table, except for the SEC fee, are in each case estimated.
<TABLE>
<S> <C>
SEC Registration Fee...................................................... 60,346
New York Stock Exchange Listing Fee....................................... (1)
Printing Expenses......................................................... 65,500
Accounting Fees and Expenses.............................................. 30,000
Legal Fees and Expenses................................................... 10,000
Blue Sky Qualification Fees and Expenses.................................. 20,000
Rating Agency Fees........................................................ (1)
Trustee Fees.............................................................. (1)
Miscellaneous Expenses.................................................... (1)
---------
Total................................................................. $ (1)
---------
---------
<FN>
- ------------------------
(1) To be supplied by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The St. Paul is subject to Minnesota Statutes, Chapter 302A. Minnesota
Statutes, Section 302A.521, provides that a corporation shall indemnify any
person made or threatened to be made a party to a proceeding by reason of the
former or present official capacity (as defined) of such person against
judgments, penalties, fines, including, without limitation, excise taxes
assessed against such person with respect to an employee benefit plan,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan; (2) acted in good faith; (3) received no
improper personal benefit and Section 302A.255 (with respect to director
conflicts of interest), if applicable, has been satisfied; (4) in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and (5) reasonably believed that the conduct was in the best interests
of the corporation in the case of acts or omissions in such person's official
capacity for the corporation, or, in the case of acts or omissions in such
person's official capacity for other affiliated organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation.
The By-laws of The St. Paul provide that, subject to the limitations of the
next sentence, it will indemnify and make permitted advances to a person made or
threatened to be made a party to a proceeding by reason of his former or present
official capacity against judgments, penalties, fines (including without
limitation excise taxes assessed against the person with respect to an employee
benefit plan), settlements and reasonable expenses (including without limitation
attorneys' fees and disbursements) incurred by him in connection with the
proceeding in the manner and to the fullest extent permitted or required by
Section 302A.521. Notwithstanding the foregoing, The St. Paul will neither
indemnify nor make advances under Section 302A.521 to any person who at the time
of the occurrence or omission claimed to have given rise to the matter which is
the subject to the proceeding only had an agency relationship to The St. Paul
and was not at that time an officer, director or employee thereof unless such
person and The St. Paul were at that time parties to a written contract for
indemnification or advances with respect to such matter or unless the board
specifically authorizes such indemnification or advances.
The St. Paul has directors' and officers' liability insurance policies, with
coverage of up to $105 million, subject to various deductibles and exclusions
from coverage.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of The
St. Paul and St. Paul Capital pursuant to the foregoing provisions or otherwise,
The St. Paul and St. Paul Capital have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
The St. Paul or St. Paul Capital of expenses incurred or paid by a director,
officer or controlling person of The St. Paul or St. Paul Capital 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 St. Paul and St. Paul Capital will, unless in the opinion of
their counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
them is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING
- ----------- ------------------------------------------------------------------------------------- ----------------
<C> <S> <C>
1 Form of Underwriting Agreement. Filed herewith
2.1 Certificate of Formation of St. Paul Capital L.L.C. Filed herewith
2.2 Form of Amended and Restated Limited Liability Company Agreement of St. Paul Capital
L.L.C. Filed herewith
3.1 Amended and Restated Articles of Incorporation of The St. Paul Companies, Inc., as
amended. (1)
3.2 By-Laws of The St. Paul Companies, Inc., as amended. (1)
3.3 Form of Certificate of Designation with respect to St. Paul Series C Convertible
Preferred Stock. Filed herewith
4.1 Form of St. Paul Capital Preferred Securities Certificate (included in 2.2). Filed herewith
4.2 Form of St. Paul Series C Convertible Preferred Stock Certificate. *
4.3 Form of Indenture. Filed herewith
4.4 Form of Subordinated Debenture (included in 4.3). Filed herewith
4.5 Form of Guarantee Agreement. Filed herewith
4.6 Form of Deposit Agreement with respect to St. Paul Series C Cumulative Preferred
Stock. Filed herewith
4.7 Form of Depositary Receipt (included in 4.6). Filed herewith
4.8 Form of St. Paul Common Stock Certificate. (2)
5 Opinion of Andrew I. Douglass, including consent. *
8 Opinion of Sullivan & Cromwell as to certain tax matters, including consent. *
12 Statement as to Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Dividends. (3)
23.1 Consent of KPMG Peat Marwick LLP. Filed herewith
23.2 Consent of Andrew I. Douglass (included in Exhibit 5). *
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8). *
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING
- ----------- ------------------------------------------------------------------------------------- ----------------
<C> <S> <C>
24 Powers of Attorney. Filed herewith
25 Form of T-1 Statement of Eligibility and Qualification under the Trust Indenture Act Filed herewith
of 1939 of The Chase Manhattan Bank (National Association).
27 Financial Data Schedule. (3)
<FN>
- ------------------------
* To be filed by amendment.
(1) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Quarterly Report on Form 10-Q of The St. Paul for the
quarter ended March 31, 1994 and is incorporated herein by reference.
(2) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Annual Report on Form 10-K of The St. Paul for the year
ended December 31, 1992 and is incorporated herein by reference.
(3) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Annual Report on Form 10-K of The St. Paul for the year
ended December 31, 1994 and is incorporated herein by reference.
</TABLE>
ITEM 17. UNDERTAKINGS.
1. The St. Paul and St. Paul Capital hereby undertake:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of this Registration Statement (or the most recent post-effective
amendment thereto) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement, and (iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement
PROVIDED, HOWEVER, that (i) and (ii) above do not apply if the information
required to be included in a post-effective amendment thereby is contained
in periodic reports filed with or furnished to the Commission by The St.
Paul pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof; and
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The St. Paul and St. Paul Capital hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of The
St. Paul's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
4. See Item 15 for The St. Paul's and St. Paul Capital's undertaking with
respect to indemnification.
II-3
<PAGE>
5. The St. Paul and St. Paul Capital hereby undertake that:
(a) For purposes of determining liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance on Rule 430A and contained in the
form of prospectus filed by The St. Paul and St. Paul Capital pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed to be part of the registration statement as of the time it was
declared effective.
(b) 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The St. Paul
Companies, Inc. and The St. Paul Capital L.L.C. certify that they have
reasonable grounds to believe that they meet all of the requirements for filing
on Form S-3 and have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of Saint
Paul, State of Minnesota, on the 7th day of April, 1995.
THE ST. PAUL COMPANIES, INC.
By /s/ BRUCE A. BACKBERG
------------------------
Bruce A. Backberg
VICE PRESIDENT AND CORPORATE
SECRETARY
ST. PAUL CAPITAL L.L.C.
By: The St. Paul Companies, Inc.,
as Managing Member
By /s/ BRUCE A. BACKBERG
------------------------
Bruce A. Backberg
VICE PRESIDENT AND CORPORATE
SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following directors and officers
of The St. Paul Companies, Inc. in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------------- ----------------
<C> <S> <C>
/s/ DOUGLAS W. LEATHERDALE Chairman, President and Chief Executive
------------------------------------------- Officer (principal executive officer) April 7, 1995
Douglas W. Leatherdale and Director
/s/ PATRICK A. THIELE Executive Vice President and Chief
------------------------------------------- Financial Officer (principal financial April 7, 1995
Patrick A. Thiele officer) and Director
/s/ HOWARD E. DALTON Senior Vice President and Chief
------------------------------------------- Accounting Officer (principal April 7, 1995
Howard E. Dalton accounting officer)
*
------------------------------------------- Director April 7, 1995
Michael R. Bonsignore
*
------------------------------------------- Director April 7, 1995
John H. Dasburg
*
------------------------------------------- Director April 7, 1995
W. John Driscoll
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------------- ----------------
<C> <S> <C>
*
------------------------------------------- Director April 7, 1995
Pierson M. Grieve
*
------------------------------------------- Director April 7, 1995
Ronald James
*
------------------------------------------- Director April 7, 1995
William H. Kling
*
------------------------------------------- Director April 7, 1995
Bruce K. MacLaury
*
------------------------------------------- Director April 7, 1995
Ian A. Martin
*
------------------------------------------- Director April 7, 1995
Glen D. Nelson
*
------------------------------------------- Director April 7, 1995
Anita M. Pampusch
* By: /s/BRUCE A. BACKBERG
Bruce A. Backberg, April 7, 1995
as Attorney-in-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION METHOD OF FILING
- ----------- ------------------------------------------------------------------------------------- ----------------
<C> <S> <C>
1 Form of Underwriting Agreement....................................................... Filed herewith
2.1 Certificate of Formation of St. Paul Capital L.L.C................................... Filed herewith
2.2 Form of Amended and Restated Limited Liability Company Agreement of St. Paul Capital
L.L.C............................................................................... Filed herewith
3.1 Amended and Restated Articles of Incorporation of The St. Paul Companies, Inc., as
amended............................................................................. (1)
3.2 By-Laws of The St. Paul Companies, Inc., as amended.................................. (1)
3.3 Form of Certificate of Designation with respect to St. Paul Series C Convertible
Preferred Stock..................................................................... Filed herewith
4.1 Form of St. Paul Capital Preferred Securities Certificate (included in 2.2).......... Filed herewith
4.2 Form of St. Paul Series C Convertible Preferred Stock Certificate.................... *
4.3 Form of Indenture.................................................................... Filed herewith
4.4 Form of Subordinated Debenture (included in 4.3)..................................... Filed herewith
4.5 Form of Guarantee Agreement.......................................................... Filed herewith
4.6 Form of Deposit Agreement with respect to St. Paul Series C Cumulative Preferred
Stock............................................................................... Filed herewith
4.7 Form of Depositary Receipt (included in 4.6)......................................... Filed herewith
4.8 Form of St. Paul Common Stock Certificate............................................ (2)
5 Opinion of Andrew I. Douglass, including consent..................................... *
8 Opinion of Sullivan & Cromwell as to certain tax matters, including consent.......... *
12 Statement as to Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Dividends................................................................. (3)
23.1 Consent of KPMG Peat Marwick LLP..................................................... Filed herewith
23.2 Consent of Andrew I. Douglass (included in Exhibit 5)................................ *
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8)............................... *
24 Powers of Attorney................................................................... Filed herewith
25 Form of T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of The Chase Manhattan Bank (National Association).......................... Filed herewith
27 Financial Data Schedule.............................................................. (3)
<FN>
- ------------------------
* To be filed by amendment.
(1) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Quarterly Report on Form 10-Q of The St. Paul for the
quarter ended March 31, 1994 and is incorporated herein by reference.
(2) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Annual Report on Form 10-K of The St. Paul for the year
ended December 31, 1992 and is incorporated herein by reference.
(3) Exhibit so marked was filed with the Securities and Exchange Commission as
an exhibit to the Annual Report on Form 10-K of The St. Paul for the year
ended December 31, 1994 and is incorporated herein by reference.
</TABLE>
<PAGE>
EXHIBIT 1
ST. PAUL CAPITAL L.L.C.
-% CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES
(LIQUIDATION PREFERENCE $- PER SECURITY)
GUARANTEED BY
THE ST. PAUL COMPANIES, INC.
_____________________
UNDERWRITING AGREEMENT
----------------------
-, 1995
Goldman, Sachs & Co.,
J.P. Morgan Securities Inc.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
St. Paul Capital L.L.C., a limited liability company formed under the laws
of Delaware (the "Company"), and The St. Paul Companies, Inc., a Minnesota
corporation, as guarantor and provider of certain backup obligations (the
"Guarantor"), propose, subject to the terms and conditions stated herein, that
the Company issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of - (the "Firm Shares") of the Company's -%
Convertible Monthly Income Preferred Securities (liquidation preference $50 per
security) representing preferred limited liability company interests in the
Company (the "Preferred Securities") and, at the election of the Underwriters,
up to - additional Preferred Securities (the "Optional Shares") (the Firm Shares
and the Optional Shares that the Underwriters elect to purchase pursuant to
Section 2 hereof being hereinafter referred to collectively as the "Shares").
The Preferred Securities are guaranteed as to the payment of dividends, if, as
and when declared, and as to payments on liquidation or redemption (the
Preferred Securities and the Guarantee (as defined below) being referred to
collectively as the "Securities") by the Guarantor pursuant to and to the extent
set forth in a Guarantee Agreement, to be dated as of -, 1995 (the "Guarantee").
The Preferred Securities are exchangeable, under certain circumstances, for -%
Convertible Subordinated Debentures of the Guarantor (the "Subordinated
Debentures") entitled to the benefits of an indenture, to be dated as of -, 1995
(in the form filed as an exhibit to the Registration Statement referred to
below, the "Indenture"), among the Company, the Guarantor and The Chase
Manhattan Bank (National Association), as trustee (the "Trustee"), which
Subordinated Debentures will be convertible into shares of Common Stock, without
par value (the "Guarantor Common Stock"), of the Guarantor or exchangeable for
depositary shares (the "Depositary Shares"), each representing a one -th (1/-)
interest in a share of Series C Cumulative Convertible Preferred Stock, par
value $- per share (the "Guarantor Preferred Stock"), of the Guarantor. The
Guarantor Preferred Stock shall be deposited by the Guarantor, immediately
following its issuance, with The Chase
<PAGE>
Manhattan Bank (National Association), as depositary (in such capacity, the
"Depositary"), against delivery of Depositary Shares evidenced by depositary
receipts (the "Depositary Receipts") to be issued by the Depositary under a
Deposit Agreement, to be dated as of -, 1995 (the "Deposit Agreement"), among
the Guarantor, the Depositary and the holders from time to time of the
Depositary Receipts issued thereunder. Unless the context otherwise requires,
references herein to the "Depositary Shares" shall include the Depositary
Receipts evidencing such Depositary Shares.
The Company is managed by the Guarantor and St. Paul Capital Holdings,
Inc., a Delaware corporation ("St. Paul Holdings"), in their capacity as the
members (the "Managing Members") of the Company that hold all of the common
limited liability company interests (the "Common Securities") of the Company.
1. Each of the Company and the Guarantor, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 33--) in respect
of the Shares, the Guarantee, the Subordinated Debentures, the Guarantor
Common Stock, the Guarantor Preferred Stock and the Depositary Shares
(collectively, the "Registered Securities") has been filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), and delivered to you; such
registration statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto but
including all documents incorporated by reference in the prospectus
contained therein, to you for each of the other Underwriters, have been
declared effective by the Commission in such form; no other document with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed, or transmitted for filing,
with the Commission; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act being hereinafter referred to as a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto and including (i) the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed by virtue
of Rule 430A under the Act to be part of the registration statement at the
time it was declared effective and (ii) the documents incorporated by
reference in the prospectus contained in the registration statement at the
time such part of the registration statement became effective, each as
amended at the time such part of the registration statement became
effective, being hereinafter collectively referred to as the "Registration
Statement"; such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, being hereinafter referred to as the
"Prospectus"; any reference herein to any Preliminary Prospectus or 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 Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to
2
<PAGE>
any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Guarantor filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not 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, in the light of the
circumstances under which they were made, 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 or the Guarantor by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not 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; 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 or the
Guarantor by an Underwriter through Goldman, Sachs & Co. expressly for use
therein;
(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects, to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto, and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact
3
<PAGE>
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 or the
Guarantor by an Underwriter through Goldman, Sachs & Co. expressly for use
therein;
(e) Neither the Company, the Guarantor nor any of the Guarantor's
subsidiaries has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
direct loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which is material
to the Company or the Guarantor and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or long-term debt of the Guarantor and its subsidiaries taken as a
whole (other than changes in the capital stock resulting from the exercise
of stock options, the issuance of deferred stock awards, the issuance of
restricted shares under the Guarantor's stock option or other benefit or
incentive plans maintained for its officers, directors or employees or the
conversion of shares of the Guarantor's Series B Convertible Preferred
Stock) or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position or members' capital of the Company or the
general affairs, management, financial position, shareholders' equity or
results of operations of the Guarantor and its subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the Prospectus;
(f) The Guarantor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Minnesota,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; each of
the Guarantor's principal subsidiaries (hereinafter called "Principal
Subsidiaries"), namely St. Paul Fire and Marine Insurance Company and The
John Nuveen Company, has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification;
(g) The Guarantor has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Guarantor have been duly authorized and validly issued and are fully paid
and non-assessable; all of the issued shares of capital stock of St. Paul
Fire and Marine Insurance Company and approximately 77% of the issued
shares of capital stock of The John Nuveen Company have been duly
authorized and validly issued, are fully paid and
4
<PAGE>
non-assessable and are owned directly or indirectly by the Guarantor, free
and clear of all liens, encumbrances, equities or claims;
(h) St. Paul Holdings has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware; all of the issued shares of capital stock of St. Paul Holdings
have been duly authorized and validly issued, are fully paid and non-
assessable and are owned directly or indirectly by the Guarantor, free and
clear of all liens, encumbrances, equities or claims; St. Paul Holdings has
conducted and will conduct no business other than in its capacity as a
Managing Member; St. Paul Holdings will not be a party to or bound by any
agreement or instrument other than the Amended and Restated Limited
Liability Company Agreement, to be dated as of -, 1995, of the Company (in
the form filed as an exhibit to the Registration Statement, the "L.L.C.
Agreement"); St. Paul Holdings has no liabilities or obligations other than
as described in the Prospectus; and St. Paul Holdings is not a party to or
subject to any action, suit or proceeding of any nature;
(i) The Company has been duly formed and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware; all of the issued Common Securities of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and are
owned directly or indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims; the Company has conducted and will
conduct no business other than the transactions contemplated by this
Agreement and described in the Prospectus; the Company is not a party to or
bound by any agreement or instrument other than the L.L.C. Agreement, this
Agreement and the Indenture; the Company has no liabilities or obligations
other than those arising out of the transactions contemplated by this
Agreement and described in the Prospectus; and the Company is not a party
to or subject to any action, suit or proceeding of any nature;
(j) The Shares have been duly authorized by the Managing Members and,
when issued and delivered against payment therefor as provided herein, will
be validly issued, fully paid and non-assessable preferred limited
liability company interests in the Company, as to which the members of the
Company who hold such Shares (the "Preferred Securityholders"), in their
capacity as members of the Company, will have no liability solely by reason
of being Preferred Securityholders in excess of their share of the
Company's assets and undistributed profits (subject to any obligation of a
Preferred Securityholder to repay any funds wrongfully distributed to it),
except as described in the Prospectus; when so issued and delivered, the
Shares will have the rights set forth in the L.L.C. Agreement, the terms of
the Shares will be valid and binding on the Company and the Shares will
conform to the descriptions thereof contained in the Prospectus; when so
issued and delivered, the Shares will be convertible through a conversion
agent acting on behalf of the holders of the Preferred Securities (the
"Conversion Agent") into shares of Guarantor Common Stock and exchangeable
through the Conversion Agent for Depositary Shares representing Guarantor
Preferred Stock, such conversion and exchange effected in each case through
an exchange through the Conversion Agent of Preferred Securities for all or
a portion of the Subordinated Debentures theretofore held by the Company
and the
5
<PAGE>
immediate conversion or exchange thereof by the Conversion Agent into
Guarantor Common Stock or Depositary Shares, as the case may be, all in
accordance with the L.L.C. Agreement, the Indenture and the Deposit
Agreement; the shares of Guarantor Common Stock initially issuable upon
conversion of the Subordinated Debentures and the shares of Guarantor
Preferred Stock initially issuable upon exchange of the Subordinated
Debentures have been duly authorized and reserved for issuance and, when
issued and delivered in accordance with the terms of the Subordinated
Debentures, will be duly and validly issued, fully paid and non-assessable
and will conform to the descriptions thereof contained in the Prospectus;
the deposit of the Guarantor Preferred Stock with the Depositary upon
issuance thereof has been duly authorized and when the Depositary Receipts
are issued in accordance with the provisions of the Deposit Agreement, such
Depositary Receipts will entitle the holders thereof to the rights
specified in such Depositary Receipts and in the Deposit Agreement (subject
in the case of the Deposit Agreement, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles) and the Depositary Shares will conform to
the description thereof in the Prospectus; the terms of the Guarantor
Preferred Stock are valid and binding on the Guarantor; and the holders of
outstanding capital stock of the Guarantor are not entitled to preemptive
or other rights afforded by the Guarantor to subscribe for the shares of
Guarantor Common Stock or the shares of Guarantor Preferred Stock issuable
upon conversion or exchange of the Shares;
(k) The Guarantee, the Deposit Agreement and the Indenture
(collectively, the "Guarantor Agreements") have each been duly authorized
by the Guarantor and when validly executed and delivered by the Guarantor
and, in the case of the Indenture, by the Company and the Trustee, and in
the case of the Deposit Agreement, by the Depositary, will constitute
legal, valid and binding obligations of the Guarantor, enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; the L.L.C. Agreement has been duly
authorized, executed and delivered by the Managing Members and constitutes
a valid and legally binding agreement of the Managing Members, enforceable
against the Managing Members by the Preferred Securityholders in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; the Subordinated Debentures are entitled to the benefits
provided by the Indenture; the Indenture has been duly qualified under the
Trust Indenture Act; and the Guarantor Agreements and the L.L.C. Agreement
conform to the descriptions thereof in the Prospectus;
(l) The Indenture has been duly authorized by the Company and, when
validly executed and delivered by the Company, the Guarantor and the
Trustee, will constitute a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
6
<PAGE>
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(m) The issue and sale of the Shares by the Company, the purchase of
the Subordinated Debentures by the Company, the exchange by the Company of
Subordinated Debentures held by it for Preferred Securities in connection
with the conversion or exchange of the Preferred Securities for Guarantor
Common Stock or Guarantor Preferred Stock, the compliance by the Company
with all of the provisions of this Agreement, the execution, delivery and
performance by the Company of the Indenture and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which any of the property or
assets of the Company is subject, nor will such actions result in any
violation of the provisions of the Certificate of Formation of the Company
or the L.L.C. Agreement or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares by the Company, the purchase of the Subordinated Debentures by the
Company, the exchange by the Company of Subordinated Debentures held by it
for Preferred Securities in connection with the conversion or exchange of
such Preferred Securities for Guarantor Common Stock or Guarantor Preferred
Stock or the consummation by the Company of the other transactions
contemplated by this Agreement, except the registration under the Act of
the Registered Securities, qualification of the Indenture under the Trust
Indenture Act, registration of the Shares under the Exchange Act, the
listing of the Shares on the New York Stock Exchange (the "Exchange") and
such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities, insurance or Blue Sky laws in
connection with the purchase of the Shares and the distribution of the
Shares by the Underwriters;
(n) The issue and sale of the Shares by the Company, the issuance by
Guarantor of the Guarantee, the issuance and sale by Guarantor of the
Subordinated Debentures, the exchange by the Company of Subordinated
Debentures held by it for Preferred Securities in connection with the
conversion or exchange of the Preferred Securities for Guarantor Common
Stock or Guarantor Preferred Stock, the issuance by Guarantor of the shares
of Guarantor Common Stock issuable upon conversion of the Subordinated
Debentures, the issuance by the Guarantor of the Guarantor Preferred Stock
issuable upon exchange of the Subordinated Debentures and the deposit
thereof with the Depositary, the compliance by the Company and the
Guarantor with all of the provisions of this Agreement, the execution,
delivery and performance by the Guarantor of the Guarantor Agreements and
the L.L.C. Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Guarantor or any of its subsidiaries
is a party or by which the Guarantor or any of its subsidiaries is bound or
to which any of the
7
<PAGE>
property or assets of the Guarantor or any of its subsidiaries is subject,
nor will such actions result in any violation of the provisions of the
Amended and Restated Articles of Incorporation or Bylaws of the Guarantor
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Guarantor or any
of its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issuance of the
Guarantee, the issuance and sale of the Subordinated Debentures, the
issuance of the shares of Guarantor Common Stock issuable upon conversion
of the Subordinated Debentures and the issuance of the shares of Guarantor
Preferred Stock issuable upon exchange of the Subordinated Debentures or
the consummation by the Guarantor of the transactions contemplated by this
Agreement or the Indenture or the Guarantee, except the registration under
the Act of the Registered Securities, qualification of the Indenture under
the Trust Indenture Act, registration of the shares under the Exchange Act,
the listing of the Shares on the Exchange and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities, insurance or Blue Sky laws in connection with the
purchase of the Shares and distribution of the Shares by the Underwriters;
(o) None of the Company, the Guarantor nor any of the Guarantor's
subsidiaries is in violation of its organizational documents or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties is or may be bound;
(p) The statements set forth in the Prospectus under the captions
"Description of Securities Offered" and "Description of St. Paul Capital
Stock", insofar as they purport to constitute a summary of the terms of the
securities therein described, and, subject to the limitations set forth
therein, under the caption "Certain Federal Income Tax Considerations",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(q) Other than as set forth in the Prospectus, and other than
litigation (none of which is reasonably likely to be material) incidental
to the kinds of business conducted by the Guarantor and its subsidiaries,
there are no legal or governmental proceedings pending to which the
Guarantor or any of its subsidiaries is a party or of which any property of
the Guarantor or any of its subsidiaries is the subject which, if
determined adversely to the Guarantor or any of its subsidiaries, would
individually or in the aggregate (after giving effect to any applicable
insurance, reinsurance or reserves therefor) have a material adverse effect
on the consolidated financial position, shareholders' equity or results of
operations of the Guarantor and its subsidiaries, taken as a whole; and, to
the best of the Guarantor's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(r) Neither the Company nor the Guarantor is and, after giving effect
to the offering and sale of the Shares, neither the Company nor the
Guarantor will be, an
8
<PAGE>
"investment company" or an entity "controlled" by an "investment company",
as such terms are defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(s) None of the Company, the Guarantor or any of their affiliates
does business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(t) KPMG Peat Marwick LLP, which has certified certain financial
statements of the Company and the Guarantor, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and
(u) Neither the Company nor the Guarantor has taken nor will it take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company or the Guarantor
to facilitate the sale or resale of any of the Securities.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per security of $-, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per security set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction, the numerator of which is the maximum number
of Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to - Optional Shares, at the purchase price per security set
forth in the paragraph above, for the sole purpose of covering overallotments in
the sale of the Firm Shares. Any such election to purchase Optional Shares may
be exercised only by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
As compensation to the Underwriters for their commitments hereunder, and in
view of the fact that the proceeds of the sale of the Shares will be used by the
Company to purchase the Subordinated Debentures of the Guarantor, the Guarantor
hereby agrees to pay
9
<PAGE>
at each Time of Delivery (as defined in Section 4 hereof) to Goldman, Sachs &
Co., for the accounts of the several Underwriters, an amount equal to $- per
security for the Shares to be delivered hereunder at such Time of Delivery.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder shall be
delivered by or on behalf of the Company to Goldman, Sachs & Co., through the
facilities of The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by certified or official bank check or checks, payable to the
order of the Company in New York Clearing House (next day) funds. The Company
will cause the certificates representing the Shares to be made available for
checking and packaging at least twenty-four hours prior to the Time of Delivery
(as defined below) with respect thereto at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on
- -, 1995, or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New
York time, on the date specified by Goldman, Sachs & Co. in the written notice
given by Goldman, Sachs & Co. of the Underwriters' election to purchase such
Optional Shares, or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of Delivery", such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called the "Second Time of Delivery", and each such time and date for delivery
is herein called a "Time of Delivery".
At each Time of Delivery, the Guarantor will pay, or cause to be paid, the
commission payable at such Time of Delivery to the Underwriters under Section 2
hereof by certified or official bank check or checks, payable to the order of
Goldman, Sachs & Co. in New York Clearing House (next day) funds.
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Securities and any additional documents requested by the Underwriters
pursuant to Section 7(i) hereof, and the check or checks specified in
subsection (a) above, will be delivered at the offices of Sullivan & Cromwell,
125 Broad Street, New York, New York 10004 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at such Time of Delivery.
A meeting will be held at the Closing Location at 1:00 p.m., New York time, on
the New York Business Day next preceding such Time of Delivery, at which meeting
the final drafts of the documents to be delivered pursuant to the preceding
sentence will be available for review by the parties hereto. For the purposes of
this Section 4, "New York Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in The City of New York are generally authorized or obligated by law or
executive order to close.
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5. Each of the Company and the Guarantor, jointly and severally, agrees
with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or the
Prospectus prior to the last Time of Delivery which shall be disapproved by
you promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; in the case of the Guarantor, to file
promptly all reports and any definitive proxy or information statements
required to be filed by the Guarantor with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares; to advise
you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Registered Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Registered Securities for offering and
sale under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection
therewith neither the Company nor the Guarantor shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration of
nine months after the time of issue of the Prospectus in connection with
the offering or sale of the Registered Securities and if at such time any
event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such
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period to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to
comply with the Act, the Exchange Act or the Trust Indenture Act, to notify
you and upon your request to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Registered Securities at any time nine months or more after the
time of issue of the Prospectus, upon your request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many copies
as you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;
d) In the case of the Guarantor, to make generally available to its
securityholders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Act), an earnings statement of the
Guarantor and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations thereunder
(including, at the option of the Guarantor, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date which is 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose of
any preferred limited liability company interests in the Company, any
shares of Guarantor Common Stock, any other shares of capital stock of the
Guarantor, any other security convertible into or exercisable or
exchangeable for Guarantor Common Stock or any capital stock or debt
securities substantially similar to the Subordinated Debentures or any
other securities substantially similar to the Shares, other than the
Shares, shares of Guarantor Common Stock, Guarantor Preferred Stock or
Depositary Shares issued or delivered upon conversion or exchange of the
Subordinated Debentures, securities issued or delivered upon conversion,
exchange, or exercise of any other securities of the Guarantor outstanding
on the date of the Prospectus, securities issued pursuant to the
Guarantor's stock option or other benefit or incentive plans maintained for
its officers, directors or employees, securities issued by the Guarantor
in connection with mergers, acquisitions or similar transactions, or Common
Securities issued to the Managing Members in connection with the sale of
the Optional Shares in order to maintain the Managing Members' 21% interest
in the total capital of the Company, without your prior written consent;
(f) To furnish to the Preferred Securityholders all other reports or
communications (financial or other) furnished to holders of Guarantor
Common Stock and, as soon as practicable after the end of each fiscal year,
an annual report (including a balance sheet and statements of income,
shareholders' equity and cash flows of the Guarantor and its consolidated
subsidiaries certified by independent public accountants);
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(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to holders of Guarantor
Common Stock, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company or the Guarantor is listed except reports filed
pursuant to Section 16(b) of the Exchange Act; and (ii) such additional
information concerning the business and financial condition of the Company
or the Guarantor as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and the Guarantor and the Guarantor's subsidiaries
are consolidated in reports furnished to its securityholders generally or
to the Commission);
(h) In the case of the Guarantor, to issue the Guarantee concurrently
with the issue and sale of the Shares as contemplated herein;
(i) To use the net proceeds received by it from the sale of the
Shares and the Subordinated Debentures pursuant to this Agreement in the
manner specified in the Prospectus under the caption "Use of Proceeds"; and
(j) To reserve and keep available at all times, free of preemptive
rights, shares of Guarantor Common Stock and Guarantor Preferred Stock for
the purpose of enabling the Guarantor to satisfy any obligations to issue
shares of Guarantor Common Stock or Guarantor Preferred Stock upon
conversion or exchange of the Subordinated Debentures.
6. The Guarantor covenants and agrees with the several Underwriters that
it will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's and the Guarantor's counsel and accountants in
connection with the registration of the Registered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
any amendments, supplements and exhibits thereto and the mailing and delivering
of copies thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement among Underwriters, this Agreement, the Deposit
Agreement, the Indenture, the L.L.C. Agreement, the Guarantee, the Registered
Securities, the Certificate of Designations relating to the Guarantor Preferred
Stock, the Blue Sky Memorandum, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Securities and the Subordinated Debentures; (iii) all
expenses in connection with the qualification of the Registered Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) any fees charged by securities rating services for rating the Preferred
Securities; (v) all fees and expenses in connection with listing any of the
Registered Securities on the Exchange and the cost of registering the Shares
under Section 12 of the Exchange Act; (vi) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (vii) the cost of qualifying the
Shares, the Guarantor Common Stock and the Guarantor Preferred Stock with
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DTC; (viii) the cost of preparing certificates for the Shares, the Guarantor
Common Stock and the Depositary Shares; (ix) the cost and charges of any
transfer agent or registrar; (x) the cost and charges of the Depositary;
(xi) the costs and charges of the Conversion Agent; (xii) 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 Subordinated
Debentures; and (xiii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section and Sections 8 and 11 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Guarantor herein are, at and as of such Time of Delivery,
true and correct, the condition that the Company and the Guarantor shall have
performed all of their respective obligations hereunder theretofore to be
performed and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the incorporation of the Guarantor and St. Paul Holdings
and the formation of the Company; the validity of the Registered Securities
being delivered at such Time of Delivery; the Registration Statement and
the Prospectus and other related matters as you may reasonably request; and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters; PROVIDED, that
in respect of certain matters of Delaware law, such counsel shall be
entitled to rely upon an opinion or opinions of Richards, Layton & Finger,
Wilmington, Delaware;
(c) Andrew I. Douglass, Senior Vice President and General Counsel of
the Guarantor, shall have furnished to you his written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Minnesota, with power and authority (corporate and other) to own
its properties and conduct its business as described in the
Prospectus;
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(ii) The Guarantor has an authorized share capital as set forth
in the Prospectus and all of the issued shares of capital stock of the
Guarantor have been duly authorized and validly issued and are fully
paid and non-assessable;
(iii) The Guarantor has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction other than that of its
incorporation in which it owns or leases properties or conducts any
business, so as to require such qualification (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel, and, as to matters of fact, upon
certificates of officers of the Guarantor, provided that such counsel
shall state that he believes that both you and he are justified in
relying upon such opinions and certificates);
(iv) Each of the Principal Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; all of the issued
shares of capital stock of St. Paul Fire and Marine Insurance Company
and approximately 77% of the issued shares of capital stock of The
John Nuveen Company have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned directly or indirectly by
the Guarantor, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the opinion
in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Guarantor or the
Principal Subsidiaries, provided that such counsel shall state that he
believes that both you and he are justified in relying upon such
opinions and certificates);
(v) St. Paul Holdings has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware; all of the issued shares of capital stock of St. Paul
Holdings have been duly authorized and validly issued, are fully paid
and non-assessable and are owned directly or indirectly by the
Guarantor, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of such
opinions upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of the Guarantor or St. Paul
Holdings, provided that such counsel shall state that he believes that
both you and he are justified in relying on such opinions and
certificates); St. Paul Holdings is not a party to or bound by any
agreement or instrument other than the L.L.C. Agreement; and, to the
best of such counsel's knowledge, there are no legal or governmental
proceedings to which St. Paul Holdings is a party or of which any
property of St. Paul Holdings is the subject, and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vi) The Company has been duly formed and is validly existing as
a limited liability company in good standing under the laws of the
State of Delaware; all of the issued Common Securities of the Company
have been duly authorized and validly issued, are fully paid and non-
assessable and are owned directly or
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indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely
in respect of such opinions upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Guarantor or the Company, provided that such counsel shall state that
he believes that both you and he are justified in relying upon such
opinions and certificates); the Company is not a party to or bound by
any agreement or instrument other than the L.L.C. Agreement, this
Agreement and the Indenture; and to the best of such counsel's
knowledge, there are no legal or governmental proceedings to which the
Company is a party or of which any property of the Company is the
subject and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(vii) The Shares have been duly authorized by the Managing
Members, and, when issued and delivered against payment therefor as
provided herein, will be validly issued, fully paid and non-assessable
preferred limited liability company interests in the Company, as to
which the Preferred Securityholders, in their capacity as members of
the Company, will have no liability solely by reason of being
Preferred Securityholders in excess of their share of the Company's
assets and undistributed profits (subject to any obligation of a
Preferred Securityholder to repay any funds wrongfully distributed to
it), except as described in the Prospectus; when so issued and
delivered, the Shares will have the rights set forth in the L.L.C.
Agreement, the terms of the Shares will be valid and binding on the
Company, and the Shares will conform to the descriptions thereof
contained in the Prospectus; when so issued and delivered, the Shares
will be convertible through the Conversion Agent into shares of
Guarantor Common Stock and exchangeable through the Conversion Agent
for Depositary Shares representing shares of Guarantor Preferred
Stock, such conversion and exchange effected in each case through an
initial exchange through the Conversion Agent of Preferred Securities
for all or a portion of the Subordinated Debentures theretofore held
by the Company and the immediate conversion or exchange thereof by the
Conversion Agent into Guarantor Common Stock or Depositary Shares, as
the case may be, all in accordance with the L.L.C. Agreement, the
Indenture and the Deposit Agreement; the shares of Guarantor Common
Stock initially issuable upon conversion of the Subordinated
Debentures and the shares of Guarantor Preferred Stock initially
issuable upon exchange of the Subordinated Debentures have been duly
authorized and reserved for issuance and, when issued and delivered in
accordance with the terms of the Indenture, will be duly and validly
issued, fully paid and non-assessable and will conform to the
descriptions thereof contained in the Prospectus; the deposit of the
Guarantor Preferred Stock with the Depositary upon issuance thereof
has been duly authorized and when the Depositary Receipts are issued
in accordance with the provisions of the Deposit Agreement such
Depositary Receipts will entitle the holders thereof to the rights
specified in such Depositary Receipts and in the Deposit Agreement
(subject in the case of the Deposit Agreement, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general
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applicability relating to or affecting creditors' rights and to
general equity principles) and the Depositary Shares will conform to
the description thereof in the Prospectus; the terms of the Guarantor
Preferred Stock are valid and binding on the Guarantor; and the
holders of outstanding capital stock of the Guarantor are not entitled
to preemptive or other rights afforded by the Guarantor to subscribe
for the shares of Guarantor Common Stock or the shares of Guarantor
Preferred Stock issuable upon conversion or exchange of the Shares;
(viii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending to which the Guarantor or
any of its subsidiaries is a party or of which any property of the
Guarantor or any of its subsidiaries is the subject, other than as set
forth in the Prospectus and other than litigation or proceedings (none
of which is reasonably likely to be material) incident to the kinds of
business conducted by the Guarantor and its subsidiaries, which, if
determined adversely to the Guarantor or any of its subsidiaries,
would individually or in the aggregate (after giving effect to any
applicable insurance, reinsurance or reserves therefor) have a
material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Guarantor and its
subsidiaries, taken as a whole; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(ix) This Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor;
(x) The L.L.C. Agreement has been duly authorized, executed and
delivered by the Managing Members and constitutes a valid and legally
binding agreement of the Managing Members, enforceable against the
Managing Members by the Preferred Securityholders in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; and the L.L.C. Agreement conforms to the
description thereof in the Prospectus;
(xi) The Guarantor Agreements have been duly authorized,
executed and delivered by the Guarantor and constitute legal, valid
and binding obligations of the Guarantor, enforceable in accordance
with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; the
Subordinated Debentures are entitled to the benefits provided by the
Indenture; the Indenture has been duly qualified under the Trust
Indenture Act; and the Guarantor Agreements conform to the
descriptions thereof in the Prospectus;
(xii) The Indenture has been duly authorized, validly executed
and delivered by the Company and constitutes a legal, valid and
binding obligation of the
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Company, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(xiii) The issue and sale by the Company of the Shares being
delivered at such Time of Delivery, the compliance by the Company with
all of the provisions of this Agreement, the purchase by the Company
of the Subordinated Debentures, the exchange by the Company of
Subordinated Debentures held by it for Preferred Securities in
connection with the conversion or exchange of the Preferred Securities
for Guarantor Common Stock or Guarantor Preferred Stock, the
execution, delivery and performance by the Company of the Indenture
and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
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 of the property or assets of the Company pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which any of
the property or assets of the Company is subject, nor will such
actions result in any violation of the provisions of the Certificate
of Formation of the Company or the L.L.C. Agreement or any statute or
any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its properties;
(xiv) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Shares by the Company,
the purchase by the Company of the Subordinated Debentures, the
exchange by the Company of Subordinated Debentures held by it for
Preferred Securities in connection with the conversion or exchange of
the Preferred Securities for Guarantor Common Stock or Guarantor
Preferred Stock, or the consummation by the Company of the
transactions contemplated herein and therein, except the registration
under the Act of the Registered Securities, qualification of the
Indenture under the Trust Indenture Act, registration of the Shares
under the Exchange Act and listing of the Shares on the Exchange, each
of which has been made or obtained, and such consents, approvals,
authorizations, registrations or qualifications as have been obtained
or may be required under state securities, insurance or Blue Sky laws
in connection with the purchase of the Shares and the distribution of
the Shares by the Underwriters;
(xv) The issue and sale of the Shares by the Company, the
issuance by the Guarantor of the Guarantee, the issuance by the
Guarantor of the Subordinated Debentures, the exchange by the Company
of Subordinated Debentures held by it for Preferred Securities in
connection with the conversion or exchange of the Preferred Securities
for Guarantor Common Stock or Guarantor Preferred Stock, the issuance
by the Guarantor of the shares of Guarantor Common Stock issuable upon
conversion of the Subordinated Debentures, the issuance
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of the shares of Guarantor Preferred Stock issuable upon exchange of
the Subordinated Debentures by the Guarantor and the deposit thereof
with the Depositary, the compliance by the Guarantor with all of the
provisions of this Agreement, the execution, delivery and performance
by the Guarantor of the Guarantor Agreements and the L.L.C. Agreement
and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
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 of the property or assets of the Guarantor or any
of its subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, loan agreement or other indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Guarantor or any of its subsidiaries is a party
or by which the Guarantor or any of its subsidiaries is bound or to
which any of the property or assets of the Guarantor or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the Amended and Restated Articles of
Incorporation or Bylaws of the Guarantor or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Guarantor or any of its
subsidiaries or any of their properties;
(xvi) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue of the Guarantee, the issuance and sale
of the Subordinated Debentures, the issuance of the shares of
Guarantor Common Stock issuable upon conversion of the Subordinated
Debentures or the issuance of the Guarantor Preferred Stock issuable
upon exchange of the Subordinated Debentures or the consummation by
the Guarantor of the transactions contemplated herein and therein,
except the registration under the Act of the Registered Securities,
qualification of the Indenture under the Trust Indenture Act,
registration of the Shares under the Exchange Act and listing of the
Shares on the Exchange, each of which has been made or obtained, and
such consents, approvals, authorizations, registrations or
qualifications as have been obtained or may be required under state
securities, insurance or Blue Sky laws in connection with the purchase
of the Shares and the distribution of the Shares by the Underwriters;
(xvii) The statements set forth in the Prospectus under the
captions "Description of Securities Offered" and "Description of
St. Paul Capital Stock" insofar as they constitute summaries of the
terms of securities therein described are accurate, correct and
fairly present the information set forth therein;
(xviii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the
Company or the Guarantor prior to such Time of Delivery (other than
the financial statements and related schedules therein, as to which
such counsel need express no
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opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of such
documents, when such documents became effective or were so filed, as
the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a
material fact, or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or contained, in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading;
(xix) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company or the
Guarantor prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the Trust Indenture Act and the
rules and regulations thereunder; such counsel has no reason to
believe that, as of its effective date, the Registration Statement or
any further amendment thereto made by the Company or the Guarantor
prior to such Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein, as to which
such counsel need express no opinion) contained an untrue statement of
a material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading or that, as of such Time of Delivery,
either the Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company or the Guarantor
prior to such Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need express
no opinion) contains 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 under which they were made, not
misleading; and such counsel does not know of any amendment to the
Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be incorporated by reference
into the Prospectus or required to be described in the Registration
Statement or the Prospectus which are not filed or incorporated by
reference or described as required; and
20
<PAGE>
(xx) Neither the Company nor the Guarantor is an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act;
PROVIDED, that in respect of certain matters of Delaware law, such counsel
shall be entitled to rely upon an opinion or opinions of Richards, Layton &
Finger, Wilmington, Delaware;
(d) Sullivan & Cromwell, special United States tax counsel for the
Company and the Guarantor, shall have furnished at each Time of Delivery
their opinion confirming their opinion as to tax matters set forth under
"Certain Federal Income Tax Considerations" in the Prospectus.
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, KPMG Peat
Marwick LLP shall have furnished to you a letter, dated the date of
delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex I hereto;
(f) The Guarantor Agreements and the Certificate of Designations with
respect to the Guarantor Preferred Stock shall have been executed and
delivered and, in the case of such Certificate of Designations, executed
and filed, in each case in a form reasonably acceptable to you;
(g) (i) Neither the Company, the Guarantor nor any of the Principal
Subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any direct loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Guarantor and its subsidiaries taken as a whole
(other than any change in the capital stock resulting from the exercise of
stock options, the issuance of restricted shares under the Guarantor's
stock option or other benefit or incentive plans maintained for its
officers, directors or employees or the conversion of shares of the
Guarantor's Series B Convertible Preferred Stock) or any change, or
any development involving a prospective change, in or affecting the general
affairs, management, financial position or members' capital of the Company
or the general affairs, management, consolidated financial position,
shareholders' equity or results of operations of the Guarantor and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering of the
Shares or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) any downgrading in the rating accorded the Guarantor's
debt securities by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act, (ii) a public announcement by any such
organization referred to in clause (i) that it has under surveillance or
21
<PAGE>
review, with possible negative implications, its rating of any of the
Guarantor's debt securities, (iii) a suspension or material limitation in
trading in securities generally on the Exchange, (iv) a general moratorium
on commercial banking activities in New York declared by either Federal or
New York State authorities, or (v) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this clause (v) in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on the Exchange; and
(j) The Company and the Guarantor shall have furnished or caused to
be furnished to you at such Time of Delivery certificates of officers of
the Company and the Guarantor satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Guarantor herein at
and as of such Time of Delivery, as to the performance by the Company and
the Guarantor of all of their obligations hereunder to be performed at or
prior to such Time of Delivery, as to the matters set forth in subsections
(a) and (g) of this Section and as to such other matters as you may
reasonably request.
8. (a) The Company and the Guarantor, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; PROVIDED, HOWEVER, that neither
the Company nor the Guarantor shall be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Goldman,
Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company and the
Guarantor against any losses, claims, damages or liabilities to which the
Company and the Guarantor may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact
22
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company or the Guarantor by such Underwriter
through Goldman, Sachs & Co. expressly for use therein; and will reimburse the
Company or the Guarantor, as the case may be, for any legal or other expenses
reasonably incurred by the Company or the Guarantor in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against such indemnifying
party under such subsection, notify such indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantor on the one hand and the Underwriters on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantor on the one hand
23
<PAGE>
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantor 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 and the Guarantor bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantor on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Guarantor and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (d) 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 above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Guarantor under this Section 8
shall be in addition to any liability which the Company and the Guarantor may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and the Guarantor (including any person who, with his or her consent, is
named in the Registration Statement as about to become a director of the Company
or the Guarantor), and to each person, if any, who controls the Company or the
Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company and the Guarantor shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
24
<PAGE>
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company and the
Guarantor that you have so arranged for the purchase of such Shares, or the
Company or the Guarantor notifies you that it has so arranged for the purchase
of such Shares, you or the Company and the Guarantor shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company and the Guarantor agree to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Guarantor as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company and the Guarantor shall have the right to require each non-defaulting
Underwriter to purchase the number of shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Guarantor as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company and
the Guarantor shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Company and the Guarantor to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter, the
Company or the Guarantor, except for the expenses to be borne by the Company and
the Guarantor and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Guarantor and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or the Guarantor, or any officer or director or
controlling person of the Company or the Guarantor, and shall survive delivery
of and payment for the Shares.
25
<PAGE>
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Guarantor shall then be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but, if for any other
reason, any Shares are not delivered by or on behalf of the Company as provided
herein, the Company or the Guarantor will reimburse the Underwriters through you
for all out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but neither the Company nor the Guarantor shall then be under any further
liability to any Underwriter in respect of the Shares not so delivered except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company or the Guarantor shall be delivered or sent by
mail to the address of the Guarantor set forth in the Registration Statement,
Attention: James L. Boudreau; PROVIDED, HOWEVER, that any notice to an
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company and the Guarantor by you upon request.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, the Guarantor and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company, the
Guarantor and each person who controls the Company, the Guarantor or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
26
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters, the Company and
the Guarantor. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
ST. PAUL CAPITAL L.L.C.
By: The St. Paul Companies, Inc.,
as Managing Member
By:______________________________
Name:
Title:
THE ST. PAUL COMPANIES, INC.
By:______________________________
Name:
Title:
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES, INC.
By:____________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
27
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ------------------
<S> <C> <C> <C>
Goldman, Sachs & Co. . . . . . . .
J.P. Morgan Securities Inc.
--------------- -----------------
Total. . . . . . . . . . . . .
</TABLE>
28
<PAGE>
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, KPMG Peat Marwick
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Guarantor and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited by them and included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder; and they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the interim consolidated condensed balance
sheets and statements of income of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have
been furnished to the Agents;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Guarantor for the five most recent fiscal years included in the Prospectus
and included or incorporated by reference in Item 6 of the Guarantor's most
recently filed Annual Report on Form 10-K agrees with the corresponding
amounts (after restatement where applicable) in the audited consolidated
financial statements for such five fiscal years which were included or
incorporated by reference in the Guarantor's Annual Reports on Form 10-K
for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Guarantor and certain of its subsidiaries,
inspection of the minute books of the Guarantor and certain of its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Guarantor who are responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated condensed balance sheets and
related unaudited consolidated condensed statements of income, common
shareholders' equity and cash flows included or incorporated by
reference in the Guarantor's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or are not in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with the basis for the audited consolidated
statements of income, consolidated balance sheets, consolidated
statements of common shareholders'
<PAGE>
equity and consolidated statements of cash flows included or
incorporated by reference in the Guarantor's most recently filed
Annual Report on Form 10-K or the Registration Statement;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Guarantor's Annual Report on Form 10-K for the most recent fiscal
year;
(C) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(D) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock of the Guarantor (other than any change in the capital
stock resulting from the exercise of stock options, the issuance of
restricted shares under the Guarantor's stock option or other benefit
or incentive plans maintained for its officers, directors or employees
or the conversion of shares of the Guarantor's Series B Convertible
Preferred Stock, in each case which were outstanding on the date of
the latest balance sheet included or incorporated by reference in the
Prospectus) or any increase in the consolidated short-term borrowings,
or long-term debt of the Guarantor and its subsidiaries or any other
items specified by the Underwriters, or any decreases in any items
specified by the Underwriters, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter;
(E) at the date of the latest available incomplete unaudited
consolidated condensed balance sheet of the Guarantor and subsidiaries
other than Minet Group, St. Paul (UK) Ltd. and subsidiaries
owned or managed by Minet Holdings PLC or St. Paul (UK) Ltd. (the
"Excluded Subsidiaries") there were any decreases in total invested
assets, total assets or total net assets or other items reasonably
specified by the Underwriters, or any increases in any items
reasonably specified by the Underwriters, in each case as compared
with the amounts reflected in the incomplete unaudited consolidated
condensed balance sheet at the date of the latest financial statements
included or incorporated by reference in the Prospectus, except in
each case for increases or decreases
2
<PAGE>
which the Prospectus discloses have occurred or may occur or which are
described in such letter; or
(F) for the period from the date of the latest income statement
included or incorporated by reference in the Prospectus to the date of
the latest available incomplete unaudited consolidated condensed
income statement of the Guarantor and subsidiaries other than the
Excluded Subsidiaries there were any decreases in total revenues,
operating earnings from continuing operations, net income or earnings
per share or other items reasonably specified by the Underwriters, or
any increases in any items reasonably specified by the Underwriters,
in each case as compared with the incomplete unaudited consolidated
condensed income statement of the Guarantor and subsidiaries other
than the Excluded Subsidiaries for the comparable period of the
preceding year and with any other period of corresponding length
reasonably specified by the Underwriters, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Underwriters which are derived from the general accounting records of the
Guarantor and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Underwriters or
in documents incorporated by reference in the Prospectus specified by the
Underwriters, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Guarantor and its
subsidiaries and have found them to be in agreement.
3
<PAGE>
EXHIBIT 2.1
CERTIFICATE OF FORMATION
OF
ST. PAUL CAPITAL L.L.C.
This Certificate of Formation of St. Paul Capital L.L.C. (the
"L.L.C.") dated as of April 4, 1995 is being duly executed and filed by The St.
Paul Companies, Inc., as an authorized person, to form a limited liability
company under the Delaware Limited Liability Company Act (6 Del.C.
Section 18-101, Et Seq.).
FIRST. The name of the limited liability company formed hereby is
St. Paul Capital L.L.C.
SECOND. The address of the registered office of the L.L.C. in the
State of Delaware is c/o RL&F Service Corp., One Rodney Square, 10th Floor,
Tenth and King Streets, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for service of
process on the L.L.C. in the State of Delaware are RL&F Service Corp., One
Rodney Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle
County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
THE ST. PAUL COMPANIES, INC.,
as authorized person
/s/ Bruce A. Backberg
------------------------
Name: Bruce A. Backberg
Title: Vice President and
Corporate Secretary
<PAGE>
EXHIBIT 2.2
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ST. PAUL CAPITAL L.L.C.
Dated as of * , 1995
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions............................................. 1
Section 1.2 Headings................................................ 11
ARTICLE II
CONTINUATION AND TERM; ADMISSION OF MEMBERS
Section 2.1 Continuation............................................ 11
Section 2.2 Name.................................................... 11
Section 2.3 Term.................................................... 11
Section 2.4 Registered Agent and Office............................. 11
Section 2.5 Principal Place of Business............................. 11
Section 2.6 Admission of Preferred Members.......................... 12
Section 2.7 Qualification in Other Jurisdictions.................... 12
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 Purposes................................................ 13
ARTICLE IV
CAPITAL CONTRIBUTIONS, ALLOCATIONS AND SECURITIES
Section 4.1 Form of Contribution.................................... 13
Section 4.2 Contributions by the Common Members..................... 13
Section 4.3 Contributions by the Preferred Members.................. 13
Section 4.4 Allocation of Profits and Losses........................ 14
Section 4.5 Allocation of Distributions............................. 14
Section 4.6 Withholding............................................. 14
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Section 4.7 Interests as Personal Property.......................... 14
ARTICLE V
MEMBERS
Section 5.1 Powers of Members....................................... 15
Section 5.2 Partition............................................... 15
Section 5.3 Resignation............................................. 15
ARTICLE VI
MANAGEMENT
Section 6.1 Management of the Company............................... 15
Section 6.2 Limits on Managing Members' Powers...................... 18
Section 6.3 Reliance by Third Parties............................... 19
Section 6.4 No Management by Any Preferred Members.................. 19
Section 6.5 Business Transactions of a Managing Member
with the Company................................... 20
Section 6.6 Actions by Managing Members............................. 20
Section 6.7 Outside Businesses.......................................20
ARTICLE VII
THE SPECIAL TRUSTEE
Section 7.1 Appointment of Special Trustee.......................... 20
Section 7.2 Powers of Special Trustee............................... 22
ARTICLE VIII
COMMON SECURITIES AND PREFERRED SECURITIES
Section 8.1 Common Securities and Preferred Securities.............. 23
Section 8.2 General Provisions Regarding Preferred
Securities......................................... 23
Section 8.3 Preferred Securities.................................... 24
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Section 8.4 Conversion Rights of Preferred Securities............... 30
Section 8.5 Optional Exchange for Depositary Shares
Representing St. Paul Preferred Stock.............. 35
ARTICLE IX
VOTING AND MEETINGS
Section 9.1 Voting Rights of Preferred Members ..................... 38
Section 9.2 Voting Rights of Holders of
Common Securities.................................. 38
Section 9.3 Meetings of the Members................................. 39
ARTICLE X
DIVIDENDS
Section 10.1 Dividends.............................................. 40
Section 10.2 Limitations on Distributions........................... 40
ARTICLE XI
BOOKS AND RECORDS
Section 11.1 Books and Records; Accounts............................ 41
Section 11.2 Financial Statements................................... 41
Section 11.3 Limitation on Access to Records........................ 41
Section 11.4 Accounting Method...................................... 41
Section 11.5 Annual Audit........................................... 41
ARTICLE XII
TAX MATTERS
Section 12.1 Company Tax Returns.................................... 42
Section 12.2 Tax Reports............................................ 42
Section 12.3 Taxation as a Partnership.............................. 42
Section 12.4 Taxation of Partners................................... 42
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ARTICLE XIII
EXPENSES
Section 13.1 Expenses............................................... 43
ARTICLE XIV
LIABILITY
Section 14.1 Liability of Common Members............................ 44
Section 14.2 Liability of Preferred Members......................... 44
ARTICLE XV
TRANSFERS OF INTERESTS BY MEMBERS
Section 15.1 Right of Assignee to Become a Preferred
Member............................................ 45
Section 15.2 Events of Cessation of Membership...................... 45
Section 15.3 Persons Deemed Preferred Members....................... 45
Section 15.4 Transfer of Interests.................................. 45
Section 15.5 Transfer of Preferred Certificates..................... 46
Section 15.6 Book-Entry Interests................................... 46
Section 15.7 Notices to Clearing Agency............................. 47
Section 15.8 Definitive Preferred Certificates...................... 47
ARTICLE XVI
MERGERS, CONSOLIDATIONS AND SALES
Section 16.1 St. Paul............................................... 48
Section 16.2 The Company............................................ 48
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ARTICLE XVII
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 17.1 No Dissolution......................................... 49
Section 17.2 Events Causing Dissolution............................. 50
Section 17.3 Notice of Dissolution.................................. 51
Section 17.4 Liquidation............................................ 51
Section 17.5 Certain Restrictions on Liquidation
Payments........................................... 51
Section 17.6 Termination............................................ 52
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 Amendments............................................. 52
Section 18.2 Amendment of Certificate............................... 52
Section 18.3 Successors; Counterparts............................... 52
Section 18.4 Law; Severability...................................... 52
Section 18.5 Filings................................................ 53
Section 18.6 Power of Attorney...................................... 53
Section 18.7 Exculpation............................................ 54
Section 18.8 Indemnification........................................ 54
Section 18.9 Additional Documents................................... 54
Section 18.10 Notices................................................ 54
ANNEX A -- Form of Preferred Certificate
Evidencing Preferred Securities......................
ANNEX B -- Form of Notice of Conversion...........................
ANNEX C -- Form of Notice of Exchange..............................
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ST. PAUL CAPITAL L.L.C.
This Amended and Restated Limited Liability Company Agreement of St.
Paul Capital L.L.C. (the "Company") is made as of * , 1995, among The St. Paul
Companies, Inc., a Minnesota corporation ("St. Paul"), and St. Paul Capital
Holdings, Inc., a Delaware corporation ("St. Paul Holdings"), as initial Members
(as defined below) of the Company, and the Persons (as defined below) who become
members of the Company in accordance with the provisions hereof.
WHEREAS, St. Paul and St. Paul Holdings have heretofore formed a
limited liability company pursuant to the Delaware Limited Liability Company
Act, 6 DEL.C. Section 18-101, ET SEQ., as amended from time to time (the
"Delaware Act"), by filing a Certificate of Formation of the Company with the
office of the Secretary of State of the State of Delaware on April 4, 1995, and
entering into a Limited Liability Company Agreement of the Company dated as of
April 4, 1995 (the "Original Limited Liability Company Agreement"); and
WHEREAS, the Members desire to continue the Company as a limited
liability company under the Delaware Act and to amend and restate the Original
Limited Liability Company Agreement in its entirety.
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby amend and
restate the Original Limited Liability Company Agreement in its entirety and
agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 DEFINITIONS. Unless the context otherwise requires,
the terms defined in this Article I shall, for the purposes of this Agreement,
have the meanings herein specified.
<PAGE>
"ACTION" means any action permitted to be taken by the Managing
Members under this Agreement relating to the terms of the Preferred Securities,
which action shall be in writing.
"ADDITIONAL DIVIDENDS" means Dividends that shall accumulate on
any Dividend arrearages in respect of the Preferred Securities at the rate of
*% per annum compounded monthly.
"ADDITIONAL INTEREST" means interest that shall accrue on any
interest on the Subordinated Debentures that is not paid monthly and that shall
accrue at the rate of * % per annum compounded monthly.
"AFFILIATE" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person and (f) if
the specified Person is an officer, director, general partner or employee, any
other entity for which the specified Person acts in any such capacity.
"AGREEMENT" means this Amended and Restated Limited Liability
Company Agreement of the Company, as amended, modified, supplemented or restated
from time to time in accordance with its terms.
"BOOK-ENTRY INTEREST" means a beneficial interest in the Preferred
Certificates, ownership of which shall be recorded and transfers of which shall
be made through the book-entry system of a Clearing Agency as described in
Section 15.4 of this Agreement.
"BUSINESS DAY" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to close.
"CERTIFICATE" means the Certificate of Formation of the Company
and any and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
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"CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name (or nominee's name) shall be
registered one or more global Preferred Certificates and which shall undertake
to effect book-entry transfers and pledges of the Preferred Securities.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of interests in securities
deposited with the Clearing Agency.
"CLOSING DATE" means each "Time of Delivery" under the
Underwriting Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended or any
corresponding federal tax statute enacted after the date of this Agreement. A
reference to a specific section (Section) of the Code refers not only to such
section but also to any corresponding provision of any federal tax statute
enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"COMMON MEMBER" means a Member that owns one or more Common
Securities.
"COMMON SECURITIES" means the Interests in the Company which
represent common limited liability company interests in the Company and are
described in this Agreement.
"COMPANY" has the meaning specified in the Preamble of this
Agreement.
"COMPANY LIQUIDATION PARITY SECURITIES" has the meaning specified
in Section 17.5 of this Agreement.
"CONVERSION AGENT" has the meaning specified in Section 8.4(c) of
this Agreement.
"CONVERSION DATE" has the meaning specified in Section 8.4(b) of
this Agreement.
"CONVERSION EXPIRATION DATE" has the meaning specified in Section
8.4(d)(ii) of this Agreement.
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"CONVERSION PRICE" has the meaning specified in Section 8.4(a) of
this Agreement.
"COVERED PERSON" means each Managing Member, any Affiliate of such
Managing Member or any officers, directors, shareholders, partners, employees,
representatives or agents of such Managing Member or its Affiliates, or any
employee or agent of the Company or its Affiliates.
"CURRENT MARKET PRICE" of St. Paul Common Stock for any day means
the last reported sales price, regular way on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Consolidated Transaction Tape, or, if the St. Paul Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the St. Paul Common Stock is listed or admitted to
trading, if the St. Paul Common Stock is listed on a national securities
exchange, or the National Market System of the National Association of
Securities Dealers, Inc., or, if the St. Paul Common Stock is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which the St. Paul Common Stock may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of the St. Paul Common Stock in the over-the-counter market on the
day in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if not so available in such
manner, as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of St. Paul for that purpose or, if not
so available in such manner, as otherwise determined in good faith by the Board
of Directors.
"DEFINITIVE PREFERRED CERTIFICATES" has the meaning specified in
Section 15.6 of this Agreement.
"DELAWARE ACT" has the meaning specified in the first Recital of
this Agreement.
"DEPOSIT AGREEMENT" means the Deposit Agreement dated as of * ,
1995 among St. Paul, the Depositary, and the holders from time to time of the
Depositary Receipts.
"DEPOSITARY" means The Chase Manhattan Bank (National Association),
and its successors and assigns.
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"DEPOSITARY RECEIPT" means one of the deposit receipts, issued by
the Depositary under the Deposit Agreement, each representing any number of
whole Depositary Shares.
"DEPOSITARY SHARES" means the depositary shares, each representing
a 1/*th interest in a share of St. Paul Preferred Stock deposited with the
Depositary pursuant to the Deposit Agreement.
"DIVIDEND PAYMENT DATE" has the meaning specified in Section
8.3(b)(ii) of this Agreement.
"DIVIDENDS" means the cumulative cash distributions from the
Company with respect to the Interests represented by the Preferred Securities,
accruing from the first Closing Date and payable monthly in arrears on the last
day of each calendar month of each year, commencing * , 1995.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE DATE" has the meaning specified in Section 8.5(e) of
this Agreement.
"EXCHANGE ELECTION" has the meaning specified in Section 8.5(c) of
this Agreement.
"EXCHANGE ELECTION MEETING" has the meaning specified in Section
8.5(c) of this Agreement.
"EXCHANGE EVENT" has the meaning specified in Section 8.5(b) of
this Agreement.
"EXCHANGE PRICE" means one Depositary Share (with a proportionate
liquidation preference per share of $ * ) representing a 1/*th interest in a
share of St. Paul Preferred Stock (with a liquidation preference per share of
$50) for each $ * principal amount of Subordinated Debentures (which rate of
exchange is equivalent to one Depositary Share representing St. Paul Preferred
Stock for one Preferred Security).
"FISCAL PERIOD" means each calendar month.
"FISCAL YEAR" means (i) the period commencing upon the formation
of the Company and ending on December 31,
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1995, and (ii) any subsequent twelve (12) month period commencing on January 1
and ending on December 31.
"GUARANTEE" means the Guarantee Agreement dated as of * , 1995 of
St. Paul in favor of the Preferred Members with respect to the Preferred
Securities.
"INDENTURE" means the Indenture, dated as of * , 1995, among St.
Paul, the Company and the Trustee relating to the Subordinated Debentures.
"INTEREST" means a limited liability company interest in the
Company, including the right of the holder thereof to any and all benefits to
which a Member may be entitled as provided in this Agreement, together with the
obligations of a Member to comply with all of the terms and provisions of this
Agreement.
"INVESTMENT COMPANY EVENT" means the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "CHANGE IN 1940 ACT LAW") to the effect that the Company is or
will be considered an "investment company" which is required to be registered
under the 1940 Act, which Change in 1940 Act Law becomes effective on or after
the date of issuance of the Preferred Securities; PROVIDED, HOWEVER, that no
Investment Company Event shall be deemed to have occurred if the Managing
Members obtain a written opinion of nationally recognized independent counsel to
the Company experienced in practice under the 1940 Act to the effect that the
Managing Members or the Company have taken reasonable measures, in their
discretion, to avoid such Change in 1940 Act Law so that in the opinion of such
counsel, notwithstanding such Change in 1940 Act Law, the Company is not
required to be registered as an "investment company" within the meaning of the
1940 Act.
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section
8.3(f) of this Agreement.
"LIQUIDATION PREFERENCE" means the stated liquidation preference
of the Preferred Securities, I.E., $50 per Preferred Security.
"LP ACT" means the Delaware Revised Uniform Limited Partnership
Act, 6 DEL C. Section 17-101, ET SEQ., as amended from time to time.
"MAJORITY (OR OTHER STATED PERCENTAGE) IN LIQUIDATION PREFERENCE"
means Preferred Member(s) who are the
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record owners of Preferred Securities whose aggregate liquidation preferences
represent more than 50% or not less than such stated percentage of the aggregate
liquidation preference of all Preferred Securities then outstanding.
"MANAGING MEMBERS" means St. Paul and St. Paul Holdings, in their
capacity as the Members which hold all of the outstanding Common Securities.
The Managing Members shall also be "managers" within the meaning of the Delaware
Act.
"MEMBER" means any Person that holds an Interest in the Company
and is admitted as a member of the Company pursuant to the provisions of this
Agreement, in its capacity as a member of the Company. For purposes of the
Delaware Act, the Managing Members and the Preferred Members shall constitute
separate classes or groups of Members.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"NOTICE OF CONVERSION" has the meaning specified in Section 8.4(a)
of this Agreement.
"NOTICE OF CONVERSION EXPIRATION" has the meaning specified in
Section 8.4(d)(iii) of this Agreement.
"NOTICE OF EXCHANGE" has the meaning specified in Section 8.5(d)
of this Agreement.
"NOTICE OF REDEMPTION" has the meaning specified in Section 8.3(e)
of this Agreement.
"NYSE" means the New York Stock Exchange, Inc.
"ORIGINAL LIMITED LIABILITY COMPANY AGREEMENT" has the meaning
specified in the first Recital to this Agreement.
"PERSON" means any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
"POWER OF ATTORNEY" means the Power of Attorney granted pursuant
to Section 18.6.
"PREFERRED CERTIFICATE" means a certificate substantially in the
form attached hereto as Annex A, evidencing the Preferred Securities held by a
Preferred Member.
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"PREFERRED MEMBER" means a Member which holds one or more
Preferred Securities.
"PREFERRED SECURITIES" means the Interests which represent
preferred limited liability company interests in the Company and are described
in this Agreement.
"PREFERRED SECURITY OWNER" means, with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency or Clearing Agency Participant).
"PRESS RELEASE" has the meaning specified in Section 8.4(d)(ii) of
this Agreement.
"PURCHASE PRICE" for any Preferred Security means the amount paid
per Preferred Security pursuant to the Underwriting Agreement, payment of which
shall constitute the contribution to capital contemplated by Section 4.3 of this
Agreement.
"REDEMPTION PRICE" has the meaning specified in Section 8.3(d) of
this Agreement.
"RIGHTS" has the meaning specified in Section 8.4(g) of this
Agreement.
"RIGHTS AGREEMENT" means the Shareholder Protection Rights
Agreement, dated as of December 4, 1989, between St. Paul and First Chicago
Trust Company of New York, as Rights Agent, as such agreement may from time to
time be amended.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPECIAL EVENT" means a Tax Event or an Investment Company Act
Event.
"SPECIAL TRUSTEE" means the Person appointed (i) to enforce
Preferred Members' rights under the Guarantee, (ii) to enforce the Company's
rights against St. Paul under the Subordinated Debentures or (iii) to exercise
rights otherwise exercisable by the Managing Members to declare and pay
distributions on the Preferred Securities as provided in Article VII of this
Agreement.
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"ST. PAUL" has the meaning specified in the Preamble of this
Agreement.
"ST. PAUL COMMON STOCK" means the Common Stock, without par value,
of St. Paul, or any other class of stock resulting from successive changes
or reclassification of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
However, subject to the provisions of Article XII of the Indenture, shares of
St. Paul Common Stock issuable on conversion of Preferred Securities shall
include only shares of the class designated as Common Stock of St. Paul on the
first Closing Date or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of Dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of St. Paul and which are
not subject to redemption by St. Paul; PROVIDED, that if at any time there
shall be more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"ST. PAUL HOLDINGS" has the meaning specified in the Preamble of
this Agreement.
"ST. PAUL PREFERRED STOCK" means the Series C Cumulative
Convertible Preferred Stock, par value $ * per share, of St. Paul with a
liquidation preference of $50 per share.
"SUBORDINATED DEBENTURES" means the convertible subordinated
debentures of St. Paul issued pursuant to the Indenture and sold by St. Paul to
the Company in connection with the issuance and sale by the Company of the
Preferred Securities.
"SUCCESSOR SECURITIES" has the meaning specified in Section 16.2
of this Agreement.
"TAX EVENT" means that the Managing Members shall have obtained an
opinion of nationally recognized independent tax counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) any amendment to or change in an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory
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determination on or after such date), or (c) any interpretation or pronouncement
that provides for a position with respect to such laws or regulations that
differs from the generally accepted position on the date of issuance of the
Preferred Securities, which amendment or change is effective or such
interpretation or pronouncement is announced on or after the date of issuance of
the Preferred Securities, there is a substantial risk that (i) the Company is
subject to federal income tax with respect to interest received on the
Subordinated Debentures, (ii) interest payable to the Company on the
Subordinated Debentures will not be deductible for federal income tax purposes
or (iii) the Company is subject to more than a DE MINIMIS amount of other
taxes, duties or other governmental charges.
"TAX MATTERS PARTNER" means the Managing Member designated as such
in Section 12.1(b) of this Agreement.
"THIRD PARTY CREDITOR" has the meaning specified in Section 14.1
of this Agreement.
"TRADING DAY" means, with respect to any security listed for
trading on the New York Stock Exchange, any day on which such securities are
traded on the New York Stock Exchange.
"TRANSFER AGENT" means The Chase Manhattan Bank (National
Association), and its successors and assigns.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"TRUSTEE" means The Chase Manhattan Bank (National Association),
the trustee under the Indenture, and its successors and assigns.
"UNDERWRITERS" means the underwriters named in Schedule I to the
Underwriting Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
* , 1995, among St. Paul, the Company and the Underwriters named therein
relating to the issuance of the Preferred Securities.
"1940 ACT" means the Investment Company Act of 1940, as amended.
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Section 1.2 HEADINGS. The headings and subheadings in this
Agreement are included for convenience and identification only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof.
ARTICLE II
CONTINUATION AND TERM; ADMISSION OF MEMBERS
Section 2.1 CONTINUATION.
(a) The Members hereby agree to continue the Company as a limited
liability company under and pursuant to the provisions of the Delaware Act and
agree that the rights, duties and liabilities of the Members shall be as
provided in the Delaware Act, except as otherwise provided herein.
(b) Upon the execution of this Agreement, St. Paul and St. Paul
Holdings shall continue to be Members and shall each be designated as a Common
Member and shall together be the owners of all of the Common Securities.
(c) Either Managing Member, as an authorized person within the
meaning of the Delaware Act, shall execute, deliver and file any and all
amendments to and restatements of the Certificate.
Section 2.2 NAME. The name of the Company heretofore formed and
continued hereby is St. Paul Capital L.L.C. The business of the Company may be
conducted upon compliance with all applicable laws under any other name
designated by the Managing Members.
Section 2.3 TERM. The term of the Company commenced on the date
the Certificate was filed in the office of the Secretary of State of the State
of Delaware and shall continue until * , unless dissolved before such date in
accordance with the provisions of this Agreement.
Section 2.4 REGISTERED AGENT AND OFFICE. The Company's
registered agent and office in Delaware shall be RL&F Service Corp., One Rodney
Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle County,
Delaware 19801. At any time, the Managing Members may designate another
registered agent and/or registered office.
Section 2.5 PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be at 385
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Washington Street, St. Paul, Minnesota 55102. The Managing Members may change
the location of the Company's principal place of business; PROVIDED that such
change has no material adverse effect upon any Member.
Section 2.6 ADMISSION OF PREFERRED MEMBERS.
(a) A Person shall be admitted as a Preferred Member and shall
become bound by the terms of this Agreement, without execution of this
Agreement, if such Person (or a representative authorized by such Person orally,
in writing or by other action such as payment for an Interest) complies with the
conditions for becoming a Preferred Member as set forth in this Section 2.6(a)
and requests (which request shall be deemed to have been made upon acquisition
of a Preferred Security or Securities directly from the Company or upon an
assignment of a Preferred Security or Securities from another Person) that the
records of the Company (maintained by or on behalf of the Company) reflect such
admission.
The Company shall be promptly notified of any assignment. The
Company will reflect the admission of a Preferred Member in the records of the
Company maintained by or on behalf of the Company as soon as is reasonably
practicable after either of the following events: (i) in the case of a Person
acquiring a Preferred Security or Securities directly from the Company, at the
time of payment therefor, and (ii) in the case of an assignment, upon
notification thereof (the Company being entitled to assume, in the absence of
knowledge to the contrary, that proper payment has been made by the assignee).
(b) Whether acquiring a Preferred Security or Securities directly
from the Company or by assignment, a Person shall be admitted as a Preferred
Member upon the acquisition or assignment, as the case may be, of such Preferred
Security or Securities and the reflection of such Person's admission as a
Preferred Member in the records of the Company (maintained by or on behalf of
the Company). The consent of any other Preferred Member shall not be required
for the admission of a Preferred Member.
Section 2.7 QUALIFICATION IN OTHER JURISDICTIONS. The Managing
Members shall cause the Company to be qualified or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company conducts business and in which such qualification or registration is
required by law or deemed advisable by the Managing Members. Either Managing
Member shall execute, deliver and file any certificates (and any amendments
and/or
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restatements thereof) necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 PURPOSES. The sole purposes of the Company are to
issue Preferred Securities and to use substantially all of the proceeds thereof
and substantially all of the proceeds from the capital contributed to the
Company by the Common Members to purchase Subordinated Debentures of St. Paul
and, except as otherwise limited herein, to enter into, make and perform all
contracts and other undertakings, and engage in all activities and transactions
as the Managing Members may reasonably deem necessary or advisable for the
carrying out of the foregoing purposes of the Company. The Company may not
conduct any other business or operations except as contemplated by the preceding
sentence. The Company shall have the power and authority to take any and all
actions necessary, appropriate, proper, advisable, incidental or convenient to
or for the furtherance of the purposes of the Company as set forth herein.
ARTICLE IV
CAPITAL CONTRIBUTIONS, ALLOCATIONS AND SECURITIES
Section 4.1 FORM OF CONTRIBUTION. The contribution of a Member
to the Company may, as determined by the Managing Members in their discretion,
be in cash or other legal consideration.
Section 4.2 CONTRIBUTIONS BY THE COMMON MEMBERS. The Common
Members shall make such contributions to the Company, either in connection with
the purchase of Common Securities or otherwise, so as to cause their Common
Securities to be entitled to at least 21% of each item of the capital, income,
gain, loss, deduction, or credit distributions of the Company at all times.
Section 4.3 CONTRIBUTIONS BY THE PREFERRED MEMBERS. On each
Closing Date there shall be contributed to the capital of the Company, with
respect to each Person who purchases a Preferred Security, an amount in cash
equal to the Purchase Price for such Preferred Security (such amount being such
Person's capital contribution to the Company).
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Preferred Members, in their capacity as Members of the Company, shall not be
required to make any additional contributions to the Company (except as required
by law).
Section 4.4 ALLOCATION OF PROFITS AND LOSSES. The profits and
losses of the Company (other than the allocation of profits to Preferred Members
in amounts equal to the Dividends accrued on their Preferred Securities,
including Additional Dividends payable with respect thereto) shall, subject to
the applicable terms of Article VIII, Article X and Article XII of this
Agreement, be allocated entirely to the Common Members.
Section 4.5 ALLOCATION OF DISTRIBUTIONS. The distributions of
the Company shall, subject to the applicable terms of Articles VIII, X and XVII
of this Agreement, be allocated entirely to the Common Members.
Section 4.6 WITHHOLDING. The Company shall comply with
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the Company is required to withhold and pay over any amounts to
any authority with respect to distributions or allocations to any Member, the
amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Member. To the fullest extent permitted by law, in the event
of any claimed over-withholding, Members shall be limited to an action against
the applicable jurisdiction. If the amount withheld was not withheld from
actual distributions, the Company may reduce subsequent distributions by the
amount of such withholding. Each Member, by its acceptance of Interests, shall
be deemed to agree to furnish the Company with any representations and forms as
shall reasonably be requested by the Company to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
Section 4.7 INTERESTS AS PERSONAL PROPERTY. Each Member hereby
agrees that its Interest shall for all purposes be personal property. A Member
has no interest in specific Company property.
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ARTICLE V
MEMBERS
Section 5.1 POWERS OF MEMBERS. The Members shall have the power
to exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement.
Section 5.2 PARTITION. Each Member waives any and all rights
that it may have to maintain an action for partition of the Company's property.
Section 5.3 RESIGNATION. The Managing Members shall have no
right to resign from the Company or assign their Common Interests. Any other
Member may only resign from the Company prior to the dissolution and winding up
of the Company upon the assignment of its Interest (including any redemption,
repurchase, exchange or other acquisition by the Company of such Interest) in
accordance with the provisions of this Agreement. A resigning Member shall not
be entitled to receive any distribution and shall not otherwise be entitled to
receive the fair value of its Interest except as otherwise expressly provided
for in this Agreement.
ARTICLE VI
MANAGEMENT
Section 6.1 MANAGEMENT OF THE COMPANY. (a) Except as provided
in Article VII or VIII and as otherwise provided herein, the business and
affairs of the Company shall be managed, and all actions required under this
Agreement shall be determined, solely and exclusively by the Managing Members,
which shall have all rights and powers on behalf and in the name of the Company
to perform all acts necessary and desirable to the objects and purposes of the
Company. Any action taken by the Managing Members or, upon appointment pursuant
to Section 7.1, the Special Trustee, shall constitute the act of and shall serve
to bind the Company.
(b) Without limiting the generality of the foregoing, and subject
to the provisions of Section 6.2, the Managing Members or, upon appointment
pursuant to Section 7.1, the Special Trustee, shall have all authority, rights
and powers in the management of the Company business to do any and all other
acts and things necessary, proper, convenient or advisable to effectuate the
purposes of this
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Agreement, including by way of illustration but not by way of limitation, the
following:
(i) to authorize and engage in transactions and dealings on behalf
of the Company, including transactions and dealings with any Member
(including any Managing Member) or any Affiliate of any Member (including,
without limitation, making loans to St. Paul);
(ii) to call meetings of Members or any class thereof;
(iii) to issue Interests, including Common Securities and Preferred
Securities in accordance with this Agreement;
(iv) to pay all expenses incurred in forming the Company;
(v) to purchase Subordinated Debentures from St. Paul;
(vi) to declare or otherwise determine and make Dividends, in cash or
otherwise, on Interests, in accordance with the provisions of this
Agreement and of the Delaware Act;
(vii) to establish a record date with respect to all actions to be
taken hereunder that require a record date to be established, including
with respect to allocations, Dividends and voting rights;
(viii) to establish or set aside in their discretion any reserve or
reserves for contingencies and for any other proper Company purpose;
(ix) to redeem, repurchase or exchange, on behalf of the Company,
Interests which may be so redeemed, repurchased or exchanged;
(x) to appoint (and dismiss from appointment) attorneys and agents
on behalf of the Company, and employ (and dismiss from employment) any and
all Persons providing legal, accounting or financial services to the
Company, or such other employees or agents as the Managing Members deem
necessary or desirable for the management and operation of the Company,
including, without limitation, any Member (including any Managing Member)
or any Affiliate of any Member;
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(xi) to incur and pay all expenses and obligations incident to the
operation and management of the Company, including, without limitation,
the services referred to in the preceding paragraph, taxes, interest,
travel, rent, insurance, supplies, salaries and wages of the Company's
employees and agents;
(xii) to acquire and enter into any contract of insurance necessary or
desirable for the protection or conservation of the Company and its assets
or otherwise in the interest of the Company as the Managing Members shall
determine;
(xiii) to open accounts and deposit, maintain and withdraw funds in the
name of the Company in banks, savings and loan associations, brokerage
firms or other financial institutions;
(xiv) to effect a dissolution of the Company and act as liquidating
trustee or the Person winding up the Company's affairs, all in accordance
with and subject to the provisions of this Agreement and of the Delaware
Act;
(xv) to bring and defend on behalf of the Company actions and
proceedings at law or equity before any court or governmental,
administrative or other regulatory agency, body or commission or
otherwise;
(xvi) to prepare and cause to be prepared reports, statements and
other relevant information for distribution to Members as may be required
or determined to be appropriate by the Managing Members from time to time;
(xvii) to prepare and file all necessary returns and statements and pay
all taxes, assessments and other impositions applicable to the assets of
the Company; and
(xviii) to execute all other documents or instruments, perform all
duties and powers and do all things for and on behalf of the Company in
all matters necessary or desirable or incidental to the foregoing.
(c) Subject to the provisions of Section 6.2, the expression of any
power or authority of the Managing Members and, upon appointment pursuant to
Section 7.1, the Special Trustee, shall not in any way limit or exclude any
other power or authority which is not specifically or expressly set forth in
this Agreement.
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(d) Notwithstanding any provision in this Agreement to the
contrary, without the need for the consent of any Person, the Company, and each
Managing Member on behalf of the Company, acting singly or jointly, shall have
the authority to enter into and perform the Indenture and the Underwriting
Agreement.
Section 6.2 LIMITS ON MANAGING MEMBERS' POWERS. (a) Anything in
this Agreement to the contrary notwithstanding, the Managing Members (and, upon
appointment pursuant to Section 7.1 of this Agreement, the Special Trustee)
shall not cause or permit the Company to:
(i) acquire any assets other than as expressly provided herein;
(ii) possess Company property for other than a Company purpose;
(iii) admit a Person as a Member, except as expressly provided in
this Agreement;
(iv) make any loans to St. Paul or its Affiliates, other than loans
represented by the Subordinated Debentures;
(v) perform any act that would subject any Preferred Member to
liability for the debts, obligations and liabilities of the Company in any
jurisdiction, except as expressly provided in this Agreement;
(vi) engage in any activity that is not consistent with the purposes
of the Company, as set forth in Section 3.1 of this Agreement;
(vii) without the written consent of 66 2/3% in Liquidation
Preference of the Preferred Securities, have an order for relief
entered with respect to the Company or commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all
or a substantial part of the Company's property, or make any assignment
for the benefit of creditors of the Company; or
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(viii) borrow money or become liable for the borrowings of any third
party or engage in any financial or other trade or business.
(b) So long as any Subordinated Debentures are held by the Company,
the Managing Members shall not:
(i) direct the time, method and place of conducting any proceeding
for any remedy available to the Special Trustee, or exercising any trust
or power conferred on the Special Trustee with respect to the Subordinated
Debentures;
(ii) waive any past default which is waivable under the Subordinated
Debentures;
(iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures shall be due and payable; or
(iv) consent to any amendment, modification or termination of the
Subordinated Debentures or the Indenture,
without, in each case, obtaining the prior approval of the Preferred Members
holding not less than 66 2/3% in Liquidation Preference of the Preferred
Securities; PROVIDED, HOWEVER, that where a consent under the Subordinated
Debentures would require the consent of each holder of Subordinated Debentures
affected thereby, no such consent shall be given by the Managing Members without
the prior consent of each Preferred Member.
Section 6.3 RELIANCE BY THIRD PARTIES. Persons dealing with the
Company are entitled to rely conclusively upon the power and authority of the
Managing Members herein set forth. In dealing with the Managing Members or,
upon appointment pursuant to Section 7.1 of this Agreement, the Special Trustee,
acting on behalf of the Company, no Person shall be required to inquire into the
authority of the Managing Members or, upon appointment pursuant to Section 7.1
of this Agreement, the Special Trustee to bind the Company. Persons dealing
with the Company are entitled to rely conclusively on the power and authority of
the Managing Members or, upon appointment pursuant to Section 7.1, the Special
Trustee, as set forth in this Agreement.
Section 6.4 NO MANAGEMENT BY ANY PREFERRED MEMBERS. Except as
otherwise expressly provided herein, no Preferred Member, in its capacity as a
Preferred Member, shall take part in the day-to-day management, operation or
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control of the business and affairs of the Company. The Preferred Members, in
their capacity as Preferred Members of the Company, shall not be agents of the
Company and shall not have any right, power or authority to transact any
business in the name of the Company or to act for or on behalf of or to bind the
Company.
Section 6.5 BUSINESS TRANSACTIONS OF A MANAGING MEMBER WITH THE
COMPANY. Subject to Sections 6.1 and 6.2 of this Agreement, the Managing
Members or their Affiliates may lend money to, act as surety, guarantor or
endorser for, guarantee or assume one or more obligations of, provide collateral
for, the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as Persons who are not Managing
Members or Affiliates thereof.
Section 6.6 ACTIONS BY MANAGING MEMBERS. Notwithstanding any
provision to the contrary, any action that the Managing Members are authorized
to take hereunder or under the Delaware Act may be taken by the Managing
Members, acting together, or either Managing Member, acting alone, or, upon
appointment pursuant to Section 7.1 of this Agreement, by the Special Trustee.
Section 6.7 OUTSIDE BUSINESSES. Any Member or Affiliate thereof
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Company, and the Company and the Members shall have no rights by virtue
of this Agreement in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the business of the Company, shall not be deemed wrongful or improper. No
Member or Affiliate thereof shall be obligated to present any particular
investment opportunity to the Company even if such opportunity is of a character
that, if presented to the Company, could be taken by the Company, and any Member
or Affiliate thereof shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment opportunity.
ARTICLE VII
THE SPECIAL TRUSTEE
Section 7.1 APPOINTMENT OF SPECIAL TRUSTEE.
(a) If:
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(i) the Company fails to pay Dividends in full on the Preferred
Securities for 15 consecutive months (other than as a result of a
determination by St. Paul to extend the interest payment period of the
Subordinated Debentures in accordance with the terms thereof);
(ii) an Event of Default under the Indenture occurs and is continuing;
or
(iii) St. Paul is in default on any of its payment obligations under the
Guarantee,
then the Preferred Members, upon the affirmative vote of at least a Majority in
Liquidation Preference of the Preferred Securities will be entitled to appoint
and authorize a Special Trustee to enforce the Company's rights as a creditor
under the Indenture and the Subordinated Debentures, enforce the rights of the
Preferred Members under the Guarantee and, to the extent permitted by law, to
declare and pay Dividends (including Additional Dividends) on the Preferred
Securities.
(b) For purposes of determining whether the Company has failed to
pay Dividends in full for 15 consecutive months, Dividends shall be deemed to
remain in arrears, notwithstanding any partial payments in respect thereof,
until full cumulative Dividends have been or contemporaneously are declared and
paid with respect to all monthly Dividend periods terminating on or prior to the
date of payment of such full cumulative Dividends.
(c) Not later than 30 days after such right to appoint a Special
Trustee arises under paragraph (a) of this Section, and upon not less than 15
days' written notice by first-class mail to the Preferred Members, the Managing
Members will convene a meeting for election of a Special Trustee. If the
Managing Members fail to convene such meeting within such 30-day period, then
Preferred Members holding at least 10% in Liquidation Preference of the
Preferred Securities will be entitled to convene such meeting. Except as
provided herein, the provisions of Section 9.3 of this Agreement relating to the
convening and conduct of meetings of the Members will apply with respect to any
such meeting.
(d) Any Special Trustee appointed in accordance with this Section
shall cease to be a Special Trustee immediately if the Company (or St. Paul
pursuant to the Guarantee) shall have paid in full all accumulated and unpaid
Dividends (including any Additional Dividends) on the
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Preferred Securities, in the case of clause (i) of paragraph (a) of this
Section, or such Event of Default or default, as the case may be, shall have
been cured, in the case of clause (ii) or (iii) of paragraph (a) of this
Section.
Section 7.2 POWERS OF SPECIAL TRUSTEE. (a) Upon the appointment of
a Special Trustee in accordance with Section 7.1 of this Agreement, and so long
as the appointment of the Special Trustee is effective, the Special Trustee
shall manage the business and affairs of the Company to the exclusion of the
Managing Members and shall have the powers and be subject to the limitations
set forth in Sections 6.1 and 6.2 of this Agreement, respectively.
(b) Without limiting the powers of any Special Trustee so appointed
and for the avoidance of any doubt concerning the powers of the Special Trustee,
any Special Trustee shall have the power to enforce the Company's rights under
the Indenture and shall to the extent of legally available funds, declare and
pay Dividends (including Additional Dividends) on the Preferred Securities.
(c) Without limiting the powers of any Special Trustee so
appointed and for the avoidance of any doubt concerning the powers of the
Special Trustee, any Special Trustee, in its own name, in the name of the
Company, in the name of any Member or otherwise may institute or cause to be
instituted a proceeding, including, without limitation, any suit in equity,
action at law or other judicial or administrative proceeding, to enforce the
Company's or any Member's rights directly against St. Paul (or any other obligor
in connection with such obligations) on behalf of the Company or any Member and
to the same extent as the Company or any Member, and may prosecute such
proceeding to judgment or final decree, and enforce the same against St. Paul
(or any other obligor in connection with such obligations) and collect, out of
the property, wherever situated, of St. Paul (or any other obligor in connection
with such obligations), the monies adjudged or decreed to be payable in the
manner provided by law. The Managing Members agree to execute and deliver such
documents as may be necessary or appropriate for the Special Trustee to exercise
such powers.
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ARTICLE VIII
COMMON SECURITIES AND PREFERRED SECURITIES
Section 8.1 COMMON SECURITIES AND PREFERRED SECURITIES. (a) The
Interests in the Company shall be divided into two classes, Common Securities
and Preferred Securities.
(b) No holder of Common Securities or of Preferred Securities shall
be entitled as a matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or additional issue of
Preferred Securities whatsoever, whether now or hereafter authorized and whether
issued for cash or other consideration or by way of a Dividend.
(c) A Preferred Security shall be represented by the corresponding
Preferred Certificate. Common Securities shall not be evidenced by any
certificate or other written instrument, but shall only be evidenced by this
Agreement.
(d) Any Person purchasing Preferred Securities shall be admitted to
the Company as a Preferred Member upon compliance with Section 2.6 of this
Agreement.
Section 8.2 GENERAL PROVISIONS REGARDING PREFERRED SECURITIES.
(a) There is hereby authorized for issuance and sale Preferred Securities
having an aggregate liquidation preference of $50 and having the designation,
annual Dividend rate, liquidation preference, redemption terms, conversion and
exchange rights and other powers, preferences and special rights and limitations
set forth in this Article VIII. The aggregate liquidation preference of
Preferred Securities authorized hereunder shall be reduced 31 days after the
first Closing Date to the aggregate liquidation preference of such Preferred
Securities as shall have been purchased through such date by the Underwriters.
(b) The payment of Dividends and payments of distributions by the
Company in liquidation or on redemption in respect of Preferred Securities shall
be guaranteed by St. Paul pursuant to, and to the extent provided in, the
Guarantee. In the event of an appointment of a Special Trustee pursuant to
Article VII, among other things, to enforce the Guarantee, the Special Trustee
may take possession of the Guarantee for such purpose. The Preferred Members,
by acceptance of such Preferred Securities,
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acknowledge and agree to the subordination provisions and other terms of the
Guarantee.
(c) The proceeds received by the Company from the issuance of
Preferred Securities, together with the proceeds of the capital contributed by
the Common Members pursuant to Section 4.2 of this Agreement, shall be invested
by the Company in Subordinated Debentures with (i) an aggregate principal amount
equal to such aggregate invested proceeds and (ii) an interest rate at least
equal to the Dividend rate of the Preferred Securities.
(d) The Company may not issue any other Interests without the
approval of the Preferred Members of not less than 66 2/3% in Liquidation
Preference of the Preferred Securities. All Preferred Securities shall rank
senior to all other Interests in respect of the right to receive Dividends or
other distributions and the right to receive payments out of the assets of the
Company upon voluntary or involuntary dissolution, winding-up or termination of
the Company. All Preferred Securities redeemed, purchased or otherwise acquired
by the Company (including Preferred Securities surrendered for conversion or
exchange) shall be cancelled. The Preferred Securities will be issued in
registered form only. Dividends on all Preferred Securities shall be
cumulative.
(e) Neither St. Paul nor any Affiliate of St. Paul shall have the
right to vote or give or withhold consent with respect to any Preferred Security
owned by it, directly or indirectly, and, for purposes of any matter upon which
the Preferred Members may vote or give or withhold consent as provided in this
Agreement, Preferred Securities owned by St. Paul or any Affiliate shall be
treated as if they were not outstanding.
Section 8.3 PREFERRED SECURITIES.
(a) DESIGNATION. The Preferred Securities, liquidation
preference $50 per Preferred Security, are hereby designated as " * %
CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES".
(b) DIVIDENDS. (i) Preferred Members shall be entitled to
receive, when, as and if declared by the Managing Members, cumulative Dividends
at a rate per annum of * % of the stated liquidation preference of $50 per
Preferred Security, calculated on the basis of a 360-day year consisting of 12
months of 30 days each. For any period shorter than a full monthly Dividend
period, Dividends will be computed on the basis of the actual number of
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days elapsed in such period. Dividends shall be payable in United States
dollars monthly in arrears on the last day of each calendar month of each year,
commencing * , 1995. Such Dividends will accrue and be cumulative whether or
not they have been declared and whether or not there are funds of the Company
legally available for the payment of Dividends. Dividends on the Preferred
Securities shall be cumulative from the first Closing Date. Additional
Dividends upon any Dividend arrearages shall be declared and paid in order to
provide, in effect, monthly compounding on such Dividend arrearages at a rate of
% per annum compounded monthly and such Additional Dividends shall accumulate.
In the event that any date on which Dividends are payable on the Preferred
Securities is not a Business Day, then payment of the Dividend payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(ii) Dividends on the Preferred Securities must be declared monthly
and be paid on the last day of each calendar month (each a "DIVIDEND PAYMENT
DATE") to the extent that the Company has, on such date, (x) funds legally
available for the payment of such Dividends and (y) cash on hand sufficient to
permit such payments, it being understood that to the extent that funds are not
available to pay in full all accumulated and unpaid Dividends, the Company may
pay partial PRO RATA Dividends to the extent of funds legally available
therefor. Dividends will be payable to the Preferred Members as they appear on
the books and records of the Company on the relevant record dates, which will be
one Business Day prior to the related Dividend Payment Date. In the event of
any extended interest payment period with respect to the Subordinated Debentures
resulting in the deferral of the payment of Dividends on the Preferred
Securities, the Company shall give written notice by first-class mail to the
Preferred Members as to such extended interest payment period no later than the
last date on which it would be required to notify the NYSE of the record or
payment date of the related Dividend on the Preferred Securities.
(iii) The Company shall not:
(A) pay, declare or set aside for payment, any Dividends or other
distributions on any other Interests; or
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(B) redeem, purchase or otherwise acquire any other Interests;
until, in each case, such time as all accumulated and unpaid Dividends on all of
the Preferred Securities, including any Additional Dividends thereon, shall have
been paid in full for all Dividend periods terminating on or prior to the date
of such payment or the date of such redemption, purchase or acquisition, as the
case may be.
(iv) In the event of an election by a Preferred Member to convert
its Preferred Securities through the Conversion Agent into St. Paul Common Stock
pursuant to Section 8.4 of this Agreement, neither St. Paul nor the Company
shall make, or be required to make, any payment, allowance or adjustment with
respect to accumulated and unpaid Dividends on such Preferred Securities;
PROVIDED that Preferred Members at the close of business on any record date
for the payment of Dividends will be entitled to receive the Dividend payable on
their Preferred Securities on the corresponding Dividend Payment Date
notwithstanding the conversion of such Preferred Securities into St. Paul Common
Stock on or after such record date and on or prior to such Dividend Payment
Date.
(c) REDEMPTION. (i) If at any time following the Conversion
Expiration Date, less than five percent (5%) of the Preferred Securities
originally issued and sold pursuant to the Underwriting Agreement remain
outstanding, such Preferred Securities shall be redeemable, at the option of the
Company, in whole but not in part, from time to time, upon not fewer than 30 nor
more than 60 days' prior notice, at a redemption price equal to the liquidation
preference per Preferred Security plus accumulated and unpaid Dividends (whether
or not earned or declared) to the date fixed for redemption, including any
Additional Dividends accrued thereon (the "REDEMPTION PRICE").
(ii) Upon repayment at maturity of the Subordinated Debentures or
as a result of acceleration of the Subordinated Debentures, the Preferred
Securities shall be redeemable, in whole but not in part, at the Redemption
Price, and the proceeds from such repayment shall be applied to redeem the
Preferred Securities at the Redemption Price. In the case of such acceleration,
the Preferred Securities shall only be redeemed when repayment of the
Subordinated Debentures has actually been received by the Company.
(d) REDEMPTION PROCEDURES. (i) Notice of any redemption (a
"NOTICE OF REDEMPTION") of the Preferred Securities to be redeemed will be
given by the Company by first-class mail to each record holder of Preferred
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Securities not fewer than 30 nor more than 60 days prior to the date fixed for
redemption thereof following the issuance of a notice of redemption of the
Subordinated Debentures by St. Paul to the Company. For purposes of the
calculation of the date of redemption and the dates on which notices are given
pursuant to this paragraph (d)(i), a Notice of Redemption shall be deemed to be
given on the day such notice is first mailed by first-class mail, postage
prepaid, to each Preferred Member. Each Notice of Redemption shall be addressed
to Preferred Member at the address of the Preferred Member appearing in the
books and records of the Company. If all of the Preferred Securities are
represented by Book-Entry Interests, Notices of Redemption shall be sent to the
Clearing Agency. No defect in the Notice of Redemption or in the mailing
thereof with respect to any Preferred Security shall affect the validity of the
redemption proceedings with respect to any other Preferred Security.
(ii) If, following a notice of redemption of all outstanding
Subordinated Debentures, the Company issues a Notice of Redemption, then, by
12:00 noon, New York time, on the redemption date, St. Paul will repay to the
Company an aggregate principal amount of the Subordinated Debentures which,
together with accrued and unpaid interest and any Additional Interest thereon,
will be an amount sufficient to pay the Redemption Price for all Preferred
Securities then outstanding. If all of the Preferred Securities are represented
by Book-Entry Interests, the Company shall irrevocably deposit such funds with
the Clearing Agency and give the Clearing Agency irrevocable instructions and
authority to pay the Redemption Price to the Preferred Members of Preferred
Securities and otherwise the Company may pay the Redemption Price by check. If
a Notice of Redemption shall have been issued and funds deposited as required or
a check deposited in the U.S. mails postage prepaid, then upon the date of such
deposit, the Preferred Members shall cease to be members of the Company, and all
rights of the Preferred Members who hold such Preferred Securities so called for
redemption will cease, except the right of the Preferred Members holding such
securities to receive the Redemption Price, but without interest from and after
such redemption date. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of
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Preferred Securities is improperly withheld or refused and not paid either by
the Company or by St. Paul pursuant to the Guarantee, Dividends on such
Preferred Securities (including any Additional Dividends thereon) will continue
to accumulate at the then applicable rate, from the original redemption date to
the date that the Redemption Price is actually paid.
(e) LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution, winding-up or termination of the Company,
the Preferred Members holding Preferred Securities at the time outstanding will
be entitled to receive out of the assets of the Company legally available for
distribution to Members after satisfaction of liabilities to creditors of the
Company as required by the Delaware Act before any distribution of assets is
made with respect to any other Interest, an amount equal to the aggregate of the
stated liquidation preference of $50 per Preferred Security and accumulated and
unpaid Dividends (whether or not earned or declared) to the date of payment,
including any Additional Dividends accrued thereon (the "LIQUIDATION
DISTRIBUTION").
(f) VOTING RIGHTS -- CERTAIN AMENDMENTS.
(i) If any proposed amendment of this Agreement provides for, or the
Managing Members otherwise propose to effect, (x) any action that would
materially adversely affect the powers, preferences or rights of the
Preferred Securities, whether by way of amendment of this Agreement or
otherwise (including, without limitation, the authorization or issuance of
any additional Interests), or (y) the liquidation, dissolution, winding-up
or termination of the Company (other than in connection with the exchange
of Depositary Shares representing St. Paul Preferred Stock for all of the
Preferred Securities upon the occurrence of an Exchange Event), or (z) the
commencement of any bankruptcy, insolvency, reorganization or other
similar proceeding involving the Company, then the Preferred Members will
be entitled to vote on such amendment or action of the Managing Members
(but not on any other amendment or action) and such amendment or action
shall not be effective except with the approval of Preferred Members
holding not less than 66 2/3% in Liquidation Preference of the Preferred
Securities; PROVIDED, HOWEVER, that no such approval shall be required
if the dissolution, winding-up or termination of the Company is otherwise
effected pursuant to Section 17 of this Agreement.
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(ii) Any required approval of the Preferred Members may be given at
a separate meeting of the Preferred Members convened for such purpose or
pursuant to written consent. The Company will cause written notice of any
meeting at which the Preferred Members are entitled to vote, or of any
matter upon which action by written consent of the Preferred Members is to
be taken, to be mailed by first-class mail to each Preferred Member at
least 15 days prior to the date of such meeting or the date by which such
action is to be taken. Each such notice will include a statement setting
forth (x) the date of such meeting or the date by which such action is to
be taken, (y) a description of any matter on which the Preferred Members
are entitled to vote or upon which written consent is sought and (z)
instructions for the delivery of proxies or consents. No vote or consent
of the Preferred Members will be required for the Company to redeem and
cancel Preferred Securities in accordance with this Agreement.
(iii) Subject to the provisions of Article IX of this Agreement,
the Preferred Members may not remove the Managing Members.
(g) SPECIAL EVENT DISSOLUTION. If a Tax Event shall occur and be
continuing, the Managing Members may, and if an Investment Company Event shall
occur and be continuing the Managing Members shall, dissolve the Company and,
after satisfaction of liabilities to creditors of the Company as required by the
Delaware Act, cause to be distributed to Preferred Members in liquidation of the
Company, within 90 days following the occurrence of such Special Event,
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Preference of the outstanding Preferred Securities and with accrued
interest in an amount equal to any unpaid Dividends on the Preferred Securities,
provided that the Managing Members have reasonably determined that Preferred
Members will not recognize gain or loss for United States federal income tax
purposes as a result of such distribution. In the case of a Tax Event, the
Managing Members may instead elect to cause the Preferred Securities to remain
outstanding.
After the date fixed for any distribution of Subordinated Debentures
upon dissolution of the Company (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) the Preferred Members shall cease to be members
of the Company, (iii) DTC or its nominee, as the record holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing
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the Subordinated Debentures to be delivered upon such distribution and (iv) any
Preferred Certificates not held by DTC or its nominee will be deemed to
represent Subordinated Debentures having a principal amount equal to the
aggregate of the Liquidation Preference and accrued and unpaid Dividends on such
Preferred Securities until such Preferred Certificates are presented to the
Managing Members or their agents for transfer or reissuance.
Section 8.4 CONVERSION RIGHTS OF PREFERRED SECURITIES. The
Preferred Members shall have the right, at their option, at any time before the
close of business on the Conversion Expiration Date, to cause the Conversion
Agent to convert Preferred Securities, on behalf of the converting Preferred
Members, into shares of St. Paul Common Stock in the manner described herein on
and subject to the following terms and conditions:
(a) The Preferred Securities will be convertible at the office of
the Conversion Agent into fully paid and nonassessable shares of St. Paul Common
Stock, pursuant to the Preferred Member's direction to the Conversion Agent
given by means of an irrevocable notice of conversion substantially in the form
of Annex B hereto (a "NOTICE OF CONVERSION") to (i) exchange such Preferred
Securities for a portion of the Subordinated Debentures theretofore held by the
Company on the basis of one Preferred Security per $ * principal amount of
Subordinated Debentures, and (ii) immediately convert such Subordinated
Debentures and any accrued and unpaid interest thereon into fully paid and
nonassessable shares of St. Paul Common Stock, at an initial rate of * shares
of St. Paul Common Stock per $ * principal amount of Subordinated Debentures
(which is equivalent to a conversion price of $ * per share of St. Paul Common
Stock, subject to certain adjustments set forth in the Indenture (as so
adjusted, "CONVERSION PRICE")).
(b) In order to convert Preferred Securities into St. Paul Common
Stock, the Preferred Member holding such Preferred Securities shall surrender
the Preferred Securities to be converted to the Conversion Agent at the office
referred to above, together with an irrevocable Notice of Conversion (i) setting
forth the number of Preferred Securities to be converted and the name or names,
if other than the Preferred Member, in which the shares of St. Paul Common Stock
should be issued and (ii) directing the Conversion Agent to exchange such
Preferred Securities for Subordinated Debentures and immediately convert such
Subordinated Debentures, on behalf of such Preferred Member, into St. Paul
Common Stock. If the Notice of Conversion is delivered before the close of
business on the Conversion
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Expiration Date, the Conversion Agent shall notify the Company of the Preferred
Member's election to convert and the Company shall, upon receipt of such notice,
deliver to the Conversion Agent (x) the appropriate principal amount of
Subordinated Debentures for exchange in accordance with this Section, together
with (y) Preferred Securities represented by the surrendered certificates but
not directed to be converted in the Notice of Conversion. The Conversion Agent
shall thereupon, on behalf of such Preferred Member, effect the conversion of
such Subordinated Debentures into shares of St. Paul Common Stock. Preferred
Members at the close of business on a Dividend payment record date will be
entitled to receive the Dividend payable on such securities on the corresponding
Dividend Payment Date notwithstanding the conversion of such Preferred
Securities on or after such Dividend payment record date and on or prior to
such Dividend Payment Date. Except as provided above, no payment, allowance
or adjustment shall be made by the Company or St. Paul upon any conversion on
account of any accumulated and unpaid Dividends accrued on the Preferred
Securities (including any Additional Dividends accrued thereon) surrendered
for conversion, or on account of any accumulated and unpaid Dividends on the
shares of St. Paul Common Stock issued upon such conversion. Preferred
Securities shall be deemed to have been converted immediately prior to
the close of business on the day on which a Notice of Conversion relating to
such Preferred Securities is delivered in accordance with the foregoing
provision (the "CONVERSION DATE"). The Person or Persons entitled to receive
the St. Paul Common Stock issuable upon conversion of the Subordinated
Debentures shall be treated for all purposes as the record holder or holders of
such St. Paul Common Stock at such time. No fractional shares of St. Paul
Common Stock will be issued as a result of conversion, but in lieu thereof, such
fractional interest will be paid in cash by St. Paul. As promptly as
practicable on or after the Conversion Date, St. Paul shall issue and deliver at
the office of the Conversion Agent a certificate or certificates for the number
of full shares of St. Paul Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, and unless otherwise directed by
the Preferred Member in the Notice of Conversion, the Conversion Agent shall
distribute such certificate or certificates and cash payment, together with the
certificate(s) representing any unconverted Preferred Securities, to such Person
or Persons.
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(c) Each Preferred Member by his acceptance of one or more
Preferred Securities appoints the Transfer Agent for the Preferred Securities
conversion agent (in such capacity, the "CONVERSION AGENT") for the purpose of
effecting the conversion of Preferred Securities in accordance with this Section
and the exchange of Preferred Securities for Depositary Shares representing St.
Paul Preferred Stock in accordance with Section 8.5 of this Agreement. In
effecting the conversion and exchange transactions described in this Section and
Section 8.5 of this Agreement, the Conversion Agent shall be acting as agent of
the Preferred Members directing it to effect such conversion or exchange
transactions. The Conversion Agent is hereby authorized (i) to effect
conversions of Preferred Securities from time to time upon receipt of Notices of
Conversion and (ii) following the occurrence of an Exchange Event, to exchange
all of the Subordinated Debentures and any accrued and unpaid interest thereon
for Depositary Shares representing St. Paul Preferred Stock in accordance with
the provisions of Section 8.5 of this Agreement.
(d) (i) On and after * , and provided that the Company has paid in
full all accumulated and unpaid Dividends on all of the Preferred Securities,
including any Additional Dividends thereon, for all Dividend periods terminating
on or prior to such date, the Company shall have the right, at its option, to
cause the conversion rights set forth in this Section to expire, BUT ONLY IF
for 20 Trading Days within any period of 30 consecutive Trading Days, including
the last Trading Day of such period, the Current Market Price of the St. Paul
Common Stock exceeds 120% of the Conversion Price in effect on such Trading Day.
(ii) In order to exercise its option to cause the conversion
rights of Preferred Members to expire, the Company must issue a press release
announcing the Conversion Expiration Date (the "PRESS RELEASE") prior to the
opening of business on the second Trading Day after a period in which the
condition in the preceding paragraph has been met (but in no event prior to *).
The Press Release shall be issued for publication to the Dow Jones News Service
and to such other print and electronic media as the Company may select. The
Press Release shall state that the Company has elected to exercise its right to
extinguish the conversion rights of Preferred Members, specify the Conversion
Expiration Date and provide the Conversion Price of the Preferred Securities and
the Current Market Price of the St. Paul Common Stock, in each case as of the
close of business on the Trading Day next preceding the date of the Press
Release. If the Company exercises the option described in this paragraph, the
"CONVERSION EXPIRATION
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DATE" shall be a date selected by the Company which shall be not less than 30
or more than 60 days after the date on which the Company issues the Press
Release. In the event the Company does not exercise the option described in
this paragraph, the Conversion Expiration Date shall be the earlier of (a) the
date of an Exchange Election, as set forth in Section 8.5(c) of this Agreement,
and (b) two Business Days prior to the date set for the mandatory redemption of
the Preferred Securities pursuant to Section 8.3(d)(ii) of this Agreement.
(iii) In addition to issuing the Press Release, the Company
shall send notice of the expiration of conversion rights (a "NOTICE OF
CONVERSION EXPIRATION") by first-class mail to each Preferred Member of record
not more than four (4) Business Days after the Company issues the Press Release.
Such mailed Notice of Conversion Expiration shall state: (1) the Conversion
Expiration Date; (2) the Conversion Price of the Preferred Securities and the
Current Market Price of the St. Paul Common Stock, in each case as of the close
of business on the Trading Day next preceding the date of the Notice of
Conversion Expiration; (3) the place or places at which Preferred Securities are
to be surrendered prior to the Conversion Expiration Date for certificates
representing shares of St. Paul Common Stock; and (4) such other information or
instructions as the Company deems necessary or advisable to enable a Preferred
Member to exercise its conversion right hereunder. No defect in the Notice of
Conversion Expiration or in the mailing thereof with respect to any Preferred
Security shall affect the validity of such notice with respect to any other
Preferred Security. As of the close of business on the Conversion Expiration
Date, the Preferred Securities shall no longer be convertible into St. Paul
Common Stock.
(e) No fractional shares of St. Paul Common Stock will be issued
as a result of conversion, but in lieu thereof, St. Paul shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Current Market Price on the date on which the certificate or certificates
for such shares were duly surrendered for conversion, or, if such day is not a
Trading Day, on the next Trading Day, and the Conversion Agent in turn will make
such payment to the Preferred Member holding Preferred Securities so converted.
(f) St. Paul shall at all times reserve and keep available out of
its authorized and unissued St. Paul Common Stock, solely for issuance upon the
conversion of the Subordinated Debentures, free from any preemptive or other
similar rights, such number of shares of St. Paul Common
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Stock as shall from time to time be issuable upon the conversion of all the
Subordinated Debentures then outstanding. Any shares of St. Paul Common Stock
issued upon conversion of the Subordinated Debentures shall be duly authorized,
validly issued and fully paid and nonassessable. St. Paul shall deliver the
shares of St. Paul Common Stock upon conversion of the Subordinated Debentures
to the Conversion Agent, as agent for the Preferred Member so converting, free
and clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of St. Paul and the Company shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
the St. Paul Common Stock (and all requirements to list the St. Paul Common
Stock issuable upon conversion of Subordinated Debentures that are at the time
applicable), in order to enable St. Paul to lawfully issue St. Paul Common Stock
to the Conversion Agent and the Conversion Agent to lawfully deliver the St.
Paul Common Stock to each Preferred Member upon conversion of the Preferred
Securities.
(g) Whenever St. Paul shall issue shares of St. Paul Common Stock
upon conversion of Preferred Securities as contemplated by this Section 8.4, St.
Paul shall issue, together with each such share of St. Paul Common Stock, one
right to purchase Series A Junior Participating Preferred Stock of St. Paul
(or other securities in lieu thereof) pursuant to the Rights Agreement, or any
similar rights issued to holders of St. Paul Common Stock in addition thereto
or in replacement therefor (such rights, together with any additional or
replacement rights, being collectively referred to as the "RIGHTS"), whether
or not such Rights shall be exercisable at such time, but only if such Rights
are issued and outstanding and held by other holders of St. Paul Common Stock
(or are evidenced by outstanding share certificates representing St. Paul
Common Stock) at such time and have not expired or been redeemed.
(h) St. Paul will pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of the issue or
delivery of shares of St. Paul Common Stock to the Conversion Agent on
conversion of Subordinated Debentures and by the Conversion Agent upon
conversion of the Preferred Securities. St. Paul shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of St. Paul Common Stock
in a name other than that in which the Preferred Securities so converted were
registered, and no such issue or delivery shall be made
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unless and until the Person requesting such issue has paid to the Company the
amount of any such tax, or has established to the satisfaction of the Company
that such tax has been paid or is not payable.
(i) Nothing in Section 8.4(h) of this Agreement shall limit the
requirement of the Company to withhold taxes pursuant to Section 4.6 of this
Agreement or otherwise require the Trustee, the Managing Members or the Company
to pay any amounts on account of such withholdings.
Section 8.5 OPTIONAL EXCHANGE FOR DEPOSITARY SHARES REPRESENTING
ST. PAUL PREFERRED STOCK.
(a) Upon the occurrence of an Exchange Event, Preferred Members
holding a Majority in Liquidation Preference of the Preferred Securities, voting
as a class or by written consent, may, at their option, cause the Conversion
Agent to (i) exchange all (but not less than all) of the Preferred Securities
then outstanding for Subordinated Debentures held by the Company, (ii)
immediately exchange such Subordinated Debentures and any accrued and unpaid
interest thereon, on behalf of the Preferred Members, for Depositary Shares,
each representing ownership of 1/*th of a share of St. Paul Preferred Stock,
at the Exchange Price and (iii) distribute such Depositary Shares to the
Preferred Members, subject to the following terms and conditions.
(b) The failure of Preferred Members to receive for 15 consecutive
months the full amount of Dividend payments (including any arrearages thereon)
on the Preferred Securities shall constitute an "EXCHANGE EVENT."
(c) As soon as practicable, but in no event later than 30 days
after the occurrence of an Exchange Event, the Managing Members will, upon not
less than 15 days' written notice by first-class mail to the Preferred Members,
convene a meeting (the "EXCHANGE ELECTION MEETING") of the Preferred Members
for the purpose of acting on the matter of whether to cause the Conversion Agent
to effect an exchange, as described above, of all of the Preferred Securities
then outstanding for Depositary Shares. If the Managing Members fail to convene
such Exchange Election Meeting within such 30-day period, Preferred Members
holding not less than 10% in Liquidation Preference of the Preferred Securities
will be entitled to convene such Exchange Election Meeting. Upon the
affirmative vote of Preferred Members holding a Majority in Liquidation
Preference of the Preferred Securities at an Exchange Election Meeting or, in
the absence of such meeting, upon receipt by the Company of a written consent
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signed by Preferred Members holding a Majority in Liquidation Preference of the
Preferred Securities, an election to exchange all outstanding Preferred
Securities on the basis described above (an "EXCHANGE ELECTION") will be
deemed to have been made.
Each Preferred Member, by becoming a party to this Agreement
pursuant to Section 2.6 of this Agreement, will be deemed to have agreed to be
bound by these optional exchange provisions in regard to the exchange of
Preferred Securities for Depositary Shares pursuant to the terms described
above.
(d) Upon receipt of notice substantially in the form of Annex C
hereto from such Preferred Members (the "NOTICE OF EXCHANGE"), the Conversion
Agent shall promptly deliver copies of the Notice of Exchange to the Company,
St. Paul and the Trustee.
(e) All outstanding Preferred Securities shall be deemed to have
been exchanged, immediately prior to the close of business on the date of the
Exchange Election (the "EXCHANGE DATE"), for Subordinated Debentures held by
the Company, at an exchange rate of $ * principal amount of Subordinated
Debentures for each Preferred Security, and the Company shall promptly deliver
the Subordinated Debentures deemed to have been so exchanged to the Conversion
Agent, on behalf of the Preferred Members holding exchanged Preferred
Securities. As promptly as practicable after the exchange date, St. Paul shall
issue and deposit with the Depositary, pursuant to the Deposit Agreement, a
certificate or certificates for the number of fully paid and non-assessable
shares of St. Paul Preferred Stock issuable at the rate referred to in paragraph
(f) below upon the exchange contemplated in such paragraph in return for a
Depositary Receipt or Receipts issued by the Depositary evidencing a
proportionate number of Depositary Shares in respect of the St. Paul Preferred
Stock so deposited. St. Paul shall request that the Depositary Receipts be
issued in the names of the Preferred Members designated in the Notice of
Exchange.
(f) St. Paul shall thereafter, promptly upon request by the
Conversion Agent, exchange such Subordinated Debentures and any accrued and
unpaid interest thereon for Depositary Shares, each representing a 1/*th
interest in a fully paid and nonassessable share of St. Paul Preferred Stock
and evidenced by Depositary Receipts, at the rate of one Depositary Share for
each $ * principal amount of Subordinated Debentures (which rate is equivalent
to one Depositary Share or 1/*th of a share of St. Paul Preferred Stock for
each Preferred Security). Any accumulated and
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unpaid Dividends on the Preferred Securities (including any Additional Dividends
thereon) at the time of the Exchange Election shall, from and after the time of
such exchange, be treated as accumulated and unpaid Dividends on the St. Paul
Preferred Stock issued in exchange for the Subordinated Debentures. The Person
or Persons entitled to receive the Depositary Shares representing the St. Paul
Preferred Stock issuable upon such exchange shall be treated for all purposes as
the record holder or holders of such St. Paul Preferred Stock as of the exchange
date. As promptly as practicable on or after the exchange date, St. Paul shall
deliver at the office of the Conversion Agent the Depositary Receipt or Receipts
representing the St. Paul Preferred Stock issuable upon such exchange. The
Conversion Agent shall deliver such Depositary Receipt or Receipts to the Person
or Persons entitled to receive the same.
(g) Each Depositary Share will represent a one one-hundredth
(1/*th) interest in a share of St. Paul Preferred Stock and shall be evidenced
by a Depositary Receipt. St. Paul shall at all times reserve and keep available
out of its authorized and unissued St. Paul Preferred Stock, solely for issuance
upon the exchange of Subordinated Debentures for Depositary Shares, free from
any preemptive or other similar rights, such number of shares of St. Paul
Preferred Stock as shall from time to time be issuable upon the exchange of all
the Subordinated Debentures then outstanding for Depositary Shares. Each of St.
Paul and the Company shall prepare and shall use its best efforts to obtain and
keep in force such governmental or regulatory permits or other authorizations as
may be required by law, and shall comply with all applicable requirements as to
registration or qualification of the St. Paul Preferred Stock in order to enable
St. Paul to lawfully issue the St. Paul Preferred Stock upon exchange of the
Subordinated Debentures and deposit such St. Paul Preferred Stock with the
Depositary under the Deposit Agreement and the Conversion Agent to lawfully
deliver Depositary Shares upon exchange of the Preferred Securities. All shares
of St. Paul Preferred Stock issued upon conversion of the Subordinated
Debentures shall be duly authorized, validly issued and fully paid and
nonassessable and the terms of the St. Paul Preferred Stock shall be valid and
binding on St. Paul. The Conversion Agent shall deliver the Depositary Shares,
evidenced by Depositary Receipts, received upon exchange of the Preferred
Securities to the exchanging Preferred Member, free and clear of all liens,
charges, security interests and encumbrances. St. Paul will use its best
efforts to have the Depositary Shares issued upon an exchange of Preferred
Securities listed for trading on the
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NYSE or such other securities exchange on which the Preferred Securities may
then be listed.
(h) St. Paul will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of St. Paul Preferred Stock to the
Conversion Agent upon exchange of the Subordinated Debentures, the delivery and
deposit of such shares to the Depositary and the delivery of the Depositary
Shares by the Conversion Agent upon exchange of the Preferred Securities. St.
Paul shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of St. Paul Preferred
Stock or Depositary Shares in a name other than that in which Preferred
Securities so exchanged were registered, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the Company
the amount of any such tax, or has established to the satisfaction of the
Company that such tax has been paid.
(i) Nothing in Section 8.5(h) of this Agreement shall limit the
requirement of the Company to withhold taxes pursuant to Section 4.6 of this
Agreement or otherwise require the Trustee, the Managing Members or the Company
to pay any amounts on account of such withholdings.
ARTICLE IX
VOTING AND MEETINGS
Section 9.1 VOTING RIGHTS OF PREFERRED MEMBERS. (a) Except as
shall be otherwise established herein and except as otherwise required by the
Delaware Act, the Preferred Members shall have no right or power to vote on any
question or matter or in any proceeding or to be represented at, or to receive
notice of, any meeting of Members.
(b) Notwithstanding that Members holding Preferred Securities are
entitled to vote or consent under any of the circumstances described in this
Agreement, any of the Preferred Securities that are owned by St. Paul or any
Person owned more than fifty percent by St. Paul, either directly or indirectly,
shall not be entitled to vote or consent and shall, for the purposes of such
vote or consent, be treated as if they were not outstanding.
Section 9.2 VOTING RIGHTS OF HOLDERS OF COMMON SECURITIES.
Except as otherwise provided herein, and except as otherwise provided by the
Delaware Act, all voting rights
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of the Members shall be vested exclusively in the Common Members. The Common
Securities shall entitle the Common Members to vote in proportion to their
percentage ownership interest in the Company upon all matters upon which Common
Members have the right to vote. All Common Members shall have the right to vote
separately as a class on any matter on which the Common Members have the right
to vote regardless of the voting rights of any other Member.
Section 9.3 MEETINGS OF THE MEMBERS. (a) Meetings of the
Members of any class or of all classes of Interests may be called at any time by
the Managing Members or as provided by this Agreement. Except to the extent
otherwise provided, the following provisions shall apply to meetings of Members.
(b) Members may vote in person or by proxy at such meeting.
Whenever a vote, consent or approval of Members is permitted or required under
this Agreement, such vote, consent or approval may be given at a meeting of
Members or by written consent.
(c) Each Member may authorize any Person to act for it by proxy on
all matters in which a Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy
must be signed by the Member or its attorney-in-fact. Every proxy shall be
revocable at the pleasure of the Member executing it at any time before it is
voted.
(d) Each meeting of Members shall be conducted by the Managing
Members or by such other Person that the Managing Members may designate.
(e) Any required approval of Preferred Members holding Preferred
Securities may be given at a separate meeting of such Preferred Members convened
for such purpose or at a meeting of Members of the Company or pursuant to
written consent. The Managing Members will cause a notice of any meeting at
which Preferred Members holding Preferred Securities are entitled to vote
pursuant to Sections 7.1, 8.3(g) or Article XVI of this Agreement, or of any
matter upon which action may be taken by written consent of such Preferred
Members, to be mailed to each Preferred Member of record of the Preferred
Securities. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken, (ii) a
description of any action proposed to be taken at such meeting on which such
Preferred Members are entitled to vote or of such matters upon which written
consent is sought
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and (iii) instructions for the delivery of proxies or consents.
(f) Subject to Section 9.3(e) of this Agreement, the Managing
Members, in their sole discretion, shall establish all other provisions relating
to meetings of Members, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Members, waiver of any such
notice, action by consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE X
DIVIDENDS
Section 10.1 DIVIDENDS. (a) Subject to the terms of this
Article X, Preferred Members shall receive periodic Dividends, if any, in
accordance with Article VIII of this Agreement, as and when declared by the
Managing Members, and Common Members shall receive periodic Dividends, subject
to Article VIII of this Agreement and to the provisions of the Delaware Act, as
and when declared by the Managing Members, in their discretion.
(b) A Preferred Member shall not be entitled to receive any
Dividend with respect to any Dividend payment date (and any such Dividend shall
not be considered due and payable), irrespective of whether such Dividend has
been declared by the Managing Members, until such time as (i) the interest
payment on the related series of Subordinated Debentures for the interest
payment date corresponding to such Dividend payment date is due and payable
(after giving effect to any delay of such interest payment date resulting from a
valid extension of the related interest payment period for such Subordinated
Debentures) and (ii) the Company shall have funds legally available for the
payment of such Dividend to such Preferred Member pursuant to the terms of this
Agreement and the Delaware Act, and notwithstanding any provision of Section
18-606 of the Delaware Act to the contrary, until such time, a Preferred Member
shall not have the status of a creditor of the Company, or the remedies
available to a creditor of the Company.
Section 10.2 LIMITATIONS ON DISTRIBUTIONS. Notwithstanding
any provision to the contrary contained in this Agreement, the Company shall not
make a distribution
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(including a Dividend) to any Member on account of its Interest if such
distribution would violate Section 18-607 of the Delaware Act or other
applicable law.
ARTICLE XI
BOOKS AND RECORDS
Section 11.1 BOOKS AND RECORDS; ACCOUNTS. The Managing Members
shall keep or cause to be kept at the address of the Managing Members (or at
such other place as the Managing Members shall advise the other Members in
writing) true and full books and records regarding the status of the business
and financial condition of the Company.
Section 11.2 FINANCIAL STATEMENTS. The Managing Members shall,
as soon as available after the end of each Fiscal Year, cause to be prepared and
mailed to each Preferred Member of record the unaudited financial statements of
the Company for such Fiscal Year prepared in accordance with generally accepted
accounting principles.
Section 11.3 LIMITATION ON ACCESS TO RECORDS. Notwithstanding
any provision of this Agreement, but subject to the provisions of Section 18-305
of the Delaware Act, the Managing Members may, to the maximum extent permitted
by law, keep confidential from the Preferred Members, for such period of time as
the Managing Members deem reasonable, any information the disclosure of which
the Managing Members reasonably believe to be in the nature of trade secrets or
other information the disclosure of which the Managing Members in good faith
believe is not in the best interest of the Company or could damage the Company
or its business or which the Company or the Managing Members are required by law
or by an agreement with any Person to keep confidential.
Section 11.4 ACCOUNTING METHOD. For both financial and tax
reporting purposes and for purposes of determining profits and losses, the books
and records of the Company shall be kept on the accrual method of accounting
applied in a consistent manner and shall reflect all Company transactions and be
appropriate and adequate for the Company's business.
Section 11.5 ANNUAL AUDIT. As soon as practical after the end of
each Fiscal Year, but not later than 90 days after such end, the financial
statements of the Company shall be audited by a firm of independent certified
public accountants selected by the Managing Members, and
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such financial statements shall be accompanied by a report of such accountants
containing their opinion. The cost of such audits will be an expense of the
Company and paid by St. Paul.
ARTICLE XII
TAX MATTERS
Section 12.1 COMPANY TAX RETURNS. (a) The Managing Members
shall cause to be prepared and timely filed all tax returns required to be filed
for the Company. The Managing Members may, in their discretion, make or refrain
from making any federal, state or local income or other tax elections for the
Company that they deem necessary or advisable, including, without limitation,
any election under Section 754 of the Code or any successor provision.
(b) St. Paul is hereby designated as the Company's "TAX MATTERS
PARTNER" under Section 6231(a)(7) of the Code and shall have all the powers and
responsibilities of such position as provided in the Code. St. Paul is
specifically directed and authorized to take whatever steps St. Paul, in its
discretion, deems necessary or desirable to perfect such designation, including
filing any forms or documents with the Internal Revenue Service and taking such
other action as may from time to time be required under the Treasury
Regulations. Expenses incurred by the Tax Matters Partner in its capacity as
such will be borne by the Company.
Section 12.2 TAX REPORTS. The Managing Members shall, as
promptly as practicable and in any event within 90 days of the end of each
Fiscal Year, cause to be prepared and mailed to each Preferred Member of record
federal income tax form K-1 and any other forms which are necessary or
advisable.
Section 12.3 TAXATION AS A PARTNERSHIP. The Members intend that
the Company shall be treated as a partnership for U.S. federal income tax
purposes.
Section 12.4 TAXATION OF PARTNERS. The members intend to adopt a
monthly convention for allocating income and loss, such that income and loss
will be allocated to each Member as of the close of the record date for each
Fiscal Period. The members intend that allocations of income and loss for U.S.
federal income tax purposes be consistent with the economic allocations of
income under this Agreement.
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ARTICLE XIII
EXPENSES
Section 13.1 EXPENSES. Except as otherwise provided in this
Agreement, the Company shall be responsible for all and shall pay all expenses
out of funds of the Company determined by the Managing Members to be available
for such purpose, provided that such expenses or obligations are those of the
Company or are otherwise incurred by the Managing Members in connection with
this Agreement, including, without limitation:
(a) all costs and expenses related to the business of the Company
and all routine administrative expenses of the Company, including the
maintenance of books and records of the Company, the preparation and
dispatch to the Members of checks, financial reports, tax returns and
notices required pursuant to this Agreement and the holding of any
meetings of the Members;
(b) all expenses incurred in connection with any litigation
involving the Company (including the cost of any investigation and
preparation) and the amount of any judgment or settlement paid in
connection therewith (other than expenses incurred by any Managing Member
in connection with any litigation brought by or on behalf of any Member
against such Managing Member);
(c) all expenses for indemnity or contribution payable by the
Company to any Person;
(d) all expenses incurred in connection with the collection of
amounts due to the Company from any Person;
(e) all expenses incurred in connection with the preparation of
amendments and/or restatements to this Agreement; and
(f) all expenses incurred in connection with the dissolution,
winding up or termination of the Company.
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ARTICLE XIV
LIABILITY
Section 14.1 LIABILITY OF COMMON MEMBERS. Each Common Member, by
acquiring its Interest and being admitted to the Company as a Common Member,
shall be liable to the creditors of the Company (other than to Members holding
other classes of Interests, in their capacity as Members) (hereinafter referred
to individually as a "THIRD PARTY CREDITOR," and collectively as the "THIRD
PARTY CREDITORS") to the same extent that a general partner of a limited
partnership formed under the LP Act is liable under Section 17-403(b) of the LP
Act to creditors of the limited partnership (other than the other partners in
their capacity as partners), as if the Company were a limited partnership formed
under the LP Act and the Common Members were general partners of the limited
partnership. In furtherance but not in limitation of the generality of the
foregoing, each Common Member (i) is liable for any and all debts, obligations
and other liabilities of the Company, whether arising under contract or by tort,
statute, operation of law or otherwise, enforceable directly and absolutely
against each Common Member by each Third Party Creditor and (ii) is deemed to
and does assume, as a surety and not as a guarantor, each debt, obligation or
other liability of the Company to all Third Party Creditors.
Section 14.2 LIABILITY OF PREFERRED MEMBERS. (a) Except as
otherwise provided by the Delaware Act, (i) the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company and, to
the extent set forth in Section 14.1, the Common Members and (ii) no Preferred
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Preferred Member of the Company.
(b) A Preferred Member, in its capacity as such, shall have no
liability in excess of (i) the amount of its capital contributions, (ii) its
share of any assets and undistributed profits of the Company, (iii) any amounts
required to be paid by such Preferred Member pursuant to this Agreement and (iv)
the amount of any distributions wrongfully distributed to it.
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ARTICLE XV
TRANSFERS OF INTERESTS BY MEMBERS
Section 15.1 RIGHT OF ASSIGNEE TO BECOME A PREFERRED MEMBER. An
assignee shall become a Preferred Member upon compliance with the provisions of
Section 2.6 of this Agreement.
Section 15.2 EVENTS OF CESSATION OF MEMBERSHIP. A Person shall
cease to be a Member upon the lawful assignment of all of its Interests
(including any redemption, exchange or other repurchase by the Company or the
Managing Members) or as otherwise provided herein.
Section 15.3 PERSONS DEEMED PREFERRED MEMBERS. The Company may
treat the Person in whose name any Preferred Certificate shall be registered on
the books and records of the Company as the sole holder of such Preferred
Certificate and of the Preferred Securities represented by such Preferred
Certificate for purposes of receiving Dividends and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Preferred Certificate or in the Preferred
Securities represented by such Preferred Certificate on the part of any other
Person, whether or not the Company shall have actual or other notice thereof.
Section 15.4 TRANSFER OF INTERESTS. (a) Preferred Securities
shall be freely transferable by a Preferred Member.
(b) Except as provided in the next sentence, a Managing Member may
not assign or transfer its Interest in whole or in part unless, prior to such
assignment or transfer, such Managing Member has obtained the consent of
Preferred Members holding not less than 66 2/3% in Liquidation Preference of the
Preferred Securities. A Managing Member may assign or transfer its Interest
without such consent only (i) to a Person that is the survivor of a merger or
consolidation of the Managing Member in a transaction that meets the
requirements of Section 16.1 of this Agreement or (ii) in exchange for interests
in a Person that is the survivor in a merger or consolidation that meets the
requirements of Section 16.2 of this Agreement. "PERMITTED SUCCESSOR" shall
mean a Person that is an assignee or transferee of the Interest of the Managing
Member as permitted by this Section 15.4(b).
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance
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with the terms and conditions set forth in this Agreement. Any transfer or
purported transfer of any Interest not made in accordance with this Agreement
shall be null and void.
Section 15.5 TRANSFER OF PREFERRED CERTIFICATES. The Managing
Members shall provide for the registration of Preferred Certificates and of
transfers of Preferred Certificates. Upon surrender for registration of
transfer of any Preferred Certificate, the Managing Members shall cause one or
more new Preferred Certificates to be issued in the name of the designated
transferee or transferees. Every Preferred Certificate surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Managing Members duly executed by the
Preferred Security Preferred Member or his or her attorney duly authorized in
writing. Each Preferred Certificate surrendered for registration of transfer
shall be canceled by the Managing Members. A transferee of a Preferred
Certificate shall be admitted to the Company as a Preferred Member and shall be
entitled to the rights and subject to the obligations of a Preferred Member
hereunder upon compliance with Section 15.1 of this Agreement.
Section 15.6 BOOK-ENTRY INTERESTS. The Preferred Certificates,
on original issuance, will be issued in the form of a global Preferred
Certificate or Preferred Certificates representing the Book-Entry Interests, to
be delivered to DTC, the initial Clearing Agency, by, or on behalf of, the
Company. Such Preferred Certificate or Preferred Certificates shall initially
be registered on the books and records of the Company in the name of Cede & Co.,
the nominee of DTC, and no Preferred Security Owner will receive a definitive
Preferred Certificate representing such Preferred Security Owner's interests in
such Preferred Certificate, except as provided in Section 15.8 of this
Agreement. Unless and until definitive, fully registered Preferred Certificates
(the "DEFINITIVE PREFERRED CERTIFICATES") have been issued to the Preferred
Security Owners pursuant to Section 15.8 of this Agreement:
(i) The provisions of this Section shall be in full force and
effect;
(ii) The Company, the Managing Members and any Special Trustee shall
be entitled to deal with the Clearing Agency for all purposes of this
Agreement (including the payment of Dividends, Redemption Price and
liquidation proceeds on the Preferred Certificates and receiving
approvals, votes or consents hereunder) as the Preferred Member and the
sole holder of the
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Preferred Certificates and shall have no obligation to the Preferred
Security Owner; and
(iii) None of the Company, the Managing Members, any Special Trustee
or any agent of the Managing Members, the Company or any Special Trustee
shall have any liability with respect to or responsibility for the records
of the Clearing Agency.
Section 15.7 NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Preferred Members is required under this Agreement,
unless and until Definitive Preferred Certificates shall have been issued to the
Preferred Members pursuant to Section 15.8, the Managing Members and any Special
Trustee shall give all such notices and communications specified herein to be
given to the Preferred Members to the Clearing Agency, and shall have no
obligations to the Preferred Members.
Section 15.8 DEFINITIVE PREFERRED CERTIFICATES. If (i) the
Clearing Agency elects to discontinue its services as securities depository,
(ii) the Company elects to terminate the book-entry system through the Clearing
Agency, or (iii) there is an Event of Default under the Subordinated Debentures,
then Definitive Preferred Certificates shall be prepared by the Company. Upon
surrender of the global Preferred Certificate or Preferred Certificates
representing the Book-Entry Interests by the Clearing Agency, accompanied by
registration instructions, the Managing Members shall cause Definitive Preferred
Certificates to be delivered to Preferred Members in accordance with the
instructions of the Clearing Agency. Neither the Managing Members nor the
Company shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Any Person receiving a Definitive Preferred Certificate in accordance with this
Article XV shall be admitted to the Company as a Preferred Member upon receipt
of such Definitive Preferred Certificate and shall be registered on the books
and records of the Company as a Preferred Member. The Clearing Agency shall not
cease to be a Preferred Member until at least one Person receiving a Definitive
Certificate is admitted to the Company as a Preferred Member. The Definitive
Preferred Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as may be required by any national securities
exchange on which the Preferred Securities may be listed and is reasonably
acceptable to the Managing Members, as evidenced by their execution thereof.
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ARTICLE XVI
MERGERS, CONSOLIDATIONS AND SALES
Section 16.1 ST. PAUL. St. Paul shall not merge or consolidate
with or into another Person or permit another Person to merge or consolidate
with or into it, and shall not be replaced by, or convey, transfer or lease all
or substantially all of its properties and assets to another Person (each such
event, a "TRANSACTION") unless (i) at the time of such Transaction, no Event
of Default (as defined in the Indenture) shall have occurred and be continuing,
or would occur as a result of such Transaction, (ii) the survivor of such merger
or consolidation or the Person to which St. Paul's assets are sold, transferred
or leased is a Person organized under the laws of the United States or any state
thereof, such Person (if other than St. Paul) becomes a party to this Agreement
and becomes a Managing Member, assumes all of St. Paul's obligations under this
Agreement, and such Person has a net worth equal to at least 10% of the total
capital contributions made by the Members to the Company, (iii) prior to such
Transaction, St. Paul obtains an opinion of nationally recognized independent
counsel experienced in such matters to the effect that the Company will continue
to be classified as a partnership for federal income tax purposes after such
Transaction and (iv) in the case of any sale, transfer or lease of all or
substantially all of St. Paul's assets that includes St. Paul's Interest in the
Company, St. Paul has obtained the consent of Preferred Members holding not less
than 66 2/3% in Liquidation Preference of the Preferred Securities to the
Transaction.
Section 16.2. THE COMPANY. In addition, the Company may not, and
St. Paul shall not cause or allow the Company to, enter into a Transaction which
will result in St. Paul, itself or the Preferred Members being considered an
"investment company" required to be registered under the 1940 Act, except as
described below. The Company may, either (i) in order to avoid 1940 Act
consequences adverse to St. Paul, itself or the Preferred Members, without the
consent of the Preferred Members, or (ii) with the prior approval of Preferred
Members holding not less than 66 2/3% in Liquidation Preference of the Preferred
Securities, merge or consolidate with or into, or be replaced by, a Person
organized as such under the laws of any state of the United States of America;
PROVIDED, that (i) such successor Person either (x) expressly assumes all of
the obligations of the Company under the Preferred Securities or (y) substitutes
for the Preferred Securities other securities having substantially the same
terms as the Preferred Securities (the "SUCCESSOR SECURITIES") so long as the
Successor
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Securities rank, with respect to participation in the profits or assets of the
successor Person, at least as high as the Preferred Securities rank, with
respect to participation in the profits or assets of the Company, (ii) St. Paul
expressly acknowledges such successor Person as the holder of the Subordinated
Debentures, (iii) such Transaction does not cause the Preferred Securities (or
the Successor Securities) to be delisted (or, in the case of any Successor
Securities, to fail to be listed) by any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
Transaction does not cause the Preferred Securities (or any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, as that term is defined by the Securities and Exchange Commission
for purposes of Rule 436(g)(2) under the Securities Act, (v) such Transaction
does not adversely affect the powers, preferences and other special rights of
the Preferred Members or the holders of any Successor Securities in any material
respect (other than with respect to any dilution of the holders' interest in the
new Person), (vi) prior to such Transaction St. Paul has received an opinion of
nationally recognized independent counsel to the Company experienced in such
matters to the effect that (w) such Transaction will not cause St. Paul, the
Company or such successor Person to become an "investment company" required to
be registered under the 1940 Act, (x) Preferred Members will not recognize any
gain or loss for federal income tax purposes as a result of such Transaction,
(y) such successor Person will not be treated as an association taxable as a
corporation for federal income tax purposes and (z) such Transaction will not
adversely affect the limited liability of Preferred Members.
ARTICLE XVII
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 17.1 NO DISSOLUTION. The Company shall not be dissolved
by the admission of Members in accordance with the terms of this Agreement.
Except as provided in Sections 17.2(b) and (c), the death, insanity, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member, or the occurrence
of any other event which terminates the continued membership of a Member in the
Company, shall not in and of itself cause the Company to be dissolved and its
affairs wound up. Upon the occurrence of any such event, the business of the
Company shall be continued without dissolution.
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Section 17.2 EVENTS CAUSING DISSOLUTION. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events:
(a) the expiration of the term of the Company, as provided in
Section 2.3 hereof;
(b) a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging either of the Managing Members
a bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of either of the
Managing Members under any applicable federal or state bankruptcy or
similar law, and such decree or order shall have continued undischarged
and unstayed for a period of 90 days; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, trustee, assignee, sequestrator or similar official in
bankruptcy or insolvency of either of the Managing Members or of all or
substantially all of its property, or for the winding up or liquidation of
its affairs, shall have been entered, and such decree or order shall have
continued undischarged and unstayed for a period of 90 days or either of
the Managing Members shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization, arrangement, adjustment or composition under any
applicable federal or state bankruptcy or similar law, or shall consent to
the filing of any such petition, or shall consent to the appointment of a
receiver, liquidator, trustee, assignee, sequestrator or similar official
in bankruptcy or insolvency of either of the Managing Members or of all or
substantially all of its property, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due and its willingness to be adjudged a
bankrupt, or corporate action shall be taken by either of the Managing
Members in furtherance of any of the aforesaid purposes;
(c) upon the bankruptcy, retirement, resignation,
expulsion, dissolution, winding up or liquidation of any Managing Member
or the occurrence of any other event that terminates the continued
membership in the Company of such Managing Member under the Delaware Act;
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(d) a decision made by the Managing Members (subject to the voting
rights of Preferred Members set forth in Section 8.3(g)) to dissolve the
Company;
(e) the entry of a decree of judicial dissolution under Section
18-802 of the Delaware Act;
(f) at the election of the Managing Members, in the event of a
Special Event in accordance with Section 8.3(h) of this Agreement;
(g) in connection with the redemption, exchange or conversion of
all outstanding Preferred Securities; or
(h) the written consent of all Members.
Section 17.3 NOTICE OF DISSOLUTION. Upon the dissolution of the
Company, the Managing Members shall promptly notify the Preferred Members of
such dissolution.
Section 17.4 LIQUIDATION. Upon dissolution of the Company, the
Managing Members or, in the event that the dissolution is caused by an event
described in Sections 17.2(b) or (c) of this Agreement and there are no Managing
Members, a Person or Persons who may be approved by the Preferred Members
holding not less than a Majority in Liquidation Preference, as liquidating
trustees, shall immediately commence to wind up the Company's affairs;
PROVIDED, HOWEVER, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of liabilities to
creditors so as to minimize the losses attendant upon a liquidation. The
proceeds of liquidation shall be distributed, as realized, in the manner
provided in Section 18-804 of the Delaware Act, subject to the provisions of
Section 17.5.
Section 17.5 CERTAIN RESTRICTIONS ON LIQUIDATION PAYMENTS. In
the event of any voluntary or involuntary dissolution of the Company other than
in connection with the redemption, exchange or conversion of all outstanding
Preferred Securities or the dissolution of the Company in the event of a Special
Event in accordance with Section 8.3(h) of this Agreement. Preferred Members
holding Preferred Securities at the time outstanding will be entitled to receive
out of the assets of the Company legally available for distribution to Members,
before any distribution of assets is made to Common Members, the Liquidation
Distribution. If, upon any such liquidation, the Liquidation Distributions can
be paid only in part because the Company has insufficient assets available to
pay
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in full the aggregate Liquidation Distributions, then the amounts payable
directly by the Company on the Preferred Securities and on such Company
Liquidation Parity Securities shall be paid on a PRO RATA basis.
Section 17.6 TERMINATION. The Company shall terminate when
all of the assets of the Company have been distributed in the manner provided
for in this Article XVII, and the Certificate shall have been canceled in the
manner required by the Delaware Act.
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 AMENDMENTS. Except as provided by Section 8.3(g) of
this Agreement, this Agreement may be amended by a written instrument executed
by the Managing Members without the consent of any Preferred Member; PROVIDED,
HOWEVER, that no amendment shall be made, and any such purported amendment
shall be void and ineffective, to the extent the result thereof would be to
cause the Company to be treated as anything other than a partnership for
purposes of United States income taxation or require the Company to register
under the 1940 Act.
Section 18.2 AMENDMENT OF CERTIFICATE. In the event this
Agreement shall be amended pursuant to Section 18.1, the Managing Members shall
amend the Certificate to reflect such change if it deems such amendment of the
Certificate to be necessary or appropriate.
Section 18.3 SUCCESSORS; COUNTERPARTS. This Agreement (a) shall
be binding as to the executors, administrators, estates, heirs and legal
successors, or nominees or representatives, of the Members and (b) may be
executed in several counterparts with the same effect as if the parties
executing the several counterparts had all executed one counterpart.
Section 18.4 LAW; SEVERABILITY. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflict of laws thereof. In particular,
this Agreement shall be construed to the maximum extent possible to comply with
all of the terms and conditions of the Delaware Act. If, nevertheless, it shall
be determined by a court of competent jurisdiction that any provisions or
wording of this Agreement shall be invalid or unenforceable under the Delaware
Act or other applicable law, such
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invalidity or unenforceability shall not invalidate the entire Agreement. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provisions cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions. If it shall be determined by a court of competent jurisdiction that
any provision relating to the distributions and allocations of the Company or to
any fee payable by the Company is invalid or unenforceable, this Agreement shall
be construed or interpreted so as (a) to make it enforceable or valid and (b) to
make the distributions and allocations as closely equivalent to those set forth
in this Agreement as is permissible under applicable law.
Section 18.5 FILINGS. Following the execution and delivery of
this Agreement, the Managing Members shall promptly prepare any documents
required to be filed and recorded under the Delaware Act, and the Managing
Members shall promptly cause each such document to be filed and recorded in
accordance with the Delaware Act and, to the extent required by local law, to be
filed and recorded or notice thereof to be published in the appropriate place in
each jurisdiction in which the Company may hereafter establish a place of
business. The Managing Members shall also promptly cause to be filed, recorded
and published such statements of fictitious business name and any other notices,
certificates, statements or other instruments required by any provision of any
applicable law of the United States or any state or other jurisdiction which
governs the conduct of its business from time to time.
Section 18.6 POWER OF ATTORNEY. Each Preferred Member does
hereby constitute and appoint each Managing Member and its duly elected officers
as its true and lawful representative and attorney-in-fact, in its name, place
and stead to make, execute, sign, deliver and file (a) any amendment of the
Certificate required because of an amendment to this Agreement or in order to
effectuate any change in the membership of the Company, (b) any amendments to
this Agreement made in accordance with the terms hereof and (c) all such other
instruments, documents and certificates which may from time to time be required
by the laws of the United States of America, the State of Delaware or any other
jurisdiction, or any political subdivision or agency thereof, to effectuate,
implement and continue the valid and subsisting existence of the Company or to
dissolve the Company or for any other purpose consistent with this Agreement and
the transactions contemplated hereby.
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The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination or bankruptcy of the Preferred Member
granting the same or the transfer of all or any portion of such Preferred
Member's Interest and (b) extend to such Preferred Member's successors, assigns
and legal representatives.
Section 18.7 EXCULPATION. (a) No Covered Person shall be liable
to the Company or any Member for any loss, damage or claim incurred by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the Company and in a manner reasonably believed to be within the scope
of authority conferred on such Covered Person by this Agreement.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Company, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
Section 18.8 INDEMNIFICATION. To the fullest extent permitted by
applicable law, each Covered Person shall be entitled to indemnification from
the Company for any loss, damage or claim incurred by such Covered Person by
reason of any act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by this
Agreement; PROVIDED, HOWEVER, that any indemnity under this Section 18.8
shall be provided out of and to the extent of Company assets only, and no Member
shall have any personal liability on account thereof.
Section 18.9 ADDITIONAL DOCUMENTS. Each Preferred Member, upon
the request of the Managing Members, agrees to perform all further acts and
execute, acknowledge and deliver any documents that may be reasonably necessary
to carry out the provisions of this Agreement.
Section 18.10 NOTICES. All notices provided for in this
Agreement shall be in writing, duly signed by the
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party giving such notice, and shall be delivered, telecopied or mailed by
registered or certified mail, as follows:
(i) If given to the Company, in care of the Managing Members at the
Company's mailing address set forth below:
c/o The St. Paul Companies, Inc.
385 Washington Street
St. Paul, Minnesota 55102
Facsimile No.: (612) 221-8304
Attention: Vice President and Corporate
Secretary
(ii) If given to any Member, at the address set forth on the records
of the Company maintained by or on behalf of the Company.
Subject to Sections 8.3(e) and 8.3(g)(ii) of this Agreement, each such notice,
request or other communication shall be effective (a) if given by telecopier,
when transmitted to the number specified in such registration books and the
appropriate confirmation is received, (b) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (c) if given by any other means, when delivered at
the address specified in such registration books.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
THE ST. PAUL COMPANIES, INC.
By: __________________________
Name:
Title:
ST. PAUL CAPITAL HOLDINGS, INC.
By: __________________________
Name:
Title:
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ANNEX A
[FORM OF PREFERRED CERTIFICATE]
[IF A GLOBAL Preferred Certificate ADD --
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to St. Paul
Capital L.L.C. 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 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 inasmuch as the registered owner hereof,
Cede & Co., has an interest herein.]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Certificate Number Number of Preferred Securities
- --------------------------------------------------------------------------------
R-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSIP NO.
CERTIFICATE EVIDENCING PREFERRED SECURITIES
of
ST. PAUL CAPITAL L.L.C.
* % Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security)
St. Paul Capital L.L.C., a limited liability company formed under
the laws of the State of Delaware (the "Company"), hereby certifies that _____
(the "Preferred Member") is the registered owner of _______ preferred securities
of the Company representing limited liability company interests in the Company,
which are designated the * % Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are fully paid and are nonassessable
A-1
<PAGE>
limited liability company interests in the Company, as to which the Members in
the Company who hold the Preferred Securities (the "Preferred Members"), in
their capacities as such, have no liability in excess of their obligations to
make payments provided for in the L.L.C. Agreement (as defined below) and their
share of the Company's assets and undistributed profits (subject to their
obligation to repay any funds wrongfully distributed to them), and are freely
transferable on the books and records of the Company, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The powers, preferences and special rights and
limitations of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Limited Liability Company Agreement of the Company dated as of *, 1995, as the
same may be amended from time to time in accordance with its terms (the "L.L.C.
Agreement"), authorizing the issuance of the Preferred Securities and
determining the powers, preferences and other special rights and limitations,
regarding Dividends, voting, return of capital and otherwise, and other matters
relating to the Preferred Securities. Capitalized terms used herein but not
defined herein shall have the meaning given them in the L.L.C. Agreement. The
Preferred Member is entitled to the benefits of the Guarantee Agreement of The
St. Paul Companies, Inc., a Minnesota corporation ("St. Paul"), dated as of * ,
1995 (the "Guarantee") to the extent provided therein. The Company will furnish
a copy of the L.L.C. Agreement and the Guarantee to the Preferred Member without
charge upon written request to the Company at its principal place of business or
registered office.
The Preferred Member, by accepting this certificate, is deemed to
have agreed (i) to be bound by the provisions of the L.L.C. Agreement, including
the provisions of the L.L.C. Agreement concerning the exchange of the Preferred
Securities for Depositary Shares representing fractional interests in St. Paul
Preferred Stock and (ii) that the Subordinated Debentures acquired by the
Company with the proceeds from the issuance of the Preferred Securities are
subordinated and junior in right of payment to all Senior Indebtedness of St.
Paul as and to the extent provided in the Subordinated Debentures and (iii) that
the Guarantee ranks (x) subordinate and junior in right of payment to all Senior
Indebtedness of St. Paul, and (y) PARI PASSU with the most senior preferred
or preference stock now or hereafter issued by St. Paul and with any guarantee
now or hereafter entered into by St. Paul in respect of any preferred or
preference stock of any Affiliate of St. Paul, and (z) senior to St. Paul
A-2
<PAGE>
Common Stock and any other class or series of capital stock of St. Paul or any
of its Affiliates which by its express terms ranks junior in the payment of
Dividends and amounts on liquidation, dissolution, and winding-up to the
Preferred Securities, in each case, as and to the extent provided in the
Guarantee. Upon receipt of this certificate, the Preferred Member is admitted
to the Company as a Preferred Member, is bound by the L.L.C. Agreement and is
entitled to the benefits thereunder.
IN WITNESS WHEREOF, this certificate has been executed on behalf of
the Company by its duly authorized Managing Member and countersigned by a duly
authorized officer of each of The St. Paul Companies, Inc., as Guarantor, and
The Chase Manhattan Bank (National Association), as Registrar and Transfer Agent
this _____ day of _________________, ____.
ST. PAUL CAPITAL L.L.C.
By: THE ST. PAUL COMPANIES, INC.,
as Managing Member
By:
------------------------------
Name:
Title:
By: THE ST. PAUL COMPANIES, INC.,
as Guarantor
By:
-------------------------------
Name:
Title:
Registered and Countersigned by
The Chase Manhattan Bank (National Association)
By:
---------------------------
Authorized Signature
A-3
<PAGE>
ANNEX B
[FORM OF NOTICE OF CONVERSION]
St. Paul Capital L.L.C.
* % Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security)
To: The Chase Manhattan Bank (National Association)
Conversion Agent
[ADDRESS OF CONVERSION AGENT]
The undersigned (the "Preferred Member") hereby irrevocably
exercises its option to convert * % Convertible Monthly Income Preferred
Securities (liquidation preference $50 per Preferred Security) (the "Preferred
Securities") of St. Paul Capital L.L.C. (the "Company"), as designated below and
surrendered herewith to the Conversion Agent, into shares of Common Stock,
without par value (the "St. Paul Common Stock"), of The St. Paul Companies, Inc.
("St. Paul") in accordance with the terms of the Amended and Restated Limited
Liability Company Agreement of the Company, dated as of *, 1995 (the
"Agreement").
The Preferred Member directs the Conversion Agent, on behalf of the
Preferred Member, to effect the conversion of the Preferred Securities
designated under (a) below for shares of St. Paul Common Stock pursuant to and
in the manner described in Section 8.4 of the Agreement. The Conversion Agent
shall instruct St. Paul that the shares of St. Paul Common Stock issuable and
deliverable upon the conversion, together with any check in lieu of fractional
shares, be issued to the Preferred Member unless, in the case of the St. Paul
Common Stock, a different name has been indicated below and to deliver such
shares and such check, if any, to the Conversion Agent. The Conversion Agent
shall distribute, as promptly as possible after the date hereof, (x) the
certificate or certificates for the number of full shares of St. Paul Common
Stock issuable upon conversion of the Preferred Securities designated under (a)
below, (y) any check in lieu of fractional shares and (z) any certificate or
certificates issued by the Company for Preferred Securities surrendered herewith
but not designated for conversion under (a) below, to the person or persons
entitled to receive the same.
If shares of St. Paul Common Stock are to be issued in the name of a
person other than the Preferred Member, the Preferred Member will pay transfer
taxes payable with respect thereto.
B-1
<PAGE>
A. PREFERRED SECURITIES TO BE CONVERTED
Certificate Numbers of Surrendered
Certificate(s): _______________
Number of Preferred Securities to be
Converted: ____________
Number of Preferred Securities Surrendered
But Not to be Converted: ____________
B. SPECIAL ISSUANCE INSTRUCTIONS
To be completed if St. Paul Common Stock Certificate(s) and/or check in
lieu of fractional shares to be issued otherwise than to Preferred Member.
Please type or print.
_____________________
(Name) Social Security or
Other Taxpayer
Identification Number
________________________
_____________________
(Address)
_____________________
________________________
C. SIGNATURE
Dated: ________
_________________________
Signature of Preferred Member (must conform
in all respects to the name of the
registered owner of the Preferred Securities
certificate(s) specified in (A) and
surrendered herewith)
Signature Guaranteed By:
_________________________
B-2
<PAGE>
ANNEX C
[FORM OF NOTICE OF EXCHANGE]
St. Paul Capital L.L.C.
* % Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security)
To: The Chase Manhattan Bank (National Association)
Conversion Agent
[ADDRESS OF CONVERSION AGENT]
The undersigned holders of a majority in liquidation preference (the
"Preferred Members") of the * % Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security) (the "Preferred Securities")
of St. Paul Capital L.L.C. (the "Company") have, pursuant to an Exchange
Election on the date hereof, elected to cause the Conversion Agent to effect an
exchange of all (but not less than all) of the outstanding Preferred Securities
for Depositary Shares (the "Depositary Shares"), each representing a 1/*th
ownership interest in a share of Series C Cumulative Convertible Preferred Stock
(the "St. Paul Preferred Stock") of the St. Paul Companies, Inc. ("St. Paul") in
accordance with the terms of the Amended and Restated Limited Liability Company
Agreement of the Company, dated as of *, 1995 (the "Agreement"). Capitalized
terms not defined herein have the meanings ascribed to them in the Agreement.
The Preferred Members direct the Conversion Agent, on their behalf,
to effect the exchange of the Preferred Securities for Depositary Shares
pursuant to and in the manner described in Section 8.5 of the Agreement. The
Conversion Agent is directed to instruct St. Paul, as promptly as possible after
the date hereof, (x) to issue and deposit with the Depositary the number of
shares of St. Paul Preferred Stock issuable upon such exchange in return for a
Depositary Receipt or Receipts evidencing Depositary Shares, (y) to request the
Depositary to issue the Depositary Receipts evidencing Depositary Shares
issuable and deliverable upon the exchange to all registered owners of Preferred
Securities unless any such owners have indicated a different name or names on
copies of Attachment 1 hereto and (z) to deliver such Depositary Receipts to the
Conversion Agent. The Conversion Agent shall distribute, as promptly as
possible after the date hereof, the Depositary Receipt or Receipts to the Person
or Persons entitled to receive the same.
C-1
<PAGE>
If Depositary Receipts are to be issued in the name of a Person
other than a registered owner of Preferred Securities as specified on one or
more copies of Attachment 1 hereto, each owner requesting such special issuance
will pay any transfer taxes payable with respect thereto.
SIGNATURES OF PREFERRED MEMBERS
Signatures of Preferred Members must conform in all respects to the names of
registered owners of Preferred Securities. This Notice of Exchange may be
executed in more than one counterpart of this signature page with the same
effect as though all Preferred Members had signed on a single page.
Dated: _______________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
C-2
<PAGE>
ATTACHMENT 1 TO NOTICE OF EXCHANGE
SPECIAL ISSUANCE INSTRUCTIONS
To be completed if Depositary Receipt(s) are to be issued otherwise than to
registered owners of Preferred Securities. Please type or print.
Name of
Registered Owner Number of Preferred
of Preferred Securities: Securities Owned:
- ------------------------ -------------------
_______________________ ____________________
Person to whom
Depositary Receipts
To Be Issued:
- -----------------------
Social Security or
_______________________ Other Taxpayer
(Name) Identification Number:
----------------------
_______________________ ______________________
(Address)
Signature of Registered Owner
of Preferred Securities: Signature Guaranteed by:
_______________________ ____________________
C-3
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF DESIGNATION
OF
THE ST. PAUL COMPANIES, INC.
Series C Cumulative Convertible Preferred Stock
-------------------------
THE UNDERSIGNED, Bruce A. Backberg, the Vice President and Corporate
Secretary of The St. Paul Companies, Inc. (the "Corporation"), does hereby
certify that pursuant to Minnesota Statutes Section 302A.401, Subd.3(a),
resolutions as hereinafter set forth were adopted [AT A MEETING OF THE BOARD OF]
DIRECTORS HELD ON] [BY WRITTEN CONSENT EXECUTED BY A MAJORITY OF THE DIRECTORS]
AS OF] , 1995 [, A QUORUM BEING AT ALL TIMES PRESENT]:
RESOLVED, that there is hereby established, out of the presently available
undesignated shares of the Corporation, a series of Preferred Stock of the
Corporation designated and having such terms and relative rights,
preferences and privileges as set forth in Exhibit A attached hereto (the
"Series C Preferred Stock").
RESOLVED FURTHER, that the Vice President and Corporate Secretary or any
Assistant Secretary of the Corporation shall prepare a Certificate of
Designation describing the Series C Preferred Stock and cause the same to
be filed with the Secretary of State of the State of Minnesota.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Designation this day of , 1995.
____________________________
Bruce A. Backberg
Vice President and Corporate
Secretary
<PAGE>
EXHIBIT A
SECTION 1. DESIGNATION AND AMOUNT; SPECIAL PURPOSE; RESTRICTION ON
SENIOR SERIES.
(A) The shares of this series of Preferred Stock shall be designated
as "Series C Cumulative Convertible Preferred Stock" ("Series C Preferred
Stock") and the number of shares constituting such series shall be , par value
$ per share.
(B) Shares of Series C Preferred Stock shall be issued by the
conversion and exchange agent (the "Conversion Agent") for the Series C
Preferred Stock only upon the exchange of % Convertible Subordinated Debentures
due of the Corporation (the "Subordinated Debentures"), and
accrued interest thereon following a valid exchange election (an "Exchange
Election") by the holders of a majority of the aggregate liquidation
preference of the outstanding % Convertible Monthly Income Preferred
Securities, liquidation preference $50 per security (the "St. Paul Capital
Preferred Securities"), of St. Paul Capital L.L.C., a Delaware limited
liability company ("St. Paul Capital"), to cause the St. Paul Capital
Preferred Securities then outstanding to be exchanged for depositary shares,
each representing a one (1/ th) interest in a share of Series C Preferred
Stock (the "Depositary Shares"), issued pursuant to the Deposit Agreement,
dated as of , 1995, among the Corporation, The Chase Manhattan Bank
(National Association), as Depositary, and the holders from time to time of
the receipts described therein (the "Deposit Agreement"), in the manner
prescribed in the Amended and Restated Limited Liability Company Agreement
of St. Paul Capital, dated as of , 1995 (the "L.L.C. Agreement").
(C) So long as any St. Paul Capital Preferred Securities are
outstanding, the Corporation shall not authorize or issue any other class or
series of capital stock ranking senior as to the payment of dividends or amounts
upon liquidation, dissolution or winding-up to the Series C Preferred Stock
without the approval of the holders of not less than 66-2/3% of the aggregate
liquidation preference of the St. Paul Capital Preferred Securities then
outstanding.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A)(1) The holders of shares of Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
in an amount per share per annum equal to $ (equivalent to a rate per annum of
% of the stated liquidation preference of $ 50 per share of Series C Preferred
Stock), calculated on the basis of a 360-day year consisting of 12 months of 30
days each, and for any period shorter than a
<PAGE>
full monthly dividend period, dividends will be computed on the basis of the
actual number of days elapsed in such period, and payable in United States
dollars monthly in arrears on the last day of each calendar month of each year.
(2) Dividends, when, as and if declared by the Board of Directors of
the Corporation out of funds legally available therefor, shall be paid on the
last day of each month. Such dividends will accrue and be cumulative whether or
not they have been earned or declared and whether or not there are funds of the
Corporation legally available for the payment of dividends. Dividends on the
Series C Preferred Stock shall be cumulative from the date of the Exchange
Election. Accumulated but unpaid dividends, if any (including arrearages at the
rate of % per annum compounded monthly), on the St. Paul Capital Preferred
Securities on the date of the Exchange Election shall constitute, and be treated
as, accumulated and unpaid dividends on the Series C Preferred Stock as of the
date of the issuance thereof. The record date for each dividend payment date
shall be the day immediately preceding such dividend payment date, provided that
such day is a day on which banking institutions in The City of New York are not
authorized or obligated by law or executive order to be closed (a "Business
Day"). In the event that any date on which dividends are payable on the Series
C Preferred Stock is not a Business Day, then payment of the dividend payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(B) In the event that full cumulative dividends on the Series C
Preferred Stock have not been declared and paid or set apart for payment when
due, then the Corporation shall not, and shall not permit any direct or indirect
majority-owned subsidiary of the Corporation (except any of The John Nuveen
Company, a Delaware corporation, and its consolidated subsidiaries) to, declare
or pay any dividend on, or redeem, purchase, acquire for value or make a
liquidation payment with respect to, any Pari Passu Stock or Junior Stock (each
as defined herein) (other than as a result of a reclassification of Pari Passu
Stock or Junior Stock or the exchange or conversion of one class or series of
Pari Passu Stock or Junior Stock for another class or series of Pari Passu Stock
or Junior Stock, respectively), or make any guarantee payments with respect to
the foregoing (other than payments under the Guarantee Agreement dated as of ,
1995 of the Corporation in favor of the holders of
-2-
<PAGE>
St. Paul Capital Preferred Securities with respect to such securities or
dividends or guarantee payments to the Corporation).
When dividends are not paid in full, all dividends declared upon the
Series C Preferred Stock and all dividends declared upon any Pari Passu Stock
shall be paid ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series C Preferred Stock and accumulated and
unpaid on such Pari Passu Stock. "Pari Passu Stock" means the Series B
Convertible Preferred Stock, liquidation preference $100 per share (the "Senior
B Preferred Stock") of the Corporation, together with any preference stock or
preferred stock of the Corporation, or any guarantee now or hereafter entered
into by the Corporation in respect of any preferred or preference stock of any
affiliate of the Corporation, ranking, in such case, as to the payment of
dividends and amounts upon liquidation, dissolution and winding-up on a parity
with the Series C Preferred Stock. "Junior Stock" means Common Stock, the
Series A Junior Participating Preferred Stock, without par value, of the
Corporation, and any other class or series of capital stock of the Corporation
or any of its affiliates which by its express terms ranks junior in the payment
of dividends or amounts upon liquidation, dissolution or winding-up to the
Series C Preferred Stock.
SECTION 3. VOTING RIGHTS.
(A) In the event that full cumulative dividends on the Series C
Preferred Stock have not been paid for 18 monthly dividend periods (including
for this purpose any arrearage with respect to St. Paul Capital Preferred
Securities), the number of directors of the Corporation constituting the entire
Board of Directors shall be increased by two (2) persons and the holders of the
Series C Preferred Stock shall have the right to elect two persons to fill such
positions at any regular meeting of shareholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series C Preferred
Stock called as hereinafter provided. Whenever all arrearages of dividends on
the Series C Preferred Stock then outstanding shall have been paid and dividends
thereon for the current monthly period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series C Preferred Stock
to elect such additional two (2) directors shall cease (but subject always to
the same provisions for the vesting of such voting rights in the case of any
similar future arrearages in dividends), and the terms of office of all persons
elected as directors by the holders of the Series C Preferred Stock shall
forthwith
-3-
<PAGE>
terminate and the number of directors of the Corporation shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of shares of the Series C Preferred Stock, the Secretary of the
Corporation may, and upon the written request for a special meeting signed by
the holders of at least 10% of all outstanding Series C Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Series C Preferred Stock for the
election of the two (2) directors to be elected by them as herein provided; such
call to be made by notice similar to that provided for in the by-laws for a
special meeting of the shareholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
Secretary within 20 days after receipt of any such request, then any holder of
Series C Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books and records of the
Corporation. The directors elected at any such special meeting shall hold
office until the next regular meeting of the shareholders or special meeting
held in place thereof if such office shall not have previously terminated as
above provided. In case any vacancy shall occur among the directors elected by
the holders of the Series C Preferred Stock, a successor shall be elected by the
Board of Directors to serve until the next regular meeting of the shareholders
or special meeting held in place thereof upon the nomination of the then
remaining director elected by the holders of the Series C Preferred Stock or the
successor of such remaining director.
(B) Except as otherwise required by law or set forth herein, holders
of Series C Preferred Stock shall have no voting rights and their consent shall
not be required for the taking of any corporate action. So long as any shares
of Series C Preferred Stock are outstanding, the consent of the holders of not
less than 66 2/3% of the outstanding shares of Series C Preferred Stock, given
in person or by proxy either at a regular meeting or at a special meeting called
for that purpose, at which the holders of Series C Preferred Stock shall vote
separately as a series, shall be necessary for effecting, validating or
authorizing any one or more of the following:
(1) The amendment, alteration or repeal of any of the provisions of
the Restated Articles of Incorporation, as amended, of the Corporation, or
any amendment thereto or any other certificate filed pursuant to law
(including any such amendment, alteration or repeal effected by any merger
or consolidation to which the Corporation is a party) that would adversely
affect any
-4-
<PAGE>
of the rights, powers or preferences of outstanding shares of Series C
Preferred Stock; provided, however, that any amendment or amendments to the
provisions of the Restated Articles of Incorporation, as amended, so as to
authorize or create, or to increase the authorized amount of, any Junior
Stock shall not be deemed to adversely affect the voting powers, rights or
preferences of the holders of the Series C Preferred Stock;
(2) The creation of any shares of any class or series or any security
convertible into shares of any class or series of capital stock ranking
prior to the Series C Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding-up of the Corporation or in the payment
of dividends; or
(3) Any merger or consolidation with or into, or any sale, transfer,
exchange or lease of all or substantially all of the assets of the
Corporation to, any other corporation, in either case that would adversely
affect any of the rights, powers or preferences of outstanding shares of
Series C Preferred Stock.
(C) For purposes of this Section 3, while St. Paul Capital Preferred
Securities are outstanding and owned by any entity other than the Corporation,
St. Paul Capital, or their subsidiaries or affiliates, any St. Paul Capital
Preferred Securities owned by the Corporation, St. Paul Capital or their
subsidiaries or affiliates shall not have the voting rights referred to in this
Section.
SECTION 4. REDEMPTION.
(A) If at any time following the Conversion Expiration Date (as
defined below), less than five percent (5%) of the shares of Series C Preferred
Stock remain outstanding, such shares of Series C Preferred Stock are
redeemable, at the option of the Corporation, in whole but not in part, from
time to time, at a redemption price equal to the liquidation preference, plus
accumulated and unpaid dividends, whether or not earned or declared, to the date
of redemption (the "Redemption Price").
(B) Unless otherwise required by law, notice of redemption will be
sent to the holders of Series C Preferred Stock by first-class mail, postage
prepaid, mailed not less than thirty (30), nor more than sixty (60) days prior
to the redemption date. Each such notice shall state: (i) the redemption date;
(ii) the Redemption Price; (iii) the place or places where receipts for
Depositary Shares representing
-5-
<PAGE>
such shares are to be surrendered for payment of the Redemption Price; and (iv)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date. Upon surrender of the receipts for Depositary Shares
representing the shares so called for redemption (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so require and
the notice shall so state), such shares shall be redeemed by the Corporation on
the date fixed for redemption at the Redemption Price.
SECTION 5. LIQUIDATION, DISSOLUTION OR WINDING-UP.
(A) Upon any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Corporation, the holders of Series C Preferred
Stock at the time outstanding will be entitled to receive out of the net assets
of the Corporation available for payment to shareholders and subject to the
rights of the holders of any stock of the Corporation ranking senior to or on a
parity with the Series C Preferred Stock in respect of distributions upon
liquidation, dissolution, winding-up or termination of the Corporation, before
any amount shall be paid or distributed with respect to any Junior Stock,
liquidating distributions in the amount of $50 per share plus an amount equal to
all accrued and unpaid dividends thereon (whether or not earned or declared) to
the date fixed for distribution. If, upon any liquidation, dissolution,
winding-up or termination of the Corporation, the amounts payable with respect
to the Series C Preferred Stock and the Pari Passu Stock are not paid in full,
the holders of the Series C Preferred Stock and the Pari Passu Stock shall share
ratably in any distribution of assets based on the proportion of their full
respective liquidation preference to the entire amount of the unpaid aggregate
liquidation preference of the Series C Preferred Stock and the Pari Passu Stock.
After payment of the full amount to which they are entitled as provided by the
foregoing provisions of this Section 5(A), the holders of shares of Series C
Preferred Stock shall not be entitled to any further right or claim to any of
the remaining assets of the Corporation.
(B) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, transfer, exchange or
lease of all or any portion of the assets of the Corporation, shall be deemed to
be a dissolution, liquidation or winding-up of the affairs of the Corporation
for purposes of this Section 5.
-6-
<PAGE>
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
Series C Preferred Stock in such circumstances shall be payable, shall be given
by first-class mail, postage prepaid, mailed not less than twenty (20) days
prior to any payment date stated therein, to the holders of Series C Preferred
Stock, at the address shown on the books of the Corporation or the transfer
agent for the Series C Preferred Stock; provided, however, that a failure to
give notice as provided above or any defect therein shall not affect the
Corporation's ability to consummate a voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation.
SECTION 6. CONVERSION RIGHTS OF SERIES C PREFERRED STOCK.
(A) The shares of Series C Preferred Stock are convertible at any
time before the close of business on the Conversion Expiration Date (as defined
in the L.L.C. Agreement), at the option of the holder thereof, into shares of
Common Stock at the initial conversion price of $ per share of Common Stock,
subject to adjustment, as provided in Section 7 (as so adjusted, the
"Conversion Price"). For this purpose, each share of Series C Preferred Stock
shall be taken at $50.
(B) Holders of record of Series C Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares of Series C Preferred Stock on the corresponding
dividend payment date notwithstanding the conversion thereof following such
dividend payment record date but on or prior to such dividend payment date.
Except as provided in the immediately preceding sentence, the Corporation will
make no payment or allowance for accumulated and unpaid dividends, whether or
not in arrears, on converted shares of Series C Preferred Stock.
(C) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, the Corporation shall pay a cash adjustment
in an amount equal to the same fraction of the Closing Price (as hereinafter
defined) on the date on which the certificate or certificates for such shares
were duly surrendered for conversion, or, if such date is not a Trading Day (as
hereinafter defined), on the next Trading Day.
(D) Any holder of shares of Series C Preferred Stock desiring to
convert such shares into shares of Common
-7-
<PAGE>
Stock shall surrender the certificate or certificates representing the shares of
Series C Preferred Stock being converted, duly assigned or endorsed for transfer
to the Corporation (or accompanied by duly executed stock powers relating
thereto), at the principal executive office of the Corporation or the offices of
the transfer agent for the Series C Preferred Stock or such office or offices in
the continental United States of an agent for conversion as may from time to
time be designated by notice to the holders of the Series C Preferred Stock by
the Corporation or the transfer agent for the Series C Preferred Stock,
accompanied by written notice of conversion, on any day prior to the Conversion
Expiration Date that is a Business Day. Such notice of conversion shall
specify (i) the number of shares of Series C Preferred Stock to be converted
and the name or names in which such holder desires the certificate
or certificates for Common Stock and for any shares of Series C Preferred Stock
not to be so converted to be issued (subject to compliance with applicable legal
requirements if any of such certificates are to be issued in a name other than
the name of the holder), and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued upon such conversion.
(E) Upon surrender of a certificate representing a share or shares of
Series C Preferred Stock for conversion, the Corporation shall issue and send by
hand delivery (with receipt to be acknowledged) or by first-class mail, postage
prepaid, to the holder thereof, at the address designated by such holder, a
certificate or certificates representing the number of shares of Common Stock to
which such holder shall be entitled upon conversion. In the event that there
shall have been surrendered a certificate or certificates representing shares of
Series C Preferred Stock, only part of which are to be converted, the
Corporation shall issue and deliver to such holder or such holder's designee in
the manner provided in the immediately preceding sentence a new certificate or
certificates representing the number of shares of Series C Preferred Stock that
shall not have been converted.
(F) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Series C Preferred Stock into shares of Common Stock
made at the option of the holder thereof shall be effective upon the surrender
by such holder or such holder's designee of the certificate or certificates for
the shares of Series C Preferred Stock to be converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto). The person or persons entitled to receive the Common
Stock issuable upon
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such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of the close of business on the
effective date of the conversion. No allowance or adjustment shall be made in
respect of dividends payable to holders of Common Stock of record as of any date
prior to such effective date.
(G) Whenever the Corporation shall issue shares of Common Stock upon
conversion of shares of Series C Preferred Stock as contemplated by this Section
6, the Corporation shall issue, together with each such share of Common Stock,
one right to purchase Series A Junior Participating Preferred Stock of the
Corporation (or other securities in lieu thereof) pursuant to the Shareholder
Protection Rights Agreement, dated as of December 4, 1989 (the "Rights
Agreement"), between the Corporation and First Chicago Trust Company of New
York, as Rights Agent, as such Rights Agreement may from time to time be
amended, or any similar rights issued to holders of Common Stock of the
Corporation in addition thereto or in replacement therefor (such rights,
together with any additional or replacement rights, being collectively referred
to as the "Rights"), whether or not such Rights shall be exercisable at such
time, but only if such Rights are issued and outstanding and held by other
holders of Common Stock of the Corporation (or are evidenced by outstanding
share certificates representing Common Stock) at such time and have not expired
or been redeemed.
(H) (i) On and after , the Corporation shall have the right, at its
option, to cause the conversion rights set forth in this Section 6 to expire,
provided that the Current Market Price (as defined below) of the Common Stock of
the Corporation on each of 20 Trading Days within any period of 30 consecutive
Trading Days, including the last Trading Day of such period, exceeds 120% of
the Conversion Price in effect on such Trading Day;
(ii) In order to exercise its option to cause the conversion rights
of holders of shares of Series C Preferred Stock to expire, the Corporation must
issue a press release for publication on the Dow Jones News Service and such
other print and electronic media as the Corporation shall select announcing the
Conversion Expiration Date (the "Press Release") prior to the opening of
business on the second Trading Day after a period in which the condition in the
preceding paragraph has been met (but in no event prior to ). The Press
Release shall state that the Corporation has elected to exercise its right to
extinguish the conversion rights of holders of shares of Series C Preferred
Stock, specify the Conversion Expiration Date and provide the
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Conversion Price of the Series C Preferred Stock and the Current Market Price of
the Common Stock, in each case as of the close of business on the Trading Day
next preceding the date of the Press Release. If the Corporation exercises the
option described in this paragraph, the "Conversion Expiration Date" shall be a
date selected by the Corporation which date shall be not less than 30 or more
than 60 days after the date on which the Corporation issues the Press Release;
and
(iii) In addition to issuing the Press Release, the Company shall
send notice of the expiration of conversion rights (a "Notice of Conversion
Expiration") by first-class mail to each record holder of shares of Series C
Preferred Stock not more than four (4) Business Days after the Corporation
issues the Press Release. Such Notice of Conversion Expiration shall state:
(1) the Conversion Expiration Date; (2) the Conversion Price of the Series C
Preferred Stock and the Current Market Price of the Common Stock, in each case
as of the close of business on the Trading Day next preceding the date of the
Notice of Conversion Expiration; (3) the place or places at which receipts for
Depositary Shares representing shares of Series C Preferred Stock are to be
surrendered prior to the Conversion Expiration Date for certificates
representing shares of Common Stock; and (4) such other information or
instructions as the Corporation deems necessary or advisable to enable a holder
of shares of Series C Preferred Stock to exercise its conversion right
hereunder. No defect in the Notice of Conversion Expiration or in the mailing
thereof with respect to any shares of Series C Preferred Stock shall affect the
validity of such notice with respect to any other share of Series C Preferred
Stock. As of the close of business on the Conversion Expiration Date, the
Series C Preferred Stock shall no longer be convertible into Common Stock. As
used in this Section, "Current Market Price" of publicly traded shares of Common
Stock for any day means the last reported sales price, regular way on such day,
or, if no sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange Consolidated Transaction Tape, or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading if the Common Stock is listed on a national securities
exchange, or the National Market System of the National Association of
Securities Dealers, Inc., or, if the Common Stock is not quoted or admitted to
trading on such quotation system, on the principal quotation system on which the
Common Stock may be listed or admitted to trading or quoted,
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or, if not listed or admitted to trading or quoted on any national securities
exchange or quotation system, the average of the closing bid and asked prices of
the Common Stock in the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or, if not so available in such manner, as furnished
by any New York Stock Exchange member firm selected from time to time by the
Board of Directors of the Corporation for that purpose or, if not so available
in such manner, as otherwise determined in good faith by the Board of Directors.
(I) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series C Preferred Stock as herein provided, free from
any preemptive or other similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Series C Preferred Stock then outstanding. All shares of Common Stock delivered
upon conversion of the Series C Preferred Stock shall be duly authorized,
validly issued, fully paid and non-assessable, free and clear of all liens,
claims, interests and other encumbrances. The Corporation shall prepare and
shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
the Common Stock (and all requirements to list the Common Stock issuable upon
conversion of Series C Preferred Stock that are at the time applicable), in
order to enable the Corporation lawfully to issue and deliver to each holder of
record of Series C Preferred Stock such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of all shares of
Series C Preferred Stock then outstanding and convertible into shares of Common
Stock.
SECTION 7. ADJUSTMENT OF CONVERSION PRICE.
(A) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price at which a share
of Series C Preferred Stock is convertible into Common Stock shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class or series of capital stock of the Corporation
exclusively in Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend
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or other distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution or exchange,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this subparagraph (i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Corporation.
The Corporation shall not pay any dividend or make any distribution on shares of
any class or series of capital stock of the Corporation exclusively in Common
Stock held in the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(a)) of the Common Stock on the date
fixed for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. In case any rights or
warrants referred to in this subparagraph (ii) in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Corporation, the Conversion Price
shall be readjusted at the time of such expiration to the Conversion Price that
would have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
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(iii) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case the
Corporation shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 7(A), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (i) of this Section 7(A)), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (iv) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in subparagraph (vii) of this Section 7(A)) of the Common Stock on
the date fixed for the payment of such distribution (the "Reference Date") less
the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vii) of this Section 7(A). For purposes of this subparagraph
(iv), any dividend or distribution that includes shares of Common
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Stock or rights or warrants to subscribe for or purchase shares of Common Stock
shall be deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other than such shares of
Common Stock or such rights or warrants (making any Conversion Price reduction
required by this subparagraph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further Conversion Price reduction required by subparagraph (i) or (ii) of
this Section 7(A)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted as "the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution," "the date fixed for the determination of
shareholders entitled to receive such rights or warrants" and "the date fixed
for such determination" within the meaning of subparagraphs (i) and (ii) of this
Section 7(A) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of subparagraph (i) of
this Section 7(A).
(v) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the case of
any regular cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events referred to
in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 7(A)), or
excluding all of such regular cash dividend if the annualized amount thereof per
share of Common Stock does not exceed 15% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next preceding the
date of declaration of such dividend), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (v) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so distributed and
not excluded as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the
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opening of business on the day following the date fixed for the payment of such
distribution.
(vi) In case a tender or exchange offer made by the Corporation or any
subsidiary of the Corporation for all or any portion of the Corporation's Common
Stock shall expire and such tender or exchange offer shall involve the payment
by the Corporation or such subsidiary of consideration per share of Common Stock
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds 10% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day (as defined in Section 7(E)) next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (vi) by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
holders of Common Stock based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the current market price per
share (determined as provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(vii) For the purpose of any computation under subparagraphs (ii), (iv),
(v) and (vi) of this Section 7(A), the current market price per share of Common
Stock on any date in question shall be deemed to be the average of the daily
Closing Prices (as defined in Section 7(E)) for the five consecutive Trading
Days selected by the Company commencing
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not more than 20 Trading Days before, and ending not later than, the earlier of
the day in question and, if applicable, the day before the "ex" date with
respect to the issuance or distribution requiring such computation; provided,
however, that if another event occurs that would require an adjustment pursuant
to subparagraphs (i) through (vi), inclusive, the Board of Directors may make
such adjustments to the Closing Prices during such five Trading Day period as it
deems appropriate to effectuate the intent of the adjustments in this Section
7(A), in which case any such determination by the Board of Directors shall be
set forth in a resolution of the Board of Directors and shall be conclusive.
For purposes of this paragraph, the term "ex" date, (1) when used with respect
to any issuance or distribution, means the first date on which the Common Stock
trades regular way on the New York Stock Exchange or on such successor
securities exchange as the Common Stock may be listed or in the relevant market
from which the Closing Price was obtained without the right to receive such
issuance or distribution, and (2) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such securities exchange or in such market after the Expiration Time of such
offer.
(viii) The Corporation may make such reductions in the Conversion Price,
in addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of this Section 7(A), as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The
Corporation from time to time may reduce the Conversion Price by any amount for
any period of time if the period is at least twenty (20) days, the reduction is
irrevocable during the period, and the Board of Directors of the Corporation
shall have made a determination that such reduction would be in the best
interest of the Corporation, which determination shall be conclusive. Whenever
the Conversion Price is reduced pursuant to the preceding sentence, the
Corporation shall mail to holders of record of the Series C Preferred Stock a
notice of the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(ix) Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Price; provided, however,
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that any adjustments which by reason of this subparagraph (ix) are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.
(x) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Corporation setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the transfer
agent for the Series C Preferred Stock; and
(2) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Corporation to all record holders of shares of Series C
Preferred Stock at their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(B) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
Corporation (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Corporation), any sale or transfer of all or substantially all of the assets
of the Corporation or any compulsory share exchange) pursuant to which the
Common Stock is converted into the right to receive other securities, cash or
other property), then lawful provision shall be made as part of the terms of
such transaction whereby the holder of each share of Series C Preferred Stock
then outstanding shall have the right thereafter, to convert such share only
into (i) in the case of any such transaction other than a Common Stock
Fundamental Change (as defined in Section 7(E)), the kind and amount of
securities, cash and other property receivable upon such transaction by a holder
of the number of shares of Common Stock of the Corporation into which such share
of Series C Preferred Stock could have been converted immediately prior to such
transaction, after giving effect,
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in the case of any Non-Stock Fundamental Change (as defined in Section 7(E)), to
any adjustment in the Conversion Price required by the provisions of Section
7(D), and (ii) in the case of a Common Stock Fundamental Change, common stock of
the kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of
Section 7(D). The Corporation or the person formed by such consolidation or
resulting from such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provision in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(C) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash out of its
retained earnings that would not require an adjustment pursuant to 7(A)(iv)
or (v) or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to 7(A)(vi);
(ii) the Corporation shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a subdivision or
combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of
any consolidation or merger to which the Corporation is a party and for
which approval of any shareholders of the Corporation shall be required, or
of the sale or transfer of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding-
up of the Corporation;
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then the Corporation shall cause to be filed with the transfer agent for the
Series C Preferred Stock, and shall cause to be mailed to the holders of record
of the Series C Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen (15) days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, redemption, repurchase, rights or warrants or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, redemption, repurchase,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding-up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(D) ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. Notwithstanding any other
provision in this Section 7 to the contrary, if any Fundamental Change (as
defined in Section 7(E)) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each share of
Series C Preferred Stock shall be convertible solely into common stock of the
kind and amount received by holders of Common Stock as the result of such Common
Stock Fundamental Change as more specifically provided in the following clauses
(D)(i) and (D)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
7(D) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion Price of
the Series C Preferred Stock shall thereupon become the lower of (A) the
Conversion Price in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments effected pursuant
to this Section 7, and (B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 7(E)) or the then applicable
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Reference Market Price (as defined in Section 7(E)) by a fraction of which the
numerator shall be $ and the denominator shall be an amount per share of
Series C Preferred Stock determined by the Corporation in its sole discretion,
after consultation with a nationally recognized investment banking firm, to be
the equivalent of the hypothetical redemption price that would have been
applicable if the Series C Preferred Stock had been redeemable during such
period; and
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price of the Series C Preferred Stock in effect immediately prior to such Common
Stock Fundamental Change, but after giving effect to any other prior adjustments
effected pursuant to this Section 7, shall thereupon be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the
Purchaser Stock Price (as defined in Section 7(E)) and the denominator shall be
the Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the consideration received by a
holder of Common Stock is common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change) and (B)
all of the Common Stock shall have been exchanged for, converted into or
acquired for common stock (and cash with respect to fractional interests) of the
successor, acquiror or other third party, the Conversion Price of the Series C
Preferred Stock in effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by multiplying such Conversion Price by a
fraction of which the numerator shall be one (1) and the denominator shall be
the number of shares of common stock of the successor, acquiror, or other third
party received by a shareholder for one share of Common Stock as a result of
such Common Stock Fundamental Change.
(E) DEFINITIONS. The following definitions shall apply to terms used in
this Section 7:
(1) "Applicable Price" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a shareholder for one share of Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices of the Common Stock
for the ten (10) consecutive Trading Days prior to and including the record date
for the determination of the holders of Common Stock entitled to receive
securities, cash or other property in connection
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with such Non-Stock Fundamental Change or Common Stock Fundamental Change, or,
if there is no such record date, the date upon which the holders of the Common
Stock shall have the right to receive such securities, cash or other property,
in each case, as adjusted in good faith by the Board of Directors of the
Corporation to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 7(A).
(2) "Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such common stock, in each case on the principal national securities
exchange on which such common stock is listed, if the common stock is listed on
a national securities exchange, or the NASDAQ National Market System of the
National Association of Securities Dealers, Inc., or, if the common stock is not
quoted or admitted to trading on such quotation system, on the principal
national securities exchange or quotation system on which the common stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the common stock in the over-the-
counter market on the day in question as reported by the National Quotation
Bureau Incorporated, or a similarly generally accepted reporting service, or, if
not so available in such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of the
Corporation for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any Fundamental Change in
which more than 50% by value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten (10) consecutive Trading
Days referred to with respect to such Fundamental Change in Section 7(E)(1)
above has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the NASDAQ National
Market System of the National Association of Securities Dealers, Inc.; provided,
however, that a Fundamental Change shall not be a Common Stock Fundamental
Change unless either (i) the Corporation continues to exist after the occurrence
of such Fundamental Change and the outstanding shares of Series C Preferred
Stock continue to exist as outstanding shares of Series C Preferred Stock, or
(ii) not later than the occurrence of
-21-
<PAGE>
such Fundamental Change, the outstanding shares of Series C Preferred Stock are
converted into or exchanged for shares of convertible preferred stock of a
corporation succeeding to the business of the Corporation, which convertible
preferred stock has powers, preferences and relative, participating, optional or
other rights, and qualifications, limitations and restrictions, substantially
similar to those of the Series C Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive securities, cash or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the Conversion Price,
such Fundamental Change shall be deemed to have occurred when substantially all
of the Common Stock of the Corporation shall be exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash or
other property, but the adjustment shall be based upon the highest weighted
average of consideration per share which a holder of Common Stock could have
received in such transactions or events as a result of which more than 50% of
the Common Stock of the Corporation shall have been exchanged for, converted
into, or acquired for or constitute solely the right to receive securities, cash
or other property.
(5) "Non-Stock Fundamental Change" shall mean any Fundamental Change other
than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change for the ten (10) consecutive
Trading Days prior to and including the record date for the determination of the
holders of Common Stock entitled to receive such common stock, or, if there is
no such record date, the date upon which the holders of the Common Stock shall
have the right to receive such common stock, in each case, as adjusted in good
faith by the Board of Directors of the Corporation to appropriately reflect any
of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi)
of Section 7(A).
-22-
<PAGE>
(7) "Reference Market Price" shall initially mean $ and in the event of
any adjustment to the Conversion Price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Price after giving
effect to any such adjustment shall always be the same as the ratio of $ to
the initial Conversion Price per share.
(8) "Trading Day" shall mean a day on which securities are traded on the
national securities exchange or quotation system or in the over-the-counter
market used to determine the Closing Price.
(F) DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant to any
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the issuance of any shares of
Common Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date the Series C Preferred Stock is first issued, shall not be deemed
to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation to which any of the adjustment
provisions described above applies.
(G) CERTAIN ADDITIONAL RIGHTS. In case the Corporation shall, by dividend
or otherwise, declare or make a distribution on its Common Stock referred to in
Section 7(A)(iv) or 7(A)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 7(A)(iv)), the holder
of each share of Series C Preferred Stock, upon the conversion thereof
subsequent to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution and prior to the
effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which such share of Series C Preferred Stock is converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Corporation (whose
election shall be evidenced by a resolution of the Board of Directors) with
respect to all holders so converting, the Corporation may, in lieu of
distributing
-23-
<PAGE>
to such holder any portion of such distribution not consisting of cash or
securities of the Corporation, pay such holder an amount in cash equal to the
fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors). If any conversion of a share of Series C Preferred
Stock described in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders of Common Stock which the holder of
the share of Series C Preferred Stock so converted is entitled to receive in
accordance with the immediately preceding sentence, the Corporation may elect
(such election to be evidenced by a resolution of the Board of Directors) to
distribute to such holder a due bill for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets to
which such holder is so entitled, provided that such due bill (i) meets any
applicable requirements of the principal national securities exchange or other
market on which the Common Stock is then traded and (ii) requires payment or
delivery of such shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the date of
payment or delivery thereof to holders of shares of Common Stock receiving such
distribution.
(H) STOCK ISSUANCES; MULTIPLE ADJUSTMENTS. There shall be no adjustment
of the Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Corporation except as
specifically described in this Section 7. If any action would require
adjustment of the Conversion Price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value to holders of
Series C Preferred Stock.
SECTION 8. RANKING; ATTRIBUTABLE CAPITAL AND ADEQUACY OF SURPLUS;
RETIREMENT OF SHARES.
(A) The Series C Preferred Stock shall rank senior to all shares of
Junior Stock and pari passu (i.e., on a parity) with Pari Passu Stock of the
Corporation as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation. The ranking of any subsequent
series of Preferred Stock issued by the Corporation as compared to the Series C
Preferred Stock as to the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation shall be as specified in the
Restated Articles of Incorporation, as amended, of the Corporation, the
-24-
<PAGE>
Certificate of Designation pertaining thereto and, if appropriate, shall also be
subject to the provisions of paragraph (C) of Section 1 and paragraph (B) of
Section 3 hereof.
(B) The capital of the Corporation allocable to the Series C
Preferred Stock for purposes of the Minnesota Business Corporation Act shall be
$ per share.
(C) Any shares of Series C Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of such shares, or
otherwise so acquired, shall be retired as shares of Series C Preferred Stock
and restored to the status of authorized but unissued undesignated shares of the
Corporation and may thereafter be reissued as part of a new series of Preferred
Stock as permitted by law.
SECTION 9. MISCELLANEOUS.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three business days after the mailing thereof if sent by registered
or certified mail (unless first-class mail shall be specifically permitted for
such notice) with postage prepaid addressed: (i) if to the Corporation, to its
office at 385 Washington Street, St. Paul, Minnesota 55102 (Attention:
Secretary) or to the transfer agent for the Series C Preferred Stock, or such
other agent of the Corporation designated as permitted by this paragraph, or
(ii) if to any holder of the Series C Preferred Stock or Common Stock, as the
case may be, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of any transfer
agent for the Series C Preferred Stock or Common Stock, as the case may be) or
(iii) to such other address as the Corporation or any such holder, as the case
may be, shall have designated by notice similarly given.
(B) The term "Common Stock" as used herein means the Corporation's
Common Stock, without par value, as the same exists at the date of filing of the
Certificate of Designation relating to the Series C Preferred Stock (the
"Certificate of Designation") with the Secretary of State of the state of
Minnesota, or any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
However, subject to the provisions of Section 7(B), shares of Common Stock
issuable on conversion of shares of Series C Preferred Stock shall include only
shares
-25-
<PAGE>
of the class designated as Common Stock of the Corporation at the date of the
filing of the Certificate of Designation with the Secretary of State of the
state of Minnesota or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution, winding-up or termination of the
Corporation and which are not subject to redemption by the Corporation;
provided that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of such classes
resulting from all such reclassifications.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series C Preferred Stock or shares of Common Stock or
other securities issued on account of Series C Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax that may be payable in respect of
any transfer involving the issuance or delivery of shares of Series C Preferred
Stock or Common Stock or other securities in a name other than that in which the
shares of Series C Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid or is not payable.
(D) In the event that a holder of shares of Series C Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Series C Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Corporation shall be entitled to register
such shares, and make such payment, in the name of the holder of such Series C
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or
-26-
<PAGE>
such payment, to the address of such holder shown on the records of the
Corporation.
(E) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Series C Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of
Series C Preferred Stock.
-27-
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE ST. PAUL COMPANIES, INC.
ST. PAUL CAPITAL L.L.C.
TO
THE CHASE MANHATTAN BANK,
(NATIONAL ASSOCIATION),
TRUSTEE
----------------
INDENTURE
DATED AS OF , 1995
----------------
$
% CONVERTIBLE SUBORDINATED DEBENTURES
DUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939, as amended:
Trust Indenture Indenture
Act Section Section
- -------------- ---------
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . 703(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . 101, 1004
(b) . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . 107
- ----------------
NOTE: This reconciliation shall not, for any purpose, be deemed to be a part
of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals of the Company and St. Paul Capital . . . . . . . . . . . . . . 1
ARTICLE ONE
Definitions and Other Provisions of
General Application
SECTION 101. Definitions:
Act. . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Dividends . . . . . . . . . . . . . . . . 3
Additional Interest. . . . . . . . . . . . . . . . . 3
Affiliate; control . . . . . . . . . . . . . . . . . 3
Applicable Price . . . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . 4
Capital Lease Obligation . . . . . . . . . . . . . . 4
Closing Price. . . . . . . . . . . . . . . . . . . . 4
Commission . . . . . . . . . . . . . . . . . . . . . 4
Common Securities. . . . . . . . . . . . . . . . . . 4
Common Stock . . . . . . . . . . . . . . . . . . . . 4
Common Stock Fundamental Change. . . . . . . . . . . 5
Company. . . . . . . . . . . . . . . . . . . . . . . 5
Company Request; Company Order . . . . . . . . . . . 5
Conversion Agent . . . . . . . . . . . . . . . . . . 5
Conversion Date. . . . . . . . . . . . . . . . . . . 5
Corporate Trust Office . . . . . . . . . . . . . . . 5
corporation. . . . . . . . . . . . . . . . . . . . . 6
Defaulted Interest . . . . . . . . . . . . . . . . . 6
Event of Default . . . . . . . . . . . . . . . . . . 6
exchange date. . . . . . . . . . . . . . . . . . . . 6
Exchange Election. . . . . . . . . . . . . . . . . . 6
Exchange Event . . . . . . . . . . . . . . . . . . . 6
Expiration Time. . . . . . . . . . . . . . . . . . . 6
Fundamental Change . . . . . . . . . . . . . . . . . 6
Guarantee; primary obligor . . . . . . . . . . . . . 6
Holder . . . . . . . . . . . . . . . . . . . . . . . 7
Incur. . . . . . . . . . . . . . . . . . . . . . . . 7
Indebtedness . . . . . . . . . . . . . . . . . . . . 7
- ----------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
-ii-
<PAGE>
Page
----
Indenture. . . . . . . . . . . . . . . . . . . . . . 7
Interest Payment Date. . . . . . . . . . . . . . . . 7
Junior Subordinated Payment. . . . . . . . . . . . . 8
L.L.C. Agreement . . . . . . . . . . . . . . . . . . 8
Managing Members . . . . . . . . . . . . . . . . . . 8
Managing Members Contribution. . . . . . . . . . . . 8
Maturity . . . . . . . . . . . . . . . . . . . . . . 8
Non-Stock Fundamental Change . . . . . . . . . . . . 8
Notice of Conversion . . . . . . . . . . . . . . . . 8
Notice of Exchange . . . . . . . . . . . . . . . . . 8
Nuveen . . . . . . . . . . . . . . . . . . . . . . . 8
Officers' Certificate. . . . . . . . . . . . . . . . 8
Opinion of Counsel . . . . . . . . . . . . . . . . . 8
Outstanding. . . . . . . . . . . . . . . . . . . . . 8
Parent Guarantee . . . . . . . . . . . . . . . . . . 10
Paying Agent . . . . . . . . . . . . . . . . . . . . 10
Payment Blockage Period. . . . . . . . . . . . . . . 10
Person . . . . . . . . . . . . . . . . . . . . . . . 10
Predecessor Security . . . . . . . . . . . . . . . . 10
Preferred Securities . . . . . . . . . . . . . . . . 10
Proceeding . . . . . . . . . . . . . . . . . . . . . 10
Purchased Shares . . . . . . . . . . . . . . . . . . 10
Purchaser Stock Price. . . . . . . . . . . . . . . . 10
Redeemable Interest. . . . . . . . . . . . . . . . . 10
Redemption Date. . . . . . . . . . . . . . . . . . . 11
Redemption Price . . . . . . . . . . . . . . . . . . 11
Reference Date . . . . . . . . . . . . . . . . . . . 11
Reference Market Price . . . . . . . . . . . . . . . 11
Regular Record Date. . . . . . . . . . . . . . . . . 11
Responsible Officer. . . . . . . . . . . . . . . . . 11
Securities . . . . . . . . . . . . . . . . . . . . . 11
Securities Payment . . . . . . . . . . . . . . . . . 11
Security Register;
Security Registrar . . . . . . . . . . . . . . . . 11
Senior Indebtedness. . . . . . . . . . . . . . . . . 11
Senior Nonmonetary Default . . . . . . . . . . . . . 13
Senior Payment Default . . . . . . . . . . . . . . . 13
Series C Preferred Stock . . . . . . . . . . . . . . 13
Special Record Date. . . . . . . . . . . . . . . . . 13
St. Paul Capital . . . . . . . . . . . . . . . . . . 13
St. Paul Holdings. . . . . . . . . . . . . . . . . . 13
Stated Maturity. . . . . . . . . . . . . . . . . . . 13
Subsidiary . . . . . . . . . . . . . . . . . . . . . 13
Trading Day. . . . . . . . . . . . . . . . . . . . . 14
- ----------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
-iii-
<PAGE>
Page
----
Trustee. . . . . . . . . . . . . . . . . . . . . . . 14
Trust Indenture Act. . . . . . . . . . . . . . . . . 14
Vice President . . . . . . . . . . . . . . . . . . . 14
SECTION 102. Compliance Certificates and
Opinions . . . . . . . . . . . . . . . . . . . . . 14
SECTION 103. Form of Documents
Delivered to Trustee . . . . . . . . . . . . . . . 15
SECTION 104. Acts of Holders; Record Dates. . . . . . . . . . . . 16
SECTION 105. Notices, Etc., to Trustee, Company
and St. Paul Capital . . . . . . . . . . . . . . . 17
SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . 18
SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . 18
SECTION 108. Effect of Headings and
Table of Contents. . . . . . . . . . . . . . . . . 19
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . 19
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . 19
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . 19
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . 19
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . 19
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . 20
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . 20
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . 24
- ----------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
-iv-
<PAGE>
Page
----
SECTION 204. Form of Trustee's
Certificate of Authentication. . . . . . . . . . . 27
ARTICLE THREE
The Securities
SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . 27
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . 29
SECTION 303. Execution, Authentication,
Delivery and Dating. . . . . . . . . . . . . . . . 29
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . 30
SECTION 305. Registration, Registration of
Transfer and Exchange. . . . . . . . . . . . . . . 31
SECTION 306. Mutilated, Destroyed,
Lost and Stolen Securities . . . . . . . . . . . . 32
SECTION 307. Payment of Interest;
Interest Rights Preserved. . . . . . . . . . . . . 33
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . 35
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . 35
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . 36
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and
Discharge of Indenture . . . . . . . . . . . . . . 36
SECTION 402. Application of Trust Money . . . . . . . . . . . . . 37
- ----------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
-v-
<PAGE>
Page
----
ARTICLE FIVE
Remedies
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . 38
SECTION 502. Acceleration of Maturity;
Rescission and Annulment . . . . . . . . . . . . . 40
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by
Trustee. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . 42
SECTION 505. Trustee May Enforce Claims
Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . 43
SECTION 506. Application of Money Collected . . . . . . . . . . . 43
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . 44
SECTION 508. Unconditional Right of Holders to
Receive Principal and
Interest and to Convert. . . . . . . . . . . . . . 45
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . 45
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . 45
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . 46
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . 46
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . 46
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . 47
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . 47
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
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Page
----
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and
Responsibilities . . . . . . . . . . . . . . . . . 48
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . 48
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . 48
SECTION 604. Not Responsible for Recitals
or Issuance of Securities. . . . . . . . . . . . . 50
SECTION 605. May Hold Securities. . . . . . . . . . . . . . . . . 50
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . 50
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . 50
SECTION 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . . . . . . 51
SECTION 609. Corporate Trustee Required;
Eligibility. . . . . . . . . . . . . . . . . . . . 51
SECTION 610. Resignation and Removal;
Appointment of Successor . . . . . . . . . . . . . 52
SECTION 611. Acceptance of Appointment by
Successor. . . . . . . . . . . . . . . . . . . . . 53
SECTION 612. Merger, Conversion, Consolidation
or Succession to Business. . . . . . . . . . . . . 54
SECTION 613. Preferential Collection of
Claims Against Company . . . . . . . . . . . . . . 54
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
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Page
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names
and Addresses of Holders . . . . . . . . . . . . . 54
SECTION 702. Preservation of Information;
Communications to Holders. . . . . . . . . . . . . 55
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . 55
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . 56
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc.,
Only on Certain Terms. . . . . . . . . . . . . . . 56
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . 57
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders . . . . . . . . . . . . . . . . 58
SECTION 902. Supplemental Indentures with
Consent of Holders . . . . . . . . . . . . . . . . 59
SECTION 903. Execution of Supplemental Indentures . . . . . . . . 60
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . 61
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . 61
SECTION 906. Reference in Securities to
Supplemental Indentures. . . . . . . . . . . . . . 61
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
-viii-
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ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal
and Interest . . . . . . . . . . . . . . . . . . . 61
SECTION 1002. Maintenance of Office or Agency. . . . . . . . . . . 61
SECTION 1003. Money for Security Payments to
Be Held in Trust . . . . . . . . . . . . . . . . . 62
SECTION 1004. Statement by Officers as to
Default. . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1005. Existence. . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1006. Maintenance of Properties. . . . . . . . . . . . . . 64
SECTION 1007. Payment of Taxes and Other Claims. . . . . . . . . . 64
SECTION 1008. Additional Covenants . . . . . . . . . . . . . . . . 65
SECTION 1009. Representations and Warranties . . . . . . . . . . . 66
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 67
SECTION 1102. Payment Over of Proceeds Upon
Dissolution, Etc. . . . . . . . . . . . . . . . . 68
SECTION 1103. No Payment When Senior
Indebtedness in Default. . . . . . . . . . . . . . 70
SECTION 1104. Payment Permitted If No Default. . . . . . . . . . . 71
SECTION 1105. Subrogation to Rights of Holders
of Senior Indebtedness . . . . . . . . . . . . . . 71
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
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SECTION 1106. Provisions Solely to Define
Relative Rights. . . . . . . . . . . . . . . . . . 72
SECTION 1107. Trustee to Effectuate Subordination. . . . . . . . . 73
SECTION 1108. No Waiver of Subordination
Provisions . . . . . . . . . . . . . . . . . . . . 73
SECTION 1109. Notice to Trustee. . . . . . . . . . . . . . . . . . 73
SECTION 1110. Reliance on Judicial Order or
Certificate of Liquidating Agent . . . . . . . . . 75
SECTION 1111. Trustee Not Fiduciary for Holders
of Senior Indebtedness . . . . . . . . . . . . . . 76
SECTION 1112. Rights of Trustee as Holder of
Senior Indebtedness;
Preservation of Trustee's
Rights . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1113. Article Applicable to Paying
Agents . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1114. Conversion and Exchange
Not Deemed Payment . . . . . . . . . . . . . . . . 76
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. Conversion Rights. . . . . . . . . . . . . . . . . . . . . 77
SECTION 1202. Conversion Price Adjustments . . . . . . . . . . . . . . . 80
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
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<PAGE>
Page
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ARTICLE THIRTEEN
Redemption of Securities and Other Matters
SECTION 1301. Conditional Right of Redemption;
Mandatory Redemption . . . . . . . . . . . . . . . . . . 93
SECTION 1302. Applicability of Article . . . . . . . . . . . . . . . . . 94
SECTION 1303. Election to Redeem; Notice
to Trustee . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 1304. Notice of Redemption . . . . . . . . . . . . . . . . . . . 94
SECTION 1305. Deposit of Redemption Price. . . . . . . . . . . . . . . . 95
SECTION 1306. Securities Payable on
Redemption Date. . . . . . . . . . . . . . . . . . . . . 95
SECTION 1307. Distribution of Securities
to Preferred Members . . . . . . . . . . . . . . . . . . 95
ARTICLE FOURTEEN
Exchange
SECTION 1401. Optional Exchange for Depositary
Shares Representing Series C
Preferred Stock . . . . . . . . . . . . . . . . . . . . . 96
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . 97
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . 98
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . 99
ANNEX A: Form of Amended and Restated Limited Liability Company Agreement of
St. Paul Capital L.L.C., dated as of , 1995.
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NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
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<PAGE>
INDENTURE, dated as of , 1995, among The St. Paul Companies, Inc.,
a corporation duly organized and existing under the laws of the State of
Minnesota (herein called the "COMPANY"), having its principal office at 385
Washington Street, St. Paul, Minnesota 55102, St. Paul Capital L.L.C., a limited
liability company duly formed and existing under the laws of the State of
Delaware (herein called "ST. PAUL CAPITAL"), having its principal office at 385
Washington Street, St. Paul, Minnesota 55102 and The Chase Manhattan Bank
(National Association), a national bank, not in its individual capacity but
solely as Trustee (herein called the "TRUSTEE").
RECITALS OF THE COMPANY AND ST. PAUL CAPITAL
WHEREAS, St. Paul Capital may, pursuant to the Underwriting Agreement,
dated , 1995, among the Company, St. Paul Capital and the Underwriters named
therein, issue up to $ aggregate liquidation preference of its %
Convertible Monthly Income Preferred Securities (collectively, the "PREFERRED
SECURITIES") with a liquidation preference of $50 per Preferred Security;
WHEREAS, the Company is guaranteeing, for the benefit of the holders
of the Preferred Securities, the payment of Dividends on the Preferred
Securities (if and to the extent declared from funds of St. Paul Capital legally
available therefor), and payment of the Redemption Price and payments on
liquidation with respect to the Preferred Securities, on a subordinated basis
and to the extent provided in the Guarantee Agreement, dated , 1995, between
the Company and St. Paul Capital (the "PARENT GUARANTEE");
WHEREAS, the Company wishes to sell to St. Paul Capital, and St. Paul
Capital wishes to purchase from the Company, Securities in an aggregate
principal amount equal to the sum of (i) the capital contributed to St. Paul
Capital by the Company and St. Paul Capital Holdings, Inc., a corporation duly
organized and existing under the laws of the State of Delaware ("ST. PAUL
HOLDINGS"), as the Managing Members thereof (the "MANAGING MEMBERS
CONTRIBUTION"), and (ii) the aggregate Liquidation Preference of the Preferred
Securities issued and sold by St. Paul Capital pursuant to the Underwriting
Agreement, less $ , which is equal to 1% of such sum;
WHEREAS, so long as St. Paul Capital is a Holder of Securities and any
Preferred Securities are outstanding, the L.L.C. Agreement provides that (i) the
holders of Preferred Securities may, on or before the Conversion Expiration
Date, cause the Conversion Agent to (a) exchange
<PAGE>
such Preferred Securities for Securities held by St. Paul Capital and
(b) immediately convert such Securities into Common Stock and (ii) under certain
circumstances the holders of Preferred Securities may cause the Conversion Agent
to (a) exchange such Preferred Securities for Securities held by St. Paul
Capital and (b) immediately exchange such Securities for Depositary Shares, each
representing a 1/ th interest in a share of Series C Preferred Stock;
WHEREAS, the Company has duly authorized the creation of an issue of
its % Convertible Subordinated Debentures Due (the "SECURITIES"), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) unless otherwise defined herein, all capitalized items used
herein shall have the meanings ascribed to them in the Amended and Restated
Limited Liability Company Agreement of St. Paul Capital, dated as of ,
1995 (the "L.L.C. AGREEMENT"), as in
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<PAGE>
effect on the date hereof, the form of which is attached as Annex A hereto.
(2) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(3) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"ACT", when used with respect to any Holder, has the meaning specified
in Section 104.
"ADDITIONAL DIVIDENDS" means dividends which shall accumulate on any
dividend arrearages in respect of the Preferred Securities at the rate of %
per annum compounded monthly.
"ADDITIONAL INTEREST" means interest which shall accrue on any
interest on the Securities that is not paid when due or not paid during an
extension of an interest payment period, which in either case shall accrue at
the rate of % per annum compounded monthly.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the
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<PAGE>
ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
"APPLICABLE PRICE" has the meaning specified in Section 1202.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any duly authorized committee of that board.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a day on which banking
institutions in The City of New York are authorized or obligated by law or
executive order to close.
"CAPITAL LEASE OBLIGATION" of any Person means the obligation to pay
rent or make other payments under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"CLOSING PRICE" has the meaning specified in Section 1202.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"COMMON SECURITIES" means the common limited liability company
interests in St. Paul Capital, all of which are owned by the Managing Members.
"COMMON STOCK" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or
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<PAGE>
involuntary liquidation, dissolution or winding-up of the Company and which is
not subject to redemption by the Company. However, subject to the provisions of
Article 12, shares issuable on conversion of Securities shall include only
shares of the class designated as Common Stock of the Company at the date of
this instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; PROVIDED that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"COMMON STOCK FUNDAMENTAL CHANGE" has the meaning specified in Section
1202.
"COMPANY" has the meaning specified in the Preamble to this instrument
until a successor Person shall have become such pursuant to the applicable
provisions of this Indenture, whereupon and thereafter "Company" shall mean such
successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"CONVERSION AGENT" means the Person appointed under the L.L.C.
Agreement to act on behalf of the holders of Preferred Securities in effecting
(i) the conversion of Preferred Securities into Common Stock of the Company as
and in the manner set forth in the L.L.C. Agreement and Section 1201 hereof and
(ii) the exchange of Preferred Securities for Depositary Shares representing
Series C Preferred Stock as and in the manner set forth in the L.L.C. Agreement
and Section 1401 hereof.
"CONVERSION DATE" has the meaning specified in Section 1201.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee in
The City of New York, at which at
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<PAGE>
any particular time its corporate trust business in such City may be
administered. At the date hereof, such office is located at 4 Chase Metrotech
Center, Brooklyn, New York 11245, Attention: Corporate Trust Administration.
"CORPORATION" means a corporation, association, company, joint-stock
company or business trust.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE DATE" has the meaning specified in Section 1401.
"EXCHANGE ELECTION" means the election by Preferred Members holding a
majority of the aggregate Liquidation Preference of Preferred Securities then
outstanding, upon an Exchange Event, to cause the Conversion Agent to
(i) exchange the Preferred Securities for Securities held by St. Paul Capital
and (ii) immediately exchange such Securities for Depositary Shares, each
representing a one-one hundredth (1/ th) interest in a share of Series C
Preferred Stock.
"EXCHANGE EVENT" means failure of Holders of Preferred Securities
(including any such failure following an election by St. Paul to extend interest
payments on the Securities in accordance with their terms) to receive, for 15
consecutive months the full amount of dividend payments (including Additional
Dividends) accumulated on the Preferred Securities.
"EXPIRATION TIME" has the meaning specified in Section 1202.
"FUNDAMENTAL CHANGE" has the meaning specified in Section 1202.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Indebtedness of the
payment of such Indebtedness, or (iii) to maintain working capital, equity
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<PAGE>
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness (and
"GUARANTEED", "GUARANTEEING" and "GUARANTOR" shall have meanings correlative to
the foregoing); PROVIDED, HOWEVER, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Indebtedness or other obligation
as a liability on the balance sheet of such Person (and "INCURRENCE",
"INCURRED", "INCURRABLE" and "INCURRING" shall have meanings correlative to the
foregoing); PROVIDED, HOWEVER, that a change in generally accepted accounting
principles that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness.
"INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person,
(i) all Indebtedness described in clauses (i)-(ix) of the definition of Senior
Indebtedness (all references to St. Paul in such definition being deemed to
refer to such Person) and (ii) the maximum fixed redemption or repurchase price
of Redeemable Interests of such Person at the time of determination.
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"INTEREST PAYMENT DATE" means the Stated Maturity of each installment
of interest on the Securities, which shall be on the last day of each calendar
month of each year commencing , 1995 until the principal of the Securities
is paid.
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<PAGE>
"JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section
1102.
"L.L.C. AGREEMENT" has the meaning specified in Section 101(1).
"MANAGING MEMBERS" means the Company and St. Paul Holdings, in their
capacity as the members of St. Paul Capital which hold all of St. Paul Capital's
outstanding Common Securities.
"MANAGING MEMBERS CONTRIBUTION" has the meaning specified in the
Recitals to this instrument.
"MATURITY", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"NON-STOCK FUNDAMENTAL CHANGE" has the meaning specified in Section
1202.
"NOTICE OF CONVERSION" means the notice to be given by a Preferred
Member to the Conversion Agent directing the Conversion Agent to exchange
Preferred Securities held by such Preferred Member for Securities and to convert
such Securities into Common Stock of the Company on behalf of such Preferred
Member.
"NOTICE OF EXCHANGE" has the meaning specified in Section 1401(a).
"NUVEEN" means The John Nuveen Company, a Delaware corporation, and
its consolidated subsidiaries.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, and who shall, and which opinion shall, be acceptable
to the Trustee.
"OUTSTANDING", when used with respect to Securities, means, as of the
date of determination, all Securities
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<PAGE>
theretofore authenticated and delivered under this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; PROVIDED that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section
306, converted into Common Stock pursuant to Section 1201, exchanged
for Series C Preferred Stock pursuant to Section 1401 or in exchange
for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a BONA FIDE
purchaser in whose hands such Securities are valid obligations of the
Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
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<PAGE>
"PARENT GUARANTEE" has the meaning specified in the Recitals to this
instrument.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"PAYMENT BLOCKAGE PERIOD" has the meaning specified in Section 1103.
"PERSON" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"PREFERRED SECURITIES" has the meaning specified in the Recitals to
this instrument.
"PROCEEDING" has the meaning specified in Section 1102.
"PURCHASED SHARES" has the meaning specified in Section 1202.
"PURCHASER STOCK PRICE" has the meaning specified in Section 1202.
"REDEEMABLE INTEREST" of any Person means any equity security of or
other ownership interest in such Person which by its terms or otherwise is
required to be redeemed prior to the Stated Maturity of the principal of the
Securities or is or may be redeemable at the option of the holder thereof at any
time prior to the Stated Maturity of the principal of the Securities; PROVIDED,
HOWEVER, that any such interest which is redeemable solely for any equity
security of or other ownership interest in such Person that by its terms or
otherwise is not required to be redeemed prior to the Stated Maturity of the
principal of the Securities shall not constitute a Redeemable Interest.
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"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which such Security may be redeemed pursuant to
this Indenture.
"REFERENCE DATE" has the meaning specified in Section 1202.
"REFERENCE MARKET PRICE" has the meaning specified in Section 1202.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date means the Business Day next preceding such Interest Payment Date.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means
any vice president, assistant secretary, assistant treasurer, assistant cashier,
trust officer or assistant trust officer or other officer of the Trustee
assigned to the Corporate Trust Office, customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"RIGHTS" has the meaning specified in Section 1201(g).
"RIGHTS AGREEMENT" means the Shareholders Protection Rights Agreement,
dated as of December 4, 1989, between the Company and First Chicago Trust
Company of New York, as Rights Agent, as such agreement may be from time to time
amended.
"SECURITIES" has the meaning specified in the Recitals to this
instrument.
"SECURITIES PAYMENT" has the meaning specified in Section 1102.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
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"SENIOR INDEBTEDNESS" means the principal of, premium, if any,
interest on and any other payment due pursuant to any of the following, whether
Incurred on or prior to the date hereof or hereafter Incurred:
(i) all obligations of the Company for money borrowed;
(ii) all obligations of the Company evidenced by notes,
debentures, bonds or other similar instruments, including obligations
Incurred in connection with the acquisition of property, assets or
businesses;
(iii) all Capital Lease Obligations of the Company;
(iv) all reimbursement obligations of the Company with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of the Company;
(v) all obligations of the Company issued or assumed as the
deferred purchase price of property or services, including all obligations
under master lease transactions pursuant to which the Company or any of its
subsidiaries have agreed to be treated as owner of the subject property for
federal income tax purposes (but excluding trade accounts payable, accrued
liabilities resulting from the sale of extended service plans, or accrued
liabilities arising in the ordinary course of business);
(vi) all payment obligations of the Company under interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements at the time of determination, including any such obligations
Incurred by the Company solely to act as a hedge against increases in
interest rates that may occur under the terms of other outstanding variable
or floating rate Indebtedness of the Company;
(vii) all obligations of the Company under secured inventory
financing credit lines;
(viii) all obligations of the type referred to in clauses (i)
through (vii) above of another Person and all dividends of another Person
the payment of which, in either case, the Company has assumed or Guaranteed
or for which the Company is responsible or liable,
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directly or indirectly, jointly or severally, as obligor, Guarantor or
otherwise;
(ix) all compensation and reimbursement obligations of the
Company pursuant to Section 607; and
(x) all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings by the Company of any such
Indebtedness referred to in clauses (i) through (ix) above (and of any
such amended, modified, renewed, extended, refinanced, refunded or replaced
Indebtedness);
PROVIDED, HOWEVER, that the following shall not constitute Senior Indebtedness:
(A) any Indebtedness owed to a Person when such Person is a Subsidiary of the
Company, (B) any Indebtedness which by the terms of the instrument creating or
evidencing the same expressly provides that it is not superior in right of
payment to the Securities, or (C) any Indebtedness to the extent Incurred in
violation of this Indenture. For purposes of this definition, "INDEBTEDNESS"
includes any obligation to pay principal, premium (if any), interest, penalties,
reimbursement or indemnity amounts, fees and expenses (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for post-petition
interest is allowed in such proceeding). Any Senior Indebtedness shall continue
to be Senior Indebtedness and entitled to the benefits of the subordination
provisions of Article Eleven irrespective of any amendment, modification or
waiver of any term of such Senior Indebtedness.
"SENIOR NONMONETARY DEFAULT" has the meaning specified in Section
1103.
"SENIOR PAYMENT DEFAULT" has the meaning specified in Section 1103.
"SERIES C PREFERRED STOCK" means the Series C Cumulative Convertible
Preferred Stock par value $ per share, of the Company having a liquidation
preference of $50 per share.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"ST. PAUL CAPITAL" has the meaning specified in the Preamble to this
instrument.
"ST. PAUL HOLDINGS" has the meaning specified in the Recitals to this
instrument.
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"STATED MATURITY", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Additional Interest), of such Security or such installment
of interest is due and payable.
"SUBSIDIARY" means a corporation, more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company (or by
one or more other Subsidiaries or by the Company and one or more other
Subsidiaries), except Nuveen. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
"TRADING DAY" has the meaning specified in Section 1202.
"TRUSTEE" means the Person named as the "Trustee" in the Preamble to
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, whereupon and thereafter "Trustee"
shall mean such successor Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"VICE PRESIDENT", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture or under the Trust Indenture Act relating to
the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, and such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with
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the requirements of the Trust Indenture Act and any other requirement set forth
in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a
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certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
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(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to
any record date, only the Holders on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE, COMPANY AND ST. PAUL CAPITAL.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration,
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
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addressed to it at the address of its principal office specified in the
Preamble to this instrument, Attention: James L. Boudreau, Vice President
& Treasurer or at any other address previously furnished in writing to
the Trustee by the Company, or
(3) St. Paul Capital by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to St.
Paul Capital addressed to it at the address of its principal office
specified in the Preamble to this instrument, Attention: James L. Boudreau
or at any other address previously furnished in writing to the Trustee by
St. Paul Capital.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
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SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or St.
Paul Capital shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
The Company's obligations under this Indenture and the Securities have
been entered into for the benefit of the holders from time to time of the
Preferred Securities. Such holders are made obligees hereunder and any one or
more of them, or a Special Trustee appointed pursuant to the L.L.C. Agreement,
may enforce such provisions for such holders' benefit. Nothing in this
Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the holders of
Senior Indebtedness, the holders of Preferred Securities and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
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SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or conversion of the Securities need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
or on such last day for conversion, PROVIDED that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. FORMS GENERALLY.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The definitive Securities shall be typewritten, word processed,
printed, lithographed or engraved or produced by any combination of these or
other methods, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
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SECTION 202. FORM OF FACE OF SECURITY.
THE ST. PAUL COMPANIES, INC.
% Convertible Subordinated Debentures
Due
No._________ $___________
The St. Paul Companies, Inc., a corporation duly organized and
existing under the laws of the State of Minnesota (herein called "ST. PAUL",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
_____________________________, or registered assigns, the principal sum of
_________ Dollars on the earliest of (i) or (ii) the earliest date upon
which St. Paul Capital L.L.C. ("ST. PAUL CAPITAL") is dissolved, wound up,
liquidated or terminated, and to pay interest thereon at the rate of % per
annum, from , 1995 or from the most recent Interest Payment Date to which
interest has been paid, payable monthly, in arrears, on the last day of each
calendar month of each year (each an "INTEREST PAYMENT DATE"), commencing ,
1995, until the principal hereof is paid or made available for payment.
Interest will compound monthly and will accrue at the rate of % per annum on
any interest installment that is not paid at the end of any monthly interest
period or when otherwise due or during an extension of an interest payment
period as set forth below ("ADDITIONAL INTEREST"). The amount of interest
payable for any period will be computed on the basis of twelve 30-day months and
a 360-day year and, for any period shorter than a full monthly interest period,
will be computed on the basis of the actual number of days elapsed in such
period. In the event that any date on which interest is payable on this
Security is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. A "BUSINESS DAY" shall mean any
day other than a day on which banking institutions in The City of New York are
authorized or required by law to close. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the Business Day next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or
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more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the Business Day
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Securities not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
St. Paul shall have the right at any time and from time to time during
the term of this Security to extend any interest payment period for up to 60
months, during which extended interest payment period interest will compound
monthly and St. Paul shall have the right to make partial payments of interest
on any Interest Payment Date, and at the end of which extended interest payment
period St. Paul shall pay all interest then accrued and unpaid (including
Additional Interest), except as provided in the next sentence; PROVIDED that
during any such extended interest payment period neither St. Paul nor any direct
or indirect majority-owned subsidiary of St. Paul (except certain subsidiaries
named in the Indenture) may declare or pay any dividend on, or redeem, purchase,
acquire for value or make a liquidation payment with respect to, any of its
common or preferred stock (other than as a result of a reclassification of such
common or preferred stock or the exchange or conversion of one class or series
of common or preferred stock for another class or series of common or preferred
stock), or make any guarantee payments with respect to the foregoing (other than
payments under the Parent Guarantee or dividends or guarantee payments to St.
Paul from a direct or indirect majority-owned subsidiary of St. Paul). Prior to
the end of any such extended interest payment period, St. Paul may further
extend such extended interest payment period, PROVIDED that such extended
interest payment period together with all such further extensions thereof may
not exceed 60 months, nor may such extended interest payment period extend the
Stated Maturity of this Security. After St. Paul has paid all accrued and
unpaid interest (including Additional Interest) following any extended interest
payment period, it may again extend interest payment periods for up to 60
months, subject to the
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preceding sentence. St. Paul shall give the Holder of this Security and the
Trustee notice of its selection of an extended interest payment period five
Business Days prior to the first scheduled Interest Payment Date on which the
scheduled interest payment shall be deferred pursuant to such selection and, if
St. Paul Capital is the Holder of this Security, no later than the last date on
which St. Paul Capital would be required to notify the New York Stock Exchange
of the record or payment date of the related dividend payment on the %
Convertible Monthly Income Preferred Securities of St. Paul Capital.
Payment of the principal of and interest on this Security will be made
at the office or agency of St. Paul maintained for that purpose in The City of
New York, 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 St. Paul payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
Reference is hereby made to the further provisions of the Indenture
summarized 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
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, St. Paul has caused this instrument to be duly
executed under its corporate seal.
Dated: ___________ __, 1995
THE ST. PAUL COMPANIES, INC.
By: __________________________
Name:
Title:
Attest:_____________________
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SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of Securities of St.
Paul, designated as its % Convertible Subordinated Debentures Due (herein
called the "SECURITIES"), limited in aggregate principal amount to $ ,
issued and to be issued under an Indenture, dated as of , 1995 (herein
called the "INDENTURE"), among The St. Paul Companies, Inc., a Minnesota
corporation ("ST. PAUL"), St. Paul Capital L.L.C., a Delaware limited liability
company ("ST. PAUL CAPITAL") and The Chase Manhattan Bank (National
Association), not in its individual capacity but solely as Trustee (herein
called the "TRUSTEE", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of St. Paul, St. Paul Capital, the Trustee,
the Holders of the Securities, the holders of Preferred Securities and the
holders of Senior Indebtedness and of the terms upon which the Securities are,
and are to be, authenticated and delivered. All terms used in this Security
which are defined in the Indenture shall have the respective meanings assigned
to them in the Indenture. All terms used in this Security which are not defined
in the Indenture but are defined in the form of L.L.C. Agreement (as executed by
the parties thereto, the "L.L.C. AGREEMENT") attached as Annex A thereto shall
have the respective meanings assigned to them in such form of L.L.C. Agreement.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of the Securities 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 St.
Paul and St. Paul Capital and the rights of the Holders of the Securities
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under the Indenture at any time by St. Paul, St. Paul Capital and the Trustee
with the consent of the Holders of 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding and while the Preferred Securities are
outstanding, the consent of holders of 66-2/3% in aggregate Liquidation
Preference of the Preferred Securities. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
Subject to and upon compliance with the provisions of the Indenture
and the L.L.C. Agreement, the Securities and any accrued and unpaid interest
thereon are convertible at any time on or before the close of business on the
date of their Stated Maturity at the option of the Holder into fully paid and
nonassessable shares of Common Stock of St. Paul at an initial conversion price
of $ aggregate principal amount of Securities per share of Common Stock of
St. Paul, subject to adjustment as provided for in the Indenture. The Holder of
the Securities will be entitled to receive the interest payable on the
Securities on the Interest Payment Date notwithstanding the conversion thereof
on or after the Regular Record Date immediately preceding such Interest Payment
Date and on or prior to such Interest Payment Date. Except as otherwise provided
in the immediately preceding sentence, in the case of any Security which is
converted, interest whose Stated Maturity is after the date of conversion of
such Security shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest on the Securities being converted. Each conversion
will be deemed to have been effected immediately prior to the close of business
on the day on which notice was received by the Conversion Agent from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the L.L.C. Agreement and as provided in the Indenture.
No fractional shares of the Common Stock of St. Paul will be issued as a result
of conversion, but in lieu thereof, such fractional interest will be paid in
cash by St. Paul.
In the event that, following the Conversion Expiration Date (as
defined in the Indenture), less than 5% of the original aggregate principal
amount of the Securities remain Outstanding, such Securities shall be subject to
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redemption at the option of St. Paul upon not less than 30 days' nor more than
60 days' notice, at a Redemption Price equal to 100% of the principal amount of
such Securities, together with accrued and unpaid interest (including Additional
Interest) to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of record of such Securities at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture. The
Company has covenanted to exercise such right to redeem if St. Paul Capital
redeems its Preferred Securities.
The Securities and any accrued and unpaid interest thereon are
exchangeable (in whole but not in part) at the request of the Holders of the
Securities following the occurrence of an Exchange Event at the Exchange Price
for Depositary Shares, each representing a fractional interest in a share of
St. Paul Series C Preferred Stock as provided under the terms of the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of St. Paul, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed or to convert or exchange this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of St. Paul in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to St. Paul
and the Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $ and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
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No service charge shall be made for any such registration of transfer
or exchange, but St. Paul may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, St. Paul, the Trustee and any agent of St. Paul or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither St. Paul,
the Trustee nor any such agent shall be affected by notice to the contrary.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
_________________________,
AS TRUSTEE
By: _______________________
AUTHORIZED OFFICER
ARTICLE THREE
The Securities
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $ , except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to Section 304, 305,
306, 906 or 1201.
The Securities shall be known and designated as the " % Convertible
Subordinated Debentures Due " of the Company. Their Stated Maturity shall be
the earliest of or the date upon which St. Paul Capital is dissolved, wound-
up, liquidated or terminated, and they shall bear interest at the rate of %
per annum, from , 1995 or from the most recent Interest Payment Date to
which interest has been
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paid, as the case may be, payable monthly, in arrears, on the last day of each
calendar month of each year, commencing , 1995 until the principal thereof
is paid or made available for payment. Interest will compound monthly and will
accrue at the rate of % per annum on any interest installment that is not
paid at the end of any monthly interest period or when otherwise due or during
an extension of an interest payment period as set forth below in this Section
301. In the event that any date on which interest is payable on the Securities
is not a Business Day, then a payment of the interest payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
The Company shall have the right, at any time and from time to time
during the term of the Securities, to extend any interest payment period for up
to 60 months, provided that during the period of any such extension, interest
will continue to accrue and compound monthly. The Company shall have the right
to make partial payments of interest during any such extended interest payment
period. At the end of any such extended interest payment period, the Company
shall pay all interest then accrued and unpaid (together with Additional
Interest thereon). Prior to the end of any such extended interest payment
period, the Company may further extend the interest payment period, PROVIDED
that such extended interest payment period together with all such further
extensions thereof may not exceed 60 months and PROVIDED, FURTHER, that no
extended interest payment period shall extend the Stated Maturity of the
Securities. After the Company has paid all accrued and unpaid interest
(including Additional Interest) following any extended interest payment period,
it may again extend interest payment periods for up to 60 months, subject to the
preceding sentence. The Company shall give the Holders of the Securities and
the Trustee written notice of its selection of an extended interest payment
period five Business Days prior to the first scheduled Interest Payment Date on
which the scheduled interest payment shall be deferred pursuant to such
selection and, if St. Paul Capital is the Holder of the Securities, no later
than the last date on which St. Paul Capital would be required to notify the
New York Stock Exchange of the record or payment date of the related dividend
payment on the Preferred Securities. In addition, at any time when any
Preferred Securities are outstanding, the Company shall give St. Paul Capital
notice of its selection of an extended interest payment period at least
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one Business Day prior to the earlier of (i) the Interest Payment Date and (ii)
the date St. Paul Capital is required to give notice of the record or payment
date of any Dividend payable on the Preferred Securities to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Preferred Securities, but in any event not less than two Business Days prior to
such record date. The Company, as one of the Managing Members of St. Paul
Capital, shall give notice of the Company's selection of an extended interest
payment period to the holders of the Preferred Securities.
The principal of and interest on the Securities shall be payable at
the office or agency of the Company in The City of New York maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose; PROVIDED, HOWEVER, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Security
Register.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Eleven.
The Securities shall be convertible as provided in Article Twelve.
The Securities shall be redeemable as provided in Article Thirteen.
The Securities shall be exchangeable as provided in Article Fourteen.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $50 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents,
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under its corporate seal reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive
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Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at any office or agency of
the Company designated pursuant to Section 1002, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "SECURITY REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "SECURITY REGISTRAR" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
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Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1201 not involving any transfer.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
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Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
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prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and, if so
listed, upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue (including in each such case Additional Interest),
which were carried by such other Security.
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In the case of any Security which is converted on or after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 307) interest (including Additional Interest) on such Security and for
all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it in accordance with its customary practices. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee in accordance with its customary practices. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture.
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SECTION 310. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months and, for any period shorter than a full monthly
interest period, shall be computed on the basis of the actual number of days
elapsed in such period.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
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(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal and interest (including
Additional Interest) to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying
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Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to Section 401 (and
held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Eleven or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) failure to pay any principal of the Securities when due;
(2) failure to pay any interest on the Securities, including any
Additional Interest, when due and such failure continues for a period
of 10 days; PROVIDED that a valid extension of the interest payment
period by the Company pursuant to this Indenture shall not constitute
a default in the payment of interest for this purpose;
(3) failure by the Company to issue and deliver the Series C
Preferred Stock or Common Stock of the Company upon an election to
convert the Securities for Common Stock or exchange the Securities for
Depositary Shares representing Series C Preferred Stock;
(4) failure by the Company to perform in any material respect
any other covenant herein for the benefit of the holders of Securities
continued for
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a period of 60 days (or, in the case of a failure by the Company to
perform in any material respect the covenant set forth in Section 1008
hereof, 10 days) after written notice to the Company from any Holder
of the Securities or any holder of Preferred Securities;
(5) the dissolution, winding up, liquidation or termination of
St. Paul Capital;
(6) entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or St. Paul
Capital in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or St. Paul
Capital a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or St. Paul Capital under
any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or St. Paul Capital or of any substantial part
of the property of either, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(7) the commencement by the Company or St. Paul Capital of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by either the Company or St. Paul Capital to the entry of
a decree or order for relief in respect of itself in an involuntary
case or proceeding under any applicable
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Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against either the Company or St. Paul Capital, or
the filing by either of them of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State
law, or the consent by either the Company or St. Paul Capital to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or St. Paul Capital or of any
substantial part of the property of either of them, or the making by
either of them of an assignment for the benefit of creditors, or the
admission by either of them in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action
by the Company or St. Paul Capital in furtherance of any such action.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have the right to declare the
principal of and the interest on all the Securities (including any Additional
Interest) and any other amounts payable hereunder to be due and payable and to
enforce the Holders' other rights as creditors with respect to the Securities
then Outstanding, PROVIDED, HOWEVER, that if upon an Event of Default, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
outstanding Securities fail to declare the payment of all amounts on the
Securities to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Preference of Preferred Securities then outstanding shall
have such right, by a notice in writing to the Company (and to the Trustee if
given by Holders or the holders of Preferred Securities) and to enforce any and
all other rights of Holders of Securities as creditors with respect to the
Securities. Upon any such declaration such principal and all accrued interest
shall become immediately due and payable.
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The Company expressly acknowledges that, under the L.L.C. Agreement,
the holders of outstanding Preferred Securities shall have the right to appoint
a Special Trustee, which Special Trustee shall be authorized to exercise the
right of the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities to accelerate the principal amount of the Securities
and to enforce the Holders' other rights hereunder and under the Securities.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including any Additional Interest) on
all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
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No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Additional Interest) on any Security when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of any Security
at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including any Additional Interest), and,
to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest (including any Additional
Interest), at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the
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Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Eleven, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal or interest (including any Additional Interest), upon presentation
of the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
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FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Interest) on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
and interest (including any Additional Interest), respectively.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL
AND INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest
(including any Additional Interest) on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to convert such Security in accordance with Article Twelve
and to institute suit for the enforcement of any such payment and right to
convert, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition
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to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or interest (including any
Additional Interest) on any Security; or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the
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consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to receive the principal of and interest (including any
Additional Interest) on any Security, convert any Security in accordance with
Article Twelve or exchange any Security in accordance with Article Fourteen.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder of
which a Responsible Officer has actual knowledge as and to the extent provided
by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default
of the character specified in Section 501(4), no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively act and rely as to the truth of the
statements and the correctness of the opinions expressed in, and shall be
protected in acting or relying or refraining from acting upon any
resolution, Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
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(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may, but shall be under no
obligation to, make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees and the Trustee shall not be responsible
for the supervision of, or any misconduct or negligence on the part of any
agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(h) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Indenture;
(i) in the event that the Trustee is also acting as Authenticating
Agent, Paying Agent or Security Registrar hereunder, the rights and
protections afforded to the Trustee pursuant to this Article Six shall also
be afforded to such Authenticating Agent, Paying Agent and Security
Registrar.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof. The
Trustee shall not be responsible for the statements relating to the Securities
or the Indenture in any registration statement, filing or document filed with
the Commission relating to the Securities.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar, any Conversion Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Paying Agent, Security
Registrar, Conversion Agent or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation
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shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable bankruptcy, insolvency or other similar law.
The obligations of the Company set forth in this Section 607 shall
survive the termination of this Indenture and the repayment of the securities
whether at the Stated Maturity or otherwise.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person which is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall
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resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 610. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may at the expense of the
Company petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a BONA FIDE
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others
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similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
(g) The resignation or removal of a Trustee pursuant to this Section
610 shall not affect the obligation of the Company to indemnify the Trustee
pursuant to Section 607 in connection with the exercise or performance by the
Trustee prior to its resignation or removal of any of its powers or duties
hereunder.
(h) The Trustee under this Indenture shall not be liable for any
action or omission of any successor Trustee.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; PROVIDED that, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and
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certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
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(a) semiannually, not later than and in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses
of the Holders as of a date not more than 15 days prior to the delivery
thereof, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
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(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; PROVIDED that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
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of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest (including any Additional
Interest) on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Section 1201 and exchange rights in accordance with Section 1401;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) such consolidation or merger or conveyance, transfer or lease of
properties or assets of the Company is permitted under, and does not give
rise to any breach or violation of, the L.L.C. Agreement or the Parent
Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
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Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, St. Paul Capital, when authorized by a written action of the
Managing Members, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Company, St. Paul Capital and the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 1201; or
(5) to make provision with respect to the exchange rights of Holders
pursuant to the requirements of Section 1401; or
(6) to cure any ambiguity, to correct or supplement any provision
herein which may
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be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, PROVIDED that such action pursuant to this clause (6) shall not
adversely affect the interests of the Holders or, so long as any of the
Preferred Securities shall remain outstanding, the holders of the Preferred
Securities.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, St.
Paul Capital, when authorized by written action of the Managing Members, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of
interest thereon, or change the place of payment where, or the coin or
currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect the
right to convert any Security as provided in Article Twelve (except as
permitted by Section 901(4)), or adversely affect the right to
exchange any Security as provided in Article Fourteen (except as
permitted by Section 901(5)), or modify the provisions of this
Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders,
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(2) reduce the percentage of aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby;
PROVIDED, that, so long as any of the Preferred Securities remains outstanding,
no such amendment shall be made that adversely affects the holders of the
Preferred Securities, and no termination of this Agreement shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Agreement shall be effective, without the prior consent of the holders of at
least 66-2/3% of the aggregate Liquidation Preference of the Preferred
Securities then outstanding unless and until the Subordinated Debentures and all
accrued and unpaid interest (including any Additional Interest) thereon have
been paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and interest
on the Securities in accordance with the terms of the Securities and this
Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
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may be surrendered for conversion or exchange and where notices and demands to
or upon the Company in respect of the Securities and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside The City of New York) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; PROVIDED, HOWEVER, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
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such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
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SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any Subsidiary;
PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
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SECTION 1008. ADDITIONAL COVENANTS.
The Company agrees that neither it nor any of its Subsidiaries will
declare or pay any dividend on, or redeem, purchase, acquire for value or make a
liquidation payment with respect to, any of its Common Stock or preferred stock
(other than as a result of a reclassification of such Common Stock or preferred
stock or the exchange or conversion of one class or series of Common Stock or
preferred stock for another class or series of Common Stock or preferred stock),
or make any guarantee payments with respect to the foregoing (other than
payments under the Parent Guarantee or dividends or guarantee payments to the
Company from a Subsidiary) if at such time (a) there shall have occurred any
event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default hereunder or under the Securities, (b) the
Company shall be in default with respect to its payment or other obligations
under the Parent Guarantee or (c) the Company shall have given notice of its
selection of an extended interest payment period as provided herein and such
period, or any extension thereof, shall be continuing. The Company also
covenants for the benefit of the Holders that, so long as any of the Preferred
Securities remains outstanding, it shall (i) not cause or permit any Common
Securities of St. Paul Capital to be transferred, (ii) maintain direct or
indirect ownership of all outstanding securities of St. Paul Capital other than
(x) the Preferred Securities and (y) any other securities issued by St. Paul
Capital (other than the Common Securities) so long as the issuance thereof to
persons other than the Company or any of its Subsidiaries would not cause
St. Paul Capital to become an "investment company" required to be registered
under the Investment Company Act of 1940, as amended, (iii) cause at least 21%
of the total value of St. Paul Capital and at least 21% of all interests in the
capital, income, gain, loss, deduction and credit of St. Paul Capital to be
represented by Common Securities, (iv) not voluntarily dissolve, wind up or
liquidate St. Paul Capital (other than in connection with the exchange of all
Preferred Securities outstanding for Depositary Shares) or either of the
Managing Members, (v) cause the Company and St. Paul Capital Holdings, Inc. to
remain the Managing Members of St. Paul Capital and timely perform all of their
respective duties as Managing Members of St. Paul Capital (including the duty to
declare and pay dividends on the Preferred Securities), (vi) use reasonable
efforts to cause St. Paul Capital to remain a limited liability company and
otherwise continue to be treated as a partnership for U.S. federal income tax
purposes; PROVIDED that, notwithstanding the foregoing, the Company may permit
St. Paul Capital to consolidate or merge with or into or convey, transfer or
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lease its properties and assets substantially as an entirety to another Person
upon the terms and subject to the conditions set forth in the L.L.C. Agreement,
and (vii) issue Series C Preferred Stock in the form of Depositary Shares or
Common Stock upon an election by Holders to exchange or convert the Securities.
The Company also covenants that so long as any Securities are held by
St. Paul Capital, the Managing Members shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Special
Trustee, or exercise any trust or power conferred on the Special Trustee with
respect to the Securities, (ii) waive any past default which is not waivable
under this Agreement, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Securities shall be due and payable, or (iv)
consent to any amendment, modification or termination of the Securities or of
this Indenture without, in each case, obtaining the prior approval of the
holders of at least 66 2/3% or more of the aggregate liquidation preference of
the Preferred Securities then outstanding, PROVIDED, HOWEVER, that where a
consent under the Securities would require the consent of each holder affected
thereby, no such consent shall be given by the Managing Members without the
prior consent of each holder of the Preferred Securities. The Managing Members
shall not revoke any action previously authorized or approved by a vote of
Preferred Securities, without the approval of the holders of Preferred
Securities representing 66 2/3% or more of the aggregate liquidation preference
of the Outstanding Preferred Securities.
SECTION 1009. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants that:
(a) It is a corporation, validly existing and in good standing under
the laws of the State of Minnesota, with all power and authority (corporate
and other) to own its properties and conduct its business as now being
conducted.
(b) It has full power and authority to enter into this Indenture and
to incur and perform the obligations provided for herein, all of which have
been duly authorized by all proper and necessary corporate action.
(c) The execution and delivery of this Indenture and the performance
by the Company of all its obligations hereunder will not conflict with or
result
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in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, fiscal agency agreement or other agreement or instrument to
which the Company is a party or by which the Company is bound or subject,
nor will this Indenture result in a violation of the provisions of the
Company's Certificate of Incorporation or By-laws.
(d) This Indenture and the Securities have been duly authorized,
executed and delivered by the Company and constitute the valid and legally
binding obligation of the Company enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article (subject to Article Four),
the payment of the principal of and interest (including any Additional Interest)
on each and all of the Securities are hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash of all Senior
Indebtedness.
This Article Eleven shall constitute a continuing offer to all persons
who become holders of, or continue to hold, Senior Indebtedness, and such
provisions are made for the benefit of the holders of Senior Indebtedness and
such holders are made obligees hereunder and any one or more of them may enforce
such provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
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SECTION 1102. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment or distribution of assets of the Company to creditors
upon (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets or liabilities of
the Company, then and in any such event specified in (a), (b) or (c) above (each
such event, if any, herein sometimes referred to as a "PROCEEDING");
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due on or to become due on or in
respect of all Senior Indebtedness, before the Holders of the Securities
are entitled to receive any payment or distribution of any kind or
character whether in cash, property or securities (including any payment or
distribution which may be payable or deliverable to Holders of the
Securities made in respect of any other Indebtedness of the Company
subordinated to the payment of the Securities, such payment or distribution
being hereinafter referred to as a "JUNIOR SUBORDINATED PAYMENT"), on
account of the principal of or interest on the Securities or on account of
any purchase, redemption or other acquisition of Securities by the Company,
any Subsidiary of the Company, the Trustee or any Paying Agent (all such
payments, distributions, purchases, redemptions and acquisitions, whether
or not in connection with a Proceeding, herein referred to, individually
and collectively, as a "SECURITIES PAYMENT"); and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders of the Securities or the Trustee would be
entitled but for the provisions of this Article (including, without
limitation, any Junior Subordinated Payment) shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or
their representative or representatives or to the trustee or
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trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness
held or represented by each, to the extent necessary to make payment in
full in cash of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received in
connection with any Proceeding any Securities Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Securities Payment shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash
after giving effect to any concurrent payment to or for the holders of Senior
Indebtedness.
For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Company provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight.
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SECTION 1103. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
In the event that any Senior Payment Default (as defined below) shall
have occurred, then no Securities Payment shall be made, nor shall any property
of the Company or any Subsidiary of the Company be applied to the purchase,
acquisition, retirement or redemption of the Securities, unless and until such
Senior Payment Default shall have been cured or waived in writing or shall have
ceased to exist or all amounts then due and payable in respect of such Senior
Indebtedness (including amounts that have become and remain due by acceleration)
shall have been paid in full in cash. "SENIOR PAYMENT DEFAULT" means any
default in the payment of principal of (or premium, if any) or interest on any
Senior Indebtedness when due, whether at the stated maturity of any such payment
or by declaration of acceleration, call for redemption, mandatory payment or
prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by the Company and
the Trustee of written notice of such Senior Nonmonetary Default from the holder
of such Senior Indebtedness (or the agent, trustee or representative thereof),
no Securities Payment shall be made, nor shall any property of the Company or
any Subsidiary of the Company be applied to the purchase, acquisition,
requirement or redemption of the Securities, during the period (the "PAYMENT
BLOCKAGE PERIOD") commencing on the date of such receipt of such written notice
and ending (subject to any blockage of payments that may then or thereafter be
in effect as the result of any Senior Payment Default) on the earlier of (i) the
date on which the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or such Senior Nonmonetary Default shall have been cured
or waived in writing or shall have ceased to exist and any acceleration of
Senior Indebtedness to which such Senior Nonmonetary Default relates shall have
been rescinded or annulled or (ii) the 179th day after the date of such receipt
of such written notice. No more than one Payment Blockage Period may be
commenced with respect to the Securities during any period of 360 consecutive
days and there shall be a period of at least 181 consecutive days in each period
of 360 consecutive days when no Payment Blockage Period is in effect. Following
the commencement of any Payment Blockage Period, the holders of any Senior
Indebtedness will be precluded from commencing a subsequent Payment Blockage
Period until the conditions set forth in the preceding sentence are satisfied.
For all purposes of this paragraph, no Senior Nonmonetary Default that existed
or was continuing on the date of commencement of any Payment
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Blockage Period with respect to the Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a
subsequent Payment Blockage Period by holders of Senior Indebtedness or their
representatives unless such Senior Nonmonetary Default shall have been cured for
a period of not less than 90 consecutive days. "SENIOR NONMONETARY DEFAULT"
means the occurrence or existence and continuance of any default (other than a
Senior Payment Default) or any event which, after notice or lapse of time (or
both), would become an event of default (other than a Senior Payment Default),
under the terms of any instrument or agreement pursuant to which any Senior
Indebtedness is outstanding, permitting (after notice or lapse of time or both)
one or more holders of such Senior Indebtedness (or a trustee or agent on behalf
of the holders thereof) to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise become due and payable.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any Securities
Payment with respect to which Section 1102 hereof would be applicable.
SECTION 1104. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent the Company, at any time except during the
pendency of any Proceeding referred to in Section 1102 hereof or under the
conditions described in Section 1103 hereof, from making Securities Payments.
SECTION 1105. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full in cash of all Senior Indebtedness, the
Holders of the Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially
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the same extent as the Securities are subordinated and is entitled to like
rights of subrogation) to the rights of the holders of such Senior Indebtedness
to receive payments and distributions of cash, property and securities
applicable to the Senior Indebtedness until the principal of and interest on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
SECTION 1106. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of and interest (including any
Additional Interest) on the Securities as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
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SECTION 1107. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file a proper claim at least 30 days before the expiration of the time
to file such claim, then the holders of the Senior Indebtedness and their
agents, trustees or other representatives are authorized to do so (but shall in
no event be liable for any failure to do so) for and on behalf of the Holders of
the Securities.
SECTION 1108. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) permit the Company to borrow,
repay and then reborrow any or all of the Senior Indebtedness; (iii) sell,
exchange, release or otherwise deal with any
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property pledged, mortgaged or otherwise securing Senior Indebtedness;
(iv) release any Person liable in any manner for the collection of Senior
Indebtedness; (v) exercise or refrain from exercising any rights against the
Company and any other Person; and (vi) apply any sums received by them to Senior
Indebtedness.
SECTION 1109. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company, any holder of Senior Indebtedness, any
Designated Senior Holder or from any trustee, fiduciary or agent therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601 hereof, shall be entitled in all respects to assume
that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have
received the notice provided for in this Section at least three Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of
or interest on any Security), then, anything herein contained to the contrary
notwithstanding, but without limiting the rights and remedies of the holders of
Senior Indebtedness or any trustee, fiduciary or agent therefor, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within two Business Days
prior to such date. Any notice required or permitted to be given to the Trustee
by a holder of Senior Indebtedness or by any agent, trustee or representative
thereof shall be in writing and shall be sufficient for every purpose hereunder
if in writing and either (i) sent via facsimile to the Trustee, the receipt of
which shall be confirmed via telephone, or (ii) mailed, first class postage
prepaid, or sent by overnight carrier, to the Trustee addressed to its
Corporate Trust Office or to any other address furnished in writing to such
holder of Senior Indebtedness by the Trustee.
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Subject to the provisions of Section 601 hereof, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness or Designated Senior
Holder (or a trustee, fiduciary or agent therefor to establish that such notice
has been given by a holder of Senior Indebtedness or Designated Senior Holder or
a trustee, fiduciary or agent therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness or Designated Senior
Holder to participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Notwithstanding anything else contained herein, no notice, request or
other communication to or with the Trustee shall be deemed given unless received
by a Responsible Officer at the Corporate Trust Office.
SECTION 1110. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601 hereof,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such Proceeding
is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article, provided that the foregoing shall
apply only if such court has been apprised of the provisions of this Article.
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SECTION 1111. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 1112. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607 hereof.
SECTION 1113. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that Section 1111 hereof shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
SECTION 1114. CONVERSION AND EXCHANGE NOT DEEMED PAYMENT.
For the purposes of this Article only, neither (1) the issuance and
delivery of Common Stock of the Company upon conversion or exchange of
Securities in accordance with Article Twelve nor the issuance and delivery of
Series C Preferred Stock upon exchange of Securities in accordance
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with Article Fourteen, nor the redemption of the Securities in accordance with
Article Thirteen shall be deemed to constitute a payment or distribution on
account of the principal of or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities (other than Common Stock of the Company
or Series C Preferred Stock) upon conversion or exchange of a Security, except
in accordance with Article Thirteen, shall be deemed to constitute payment on
account of the principal of such Security. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or shall impair,
as among the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert or exchange such
Security or of the Company to redeem such Security, in accordance with Articles
Twelve, Thirteen or Fourteen, as the case may be.
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. CONVERSION RIGHTS.
(a) The Securities are convertible, at the option of the Holder, at
any time on or before the close of business on the date of the Stated Maturity,
unless previously exchanged pursuant to Article Fourteen, into fully paid and
nonassessable shares of Common Stock at an initial conversion price of $
aggregate principal amount of Securities per share of Common Stock, subject to
adjustment as described in Section 1202. A Holder of Securities may convert any
portion of the principal amount of the Securities into that number of fully paid
and nonassessable shares of Common Stock (calculated as to each conversion to
the nearest 1/ th of a share) obtained by dividing the principal amount of the
Securities to be converted by such conversion price.
(b) In order to convert a portion of the Securities, the Holder shall
deliver to the Conversion Agent an irrevocable Notice of Conversion setting
forth the principal amount of Securities to be converted, together with the name
or names, if other than the Holder, in which the shares of Common Stock should
be issued upon conversion. In addition, a holder of Preferred Securities may
exercise its right under the L.L.C. Agreement to convert such
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Preferred Securities into Common Stock by delivering to the Conversion Agent
such Preferred Securities and an irrevocable Notice of Conversion setting forth
the information called for by the preceding sentence and directing it (i) to
exchange such Preferred Security for a portion of the Securities held by St.
Paul Capital (at an exchange rate of $ principal amount of Securities for
each Preferred Security) and (ii) to immediately convert such Securities and any
accrued and upaid interest thereon, on behalf of such holder, into Common Stock
of St. Paul pursuant to this Article Twelve; if such Notice of Conversion
(accompanied by such Preferred Securities) is delivered before the close of
business on the Conversion Expiration Date with respect to the Preferred
Securities, St. Paul Capital shall deliver Securities held by it to the
Conversion Agent for exchange in accordance with this paragraph, and the
Conversion Agent shall immediately convert such Securities on behalf of such
holders. So long as any Preferred Securities are outstanding, St. Paul Capital
shall not convert any Securities except pursuant to a Notice of Conversion
delivered to the Conversion Agent by a holder of Preferred Securities.
If a Notice of Conversion is given on or after the Regular Record
Date and on or prior to the subsequent Interest Payment Date, the Holder will
be entitled to receive, on such Interest Payment Date, the interest payable on
the portion of Securities to be converted notwithstanding the conversion
thereof on or prior to such Interest Payment Date. Except as otherwise provided
in the immediately preceding sentence, in the case of any Security which is
converted, interest whose Stated Maturity is after the date of conversion of
such Security shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest on the Securities being converted. Each conversion
shall be deemed to have been effected immediately prior to the close of
business on the day on which the Notice of Conversion was received (the
"CONVERSION DATE") by the Conversion Agent from the Holder or from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the L.L.C. Agreement, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the
Conversion Date, the Company shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder in the Notice of
Conversion, a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the
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Person or Persons entitled to receive the same. The Conversion Agent shall
deliver such certificate or certificates to such Person or Persons.
(c) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Securities are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to be
the payment in full of the principal amount at Maturity of the portion of
Securities so converted and any unpaid interest accrued on such Securities at
the time of such conversion.
(d) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, such fractional interest will be paid in
cash by the Company.
(e) In the event of the conversion of any Security in part only, a
new Security or Securities for the unconverted portion thereof will be issued in
the name of the Holder thereof upon the cancellation thereof in accordance with
Section 305.
(f) In effecting the conversion transactions described in this
Section or the exchange transactions described in Article Fourteen hereof, the
Conversion Agent is acting as agent of the holders of Preferred Securities (in
the exchange of Preferred Securities for Securities) and as agent of the Holders
of Securities (in the exchange of Securities for Common Stock or Series C
Preferred Stock), as the case may be, directing it to effect such conversion or
exchange transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities held by St. Paul Capital from time to time for Preferred
Securities in connection with the conversion or exchange of such Preferred
Securities in accordance with Articles Twelve and Thirteen hereof, (ii) to
convert all or a portion of the Securities into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of this
Article Twelve and to deliver to St. Paul Capital a new Security or Securities
for any resulting unconverted principal amount and (iii) to exchange all of the
Securities following the occurrence of an Exchange Event for Depositary Shares
representing Series C Preferred Stock in accordance with the provisions of
Article Thirteen hereof and thereupon to deliver such Depositary Shares to the
Persons entitled to receive them.
(g) Whenever the Company shall issue shares of Common Stock upon
conversion of shares of Series C Preferred Stock as contemplated by this Section
1201, the Company
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shall issue, together with each such share of Common Stock, one right to
purchase Series A Junior Participating Preferred Stock of the Company (or other
securities in lieu thereof) pursuant to the Rights Agreement, or any similar
rights issued to holders of Common Stock in addition thereto or in replacement
therefor (such rights, together with any additional or replacement rights, being
collectively referred to as the "Rights"), whether or not such Rights shall be
exercisable at such time, but only if such Rights are issued and outstanding and
held by other holders of Common Stock (or are evidenced by outstanding share
certificates representing Common Stock) at such time and have not expired or
been redeemed.
SECTION 1202. CONVERSION PRICE ADJUSTMENTS.
(a) The conversion price shall be subject to adjustment from time to
time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on any class or series of capital stock of the Company exclusively
in Common Stock, the conversion price in effect at the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution or exchange, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not pay any dividend or make any
distribution on shares of any class or series of Capital Stock of the Company
exclusively in Common Stock held in the treasury of the Company.
(ii) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in subparagraph (vii) of this Section 1202(a)) of the Common Stock on the date
fixed for the determination of stockholders
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entitled to receive such rights or warrants, the conversion price in effect at
the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this subparagraph (ii),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not issue any
rights or warrants in respect of shares of Common Stock held in the treasury of
the Company. In case any rights or warrants referred to in this subparagraph
(ii) in respect of which an adjustment shall have been made shall expire
unexercised within 45 days after the same shall have been distributed or issued
by the Company, the conversion price shall be readjusted at the time of such
expiration to the conversion price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced and, conversely,
in case outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but
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excluding any rights or warrants referred to in subparagraph (ii) of this
Section 1202(a), any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in subparagraph (i) of this
Section 1202(a)), the conversion price shall be reduced so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (iv) by a fraction of which the numerator
shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 1202(a)) of the Common Stock on the date
fixed for the payment of such distribution (the "REFERENCE DATE") less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vii) of this Section 1202(a). For purposes of this subparagraph
(iv), any dividend or distribution that includes shares of Common Stock or
rights or warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other than such shares of
Common Stock or such rights or warrants (making any conversion price reduction
required by this subparagraph (iv)) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (making
any further conversion price reduction required by subparagraph (i) or (ii) of
this Section 1202(a), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted as "the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution," "the date fixed for the determination of
stockholders entitled to receive such rights or warrants" and "the date fixed
for such determination" within the meaning of subparagraphs (i) and (ii) of this
Section 1202(a) and (B) any shares of Common Stock included in such dividend or
distribution shall not be
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deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of subparagraph (i) of this Section 1202(a).
(v) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding, in the case of
any regular cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceding regular cash dividend on the
Common Stock (as adjusted to appropriately reflect any of the events referred to
in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 1202(a)),
or all of such regular cash dividend if the annualized amount thereof per share
of Common Stock does not exceed 15% of the current market price per share
(determined as provided in subparagraph (vii) of this Section 1202(a)) of the
Common Stock on the Trading Day (as defined in Section 1202(e)) next preceding
the date of declaration of such dividend), the conversion price shall be reduced
so that the same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the conversion price
reduction contemplated by this subparagraph (v) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
subparagraph (vii) of this Section 1202(a)) of the Common Stock on the date
fixed for the payment of such distribution less the amount of cash so
distributed and not excluded as provided above applicable to one share of Common
Stock and the denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the payment of such
distribution.
(vi) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such subsidiary of consideration per share of Common Stock having a
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) at the last time (the "EXPIRATION TIME") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it shall have been amended)
that exceeds 10% of the current market price per share (determined as provided
in subparagraph (vii) of this Section 1202(a)) of the Common Stock on the
Trading Day (as defined in Section 1202(e)) next succeeding the Expiration Time,
the conversion price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect
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immediately prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (vi) by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in subparagraph (vii) of this
Section 1202(a)) of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "PURCHASED SHARES") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this Section 1202(a)) of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(vii) For the purpose of any computation under subparagraphs (ii),
(iv), (v) and (vi) of this Section 1202(a), the current market price per share
of Common Stock on any date in question shall be deemed to be the average of the
daily Closing Prices (as defined in Section 1202(e)) for the five consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance or
distribution requiring such computation; PROVIDED, HOWEVER, that if another
event occurs that would require an adjustment pursuant to subparagraph (i)
through (vi), inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such five Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 1202(a), in which case
any such determination by the Board of Directors shall be set forth in a Board
Resolution and shall be conclusive. For purposes of this paragraph, the term
"ex" date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the New York Stock
Exchange or on such successor securities exchange as the Common Stock may be
listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution, and (2) when used
with respect to any tender or exchange
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offer means the first date on which the Common Stock trades regular way on such
securities exchange or in such market after the Expiration Time of such offer.
(viii) The Company may make such reductions in the conversion price, in
addition to those required by subparagraphs (i), (ii), (iii), (iv), (v) and (vi)
of this Section 1202(a), as it considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. The Company
from time to time may reduce the conversion price by any amount for any period
of time if the period is at least twenty (20) days, the reduction is irrevocable
during the period, and the Board of Directors of the Company shall have made a
determination that such reduction would be in the best interest of the Company,
which determination shall be conclusive. Whenever the conversion price is
reduced pursuant to the preceding sentence, the Company shall mail to holders of
record of the Securities a notice of the reduction at least fifteen (15) days
prior to the date the reduced conversion price takes effect, and such notice
shall state the reduced conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of
this subparagraph (ix) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(x) Whenever the conversion price is adjusted as herein provided:
(1) the Company shall compute the adjusted conversion price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the transfer agent for
the Preferred Securities; and
(2) a notice stating the conversion price has been adjusted and
setting forth the adjusted conversion price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities
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at their last addresses as they appear upon the stock transfer books of the
Company.
(b) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS. In
the event that the Company shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), any consolidation of the Company with, or merger of the Company
into, any other person, any merger of another person into the Company (other
than a merger which does not result in a reclassification, conversion, exchange
or cancellation of outstanding shares of Common Stock of the Company), any sale
or transfer of all or substantially all of the assets of the Company or any
compulsory share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby the
holder of each Security then outstanding shall have the right thereafter to
convert such Security only into (i) in the case of any such transaction other
than a Common Stock Fundamental Change (as defined in Section 1202(e)), the kind
and amount of securities, cash and other property receivable upon such
transaction by a holder of the number of shares of Common Stock of the Company
into which such Security could have been converted immediately prior to such
transaction, after giving effect, in the case of any Non-Stock Fundamental
Change, to any adjustment in the conversion price required by the provision of
Section 1202(d), and (ii) in the case of a Common Stock Fundamental Change,
common stock of the kind received by holders of Common Stock as a result of such
Common Stock Fundamental Change in an amount determined pursuant to the
provisions of Section 1202(d). The Company or the person formed by such
consolidation or resulting from such merger or which acquired such assets or
which acquires the Company's shares, as the case may be, shall make provision in
its certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments which, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 1202. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(c) PRIOR NOTICE OF CERTAIN EVENTS. In case:
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(i) the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to 1202(a)(iv) or (v) or (2) authorize a
tender or exchange offer that would require an adjustment pursuant to
Section 1202(a)(vi);
(ii) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company shall be
required, or of the sale or transfer of all or substantially all of the
assets of the Company or of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the transfer agent for the
Preferred Securities, and shall cause to be mailed to the holders of record of
the Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books of the Company, at least fifteen days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record (if any) is to be taken for the purpose of such
dividend, distribution, redemption, repurchase, rights or warrants or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, repurchase,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in
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the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
(d) ADJUSTMENTS IN CASE OF FUNDAMENTAL CHANGES. Notwithstanding any
other provision in this Section 1202 to the contrary, if any Fundamental Change
(as defined in Section 1202(e)) occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change (as defined in
Section 1202(e)), each Security shall be convertible solely into common stock of
the kind and amount received by holders of Common Stock as the result of such
Common Stock Fundamental Change as more specifically provided in the following
clauses (d)(i) and (d)(ii).
For purposes of calculating any adjustment to be made pursuant to this Section
1202(d) in the event of a Fundamental Change, immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change (as defined in
Section 1202(e)), the conversion price of the Securities shall thereupon
become the lower of (A) the conversion price in effect immediately prior to
such Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Section 1202, and (B) the
result obtained by multiplying the greater of the Applicable Price (as
defined in Section 1202(e)) or the then applicable Reference Market Price
(as defined in Section 1202(e)) by a fraction of which the numerator shall
be $ and the denominator shall be an amount per Security determined by
the Managing Members in their sole discretion, after consultation with a
nationally recognized investment banking firm, to be the equivalent of the
hypothetical redemption price that would have been applicable if the
Securities had been redeemable during such period; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Securities in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Section 1202, shall thereupon be
adjusted by multiplying such conversion price by a fraction of which the
numerator shall be the Purchaser Stock Price (as defined in Section
1202(e)) and the denominator shall be the Applicable Price; PROVIDED,
HOWEVER, that in the event of a Common Stock Fundamental Change in which
(A) 100% of the value of the consideration
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received by a holder of Common Stock is common stock of the successor,
acquiror or other third party (and cash, if any, is paid with respect to
any fractional interests in such common stock resulting from such Common
Stock Fundamental Change) and (B) all of the Common Stock shall have been
exchanged for, converted into or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquiror or other third
party, the conversion price of the Securities in effect immediately prior
to such Common Stock Fundamental Change shall thereupon be adjusted by
multiplying such conversion price by a fraction of which the numerator
shall be one (1) and the denominator shall be the number of shares of
common stock of the successor, acquiror, or other third party received by a
stockholder for one share of Common Stock as a result of such Common Stock
Fundamental Change.
(e) DEFINITIONS. The following definitions shall apply to terms used
in this Section 1202:
(1) "APPLICABLE PRICE" shall mean (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only
cash, the amount of cash received by a stockholder for one share of Common
Stock and (ii) in the event of any other Non-Stock Fundamental Change or
any Common Stock Fundamental Change, the average of the daily Closing
Prices of the Common Stock for the ten (10) consecutive Trading Days prior
to and including the record date for the determination of the holders of
Common Stock entitled to receive securities, cash or other property in
connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change, or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive such
securities, cash or other property, in each case, as adjusted in good faith
by the Board of Directors of St. Paul to appropriately reflect any of the
events referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 1202(a).
(2) "CLOSING PRICE" of any common stock on any day shall mean the
last reported sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices regular way of such common stock, in each case on the principal
national securities exchange on which such common stock is listed, if the
common stock is listed on a national securities exchange, or the National
Market System of the National Association of
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Securities Dealers, Inc., or, if the common stock is not quoted or admitted
to trading on such quotation system, on the principal quotation system on
which the common stock is listed or admitted to trading or quoted, or, if
not listed or admitted to trading or quoted on any national securities
exchange or quotation system, the average of the closing bid and asked
prices of the common stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or, if not so available in
such manner, as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of St. Paul for that
purpose or, if not so available in such manner, as otherwise determined in
good faith by the Board of Directors.
(3) "COMMON STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten consecutive Trading
Days referred to with respect to such Fundamental Change in Section
1202(e)(1) above has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or quoted
on the National Market System of the National Association of Securities
Dealers, Inc.; PROVIDED, HOWEVER, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (i) the Company continues to
exist after the occurrence of such Fundamental Change and the outstanding
Securities continue to exist as outstanding Securities, or (ii) not later
than the occurrence of such Fundamental Change, the outstanding Securities
are converted into or exchanged for convertible subordinated debentures of
a corporation succeeding to the business of the Company, which convertible
subordinated debentures have terms substantially similar to those of the
Securities.
(4) "FUNDAMENTAL CHANGE" shall mean the occurrence of any transaction
or event in connection with a plan pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired
for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); PROVIDED, HOWEVER, in the case of a plan involving more than
one such trans-
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action or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all
of the Common Stock of the Company shall be exchanged for, converted into,
or acquired for or constitute solely the right to receive securities, cash
or other property, but the adjustment shall be based upon the highest
weighted average of consideration per share which a holder of Common Stock
could have received in such transactions or events as a result of which
more than 50% of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for or constitute solely the right to
receive securities, cash or other property.
(5) "NON-STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(6) "PURCHASER STOCK PRICE" shall mean, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Prices of the
common stock received in such Common Stock Fundamental Change for the ten
(10) consecutive Trading Days prior to and including the record date for
the determination of the holders of Common Stock entitled to receive such
common stock, or, if there is no such record date, the date upon which the
holders of the Common Stock shall have the right to receive such common
stock, in each case, as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in subparagraphs (i),
(ii), (iii), (iv), (v) and (vi) of Section 1202(a).
(7) "REFERENCE MARKET PRICE" shall initially mean $ and in the
event of any adjustment to the conversion price other than as a result of a
Non-Stock Fundamental Change, the Reference Market Price shall also be
adjusted so that the ratio of the Reference Market Price to the conversion
price after giving effect to any such adjustment shall always be the same
as the ratio of $ to the initial conversion price per share.
(8) "TRADING DAY" shall mean a day on which securities are traded on
the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
(f) DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding the
foregoing provisions, the issuance of
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any shares of Common Stock pursuant to any plan providing for the reinvestment
of dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Securities were first
issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of St. Paul except as
specifically described in this Section 1202. If any action would require
adjustment of the conversion price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such adjustment shall be
the amount of adjustment that has the highest absolute value to the holder of
the Securities.
(g) CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 1202(a)(iv) or 1202(a)(v) (including, without limitation,
dividends or distributions referred to in the last sentence of Section
1202(a)(iv)), the holder of the Securities, upon the conversion thereof
subsequent to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution and prior to the
effectiveness of the conversion price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Securities are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be
evidenced by a resolution of the Board of Directors) with respect to all holders
so converting, the Company may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Securities described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of
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Securities so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such holder is so
entitled, PROVIDED that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
ARTICLE THIRTEEN
Redemption of Securities and Other Matters
SECTION 1301. CONDITIONAL RIGHT OF REDEMPTION; MANDATORY REDEMPTION.
(a) In the event that, following the Conversion Expiration Date in
respect of the Preferred Securities, less than 5% of the original aggregate
principal amount of the Securities remain Outstanding, the Securities shall be
subject to redemption, in whole but not in part, at the option of the Company at
the Redemption Price specified in the form of Security hereinbefore set forth,
together with accrued interest (including Additional Interest) to the Redemption
Date, provided that if the Company elects to redeem Securities, the aggregate
principal amount of Securities so redeemed shall be not less than the aggregate
liquidation preference of the Preferred Securities then outstanding.
(b) The Company covenants that if St. Paul Capital redeems the
Preferred Securities in accordance with the terms thereof, the Company will
redeem the Securities not later than the date of redemption of the Preferred
Securities, and shall pay the Redemption Price for the Securities prior to 12:00
noon, New York City time, on the date of such redemption, which date shall be
deemed to be the Redemption Date.
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SECTION 1302. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company, as permitted
by Section 1301(a) hereof, shall be made in accordance with such provision and
Sections 1303 through 1306 of this Article, which shall not apply to redemptions
pursuant to Section 1301(b).
SECTION 1303. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Securities pursuant to Section
1301(a) shall be evidenced by a Board Resolution. In case of any such
redemption at the election of the Company, the Company shall, at least 35 days
and no more than 60 days prior to the Redemption Date fixed by the Company,
notify the Trustee of such Redemption Date and of the principal amount of
Securities to be redeemed and provide a copy of the notice of redemption given
to Holders of Securities to be redeemed pursuant to Section 1304.
SECTION 1304. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 35 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due
and payable upon each Security and that interest thereon will cease to
accrue on and after said date, and
(4) the place or places where the Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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SECTION 1305. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent, (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all Outstanding
Securities.
SECTION 1306. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) the
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of the Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security, having been called for redemption, shall not be so
paid upon surrender thereof for redemption, the principal shall, until paid,
bear interest from the Redemption Date at the rate borne by such Security.
SECTION 1307. DISTRIBUTION OF SECURITIES OF PREFERRED MEMBERS.
If the Securities are distributed to Preferred Members as
contemplated by Section 8.3(h) of the L.L.C. Agreement, the Company will use its
best efforts to have the Securities listed on the same exchange on which the
Preferred Securities were listed immediately prior to such distribution.
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ARTICLE FOURTEEN
Exchange
SECTION 1401. OPTIONAL EXCHANGE FOR DEPOSITARY SHARES REPRESENTING SERIES C
PREFERRED STOCK.
For so long as any Preferred Securities are outstanding, the
Securities shall be exchangeable at the request of Holders thereof, following an
Exchange Election by a Majority in Liquidation Preference of the Preferred
Securities for Depositary Shares (as such terms are defined in the L.L.C.
Agreement), each representing ownership of 1/ th of a fully paid and non-
assessable share of Series C Preferred Stock, subject to the following terms and
conditions:
(a) The Conversion Agent, upon receiving irrevocable notice of an
Exchange Election by the holders of a majority in Liquidation Preference of
the Preferred Securities (a "NOTICE OF EXCHANGE"), shall promptly deliver a
copy of such notice to the Company, the Trustee and St. Paul Capital.
(b) All outstanding Preferred Securities shall be deemed to have been
exchanged, immediately prior to the close of business on the date of the
Exchange Election (the "EXCHANGE DATE"), for Securities held by St. Paul
Capital, at an exchange rate of $ principal amount of Securities for
each Preferred Security, and St. Paul Capital shall promptly deliver the
Securities deemed to have been so exchanged to the Conversion Agent, on
behalf of the holders of exchanged Preferred Securities. As promptly as
practicable after the exchange date, the Company shall issue and deposit
with the Depositary, pursuant to the Deposit Agreement, a certificate or
certificates for the number of fully paid and non-assessable shares of
Series C Preferred Stock issuable at the rate referred to in paragraph (c)
below upon the exchange contemplated in such paragraph in return for a
Depositary Receipt or Receipts issued by the Depositary evidencing a
proportionate number of Depositary Shares in respect of the Series C
Preferred Stock so deposited. The Company shall request that the
Depositary Receipts be issued in the names of the holders of Preferred
Securities designated in the Notice of Exchange.
(c) The Company shall thereafter, promptly upon request by the
Conversion Agent, exchange such
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Securities and any accrued and unpaid interest thereon for Depositary
Shares, each representing a 1/ th interest in a fully paid and non-
assessable share of its Series C Preferred Stock and evidenced by
Depositary Receipts, at the rate of one Depositary Share for each $
principal amount of Securities (which rate is equivalent to one Depositary
Share or 1/ th of a share of Series C Preferred Stock for each Preferred
Security). Any accumulated and unpaid dividends on the Preferred
Securities (including any Additional Dividends thereon) at the time of the
Exchange Election shall from and after the time of such exchange be treated
as accumulated and unpaid dividends on the Series C Preferred Stock issued
in exchange for the Securities. The Person or Persons entitled to receive
the Series C Preferred Stock issuable upon such exchange shall be treated
for all purposes as the record holder or holders of such Series C Preferred
Stock as of the exchange date. As promptly as practicable on or after the
exchange date, the Company shall deliver at the office of the Conversion
Agent the Depositary Receipt or Receipts representing the Series C
Preferred Stock issuable upon such exchange. The Conversion Agent shall
deliver such Depositary Receipt or Receipts to the Person or Persons
entitled to receive the same.
(d) The Company will use its best efforts to have the Depositary
Shares listed for trading on the New York Stock Exchange or such other
securities exchange on which the Preferred Securities may be listed at the
time of the Exchange Election.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective
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corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.
THE ST. PAUL COMPANIES, INC.
By: __________________________
Name:
Title:
ST. PAUL CAPITAL L.L.C.
By: The St. Paul Companies, Inc.,
as Managing Member
By: __________________________
Name:
Title:
By: St. Paul Capital Holdings, Inc.,
as Managing Member
By: __________________________
Name:
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
not in its individual capacity,
but solely as Trustee
By: _________________________
Name:
Title:
Attest:____________________
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STATE OF MINNESOTA ) ss.:
COUNTY OF ________ )
On the day of , 1995, before me personally came , to me
known, who, being by me duly sworn, did depose and say that he is the of St.
Paul Companies, Inc., a corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by authority of the
Board of Directors of such corporation.
[SEAL] ______________________________
STATE OF MINNESOTA ) ss.:
COUNTY OF ________ )
On the day of , 1995, before me personally came , to me
known, who, being by me duly sworn, did depose and say that he is the of St.
Paul Companies, Inc., one of the two Managing Members of St. Paul Capital,
L.L.C., a limited liability company described in and which, through the Managing
Members, executed the foregoing instrument; and that he signed his name thereto
by authority of the Board of Directors of such Managing Member.
[SEAL] ______________________________
STATE OF MINNESOTA ) ss.:
COUNTY OF ________ )
On the day of , 1995, before me personally came , to me
known, who, being by me duly sworn, did depose and say that he is the of St.
Paul Capital Holdings, Inc., one of the two Managing Members of St. Paul
Capital, L.L.C., a limited liability company described in and which, through the
Managing Members, executed the foregoing instrument; and that he signed his name
thereto by authority of the Board of Directors of such Managing Member.
[SEAL] ______________________________
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STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK)
On the day of , 1995, before me personally came , to me
known, who, being by me duly sworn, did depose and say that [he] [she] is a
of The Chase Manhattan Bank (National Association), the Trustee described in and
which executed the foregoing instrument; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said national bank, and that [he] [she] signed [his] [her]
name thereto by like authority.
______________________________
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EXHIBIT 4.5
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Guarantee"), dated as of , 1995, is
executed and delivered by The St. Paul Companies, Inc., a corporation organized
under the laws of the State of Minnesota ("St. Paul"), for the benefit of the
Holders (as hereinafter defined) from time to time of the Preferred Securities
(as hereinafter defined) of St. Paul Capital L.L.C., a limited liability company
formed under the laws of the State of Delaware ("St. Paul Capital" or the
"L.L.C.").
WHEREAS, St. Paul Capital desires to issue up to of its %
Convertible Monthly Income Preferred Securities, with a liquidation preference
of $ each (the "Preferred Securities"), and St. Paul desires to issue this
Guarantee for the benefit of the Holders, as provided herein; and
WHEREAS, St. Paul Capital will purchase the Subordinated Debentures
(as hereinafter defined) issued pursuant to the Indenture (as hereinafter
defined) with substantially all of the proceeds from the issuance and sale of
the Preferred Securities and its common limited liability company interests (the
"Common Securities"); and
WHEREAS, St. Paul desires to unconditionally and irrevocably agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
hereinafter defined) and to perform the other obligations set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase St. Paul hereby agrees shall benefit St.
Paul, St. Paul executes and delivers this Guarantee for the benefit of the
Holders.
ARTICLE 1
DEFINITIONS
As used in this Guarantee, the terms set forth below shall, unless the
context otherwise requires, have the following meanings. Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to such
terms in the Amended and Restated Limited Liability Company Agreement of
St. Paul Capital, dated as of , 1995 (the "L.L.C. Agreement").
1.1 "Additional Dividends" means Dividends which shall accumulate on
any Dividend arrearages in respect of the Preferred Securities at the rate of
% per annum, compounded monthly.
<PAGE>
1.2 "Conversion Agent" shall mean The Chase Manhattan Bank (National
Association) and its successors, acting as agent of the Holders in effecting the
conversion of Preferred Securities into shares of St. Paul Common Stock or the
exchange of Preferred Securities for Depositary Shares, in each case as and in
the manner set forth in the L.L.C. Agreement.
1.3 "Deposit Agreement" shall mean the Deposit Agreement, dated as
of , 1995 among St. Paul, the Depositary and the holders from time to time
of the Depositary Receipts.
1.4 "Depositary" shall mean The Chase Manhattan Bank (National
Association) and its successors and assigns.
1.5 "Depositary Receipt" shall mean one of the depositary receipts,
issued by the Depositary under the Deposit Agreement, each representing any
number of whole Depositary Shares.
1.6 "Depositary Share" shall mean one of the depositary shares, each
representing a one (1/ th) interest in a share of St. Paul Preferred Stock
deposited with the Depositary pursuant to the Deposit Agreement.
1.7 "Dividends" means the cumulative cash distributions from the
L.L.C. with respect to the Interests represented by the Preferred Securities,
accumulating from ,1995 and payable monthly in arrears on the last day of
each calendar month of the year, commencing , 1995.
1.8 "Guarantee Payments" shall mean the following payments, without
duplication, to the extent not paid by St. Paul Capital: (a) any accumulated and
unpaid Dividends (including any Additional Dividends accrued thereon) which have
been declared on the Preferred Securities from funds legally available therefor;
(b) the Redemption Price (including all accumulated and unpaid Dividends and
distributions) payable with respect to Preferred Securities called for
redemption by St. Paul Capital out of funds legally available therefor; and
(c) upon a liquidation of St. Paul Capital, the lesser of (i) the Liquidation
Distribution and (ii) the amount of assets of St. Paul Capital available for
distribution to Holders in liquidation of St. Paul Capital.
1.9 "Holder" shall mean any holder from time to time of any Preferred
Securities of St. Paul Capital; PROVIDED, HOWEVER, that in determining whether
the Holders of the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder,
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"Holder" shall not include St. Paul or any Subsidiary thereof, either directly
or indirectly.
1.10 "Indenture" shall mean the Indenture, dated as of , 1995,
among St. Paul, St. Paul Capital and The Chase Manhattan Bank (National
Association), as trustee.
1.11 "Liquidation Distribution" shall mean the aggregate of the stated
liquidation preference of $50 per Preferred Security and all accumulated and
unpaid dividends and distributions (whether or not declared) to the date of
payment, including any Additional Dividends accrued thereon.
1.12 "Managing Members" means St. Paul and St. Paul's wholly-owned
subsidiary, St. Paul Capital Holdings, Inc., a corporation organized under the
laws of the State of Delaware, each in their capacity as the members and
managers of St. Paul Capital which hold all of St. Paul Capital's outstanding
Common Securities.
1.13 "Nuveen" shall mean The John Nuveen Company, a corporation
organized under the laws of the State of Delaware.
1.14 "Redemption Price" shall have the meaning ascribed to such term
in the L.L.C. Agreement.
1.15 "St. Paul Common Stock" shall mean the shares of Common Stock,
without par value, of St. Paul.
1.16 "St. Paul Preferred Stock" shall mean the Series C Cumulative
Convertible Preferred Stock of St. Paul, liquidation preference $50 per share.
1.17 "Subordinated Debentures" shall mean the % Convertible
Subordinated Debentures issued pursuant to the Indenture and sold by St. Paul to
the L.L.C. in connection with the issuance and sale by the L.L.C. of the
Preferred Securities. The Subordinated Debentures will evidence the loans to be
made by the L.L.C. to St. Paul of substantially all of the proceeds received by
the L.L.C. from the issuance and sale of the Preferred Securities and the Common
Securities.
1.18 "Subsidiary" of any Person means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries, or by such Person and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such
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voting power by reason of any contingency. For the purposes of this definition
neither Nuveen nor any of Nuveen's consolidated subsidiaries is a Subsidiary of
St. Paul.
ARTICLE II
GUARANTEE
2.1 GENERAL. St. Paul irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments, as and when due (except to the
extent paid by St. Paul Capital), regardless of any defense, right of set-off or
counterclaim which St. Paul Capital may have or assert. This Guarantee is
continuing, irrevocable, unconditional and absolute. St. Paul's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by St. Paul to the Holders or by causing St. Paul Capital to pay such
amounts to the Holders.
2.2 WAIVER OF CERTAIN RIGHTS. St. Paul hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
2.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements
and duties of St. Paul under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by St. Paul Capital of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by St. Paul Capital;
(b) the extension of time for the payment by St. Paul Capital of all
or any portion of the Dividends, distributions, Additional Dividends,
Redemption Price, Liquidation Distribution or any other sums payable under
the terms of the Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of
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St. Paul Capital granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, St. Paul
Capital or any of the assets of St. Paul Capital;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain any
consent of, St. Paul with respect to the happening of any of the foregoing.
2.4 HOLDERS MAY PROCEED DIRECTLY AGAINST ST. PAUL. This Guarantee is
a guarantee of payment and not of collection. A Holder may enforce this
Guarantee directly against St. Paul, and St. Paul waives any right or remedy to
require that any action be brought against St. Paul Capital or any other person
or entity before proceeding against St. Paul. Subject to Section 2.5 hereof,
all waivers herein contained shall be without prejudice to the Holders' right at
the Holders' option to proceed against St. Paul Capital, whether by separate
action or by joinder. St. Paul agrees that this Guarantee shall not be
discharged except by payment of the Guarantee Payments in full.
2.5 SUBROGATION. St. Paul shall be subrogated to all (if any) rights
of the Holders against St. Paul Capital in respect of any amounts paid to the
Holders by St. Paul under this Guarantee and shall have the right to waive
payment of any amount of dividends or distributions in respect of which payment
has been made to the Holders by St. Paul pursuant to Section 2.1 hereof;
PROVIDED, HOWEVER, that St. Paul shall not (except to the extent required by
mandatory provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be
paid to St. Paul in violation of the preceding sentence, St. Paul agrees to pay
over such amount to the Holders.
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2.6 INDEPENDENT OBLIGATIONS. St. Paul acknowledges that its
obligations hereunder are independent of the obligations of St. Paul Capital
with respect to the Preferred Securities and that St. Paul shall be liable as
principal and sole debtor under this Guarantee to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (f), inclusive, of Section 2.3
hereof.
2.7 TERMINATION. This Guarantee shall terminate and be of no further
force and effect upon full payment of the Redemption Price of all Preferred
Securities then outstanding, upon full payment of the amounts payable to the
Holders upon liquidation of St. Paul Capital or upon the conversion or exchange
(in the manner provided in the L.L.C. Agreement) of all Preferred Securities
into St. Paul Common Stock or Depositary Shares representing St. Paul Preferred
Stock, as the case may be, and the distribution of such stock or Depositary
Shares to the Holders of the Preferred Securities then outstanding; PROVIDED,
HOWEVER, that this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Guarantee for any reason whatsoever. St. Paul agrees to indemnify
each Holder and hold it harmless from and against any loss it may suffer in such
circumstances.
ARTICLE III
CERTAIN COVENANTS OF ST. PAUL
3.1 DIVIDENDS AND OTHER PAYMENTS. So long as any Preferred
Securities remain outstanding, neither St. Paul, nor any Subsidiary of St. Paul,
shall declare or pay any dividend or distribution on, or redeem, purchase or
otherwise acquire or make a liquidation payment with respect to, any of its
capital stock (other than as a result of a reclassification of capital stock or
the exchange or conversion of one class or series of capital stock for another
class or series of capital stock) or make any Guarantee Payments with respect
to the foregoing (other than payments under this Guarantee or dividends or
Guarantee Payments to St. Paul by a Subsidiary of St. Paul), if at such time
St. Paul has exercised its option to extend the interest payment period on the
Subordinated Debentures and such extension is continuing, St. Paul shall be in
default with respect to its payment or other obligations hereunder or there
shall have occurred any event that, with the giving of notice or the lapse of
time or both, would constitute an
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Event of Default under the Subordinated Debentures. St. Paul shall take all
actions necessary to ensure the compliance of its Subsidiaries with this
Section 3.1.
3.2 CERTAIN OTHER COVENANTS. St. Paul covenants that, so long as any
Preferred Securities remain outstanding it shall: (i) not cause or permit any
Common Securities to be transferred; (ii) maintain direct or indirect 100%
ownership of all outstanding securities of St. Paul Capital other than (x) the
Preferred Securities and (y) any other securities issued by St. Paul Capital
(other than the Common Securities) so long as the issuance thereof to persons
other than St. Paul or any of its Subsidiaries would not cause St. Paul Capital
to become an "investment company" required to be registered under the Investment
Company Act of 1940, as amended; (iii) cause at least 21% of the total value of
St. Paul Capital and at least 21% of all interests in the capital, income, gain,
loss, deduction and credit of St. Paul Capital to be represented by Common
Securities; (iv) not voluntarily dissolve, wind up or liquidate St. Paul Capital
(other than in connection with the exchange of all Preferred Securities
outstanding for Depositary Shares) or either of the Managing Members; (v) cause
St. Paul and St. Paul Capital Holdings, Inc. to remain the Managing Members of
St. Paul Capital and timely perform all of their respective duties as Managing
Members (including the duty to declare and pay dividends on the Preferred
Securities); and (vi) use reasonable efforts to cause St. Paul Capital to remain
a limited liability company and otherwise continue to be treated as a
partnership for United States federal income tax purposes; provided that,
notwithstanding the foregoing, St. Paul may permit St. Paul Capital to
consolidate or merge with or into or convey, transfer or lease its properties
and assets substantially as an entirety to another entity upon the terms and
subject to the conditions set forth in the L.L.C. Agreement.
ARTICLE IV
SUBORDINATION
4.1 SUBORDINATION. St. Paul covenants and agrees, and each holder of
Preferred Securities by his acceptance of such Preferred Securities shall be
deemed to acknowledge and agree that for all purposes (including any bankruptcy,
insolvency, or reorganization of St. Paul) this Guarantee constitutes an
unsecured obligation of St. Paul ranking (i) subordinate and junior in right of
payment to all liabilities of St. Paul and the Subordinated Debenture, (ii) PARI
PASSU with the most senior preferred shares now or hereafter issued by St. Paul
and with any guarantee now or hereafter entered into by St. Paul in respect of
any
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preferred or preference stock of any affiliate of St. Paul and (iii) senior to
St. Paul Common Stock and any other class or series of capital stock issued by
St. Paul or any of its affiliates which by its express terms ranks junior in the
payment of dividends and amounts on liquidation, dissolution and winding-up to
the Preferred Securities.
ARTICLE V
CONVERSION AND EXCHANGE OF PREFERRED SECURITIES
5.1 ISSUANCE OF ST. PAUL COMMON STOCK. St. Paul hereby agrees that,
upon the request of the Conversion Agent, on behalf of one or more Holders of
Preferred Securities, to convert Subordinated Debentures into St. Paul Common
Stock in accordance with the terms of the L.L.C. Agreement, St. Paul shall
deliver to the Conversion Agent certificates representing the full number of
shares of St. Paul Common Stock issuable upon conversion of such Subordinated
Debentures in accordance with the terms of the Indenture and such Subordinated
Debentures. St. Paul has reserved and will keep available for issuance, solely
for the purpose of effecting the conversion of the Subordinated Debentures,
the full number of shares of St. Paul Common Stock deliverable upon the
conversion of all outstanding Preferred Securities not theretofore converted.
5.2 VALIDITY OF ST. PAUL COMMON STOCK. St. Paul hereby
represents and warrants that all shares of St. Paul Common Stock delivered
by St. Paul upon such conversion will be duly and validly issued and fully
paid and nonassessable.
5.3 ISSUANCE OF ST. PAUL PREFERRED STOCK AND DEPOSITARY SHARES.
St. Paul hereby agrees that, upon the making of an Exchange Election by the
Holders of a majority in outstanding liquidation preference of the Preferred
Securities in accordance with the terms of the L.L.C. Agreement, it will
issue one (1/ th) of a share of St. Paul Preferred Stock in respect of each
$ principal amount of Subordinated Debentures then outstanding. St. Paul
further agrees to deposit as soon as may be practicable after the Exchange
Election the full number of shares of St. Paul Preferred Stock so issuable
with the Depositary and to cause to be delivered to the Conversion Agent the
Depositary Receipts representing Depositary Shares issued in respect of the
deposited shares of St. Paul Preferred Stock. St. Paul shall reserve and keep
available for issuance, solely for the purpose of effecting such exchange,
the full number of shares of St. Paul Preferred Stock issuable upon exchange
of all outstanding Preferred Securities.
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5.4 VALIDITY OF ST. PAUL PREFERRED STOCK AND DEPOSITARY SHARES. St.
Paul hereby represents and warrants that all shares of St. Paul Preferred Stock
issued by St. Paul upon such exchange will be duly and validly issued and fully
paid and nonassessable, and upon due issuance by the Depositary of Depositary
Receipts evidencing the Depositary Shares against the deposit of shares of St.
Paul Preferred Stock in accordance with the provisions of the Deposit Agreement,
such Depositary Receipts will be duly and validly issued and will entitle the
holders thereof to the rights specified in such Depositary Receipts and in the
Deposit Agreement.
5.5 TERMINATION OF OBLIGATION TO ISSUE ST. PAUL COMMON STOCK AND ST.
PAUL PREFERRED STOCK. St. Paul's obligations under this Article V to issue St.
Paul Common Stock shall terminate upon the termination of the right of Holders
of Preferred Securities to request the Conversion Agent to effect such
conversion as set forth in the L.L.C. Agreement and, with respect to a
particular Holder, upon such conversion. St. Paul's obligations under this
Article V to issue St. Paul Preferred Stock shall terminate upon the termination
of the right of Holders of Preferred Securities to make an Exchange Election as
set forth in the L.L.C. Agreement and upon such exchange.
ARTICLE VI
MISCELLANEOUS
6.1 THIRD PARTY BENEFICIARIES. All of St. Paul's representations,
warranties and obligations under this Guarantee shall be directly enforceable by
the Holders from time to time of the Preferred Securities. Each Holder of
Preferred Securities is an intended third-party beneficiary of this Guarantee.
6.2 SUCCESSORS AND ASSIGNS. All guarantees and agreements contained
in this Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of St. Paul and shall inure to the benefit of the Holders.
Except as permitted by Section 6.4 hereof, St. Paul shall not assign its rights
or delegate its obligations hereunder without the prior approval of the Holders
of not less than 66-2/3% of the aggregate liquidation preference of all
Preferred Securities then outstanding.
6.3 AMENDMENTS. This Guarantee may only be amended by an instrument
in writing signed by St. Paul with the prior approval of the Holders of not less
than 66-2/3%
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of the aggregate liquidation preference of all Preferred Securities then
outstanding.
6.4 MERGER, CONSOLIDATION OR SALE OF ASSETS. St. Paul, without the
consent of any Holders of Preferred Securities, may merge or consolidate with or
into another entity or may permit another entity to merge or consolidate with or
into St. Paul, and may sell, transfer or lease all or substantially all of St.
Paul's assets to another entity, IF AND ONLY IF (a) at such time no Event of
Default (as defined in the Indenture) shall have occurred and be continuing, or
would occur as a result of such merger, consolidation or sale, transfer or lease
and (b) the successor is an entity organized under the laws of the United States
or any state thereof, acquires directly or indirectly all of the Common
Securities, assumes all of St. Paul's obligations under this Guarantee and has a
net worth equal to at least 10% of the total capital contributions to St. Paul
Capital.
6.5 NOTICES. Any notice, request or other communication required or
permitted to be given hereunder to St. Paul shall be given in writing by
delivering the same against receipt therefor by registered mail, hand delivery,
facsimile transmission (confirmed by registered mail) or telex, addressed to St.
Paul, as follows (and if so given, shall be deemed given when mailed; upon
receipt of facsimile confirmation, if sent by facsimile transmission; or upon
receipt of an answer-back, if sent by telex):
The St. Paul Companies, Inc.
385 Washington Street
St. Paul, Minnesota 55102
Attention: Senior Vice President and
General Counsel
Telecopy: (612) 221-8204
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by St. Paul in the same manner as
notices are sent by St. Paul Capital to the Holders.
6.6 GENDERS. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
6.7 GUARANTEE NOT SEPARATELY TRANSFERABLE. This Guarantee is solely
for the benefit of the Holders and is not separately transferable from the
Preferred Securities.
6.8 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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6.9 SEVERABILITY. In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.10 HEADINGS. The Article and section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, St. Paul has caused this Guarantee to be duly
executed as of the day and year first above written.
THE ST. PAUL COMPANIES, INC.
By:
-------------------------------
Name:
Title:
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EXHIBIT 4.6
DEPOSIT AGREEMENT
dated as of * , 1995
among
THE ST. PAUL COMPANIES, INC.,
a Minnesota corporation,
THE CHASE MANHATTAN BANK
(National Association),
a national bank,
AND THE HOLDERS FROM TIME TO TIME
OF THE RECEIPTS DESCRIBED HEREIN.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of Series C Cumulative Convertible
Preferred Stock, par value $ * per share (liquidation preference $50 per share),
of The St. Paul Companies, Inc. with the Depositary (as defined herein) for the
purposes set forth in this Deposit Agreement and for the issuance hereunder of
Receipts (as defined herein) by the Depositary evidencing Depositary Shares (as
defined herein) in respect of the Stock (as defined herein) so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit
A hereto, with such appropriate insertions, modifications and omissions as
provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein
and such other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement and the
Receipts (as defined herein):
"Certificate" shall mean the Certificate of Designation of The St.
Paul Companies, Inc. of Series C Cumulative Convertible Preferred Stock filed
with the Secretary of State of the State of Minnesota establishing the Stock as
a series of preferred stock of the Company, as it may be amended from time to
time in accordance with its terms.
<PAGE>
"Common Stock" shall mean the Company's common stock, without par
value.
"Company" shall mean The St. Paul Companies, Inc., a corporation
duly organized and existing under the laws of the State of Minnesota, and its
successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time in accordance with the terms hereof.
"Depositary" shall mean The Chase Manhattan Bank (National
Association), a national bank, and any successor thereof hereunder.
"Depositary Shares" shall mean the Depositary Shares, each
representing a one * (1/*th) interest in a share of Stock and evidenced by a
Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.05.
"Depositary's Office" shall mean the principal office of the
Depositary at which at any particular time its depositary business shall be
administered which office at the date hereof is located at 4 Chase MetroTech
Center, Brooklyn, New York 11245, Attention: Corporate Trust Administration.
"Receipt" shall mean one of the depositary receipts, whether in
definitive or temporary form, issued hereunder by the Depositary, each
representing any number of whole Depositary Shares.
"Record Holder" or "Holder" with respect to a Receipt shall mean the
individual, entity or person in whose name a Receipt is registered on the books
of the Depositary or any register of any Registrar maintained for such purpose
at a given time.
"Registrar" shall mean any bank or trust company appointed by the
Depositary to register ownership and transfers of Receipts as herein provided
(and may include the Depositary).
"Stock" shall mean shares of the Company's Series C Cumulative
Convertible Preferred Stock, par value $ * per share (liquidation preference $50
per share).
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ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK, EXECUTION AND DELIVERY,
TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.01. FORM AND TRANSFER OF RECEIPTS. Definitive Receipts
shall be engraved or printed or lithographed with steel-engraved borders and
shall be substantially in the form set forth in Exhibit A hereto, with such
appropriate insertions, modifications and omissions, as hereinafter provided.
Pending the preparation of definitive Receipts, the Depositary, upon the written
order of the Company delivered in compliance with Section 2.02, shall execute
and deliver temporary Receipts, which shall be printed, lithographed,
typewritten, word processed, photocopied, mimeographed or otherwise
substantially of the tenor of the definitive Receipts in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the persons executing such Receipts may determine, as evidenced by
their execution of such Receipts. If temporary Receipts are issued, the Company
and the Depositary will cause definitive Receipts to be prepared without
unreasonable delay. After the preparation of definitive Receipts, the temporary
Receipts shall be exchangeable for definitive Receipts upon surrender of the
temporary Receipts at the Depositary's Office. Upon surrender for cancellation
of any one or more temporary Receipts, the Depositary shall execute and deliver
in exchange therefor definitive Receipts representing the same number of
Depositary Shares as represented by the surrendered temporary Receipt or
Receipts registered in the name (and only the name) of the Holder of the
temporary Receipt. Such exchange shall be made at the Company's expense (and
without any charge therefor to the Holder). Until so exchanged, the temporary
Receipts shall in all respects be entitled to the same benefits under this
Deposit Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of one of its duly authorized officers; PROVIDED, that such signature may be a
facsimile if a Registrar for the Receipts (other than the Depositary) shall have
been appointed and such Receipts are countersigned by manual signature of a duly
authorized officer of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for any purpose
unless it shall have been executed manually by a duly authorized officer of the
Depositary or, if a Registrar for the Receipts (other than the Depositary) shall
have been appointed, by facsimile signature of a duly authorized officer of the
Depositary and countersigned manually by a
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duly authorized officer of such Registrar. The Depositary shall record on its
books each Receipt so signed and delivered as hereinafter provided. The manual
or facsimile signatures of individuals who were at any time proper officers of
the Depositary or the Registrar, as the case may be, shall constitute adequate
signatures hereunder, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the delivery of Receipts bearing such
signatures or did not hold such offices on the date of delivery of such
Receipts.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Deposit Agreement as may be required by the Depositary and approved by
the Company or required to comply with any applicable law or regulation or with
the rules and regulations of any securities exchange upon which the Stock, the
Depositary Shares or the Receipts may be listed or to conform with any usage
with respect thereto, or to indicate any special limitations or restrictions to
which any particular Receipts are subject.
Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed, or accompanied by a properly executed
instrument of transfer, shall be transferable by delivery of such Receipt with
the same effect as if such receipt were a negotiable instrument; PROVIDED,
HOWEVER, that until transfer of a Receipt shall be registered on the books of
the Registrar, on behalf of the Depositary, as provided in Section 2.04, the
Depositary may, notwithstanding any notice to the contrary, treat the Record
Holder as the absolute owner thereof for the purpose of determining the person
entitled to distributions of dividends or other distributions with respect to
the Stock or to any notice provided for in this Deposit Agreement and for all
other purposes.
The Depositary shall not lend any Stock deposited hereunder.
SECTION 2.02. DEPOSIT OF STOCK; EXECUTION AND DELIVERY OF RECEIPTS
IN RESPECT THEREOF. Subject to the terms and conditions of this Deposit
Agreement, the Company may from time to time deposit shares of Stock with the
Depositary under this Deposit Agreement by delivery to the Depositary a
certificate or certificates representing the Stock to be deposited; PROVIDED,
HOWEVER, that other than in the case of splits, combinations or other
reclassifications
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affecting the Stock, or in the case of dividends or other distributions of
Stock, if any, there shall be deposited with the Depositary hereunder not more
than * shares of Stock. Such certificate or certificates representing the Stock
shall be properly endorsed or accompanied, if required by the Depositary, by a
duly executed instrument of transfer or endorsement, in form satisfactory to the
Depositary, together with all such certifications as may be required by the
Depositary in accordance with the provisions of this Deposit Agreement, and
together with a written order of the Company directing the Depositary to execute
and deliver to the person or persons named in such order a Receipt or Receipts
evidencing in the aggregate the number of Depositary Shares representing such
deposited Stock.
All Stock deposited by the Company with the Depositary shall be held
by the Depositary at the Depositary's Office or at such other place or places as
the Depositary shall determine.
If required by the Depositary, Stock presented for deposit at any
time (except for the initial deposit of Stock and any subsequent deposit by the
Company), whether or not the register of shareholders of the Company is closed,
shall also be accompanied by an agreement or assignment, or other instrument
satisfactory to the Depositary, that will provide for the prompt transfer to the
Depositary or its nominee of any dividend or right to subscribe for additional
Stock or to receive other property that any person in whose name the Stock is or
has been registered may thereafter receive upon or in respect of such deposited
Stock, or in lieu thereof such agreement of indemnity or other agreement as
shall be satisfactory to the Depositary.
Upon receipt by the Depositary of a certificate or certificates
representing Stock deposited with the Depositary by the Company in accordance
with the provisions of this Section 2.02, together with the other documents
required as above specified, and upon recordation of the Stock so deposited on
the books of the Company in the name of the Depositary, the Depositary shall
execute and deliver, to the person or persons named in the written order
delivered to the Depositary referred to in the first paragraph of this Section
2.02, a Receipt or Receipts evidencing in the aggregate the number of Depositary
Shares relating to the Stock so deposited. Such Receipt or Receipts shall be
registered by the Depositary or the Registrar in such name or names as may be
requested by the person or persons named in the written order of the Company
delivered to the Depositary. The Depositary shall execute and deliver such
Receipts at the Depositary's Office or such other offices,
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if any, as such person may designate. Delivery at other offices shall be at the
risk and expense of the person requesting such delivery. In each case, delivery
will be made only upon payment by the Company to the Depositary of all taxes and
other governmental charges and any fees payable in connection with such deposit
and the transfer of the deposited Stock.
The Company shall deliver to the Depositary from time to time such
quantities of blank Receipts as the Depositary may request to enable it to
perform its obligations under this Deposit Agreement.
SECTION 2.03. REDEMPTION OF STOCK. Whenever the Company shall
elect to redeem shares of Stock in accordance with the Certificate, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary in
its capacity as Depositary not less than ten days' prior written notice of the
proposed date of the mailing of a notice of redemption of Stock to Holders of
Receipts to be effected in connection with a redemption of Stock and of the
number of such shares of Stock held by the Depositary to be redeemed as
hereinafter provided. On the date of any such redemption of Stock, the
Depositary shall redeem (using the proceeds received by the Depositary from the
redemption of the Stock) the number of Depositary Shares representing such
redeemed Stock. The Depositary shall, as directed by the Company in writing,
mail, first-class postage prepaid, a notice of the redemption of Stock and the
proposed simultaneous redemption of the Depositary Shares representing the Stock
to be redeemed, not less than 30 and not more than 60 days prior to the date
fixed for redemption (the "Redemption Date") of such Stock and Depositary
Shares. Such notice shall be mailed to the Record Holders on the record date
fixed for such redemption pursuant to Section 4.04 hereof of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
Holders as the same appear on the records of the Depositary; but neither failure
to mail any such notice to one or more such Holders nor any defect in any notice
shall affect the sufficiency of the proceedings for redemption. The Company
shall provide the Depositary with such notice, and each such notice shall state:
the record date for such redemption; the Redemption Date; that all outstanding
Depositary Shares are to be redeemed or converted; the place or places where
Receipts evidencing Depositary Shares to be redeemed are to be surrendered for
redemption; and that dividends in respect of the Stock represented by the
Depositary Shares to be redeemed will cease to accrue on such Redemption Date
unless the Company shall default in delivering the money or other property
payable by the Company at the time and place specified in such notice.
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Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to redeem the
shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph), all dividends in respect of the shares
of Stock so called for redemption shall cease to accrue (except as otherwise
provided in the Certificate), the Depositary Shares being redeemed shall be
deemed no longer to be outstanding, all rights of the Holders of Receipts
evidencing such Depositary Shares (except the right to receive the amounts
payable upon redemption) shall, to the extent of such Depositary Shares, cease
and terminate. Upon surrender in accordance with such notice of the Receipts
evidencing any such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), the Holders of such Receipts
shall receive for each such Depositary Share an amount of cash or other property
equal to one * (1/*th) of the redemption price per share payable with respect to
the Stock redeemed. The foregoing shall be subject further to the terms and
conditions of the Certificate.
The Depositary shall not be required (a) to issue, transfer or
exchange any Receipts for a period beginning at the close of business on the day
the Company first publicly announces the redemption of Stock and ending at the
close of business on the day the Depositary mails the notices of redemption of
Depositary Shares or (b) to transfer or exchange for another Receipt any Receipt
evidencing Depositary Shares called or being called for redemption.
SECTION 2.04. REGISTRATION OF TRANSFER OF RECEIPTS. Subject to
the terms and conditions of this Deposit Agreement, the Registrar, on behalf of
the Depositary, shall register on its books transfers of Receipts from time to
time upon notice to the Registrar by the Depositary of the surrender of a
Receipt for transfer by the Holder in person or by duly authorized
attorney-in-fact, which Receipt in each case must be properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement
together with evidence of the payment of any transfer taxes as may be required
by law. Upon surrender of a properly endorsed Receipt or a Receipt accompanied
by an instrument of transfer or endorsement, the Depositary shall execute a new
Receipt or Receipts evidencing the same aggregate number of Depositary Shares as
those evidenced by the Receipt or Receipts surrendered and deliver such new
Receipt or Receipts to or upon the order of the transferee named in the
endorsement or instrument of transfer.
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SECTION 2.05. SPLIT-UPS AND COMBINATIONS OF RECEIPTS, SURRENDER OF
RECEIPTS AND WITHDRAWAL OF STOCK. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other office as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts
(written notice of such split-up or combination having been provided to the
Depositary by the Company), the Depositary will execute and deliver a new
Receipt or Receipts to the Holder thereof or to such Holder's order in the
denominations requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.
Any Holder of at least * Depositary Shares which have not been
previously called for redemption may withdraw the number of whole shares of
Stock underlying such Depositary Shares and all money and other property, if
any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals. Thereafter, without unreasonable delay, the Depositary shall
deliver to such Holder, or to the person or persons designated by such Holder as
hereinafter provided, the number of whole shares of Stock and all money and
other property, if any, represented by the Receipt or Receipts so surrendered
for withdrawal, but Holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive Depositary Shares
therefor. If the Receipt or Receipts delivered by the Holder to the Depositary
in connection with such withdrawal shall evidence in the aggregate a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of Stock to be so withdrawn, the Depositary shall at the
same time, in addition to such number of whole shares of Stock and such money
and other property, if any, to be so withdrawn, deliver to such Holder, or
(subject to Sections 2.04 and 3.02) upon his order, a new Receipt evidencing
such excess number of Depositary Shares. Delivery of the Stock and the money
and other property being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock and the money and other property being withdrawn are to
be delivered to a person or persons other than the Record Holder of the Receipt
or Receipts being surrendered for withdrawal of Stock, such Holder shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
Holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer in blank.
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Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the Holder surrendering such Receipt or Receipts and for the account
of the Holder thereof, such delivery may be made at such other place as may be
designated by such Holder.
SECTION 2.06. LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND EXCHANGE OF RECEIPTS. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any taxes, charges or expenses payable by the Holder of
a Receipt pursuant to Sections 3.02 and 5.07, may require the production of
evidence satisfactory to it as to the identity and genuineness of any signature
and may also require compliance with the rules and regulations of any
governmental body, any stock exchange or any applicable self-regulatory body,
including, without limitation, the National Association of Securities Dealers,
Inc. (the "NASD") or such procedures, if any, as the Depositary or the Company
may establish consistent with the provisions of this Deposit Agreement.
The delivery of Receipts against Stock deposited with the Depositary
may be suspended, the registration of transfer of Receipts may be refused and
the registration of transfer, surrender, exchange, split-up or combination of
outstanding Receipts may be suspended and the deposit of Stock may be refused
(i) during any period when the register of shareholders of the Company is closed
or (ii) if any such action is deemed necessary by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of law or of any government, governmental body or commission,
stock exchange or the NASD.
SECTION 2.07. LOST RECEIPTS, ETC. If any mutilated Receipt is
surrendered to the Depositary, the Depositary shall execute and deliver in
exchange therefor a new Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt. In case any Receipt shall be
destroyed, lost or stolen, the Depositary shall execute and deliver a Receipt to
the Holder thereof of like form and tenor in exchange and substitution for such
destroyed or lost or stolen Receipt, upon (i) the filing by the Holder thereof
with the Depositary of evidence satisfactory to the
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Depositary of such destruction or loss or theft of such Receipt, of the
authenticity thereof and of such Holder's ownership thereof, (ii) the Holder's
furnishing the Depositary with reasonable indemnification satisfactory to the
Depositary and (iii) payment of any expenses including fees, charges and
expenses of the Depositary in connection with such execution and delivery.
Every new Receipt issued pursuant to this Section 2.07 in lieu of any mutilated,
destroyed, lost or stolen Receipt shall constitute an original additional
contractual obligation under this Deposit Agreement, whether or not the
mutilated, destroyed, lost or stolen Receipt shall be at any time enforceable by
anyone.
SECTION 2.08. CANCELLATION AND DESTRUCTION OF SURRENDERED
RECEIPTS. All Receipts surrendered to the Depositary or any Depositary's Agent
shall be canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
SECTION 2.09. CONVERSION OF STOCK INTO COMMON STOCK. At any time
when the Stock is convertible into Common Stock, Receipts may be surrendered
with written instructions to the Depositary to instruct the Company to cause the
conversion of any specified number of whole or fractional shares of Stock
represented by the Depositary Shares evidenced thereby into whole shares of
Common Stock at the conversion price then in effect for the Stock (and,
therefore, for the Depositary Shares) specified in the Certificate, as such
conversion price may be adjusted by the Company from time to time as provided in
the Certificate. Subject to the terms and conditions of this Deposit Agreement
and the Certificate, a Holder of a Receipt or Receipts evidencing Depositary
Shares representing whole or fractional shares of Stock may surrender such
Receipt or Receipts at the Depositary's Office or to such office or to such
Depositary's Agents as the Depositary may designate for such purpose, together
with a notice of conversion duly completed and executed, thereby directing the
Depositary to instruct the Company to cause the conversion of the number of
shares or fractions thereof of underlying Stock specified in such notice of
conversion into shares of Common Stock, and an assignment of such Receipt or
Receipts to the Company or in blank, duly completed and executed. If more than
one Receipt shall be delivered for conversion at one time by the same Holder,
the number of whole shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of Receipts so delivered.
Upon receipt by the Depositary of a Receipt or Receipts, together
with notice of conversion, duly completed
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and executed, directing the Depositary to instruct the Company to cause the
conversion of a specified number of shares or fractions thereof of Stock and an
assignment of such Receipt or Receipts to the Company or in blank, duly
completed and executed, if the Stock is at such time convertible into Common
Stock, the Depositary shall instruct the Company to cause (i) the conversion of
the Depositary Shares evidenced by the Receipts so surrendered for conversion as
specified in the written notice to the Depositary and (ii) the delivery to the
Holders of such Receipts of a certificate or certificates evidencing the number
of whole shares of Common Stock and the amount of money, if any, to be delivered
to the Holders of Receipts surrendered for conversion in lieu of fractional
shares of Common Stock otherwise issuable. The Company shall as promptly as
practicable after receipt thereof cause the delivery of (i) a certificate or
certificates evidencing the number of whole shares of Common Stock into which
the Stock represented by the Depositary Shares evidenced by such Receipt or
Receipts has been converted and (ii) any money or other property to which the
Holder is entitled. Upon such conversion the Depositary shall (i) deliver to
the Holder a Receipt evidencing the number of Depositary Shares, if any, which
such Holder has elected not to convert and evidencing the number of Depositary
Shares, if any, in excess of the number of Depositary Shares representing Stock
which has been so converted, (ii) cancel the Depositary Shares evidenced by
Receipts surrendered for conversion and (iii) deliver to the Company or its
transfer agent for the Stock for cancellation, the shares of Stock represented
by the Depositary Shares evidenced by the Receipts so surrendered and so
converted.
The Record Holder of Depositary Shares on any dividend payment
record date established by the Depositary pursuant to Section 4.04 shall be
entitled to receive the dividend payable with respect to such Depositary Shares
on the corresponding dividend payment date notwithstanding the subsequent
conversion of the shares of Stock to which such Depositary Shares relate.
Upon the conversion of any shares of Stock for which a request for
conversion has been made by the Holder of Depositary Shares representing such
shares, all dividends in respect of such Depositary Shares shall cease to
accrue, such Depositary Shares shall be deemed no longer outstanding, all rights
of the Holders of the Receipts with respect to such Depositary Shares (except
the right to receive the Common Stock, any cash payable with respect to any
fractional shares of Common Stock as provided herein and any cash payable on
account of accrued dividends and any
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Receipts evidencing Depositary Shares not so converted) shall terminate, and the
Receipts evidencing such Depositary Shares shall be cancelled in accordance with
Section 2.08 hereof.
No fractional shares of Common Stock shall be issuable upon
conversion of Stock underlying the Depositary Shares. If any Holder of Receipts
surrendered with instructions to the Depositary for conversion of the underlying
Stock would be entitled to a fractional share of Common Stock upon such
conversion, the Company shall cause to be delivered to such Holder an amount in
cash for such fractional share as provided in the Certificate.
ARTICLE III
CERTAIN OBLIGATIONS OF THE HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
Except for the initial deposit of Stock by the Company and any subsequent
deposit by the Company, any person presenting Stock for deposit or any Holder of
a Receipt may be required from time to time to file such proof of residence, or
other matters or other information, to obtain such guaranties of signature, to
execute such certificates and to make such customary representations and
warranties consistent with the terms of the Stock as the Depositary or the
Company may reasonably deem necessary or proper. The Depositary or the Company
may withhold the delivery, or delay the registration of transfer, conversion,
redemption or exchange, of any Receipt or the distribution of any dividend or
other distribution or the sale of any rights or of the proceeds thereof until
such proof or other information is filed or such certificates are executed or
such representations and warranties are made.
SECTION 3.02. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES.
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses as provided in Section 5.07. Registration of
transfer of any Receipt and delivery of all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or all or any part of the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the Holder thereof (after
attempting by reasonable means to notify such Holder prior
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to such sale), and such dividends, interest payments or other distributions or
the proceeds of any such sale may be applied to any payment of such charges or
expenses, the Holder of such Receipt remaining liable for any deficiency.
SECTION 3.03. WARRANTY AS TO STOCK. The Company hereby
represents and warrants to the Depositary that the Stock, when issued, will be
validly issued, fully paid and nonassessable, and entitled to the rights,
preferences and privileges set forth in the Certificate. Such representation
and warranty shall survive the deposit of the Stock and the issuance of
Receipts.
SECTION 3.04. COVENANTS AND WARRANTIES AS TO COMMON STOCK. The
Company covenants that it will keep reserved or otherwise available a sufficient
number of authorized and unissued shares of Common Stock to meet conversion
requirements in respect of the Stock and that it will give written notice to the
Depositary of any adjustments in the conversion price as set forth in the
Certificate. The Company represents and warrants that the Common Stock issued
upon conversion, when issued, will be validly issued, fully paid and
nonassessable. Such representation and warranty shall survive the conversion of
the Stock into such Common Stock.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.01. CASH DISTRIBUTIONS. Whenever the Depositary shall
receive any cash dividend or other cash distribution with respect to the Stock,
the Depositary shall, subject to Section 3.02, distribute to Record Holders of
Receipts on the record date fixed pursuant to Section 4.04 such amounts of such
dividend or distribution as are applicable to the number of Depositary Shares
evidenced by the Receipts held by such Holders; PROVIDED, HOWEVER, that if
the Company or the Depositary shall be required to withhold and shall withhold
any monies from any cash dividend or other cash distribution in respect of the
Stock on account of taxes or as otherwise required by law, regulation or court
order, the distribution in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any Holder of Depositary Shares a fraction of
one cent, and any balance not so distributable shall be held by the Depositary
(without liability for interest thereon) and shall be added to and be treated as
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part of the next succeeding distribution to Record Holders of Receipts then
outstanding.
SECTION 4.02. DISTRIBUTIONS OTHER THAN CASH. Whenever the
Depositary shall receive any property (including securities) for distribution in
a form other than cash with respect to the Stock, the Depositary shall, subject
to Section 3.02, distribute to Record Holders of Receipts on the record date
fixed pursuant to Section 4.04 such amounts, as nearly as practicable, of such
property (including securities) received by it as are applicable to the number
of Depositary Shares evidenced by the Receipts held by such Holders, in any
manner that the Depositary may deem equitable and practicable for accomplishing
such distribution. If, in the opinion of the Depositary, such distribution
cannot be made proportionately among such Record Holders, or if for any other
reason (including any requirement that the Company or the Depositary withhold an
amount on account of taxes or as otherwise required by law, regulation or court
order) the Depositary deems, after consultation with the Company, such
distribution not to be feasible, the Depositary may, with the approval of the
Company, adopt such method as it deems equitable and practicable for the purpose
of effecting such distribution, including the sale of the property thus
received, or any part thereof, in a commercially reasonable manner. The net
proceeds of any such sale shall, subject to Section 3.02, be distributed or made
available for distribution, as the case may be, by the Depositary to Record
Holders of Receipts in accordance with the provisions of Section 4.01 for a
distribution received in cash.
SECTION 4.03. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If
the Company shall at any time offer or cause to be offered to the persons in
whose names Stock is recorded on the books of the Company any rights,
preferences or privileges to subscribe for or to purchase any securities or any
rights, preferences or privileges of any other nature, such rights, preferences
or privileges shall in each such instance be made available by the Depositary
(after having received written notice of such event from the Company) to the
Record Holders of Receipts pursuant to written instructions received by the
Depositary from the Company, either by the issue to such Record Holders of
warrants representing such rights, preferences or privileges or by such other
method pursuant to the written instruction of the Company; PROVIDED, HOWEVER,
that (i) if at the time of issue or offer of any such rights, preferences or
privileges the Company determines that it is not lawful or not feasible to make
such rights, preferences or privileges available to Holders of Receipts by the
issue of warrants or otherwise, or (ii) if and to the extent so
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instructed by Holders of Receipts who do not desire to exercise such rights,
preferences or privileges, then the Depositary shall so notify the Company,
which may, if applicable laws or the terms of such rights, preferences or
privileges permit such transfer, arrange for the sale of such rights,
preferences or privileges at public or private sale, at such place or places and
upon such terms as it may deem proper. The net proceeds of any such sales shall
be distributed by the Depositary to the Record Holders of Receipts entitled
thereto as provided by Section 4.01 in the case of a distribution received in
cash.
If any action under the laws of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to Holders of Receipts,
the Company agrees with the Depositary that the Company will use its best
efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such Holders to exercise such rights, preferences or
privileges.
SECTION 4.04. NOTICE OF DIVIDENDS, ETC.; FIXING OF RECORD DATE FOR
HOLDERS OF RECEIPTS. Whenever any cash dividend or other cash distribution
shall become payable or any distribution of property (including securities)
other than cash shall be made, or if rights, preferences or privileges shall at
any time be offered with respect to Stock, or whenever the Depositary shall
receive notice of (i) any meeting at which holders of Stock are entitled to vote
or of which holders of Stock are entitled to notice or (ii) any election on the
part of the Company to redeem any shares of Stock, the Depositary, in each such
instance, shall fix a record date (which shall be the same date as the record
date fixed by the Company with respect to the Stock) for the determination of
the Holders of Receipts who shall be entitled hereunder to receive a
distribution in respect of such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, or to give instructions for
the exercise of voting rights at any such meeting, or to receive notice of such
meeting.
SECTION 4.05. VOTING RIGHTS. Upon receipt of notice of any
meeting at which the holders of Stock are entitled to vote, the Depositary
shall, as soon as practicable thereafter, mail to the Record Holders of Receipts
a notice which shall be provided by the Company and which shall contain (i) such
information as is contained in such
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notice of meeting, (ii) a statement that the Record Holders at the close of
business on the specified record date fixed pursuant to Section 4.04 will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of Stock (or portion thereof) underlying their
respective Depositary Shares and (iii) a brief statement to the manner in which
such instructions may be given. Upon the written request of the Holders of
Receipts on the applicable record date, the Depositary shall endeavor, insofar
as practicable, to vote or cause to be voted, in accordance with the
instructions set forth in such requests, the votes relating to the shares of
Stock (or portion thereof) underlying the Depositary Shares evidenced by all
Receipts as to which any particular voting instructions are received. The
Company hereby agrees to take all necessary action in order to enable the
Depositary to vote such Stock (or portion thereof) or cause such Stock (or
portion thereof) to be voted. Absent specific instructions from the Holder of a
Receipt, the Depositary will abstain from voting (but, at its discretion, not
from appearing at any meeting with respect to such Stock unless directed to the
contrary by the Holders of all the Receipts then outstanding) to the extent of
the Stock (or portion thereof) underlying the Depositary Shares evidenced by
such Receipt.
SECTION 4.06. CHANGES AFFECTING DEPOSITED SECURITIES AND
RECLASSIFICATIONS, RECAPITALIZATIONS, ETC. Upon any change in par or stated
value, split-up, combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, amalgamation or consolidation to
which the Company is a party or sale of all or substantially all of the
Company's assets (each of the foregoing being referred to herein as a
"Transaction"), the Depositary (after having received written notice of any such
Transaction from the Company) shall, upon the written instructions of the
Company, and in such manner as to retain as nearly as possible the percentage
ownership interest in Stock of Holders of Receipts immediately prior to such
event, (i) make such adjustments in (a) the fraction of an interest in one share
of Stock underlying one Depositary Share, (b) the ratio of the redemption price
per Depositary Share to the redemption price of a share of Stock and (c) the
ratio of the conversion price per Depositary Share to the conversion price of a
share of Stock, in each case as may be necessary to reflect fully the effects of
such Transaction and (ii) treat any securities received by the Depositary in
exchange for, or upon conversion or in respect of, the Stock as new deposited
securities so received in exchange for, or upon conversion or in respect of, the
Stock. In any such case the Depositary may, with the approval of the Company,
execute
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and deliver additional Receipts, or may call for surrender of all outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited securities.
Anything to the contrary herein or in the Receipt notwithstanding,
Holders of Receipts shall have the right from and after the effective date of
any such Transaction, to the extent that Holders of Stock had the right, prior
to or on the applicable effective date, to convert, exchange or surrender shares
of Stock into or for other stock, securities, property or cash, to surrender
such Receipts to the Depositary with instructions to convert, exchange or
surrender the Stock represented thereby only into or for, as the case may be,
the kind and amount of shares of stock and other securities and property and
cash into which such Stock represented by such Receipts has been converted or
for which such Stock might have been exchanged or surrendered immediately prior
to the effective date of such Transaction.
SECTION 4.07. INSPECTION OF REPORTS. The Depositary shall make
available for inspection by Holders of Receipts during normal business hours at
the Depositary's office, and at such other places as it may from time to time
deem advisable, any reports and communications received from the Company that
are both received by the Depositary as the holder of Stock and made generally
available to the holders of Stock.
SECTION 4.08. LIST OF RECEIPT HOLDERS. Promptly upon request by,
and at the expense of, the Company, the Depositary shall furnish to it a list,
as of a specified date, of the names and addresses of all persons in whose names
Receipts are registered on the books of the Depositary, and the amount of Stock
represented thereby.
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.01. MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS
BY THE DEPOSITARY; REGISTRAR. Upon execution of this Deposit Agreement, the
Depositary shall maintain, at the Depositary's Office, facilities for the
execution and delivery, registration and registration of transfer, surrender and
exchange of Receipts, and at the offices of the Depositary's Agents, if any,
facilities for the delivery, registration of transfer, surrender and exchange of
Receipts, all in accordance with the provisions of this Deposit Agreement.
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The Depositary shall, with the approval of the Company, appoint a
Registrar for registration of such Receipts or Depositary Shares in accordance
with any requirements of any applicable stock exchange in which the Receipts or
the Depositary Shares are listed. Such Registrar (which may be the Depositary
if so permitted by the requirements of such exchange) may be removed and a
substitute Registrar appointed by the Depositary upon the request or with the
approval of the Company. If the Receipts, the Depositary Shares or the Stock
are listed on one or more other stock exchanges, the Depositary will, at the
request of the Company, arrange such facilities for the delivery, registration,
registration of transfer, surrender and exchange of such Receipts, such
Depositary Shares or such Stock as may be required by law or applicable stock
exchange regulation.
The Registrar shall maintain books at the Depositary's Office for
the registration and registration of transfer of Receipts or at such other place
as shall be approved by the Company and of which the Holders of Receipts shall
have reasonable notice, which books at all reasonable times during normal
business hour shall be open for inspection by the Record Holders of Receipts;
PROVIDED, that any such Holder requesting to exercise such rights shall
certify in writing to the Registrar that such inspection shall be for a proper
purpose reasonably related to such person's interest as an owner of Depositary
Shares evidenced by the Receipts.
The Depositary may cause the Registrar to close the books with
respect to the Receipts, at any time or from time to time, when the register of
shareholders of the Company is closed with respect to the Stock or when such
action is deemed necessary or advisable by the Depositary, any Depositary's
Agent or the Company because of any requirement of law or of any government,
governmental body or commission, stock exchange or any applicable
self-regulatory body, including, without limitation, the NASD.
SECTION 5.02. PREVENTION OF OR DELAY IN PERFORMANCE BY THE
DEPOSITARY, THE DEPOSITARY'S AGENTS, THE RESISTRAR OR THE COMPANY. Neither the
Depositary nor any Depositary's Agent nor any Registrar nor the Company, nor any
officer, director, employee or agent thereof, shall incur any liability to any
Holder of any Receipt if by reason of any provision of any present or future
law, or regulation thereunder, of the United States of America or of any other
governmental authority or by reason of any provision, present or future, of the
Company's Amended and Restated Articles of Incorporation (including the
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Certificate) or by reason of any act of God, war or civil disorder, failure of
power, fire or other casualty damage or governmental requirements or
restrictions, the Depositary, the Depositary's Agent, the Registrar or the
Company shall be prevented, delayed or forbidden from doing or performing any
act or thing that the terms of this Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary's Agent, any Registrar or
the Company, nor any officer, director, employee or agent thereof, incur any
liability or be subject to any obligation (i) by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing that the
terms of this Deposit Agreement provide shall or may be done or performed, or
(ii) by reason of any exercise of, or failure to exercise, any discretion
provided for in this Deposit Agreement, except in the event of the negligence or
misconduct of the party charged with such exercise or failure to exercise.
SECTION 5.03. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY. Neither the Depositary nor any
Depositary's Agent nor any Registrar nor the Company shall be under any
obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of the Stock, the Depositary Shares or the Receipts that
in its opinion may involve it in expense or liability unless indemnity
satisfactory to such party against all such expense and liability be furnished
as required.
Neither the Depositary nor any Depositary's Agent nor the Company,
nor any officer, director, employee or agent thereof, assumes any obligation or
shall be subject to any liability under this Deposit Agreement to Holders of
Receipts other than to use its best judgment and good faith in the performance
of such duties as are specifically set forth in this Deposit Agreement. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company, nor
any officer, director, employee or agent thereof, shall be liable to any party
hereto for any action or any failure to act by it with respect to this Deposit
Agreement in reliance upon the written advice of legal counsel or accountants,
or information from any person presenting stock for deposit, any Holder of a
Receipt or other persons believed to be authorized or competent and on documents
believed to be genuine. The Depositary, any Depositary's Agent, any Registrar
and the Company, and any officer, director, employee or agent thereof, may each
conclusively, rely and shall each be fully protected in acting upon any written
notice, request, direction or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
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The Depositary undertakes, and shall cause any Registrar to
undertake, to perform such duties as are specifically set forth in this Deposit
Agreement using its best efforts and in good faith. The parties hereto
acknowledge that no implied covenants or obligations shall be read into this
Deposit Agreement against the Depositary or any Registrar or against the Company
with respect to the Depositary and any Registrar. The Depositary hereby
indemnifies the Company against any liability that may arise out of acts
performed or omitted by the Depositary or any Depositary's Agent due to its or
their gross negligence or willful misconduct.
The Depositary and its affiliates or subsidiaries, any Depositary's
Agent and the Company (to the extent permitted by law) may own, buy, sell or
deal in any class of securities of the Company and its affiliates and in
Receipts or Depositary Shares. The Depositary and its affiliates or
subsidiaries, and any Depositary's Agent may become pecuniarily interested in
any transaction in which the Company or its affiliates or subsidiaries may be
interested or contract with or lend money to the Company or its affiliates or
subsidiaries or otherwise act as fully or as freely as if it were not the
Depositary or the Depositary's Agent hereunder. The Depositary may also act as
transfer agent or registrar of any of the securities of the Company and its
affiliates or subsidiaries or act in any other capacity for the Company or its
affiliates or subsidiaries. Neither the Depositary (or its officers, directors,
employees or agents) nor any Depositary's Agent makes any representation or has
any responsibility as to the validity of the Registration Statement pursuant to
which the Depositary Shares are registered under the Securities Act of 1933, as
amended, the Stock, the Depositary Shares, the Receipts (except its signature
thereon) or any instruments referred to therein or herein, or as to the
correctness of any statement made therein except the number of Depositary Shares
represented by such Receipts.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Stock at any time deposited with the Depositary hereunder or
of the Depositary Shares or as to the value of the Depositary Shares. The
Depositary shall not be accountable for the use or application by the Company of
the Depositary Shares or the Receipts or the proceeds thereof.
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SECTION 5.04. RESIGNATION AND REMOVAL OF THE DEPOSITARY;
APPOINTMENT OF SUCCESSOR DEPOSITARY. The Depositary may at any time resign as
Depositary hereunder by written notice of its election so to resign delivered to
the Company, such resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice
of such removal delivered to the Depositary, such removal to take effect upon
the appointment of a successor Depositary and its acceptance of such appointment
as hereinafter provided.
If the Depositary acting hereunder shall at any time resign or be
removed, the Company shall, within sixty (60) days after the delivery of the
notice of resignation or removal, as the case may be, appoint a successor
Depositary, which shall be a bank or trust company having its principal office
in the United States of America and having a combined capital and surplus of at
least $50,000,000. In the event the Company fails to appoint such successor
Depositary within such sixty (60) day period, the Depositary may petition any
court of competent jurisdiction for the appointment of a successor Depositary.
Every successor Depositary shall execute and deliver to its predecessor and to
the Company an instrument in writing accepting its appointment hereunder and
agreeing to become a party to this Deposit Agreement, and thereupon such
successor Depositary, without any further act or deed, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor and for
all purposes shall be the Depositary under this Deposit Agreement, and such
predecessor, upon payment of all sums due it and on the written request of the
Company, shall execute and deliver an instrument transferring to such successor
all rights and powers of such predecessor hereunder, shall duly assign, transfer
and deliver all right, title and interest in the Stock and any monies or
property held hereunder to such successor and shall deliver to such successor a
list of the Record Holders of all outstanding Receipts. Any successor
Depositary shall promptly mail notice of its appointment to the Record Holders
of Receipts.
Any corporation or other entity into or with which the Depositary
may be merged, consolidated or converted, or to which the Depositary may sell
all or substantially all its assets, shall be the successor of such Depositary
without the execution or filing of any document or any further act. Such
successor Depositary may authenticate the Receipts in the name of the
predecessor Depositary or in the name of the successor Depositary.
SECTION 5.05. CORPORATE NOTICES AND REPORTS. The Company agrees
that it will deliver to the Depositary and
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the Depositary will, promptly after receipt thereof, transmit to the Record
Holders of Receipts, in each case at the address furnished to it pursuant to
Section 4.08, all notices and reports (including, without limitation, financial
statements) required by law, the rules of any national securities exchange upon
which the Stock, the Depositary Shares or the Receipts are listed or by the
Company's Amended and Restated Articles of Incorporation (including the
Certificate) or By-laws to be furnished by the Company to Holders of Stock.
Such transmission will be at the Company's expense and the Company will provide
the Depositary with such number of copies of such documents as the Depositary
may reasonably request. In addition, the Depositary will transmit to Record
Holders of Receipts at the Company's expense such other documents as may be
requested by the Company.
SECTION 5.06. INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify the Depositary, any Depositary's Agent and any Registrar and any
director, officer, employee or agent thereof against, and hold each of them
harmless from, any loss, liability or expense (including the reasonable costs
and expenses of defending itself) that may arise out of (i) acts performed or
omitted in connection with this Deposit Agreement and the Receipts (a) by the
Depositary, any Registrar or any of their respective agents (including any
Depositary's Agent) except for any liability arising out of gross negligence or
willful misconduct on the respective parts of any such person or persons, or (b)
by the Company or any of its agents, or (ii) the offer, sale or registration of
the Depositary Shares, Receipts or the Stock pursuant to the provisions hereof.
This indemnification does not extend in favor of Holders of Receipts.
SECTION 5.07. CHARGES AND EXPENSES. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The Company shall pay all charges of
the Depositary in connection with the initial deposit of the Stock and the
initial issuance of the Depositary Shares, any redemption of the Stock and the
issuance of shares of Common Stock upon the surrender of Receipts for
conversion. All other transfer and other taxes and governmental charges shall
be at the expense of Holders of Depositary Shares. If, at the request of a
Holder of Receipts, the Depositary incurs charges or expenses for which it is
not otherwise liable hereunder, such Holder will be liable for such charges and
expenses. All other reasonable charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
reasonable fees and expenses of counsel) incident to the performance of their
respective obligations hereunder will be payable by the
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Company. The Depositary shall present any statement for charges and expenses to
the Company promptly, unless the Company shall agree otherwise.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. AMENDMENT. The form of the Receipts and any
provisions of this Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary in any respect which
they may deem necessary or desirable; PROVIDED, HOWEVER, that no such
amendment that shall materially and adversely alter the rights of the Holders of
Receipts shall be effective unless such amendment shall have been approved by
the Holders of at least 66 2/3% of the Depositary Shares then outstanding.
Every Holder of an outstanding Receipt at the time any amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby. In no event shall any amendment impair the right, subject to the
provisions of Sections 2.05, 2.06 and 2.09 hereof, of any owner of any
Depositary Shares to surrender any Receipt evidencing such Depositary Shares to
the Depositary with instructions to cause the conversion of such Receipt into
Common Stock or to deliver to the Holder the Stock, all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law or the rules and regulations of any governmental
body, agency or commission, the NASD or any applicable stock exchange.
SECTION 6.02. TERMINATION. This Agreement may be terminated by
the Company or the Depositary only after (i) all outstanding Depositary Shares
shall have been redeemed pursuant to Section 2.03, (ii) there shall have been
made a final distribution in respect of the Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the Holders of Receipts pursuant to Section 4.01
or 4.02, as applicable, or (iii) each share of Stock shall been converted into
shares of Common Stock.
Upon the termination of this Deposit Agreement, the parties hereto
shall be discharged from all obligations
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under this Deposit Agreement except for their respective obligations under
Sections 5.03, 5.06 and 5.07.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. COUNTERPARTS. This Deposit Agreement may be
executed in any number of counterparts, and by each of the parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed an original, but all of which counterparts when taken
together shall constitute one and the same instrument.
SECTION 7.02. EXCLUSIVE BENEFIT OF PARTIES. This Deposit
Agreement is for the exclusive benefit of the parties hereto, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.
SECTION 7.03. INVALIDITY OF PROVISIONS. If any one or more of
the provisions contained in this Deposit Agreement or in the Receipts should be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or modified thereby.
SECTION 7.04. NOTICES. All notices hereunder shall be deemed
given by a party hereto if in writing and delivered personally or by telegram or
facsimile transmission or by registered or certified mail (return receipt
requested) to the other party at the following address for such party (or at
such other address as shall be specified by like notice):
If to the Company to:
385 Washington Street
St. Paul, Minnesota 55102
Telecopy: (612) 221-8204
Attention: Senior Vice President and
General Counsel
If to the Depositary to:
The Chase Manhattan Bank
(National Association)
4 Chase MetroTech Center
Brooklyn, New York 11245
Telecopy: (718) 242-5886
Attention: Mr. Sam Schwartzman
Corporate Trust Administration
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<PAGE>
Any notices given to any Holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if (i)
personally delivered, (ii) sent by first-class mail, or (iii) sent by telegram,
telex, telecopier or facsimile transmission and confirmed by first-class letter.
Such notice shall be addressed to such Holder at the address of such Holder as
it appears on the books of the Depositary or, if such Holder shall have timely
filed with the Depositary a written request that notices intended for such
Holder be mailed to some other address, at the address designated in such
request.
Delivery of a notice sent by first class mail, or by telegram or
telex or telecopier or facsimile, shall be deemed to be effected at the time
when a duly addressed letter containing the same (or a duly addressed letter
confirming an earlier notice in the case of a telegram or telex or telecopier or
facsimile) is deposited, postage prepaid, in a post office letter box. The
Depositary or the Company may, however, act upon any telegram or telex or
telecopier message received by it from the other or from any Holder of a
Receipt, notwithstanding that such telegram or telex or telecopier message shall
not subsequently be confirmed by letter as aforesaid.
SECTION 7.05. DEPOSITARY'S AGENTS. The Depositary may from time
to time appoint any Depositary's Agent to act in any respect for the Depositary
for the purposes of this Deposit Agreement and may at any time appoint
additional Depositary's Agents and vary or terminate the appointment of such
Depositary's Agents. The Depositary will promptly notify the Company of any
such action.
SECTION 7.06. HOLDERS OF RECEIPTS ARE PARTIES. By acceptance of
delivery of the Receipts, any Holder of such Receipt from time to time shall be
deemed to have agreed to become a party to this Deposit Agreement and to be
bound by all of the terms and conditions hereof and of the Receipts to the same
extent as though such person executed this Agreement.
Section 7.07. GOVERNING LAW. This Deposit Agreement and the
Receipts and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by, and construed in accordance with, the laws of the
State of New York (without reference to applicable conflicts of law provisions).
SECTION 7.08. INSPECTION OF DEPOSIT AGREEMENT. Copies of the
Deposit Agreement shall be filed with the
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Depositary and the Depositary's Agents and shall be open to inspection during
business hours at the Depositary's Office and the respective offices of the
Depositary's Agents, if any, by any Holder of a Receipt.
SECTION 7.09. HEADINGS. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or the Receipts or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Depositary have caused their
duly authorized officers to execute and deliver this Deposit Agreement as of the
day and year first above set forth, and all Holders of Receipts shall become
parties hereto by and upon acceptance by them of delivery of Receipts issued in
accordance with the terms hereof.
THE ST. PAUL COMPANIES, INC.
By:
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
(National Association), as Depositary
By:
--------------------------------------
Authorized Officer
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EXHIBIT A
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES
EACH REPRESENTING AN INTEREST IN ONE *
(1/*th) OF
A SHARE OF SERIES C CUMULATIVE CONVERTIBLE PREFERRED
STOCK
(Par Value $ * Per Share)
OF
THE ST. PAUL COMPANIES, INC.
(Incorporated under the Laws of the State of Minnesota)
--------------------------------
The Chase Manhattan Bank (National Association), a national bank,
with an office at the time of the execution of the Deposit Agreement (as defined
below) at 4 Chase MetroTech Center, Brooklyn, New York 11245, as Depositary
(the "Depositary"), hereby certifies that __________________ is the registered
owner of _____________ Depositary Shares ("Depositary Shares"), each Depositary
Share representing an interest in one * (1/*th) of a share of Series C
Cumulative Convertible Preferred Stock, par value $ * per share (liquidation
preference $50 per share) (the "Stock") of The St. Paul Companies, Inc., a
corporation duly organized and existing under the laws of the State of Minnesota
(the "Company"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, through the Depositary to all the
rights and preferences of the Stock relating thereto, including dividend,
voting, conversion, redemption and liquidation rights and preferences contained
in the Certificate of Designation of The St. Paul Companies, Inc. of Series C
Cumulative Convertible Preferred Stock adopted by the Company's Board of
Directors setting forth the number, terms, powers, designations, rights,
preferences, qualifications, restrictions and limitations of the Stock (the
"Certificate"), copies of which are on file at the Depositary's Office.
1. THE DEPOSIT AGREEMENT. Depositary Receipts (the "Receipts"),
of which this Receipt is one, are made available upon the terms and conditions
set forth in the Deposit Agreement, dated as of * , 1995 (the "Deposit
Agreement"), among the Company, the Depositary and all Holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office) sets forth the rights of Holders of Receipts and the rights
and duties of the Depositary and the Company in respect of the Stock deposited,
and any and all other property and cash deposited from time to time, thereunder.
The statements made on the face and the reverse of this Receipt are summaries of
certain provisions of the Deposit
<PAGE>
Agreement and are subject to the detailed provisions thereof, to which reference
is hereby made. Unless otherwise expressly herein provided, all capitalized and
undefined terms used herein shall have the meaning ascribed thereto in the
Deposit Agreement.
2. REDEMPTION. Whenever the Company shall elect to redeem shares
of Stock in accordance with the Certificate, it shall (unless otherwise agreed
in writing with the Depositary) give the Depositary in its capacity as
Depositary not less than ten days' prior notice of the proposed date of the
mailing of a notice of redemption of Stock to Holders of Receipts to be effected
in connection with a redemption of Stock and of the number of such shares of
Stock held by the Depositary to be redeemed as provided herein. On the date of
any such redemption of Stock, the Depositary shall redeem (using the proceeds
received by the Depositary from the redemption of the Stock) the number of
Depositary Shares representing such redeemed Stock. The Depositary shall, as
directed by the Company, mail, first-class postage prepaid, notice of the
redemption of Stock and the proposed simultaneous redemption of the Depositary
Shares representing the Stock to be redeemed, not less than 30 and not more than
60 days prior to the date fixed for redemption (the "Redemption Date") of such
Stock and Depositary Shares. Such notice shall be mailed to the Holders of
record of the Receipts evidencing Depositary Shares to be redeemed on the record
date fixed for such redemption as provided in paragraph 11 below of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
Holders as the same appear on the records of the Depositary; but neither failure
to mail any such notice to one or more such Holders nor any defect in any notice
shall affect the sufficiency of the proceedings for redemption. The Company
shall provide the Depositary with such notice, and each such notice shall state:
the record date for such redemption; the Redemption Date; that all outstanding
Depositary Shares are to be redeemed or converted; the place or places where
Receipts evidencing Depositary Shares to be redeemed are to be surrendered for
redemption; and that dividends in respect of the Stock represented by the
Depositary Shares to be redeemed will cease to accrue on such Redemption Date
unless the Company shall default in delivering the money or other property
payable by the Company at the time and place specified in such notice. Notice
having been mailed by the Depositary as aforesaid, from and after the Redemption
Date (unless the Company shall have failed to redeem the shares of Stock to be
redeemed by it, as set forth in the Company's notice provided for above), all
dividends in respect of shares of Stock so called for redemption shall cease to
accrue (except
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as otherwise provided in the Certificate), the Depositary Shares being redeemed
shall be deemed no longer to be outstanding and all rights of the Holders of
Receipts evidencing such Depositary Shares (except the right to receive the
amounts payable upon redemption) shall, to the extent of such Depositary Shares,
cease and terminate. Upon surrender in accordance with said notice of the
Receipts evidencing such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), the Holders of such Receipts
shall receive for each such Depositary Share an amount of cash or other property
equal to one * (1/*th) of the redemption price per share payable with respect to
the Stock redeemed. The foregoing shall be subject further to the terms and
conditions of the Certificate.
3. TRANSFER, SPLIT-UPS, COMBINATIONS. This Receipt is
transferable on the books of the Depositary upon surrender of this Receipt to
the Depositary, properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement, and upon such transfer the Depositary
shall execute a new Receipt to or upon the order of the person entitled thereto,
as provided in the Deposit Agreement. This Receipt may be split into other
Receipts or combined with other Receipts into one Receipt, representing the same
aggregate number of Depositary Shares as the Receipt or Receipts surrendered.
Any Holder of at least * (*) Depositary Shares which have not been previously
called for redemption may withdraw the number of whole shares of Stock
underlying such Depositary Shares and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts at the Depositary's
Office or at such other offices as the Depositary may designate for such
withdrawals. Thereafter, holders of such whole shares will not be entitled to
deposit such Stock and receive Depositary Shares therefor.
4. CONVERSION RIGHTS. At any time when the Stock is convertible
into Common Stock, this Receipt may be surrendered with written instructions to
the Depositary to instruct the Company to cause the conversion of any specified
number of whole or fractional shares of Stock represented by the Depositary
Shares evidenced thereby into whole shares of Common Stock at the conversion
price then in effect for the Stock (and, therefore, for the Depositary Shares)
specified in the Certificate, as such conversion price may be adjusted by the
Company from time to time as provided in the Certificate. Subject to the terms
and conditions of the Deposit Agreement and the Certificate, a Holder of a
Receipt or Receipts evidencing Depositary Shares representing whole or
fractional shares of Stock may
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<PAGE>
surrender such Receipt or Receipts at the Depositary's Office or to such office
or to such Depositary's Agents as the Depositary may designate for such purpose,
together with a notice of conversion duly completed and executed, thereby
directing the Depositary to instruct the Company to cause the conversion of the
number of shares or fractions thereof of underlying Stock specified in such
notice of conversion into shares of Common Stock, and an assignment of such
Receipt or Receipts to the Company or in blank, duly completed and executed. If
more than one Receipt shall be delivered for conversion at one time by the same
Holder, the number of whole shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of Receipts so
delivered.
Upon receipt by the Depositary of a Receipt or Receipts, together
with notice of conversion, duly completed and executed, directing the Depositary
to instruct the Company to cause the conversion of a specified number of shares
or fractions thereof of Stock into Common Stock and an assignment of such
Receipt or Receipts to the Company or in blank, duly completed and executed, if
the Stock is at such time convertible into Common Stock, the Depositary shall
instruct the Company to cause (i) the conversion of the Depositary Shares
evidenced by the Receipts so surrendered for conversion as specified in the
written notice to the Depositary and (ii) the delivery to the Holders of such
Receipts a certificate or certificates evidencing the number of whole shares of
Common Stock, and the amount of money, if any, to be delivered to the Holders of
Receipts surrendered for conversion in lieu of fractional shares of Common Stock
otherwise issuable. The Company shall as promptly as practicable after receipt
thereof cause the delivery of (i) a certificate or certificates evidencing the
number of whole shares of Common Stock into which the Stock represented by the
Depositary Shares evidenced by such Receipt or Receipts has been converted, and
(ii) any money or other property to which the Holder is entitled. Upon such
conversion, the Depositary shall (i) deliver to the Holder a Receipt evidencing
the number of Depositary Shares, if any, which such Holder has elected not to
convert and evidencing the number of Depositary Shares, if any, in excess of the
number of Depositary Shares representing Stock which has been so converted, (ii)
cancel the Depositary Shares evidenced by Receipts surrendered for conversion
and (iii) deliver to the Company or its transfer agent for the Stock for
cancellation the shares of Stock represented by the Depositary Shares evidenced
by the Receipts so surrendered and so converted.
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The Holder of Depositary Shares on any dividend payment record date
established by the Depositary shall be entitled to receive the dividend payable
with respect to such Depositary Shares on the corresponding dividend payment
date notwithstanding the subsequent conversion of the shares of Stock to which
such Depositary Shares relate.
Upon the conversion of any shares of Stock for which a request for
conversion has been made by the Holder of Depositary Shares representing such
shares, all dividends in respect of such Depositary Shares shall cease to
accrue, such Depositary Shares shall be deemed no longer outstanding, all rights
of the Holder of the Receipt with respect to such Depositary Shares (except the
right to receive the Common Stock, any cash payable with respect to any
fractional shares of Common Stock as provided herein and any cash payable on
account of accrued dividends and any Receipts evidencing Depositary Shares not
so converted) shall terminate, and the Receipt evidencing such Depositary Shares
shall be cancelled.
5. SUSPENSION OF DELIVERY, TRANSFER, ETC. The transfer,
split-up, combination or surrender of this Receipt may be suspended and except
as otherwise provided in the Deposit Agreement, the deposit of Stock may be
refused during any period when the register of shareholders of the Company is
closed, or if any such action is deemed necessary or advisable by the
Depositary, any agent of the Depositary or the Company at any time or from time
to time because of any requirement of law or of any government or governmental
body or commission, stock exchange or the NASD or under any provision of the
Deposit Agreement.
6. WARRANTY BY COMPANY. The Company warrants that the Stock when
issued and any shares of Common Stock issuable upon conversion of the Stock
(which the Company shall keep available for issuance), will be validly issued,
fully paid and nonassessable.
7. AMENDMENT. The form of the Receipts and any provisions of the
Deposit Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect which they may deem
necessary or desirable; PROVIDED, HOWEVER, that no such amendment that shall
materially and adversely alter the rights of the Holders of Receipts shall be
effective unless such amendment shall have been approved by the Holders of at
least 66 2/3% of the Depositary Shares then outstanding. A Holder of an
outstanding Receipt at the time any amendment becomes effective shall be deemed,
by continuing to hold such
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Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby.
8. CHARGES OF DEPOSITARY. The Company shall pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements, and all charges of the Depositary in connection with
the initial deposit of the Stock, the initial issuance of the Depositary Shares,
the redemption of the Stock and the issuance of shares of Common Stock upon the
surrender of Receipts for conversion. All other transfer and other taxes and
other governmental charges shall be at the expense of Holders of Depositary
Shares.
9. TITLE TO RECEIPTS. This Receipt (and the Depositary Shares
evidenced hereby), when properly endorsed or accompanied by a properly executed
instrument of transfer, is transferable by delivery with the same effect as in
the case of a negotiable instrument; PROVIDED, HOWEVER, that until transfer
of a Receipt shall be registered on the books of the Registrar, on behalf of the
Depositary, the Depositary may, notwithstanding any notice to the contrary,
treat the Holder hereof at such time as the absolute owner hereof for the
purpose of determining the person entitled to distributions of dividends or
other distributions with respect to the Stock or to any notice provided for in
the Deposit Agreement, and for all other purposes.
10. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary
receives any cash dividend or other cash distribution with respect to the Stock,
the Depositary shall, subject to the provisions of the Deposit Agreement, make
such distribution to the Receipt Holders in proportion to the number of
Depositary Shares held by them; PROVIDED, HOWEVER, that the amount
distributed will be reduced by any amounts required to be withheld by the
Company or the Depositary on account of taxes or as otherwise required by law,
regulations or court order. Other distributions received on the Stock shall,
subject to the provisions of the Deposit Agreement, be distributed to Holders of
Receipts as provided in the Deposit Agreement.
11. FIXING OF RECORD DATE. Whenever any cash dividend or other
cash distribution shall become payable or any distribution of property
(including securities) other than cash shall be made, or if rights, preferences
or privileges shall at any time be offered with respect to Stock, or whenever
the Depositary shall receive notice of (i) any meeting at which holders of Stock
are entitled to vote or of which holders of Stock are entitled to notice or
-6-
<PAGE>
(ii) any election on the part of the Company to redeem any shares of Stock, the
Depositary shall in each instance fix a record date (which shall be the record
date fixed by the Company with respect to the Stock), for the determination of
the Holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences, privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting, or who shall be entitled to notice of such meeting.
12. VOTING RIGHTS. Upon receipt of notice of any meeting at
which Holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the Record Holders of Receipts a notice which
shall be provided by the Company which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement informing Holders of
record at the close of business on the specified record date that they may
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock (or portion thereof) underlying their respective Depositary
Shares and (iii) a brief statement as to the manner in which such instructions
may be given. Upon the written request of a Holder of a Receipt on such record
date, the Depositary shall endeavor, insofar as practicable, to vote or to cause
to be voted the amount of Stock (or portion thereof) relating to such Receipt in
accordance with the instructions set forth in such request. Absent specific
instructions from the Holder of a Receipt, the Depositary will abstain from
voting (but, at its discretion, not from appearing at any meeting with respect
to such Stock unless directed to the contrary by the Holders of all the Receipts
then outstanding) to the extent of the Stock (or portion thereof) underlying the
Depositary Shares evidenced by such Receipt.
13. CHANGES AFFECTING DEPOSITED SECURITIES. Upon any change in
par or stated value, split-up, combination or any other reclassification of the
Stock or upon any recapitalization, reorganization, merger, amalgamation or
consolidation to which the Company is a party, or upon the sale of all or
substantially all of the Company's assets, the Depositary (after having received
written notice of any such event from the Company) shall upon the written
instructions of the Company and in such manner as to retain as nearly as
possible the percentage ownership interest in Stock of Holders of Receipts
immediately prior to such event, (i) make such adjustments in (a) the fraction
of an interest in one share of Stock underlying one Depositary Share, (b) the
ratio of the redemption price per Depositary Share to the redemption price of a
share of Stock, and (c) the ratio of the conversion price per Depositary Share
to the conversion
-7-
<PAGE>
price of a share of Stock, in each case as may be necessary fully to reflect the
effects of such change, and (ii) treat any securities received by the Depositary
in exchange for, or upon conversion or in respect of, the Stock as new deposited
securities so received in exchange for, or upon conversion or in respect of,
such Stock. In any such case the Depositary may in its discretion, with the
approval of the Company, execute and deliver additional Receipts, or may call
for the surrender of outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited securities.
Anything to the contrary herein or in the Depositary Agreement
notwithstanding, Holders of Receipts shall have the right from and after the
effective date of any such transaction, to the extent that holders of Stock had
the right, prior to or on the applicable effective date, to convert, exchange or
surrender shares of Stock into or for other stock, securities, property or cash,
to surrender such Receipts to the Depositary with instructions to convert,
exchange or surrender the Stock represented thereby only into or for, as the
case may be, the kind and amount of shares of stock and other securities and
property and cash into which the Stock represented by such Receipts has been
converted or for which such Stock might have been exchanged or surrendered
immediately prior to the effective date of such transaction.
14. LIABILITY AND OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS OR THE COMPANY. Neither the Depositary nor any Depositary's Agent nor
any Registrar nor the Company, nor any officer, director, employee or agent
thereof, shall incur any liability to any Holder of any Receipt if by reason of
any provision of any present or future law, or regulation thereunder, of the
United States of America or of any other governmental authority or by reason of
any provision, present or future, of the Company's Amended and Restated Articles
of Incorporation (including the Certificate) or by reason of any act of God, war
or civil disorder, failure of power, fire or other casualty damage or
governmental requirements or restrictions, the Depositary, the Depositary's
Agent, the Registrar or the Company shall be prevented or forbidden from doing
or performing any act or thing that the terms of the Deposit Agreement provide
shall be done or performed; nor shall the Depositary, any Depositary's Agent,
any Registrar or the Company, nor any officer, director, employee or agent
thereof, incur any liability or be subject to any obligation (i) by reason of
nonperformance or delay, caused as aforesaid, in performance of any act or thing
that the terms of the Deposit Agreement provide shall or may be done or
-8-
<PAGE>
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in the Deposit Agreement, except in the event of the
negligence or misconduct of the party charged with such exercise or failure to
exercise. Neither the Depositary nor any Depositary's Agent nor the Company,
nor any officer, director, employee or agent thereof, assumes any obligation or
shall be subject to any liability under the Deposit Agreement to Holders of
Receipts other than to use its best judgment and good faith in the performance
of such duties as are specifically set forth in the Deposit Agreement. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company
shall be under any obligation to appear in, prosecute or defend any action, suit
or other proceeding in respect of the Stock, the Depositary Shares or the
Receipts that in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all such expense and liability be
furnished. The Deposit Agreement contains various other exculpatory,
indemnification and related provisions, to which reference is hereby made.
15. RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may
at any time (i) resign by written notice of its election so to resign delivered
to the Company, such resignation to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment, or (ii) be removed
by the Company, such removal to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment.
16. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement may
be terminated by the Company or the Depositary upon or after the occurrence of
any of the following events: (i) all outstanding Depositary Shares shall have
been redeemed; (ii) there shall have been made a final distribution in respect
of the Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution shall have been distributed to the Holders of
Receipts; or (iii) each share of Stock shall have been converted into shares of
Common Stock.
17. GOVERNING LAW. THIS RECEIPT AND THE DEPOSIT AGREEMENT AND
ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW PROVISIONS).
This receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose unless this Receipt shall
have been executed
-9-
<PAGE>
manually by a duly authorized officer of the Depositary or, if a Registrar for
the Receipts (other than the Depositary) shall have been appointed, by facsimile
signature of a duly authorized officer of the Depositary and countersigned
manually by a duly authorized officer of such Registrar.
THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK. THE
DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE FOREGOING
DESCRIPTION, WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY SUMMARIZING
CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT THAT APPEARS IN THE DEPOSITARY
RECEIPTS. THE DEPOSITARY MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE
VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT ANY TIME DEPOSITED WITH THE
DEPOSITARY HEREUNDER OR OF THE DEPOSITARY SHARES (EXCEPT ITS SIGNATURE HEREON),
OR AS TO THE VALUE OF THE DEPOSITARY SHARES.
Dated:
THE CHASE MANHATTAN BANK
(National Association), as Depositary
By:
--------------------------------
Authorized Officer
-10-
<PAGE>
NOTICE OF CONVERSION
The undersigned hereby irrevocably exercises the option to convert
this Receipt or a portion hereof below designated into shares of Common Stock of
The St. Paul Companies, Inc. in accordance with the terms of the Certificate
referred to in this Receipt, and directs the Depositary to instruct the Company
that the shares of Common Stock issuable and deliverable upon the conversion,
together with any check in payment of accrued and unpaid dividends or in lieu of
fractional shares, and any Receipts representing any unconverted Depositary
Shares be issued and delivered to the undersigned unless, in the case of such
shares of Common Stock or Receipts, a different name has been indicated below.
If shares of Common Stock or Receipts are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
Dated:_______________ ____________________________________________
Signature of Holder (must conform in all
respects to the name of the Holder appearing
on the face hereof)
Signature Guaranteed By:
____________________________________________
Number of Depositary Shares
to be Converted
- ------------------------------
Fill in for registration of shares of Common Stock and/or Receipts if to be
issued otherwise than to Holder.
- ------------------------------ Social Security or Other
(Name) Taxpayer Identifying Number
- ------------------------------ ---------------------------------
(Address)
- ------------------------------
Print name and address
(including zip code number)
-11-
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The St. Paul Companies, Inc.:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
Our reports refer to changes in the method of accounting for certain
investments, reinsurance, income tax and postretirement benefits other
than pensions.
/s/ KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
April 6, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ MICHAEL R. BONSIGNORE
------------------------------
Michael R. Bonsignore
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ JOHN H. DASBURG
------------------------------
John H. Dasburg
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ W. JOHN DRISCOLL
------------------------------
W. John Driscoll
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ PIERSON M. GRIEVE
------------------------------
Pierson M. Grieve
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ RONALD JAMES
------------------------------
Ronald James
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ WILLIAM H. KLING
------------------------------
William H. Kling
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ BRUCE K. MACLAURY
------------------------------
Bruce K. MacLaury
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ IAN A. MARTIN
------------------------------
Ian A. Martin
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ GLEN D. NELSON
------------------------------
Glen D. Nelson
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned does hereby appoint Douglas W. Leatherdale, Patrick A.
Thiele, Andrew I. Douglass and Bruce A. Backberg, and each of them severally,
his true and lawful attorneys to execute on behalf of the undersigned a
Registration Statement on Form S-3 relating to the registration of (i)
Convertible Monthly Income Preferred Securities ("Convertible MIPSs")
representing preferred limited liability company interests of St. Paul Capital
L.L.C. ("St. Paul Capital"); (ii) Convertible Subordinated Debentures of The St.
Paul Companies, Inc. (the "Corporation"); (iii) Series C Convertible Preferred
Stock of the Corporation; (iv) Depositary Shares of the Corporation; (v) Common
Stock of the Corporation; (vi) Stock Purchase Rights of the Corporation; and
(vii) a Guarantee of the Corporation with respect to the Convertible MIPSs of
St. Paul Capital, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
each of such attorneys shall have the power to act hereunder with or without the
others.
Dated: April 5, 1995 /s/ ANITA M. PAMPUSCH
------------------------------
Anita M. Pampusch
<PAGE>
EXHIBIT 25
Securities Act of 1933 File No. _________
(If application to determine eligibility of
trustee for delayed offering pursuant to
Section 305 (b) (2))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)____X____
------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 CHASE MANHATTAN PLAZA, NEW YORK, NEW YORK
(Address of principal executive offices)
10081
(Zip Code)
________________
THE ST. PAUL COMPANIES, INC ST. PAUL CAPITAL L.L.C.
(Exact name of obligor as specified in its charter)
MINNESOTA DELAWARE
(State or other jurisdiction of incorporation or organization)
41-0518860
(I.R.S. Employer Identification No.)
385 WASHINGTON STREET
ST. PAUL, MINNESOTA
(Address of principal executive offices)
55102
(Zip Code)
----------------------------------
DEBT SECURITIES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The Trustee is not the obligor, nor is the Trustee directly or
indirectly controlling, controlled by, or under common control
with the obligor.
(See Note on Page 2.)
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of
eligibility.
*1. -- A copy of the articles of association of the trustee as now in
effect. (See Exhibit T-1 (Item 12), Registration No. 33-55626.)
*2. -- Copies of the respective authorizations of The Chase Manhattan
Bank (National Association) and The Chase Bank of New York
(National Association) to commence business and a copy of
approval of merger of said corporations, all of which
documents are still in effect. (See Exhibit T-1 (Item 12),
Registration No. 2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank
(National Association) to exercise corporate trust powers,
both of which documents are still in effect.
(See Exhibit T-1 (Item 12), Registration No. 2-67437).
*4. -- A copy of the existing by-laws of the trustee. (See Exhibit
T-1 (Item 12(a)), Registration No. 33-28806.)
5. -- A copy of each indenture referred to in Item 4, if the obligor
is in default. (Not applicable).
*6. -- The consents of United States institutional trustees required
by Section 321(b) of the Act. (See Exhibit T-1, (Item 12),
Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
- -----------------
*The Exhibits thus designated are incorporated herein by reference.
Following the description of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange Commission, to which
there have been no amendments or changes.
------------------
1.
<PAGE>
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base a responsive answer to Item 2 the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, The Chase Manhattan Bank (National Association), a corporation
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized , all in the City of New York, and the
State of New York, on the 7th day April, 1995.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ SAM SCHWARTZMAN
----------------------
Sam Schwartzman
Corporate Trust Officer
------------------
2.
<PAGE>
Consolidating domestic and foreign subsidiaries of the
THE CHASE MANHATTAN BANK (National Association)
of New York in the State of New York, at the close of business on December 31,
1994, published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161.
CHARTER NUMBER 2370
COMPTROLLER OF THE CURRENCY NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin $ 4,517,179
Interest-bearing balances 7,001,642
Held to maturity securities 1,593,325
Available-for-sale securities 4,669,255
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBFs:
Federal funds sold 3,651,850
Securities purchased under agreements to resell 0
Loans and lease financing receivable:
Loans and leases, net of unearned
income $ 50,879,818
LESS: Allowance for loan and lease
losses 1,073,196
LESS: Allocated transfer risk reserve 0
------------
Loans and leases, net of unearned income, allowance,
and reserve 49,806,622
Assets held in trading accounts 13,112,807
Premises and fixed assets (including capitalized
leases) 1,758,500
Other real estate owned 480,982
Investments in unconsolidated subsidiaries and
associated companies 55,722
Customers' liability to this bank on acceptances
outstanding 611,839
Intangible assets 787,948
Other assets 6,145,452
-----------
TOTAL ASSETS $94,193,123
-----------
-----------
LIABILITIES
Deposits:
In domestic offices $ 29,536,028
Noninterest-bearing $ 11,648,377
Interest-bearing 17,887,651
-------------
In foreign offices, Edge and Agreement
subsidiaries, and IBFs 36,020,612
Noninterest-bearing $ 2,320,293
Interest-bearing 33,700,319
Federal funds purchased and securities sold -------------
under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased 1,014,936
Securities sold under agreements to repurchase 678,033
Demand notes issued to the U.S. Treasury 300,000
Trading liabilities 8,066,477
Other borrowed money:
With original maturity of one year or less 2,940,252
With original maturity of more than one year 427,525
Mortgage indebtedness and obligations under
capitalized leases 40,550
Bank's liability on acceptances executed and
outstanding 616,531
Subordinated notes and debentures 2,360,000
Other liabilities 5,195,890
-----------
TOTAL LIABILITIES 87,196,834
-----------
Limited-life preferred stock and related surplus 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 915,576
Surplus 4,656,010
Undivided profits and capital reserves 1,478,713
Net unrealized holding gains (losses) on available-for-sale
securities (64,959)
Cumulative foreign currency translation adjustments 10,949
-----------
TOTAL EQUITY CAPITAL 6,996,289
-----------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL $94,193,123
-----------
-----------
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and Controller of the above
named bank do hereby declare that this Report of Condition is true and correct
to the best of my knowledge and belief.
(Signed) Lester J. Stephens, Jr.
<PAGE>
We the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
(Signed) Thomas G. Labrecque
(Signed) Richard J. Boyle Directors
(Signed) Donald H. Trautlein
