EXHIBIT 1.1
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Form of
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NATIONAL INTERSTATE CORPORATION
(an Ohio corporation)
[ ] Common Shares
PURCHASE AGREEMENT
Dated: [ ], 2004
Form of
NATIONAL INTERSTATE CORPORATION
(an Ohio corporation)
[ ] Common Shares
(Par Value $0.01 Per Share)
PURCHASE AGREEMENT
[ ], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
as Representative of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
National Interstate Corporation, an Ohio corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Shareholders"), confirm
their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters", which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as representative (in such capacity,
the "Representative"), with respect to (i) the issue and sale by the Company and
the sale by the Selling Shareholders, acting severally and not jointly, and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Shares, par value $0.01 per share, of the
Company ("Common Shares") set forth in Schedules A and B hereto and (ii) the
grant by the Company to the Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of [ ]
additional Common Shares to cover overallotments, if any. The aforesaid [ ]
Common Shares (the "Initial Securities") to be purchased by the Underwriters and
all or any part of the [ ] Common Shares subject to the option described in
Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities".
The Company and the Selling Shareholders understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representative deems advisable after this Agreement has been executed and
delivered.
The Company, the Selling Shareholders and the Underwriters agree that up
to [ ] shares of the Securities to be purchased by the Underwriters (the
"Reserved Securities") shall be reserved for sale by the Underwriters to certain
eligible directors, officers, employees and persons having business
relationships with the Company (collectively the "Invitees"), as part of the
distribution of the Securities
by the Underwriters, subject to the terms of this Agreement, the applicable
rules, regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. To the
extent that such Reserved Securities are not orally confirmed for purchase by
Invitees by the end of the first business day after the date of this Agreement,
such Reserved Securities may be offered to the public as part of the public
offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-119270), including
the related preliminary prospectus or prospectuses, covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act").
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits and any schedules thereto, at the time it
became effective, and including the Rule 430A Information, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement or any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or, to the knowledge
of the Company, are threatened or contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in each case as so amended and supplemented prior
to the date hereof in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not
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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, and the Prospectus, any preliminary
prospectus and any supplement thereto or prospectus wrapper, if any,
prepared in connection therewith, at their respective times of issuance
and at the Closing Time, complied and will comply in all material respects
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus and such preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the offer
and sale of Reserved Securities. Neither the Prospectus nor any amendments
or supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or as so amended or supplemented prior to the date
hereof will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment
or supplement thereto).
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. Ernst & Young LLP, the accounting firm
that certified the financial statements and supporting schedules included
in the Registration Statement is an independent registered public
accounting firm as required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes thereto, present fairly in all material respects the
financial position of the Company and its consolidated subsidiaries at the
dates indicated and the statement of operations, shareholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis (except to the extent otherwise noted in such
financial statements or the notes thereto) throughout the periods
involved. The supporting schedules, if any, included in the Registration
Statement present fairly, in all material respects, in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus
present fairly, in all material respects, the information shown therein
and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement, except as
noted in the Prospectus.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect") and (B)
except as disclosed in the Prospectus, there have been no
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transactions entered into by either the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise, and except as disclosed in or contemplated by the
Registration Statement, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) Good Standing of the Company. The Company has been duly
incorporated and is a validly existing corporation in good standing under
the laws of the State of Ohio and has power and authority (corporate and
other) to own, lease and operate its properties and to conduct its
business in all material respects as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the
Company is duly qualified to do business as a foreign corporation and is
in good standing (or local law equivalent) in all other jurisdictions in
which the ownership, lease or operation of its properties or the conduct
of its business, requires such qualification, except where the failure to
qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each
a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
incorporated or organized and is an existing corporation or company in
good standing (or local law equivalent) under the laws of the jurisdiction
of its incorporation or organization, with power and authority (corporate
and other) to own its properties and conduct its business as described in
the Prospectus and is duly qualified to do business as a foreign
corporation in good standing (or local law equivalent) in all other
jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification; except where the failure to
so qualify or be in good standing, would not, individually or in the
aggregate, result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free from liens, encumbrances and
defects; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or other similar rights of any
securityholder of such Subsidiary. The only Subsidiaries of the Company
are the subsidiaries listed on Schedule E hereto.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). The shares of issued and
outstanding capital stock, including the Securities to be purchased by the
Underwriters from the Selling Shareholders, have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock, including the Securities to be
purchased by the Underwriters from the Selling Shareholders, was issued in
violation of the preemptive or other similar rights of any securityholder
of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to
be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly
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issued and fully paid and non-assessable; the Common Shares conform, in
all material respects, to all descriptions relating thereto contained in
the Registration Statement and Prospectus and such description conforms,
in all material respects, to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its articles of incorporation or
code of regulations (or similar corporate documents) or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for in each case such defaults that would not result,
individually or in the aggregate, in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and compliance by the Company with
its obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant to,
the Agreements and Instruments (except for such conflicts, breaches,
defaults or Repayment Events or liens, charges or encumbrances that,
individually or in the aggregate, would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the articles of incorporation or code of regulations (or similar corporate
document) of the Company or any subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the employees
of either the Company or any subsidiary that might have a Material Adverse
Effect exists or, to the knowledge of the Company, is threatened.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might result in a
Material Adverse Effect, or which might materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not result in a Material
Adverse Effect.
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(xiii) Accuracy of Exhibits. There are no contracts or documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto that have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own, possess or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws and (ii) such as have been obtained under the laws
and regulations of jurisdictions outside the United States in which the
Reserved Securities are offered, if any.
(xvi) Absence of Manipulation. Neither the Company nor any affiliate
of the Company has taken, nor will the Company take or permit any
affiliate to take, directly or indirectly, any action which is designed to
or which has constituted or which would be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(xvii)Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure so to possess would not, singly or in the aggregate, result in a
Material Adverse Effect; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, result in a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xviii) Possession of Insurance Licenses and Permits. Each
subsidiary of the Company which is engaged in the business of insurance or
reinsurance (collectively, the "Insurance Subsidiaries") holds such
insurance licenses, certificates and permits from governmental authorities
(including, without limitation, from the insurance regulatory agencies of
the various jurisdictions where it conducts business (the "Insurance
Licenses")) as are necessary to the conduct of its business as described
in the Registration Statement; the Company and each Insurance Subsidiary
have fulfilled and performed all obligations necessary to maintain the
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Insurance Licenses except where the failure to maintain such Insurance
License would not, individually or in the aggregate, result in a Material
Adverse Effect; except as disclosed in the Registration Statement, there
is no pending or, to the knowledge of the Company, threatened action,
suit, proceeding or investigation that could reasonably be expected to
result in the revocation, termination or suspension of any Insurance
License which would, individually or in the aggregate, have a Material
Adverse Effect; and except as disclosed in the Registration Statement, no
insurance regulatory agency or body has issued, or, to the knowledge of
the Company, commenced any proceeding for the issuance of, any order or
decree impairing, restricting or prohibiting the payment of dividends by
any Insurance Subsidiary to its parent.
(xix) Title to Property. Except as disclosed in the Registration
Statement, the Company and its Subsidiaries have good and marketable title
to all real properties and good title to all other properties and assets
owned by them, in each case free from liens, encumbrances and defects that
would, individually or in the aggregate, materially affect the value of
such properties and assets, taken as a whole, or materially interfere with
the use made or to be made thereof by the Company and its subsidiaries;
and except as disclosed in the Registration Statement, the Company and its
Subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with
the use made or to be made of the leased property, taken as a whole, by
the Company and its Subsidiaries.
(xx) Environmental Laws. Except as disclosed in the Registration
Statement, neither the Company nor any of its subsidiaries is in violation
of any statute, rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"), owns
or operates any real property contaminated with any substance that is
subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation, contamination,
liability or claim would individually or in the aggregate have a Material
Adverse Effect; and the Company is not aware of any pending or threatened
investigation which might lead to such a claim.
(xxi) Investment Company Act. The Company is not required, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Registration
Statement will not be required, to register as an "investment company"
under the Investment Company Act of 1940, as amended (the "1940 Act").
(xxii) Insurance Reserving. Except as disclosed in the Registration
Statement, the Company and the Insurance Subsidiaries have made no
material change in their insurance reserving practices since December 31,
2003.
(xxiii) Reinsurance. All reinsurance treaties and arrangements to
which any Insurance Subsidiary is a party are in full force and effect and
no Insurance Subsidiary is in violation of, or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein except where the failure to be in
full force and effect and except where any such violation or default would
not, individually or in the aggregate, have a Material Adverse Effect; no
Insurance Subsidiary has received any notice from any of the other parties
to such treaties, contracts or agreements that such other party intends
not to perform such treaty and, the Company and the Insurance Subsidiaries
have no reason to believe that any of the other parties to such treaties
or arrangements will be unable to perform such treaty or arrangement
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except to the extent adequately and properly reserved for in the
consolidated financial statements of the Company included in the
Registration Statement or Prospectus, except where such default or
inability to perform would not, individually or in the aggregate, have a
Material Adverse Effect.
(xxiv) Statutory Financial Statements. The statutory financial
statements of the Insurance Subsidiaries, from which certain ratios and
other statistical data included or incorporated by reference in the
Registration Statement and Prospectus have been derived, have been
prepared for each relevant period, in all material respects, in conformity
with statutory accounting principles or practices required or permitted by
the appropriate Insurance Department of the jurisdiction of domicile of
each Insurance Subsidiary, and such statutory accounting practices have
been applied on a consistent basis throughout the periods involved, except
as may otherwise be indicated therein or in the notes thereto, and present
fairly in all material respects the statutory financial position of the
Insurance Subsidiaries as of the dates thereof, and the statutory basis
results of operations of the Insurance Subsidiaries for the periods
covered thereby.
(xxv) Internal Controls. The Company and each of the subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxvi) Disclosure Controls. The Company has established disclosure
controls and procedures (as such term is defined in Rule 13a-15 and 15d-15
under the Securities Exchange Act of 1934 (the "1934 Act"); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's President and its Chief
Financial Officer by others within those entities, and such disclosure
controls and procedures are effective to perform the functions for which
they were established.
(xxvii) Personal Loans. The Company has provided the Representative
true, correct, and complete copies of all documentation pertaining to any
extension of credit in the form of a personal loan currently outstanding
made, directly or indirectly, by the Company or any subsidiary to any
director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company; the Company
has not, directly or indirectly, including through any subsidiary:
extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or
executive officer of the Company, or to or for any family member or
affiliate of any director or executive officer of the Company.
(xxviii) Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company has taken
all necessary actions to ensure that, upon and for the foreseeable future
after the effectiveness of the Registration Statement, the Company and the
Subsidiaries and any of the officers and directors of the Company and any
of the Subsidiaries, in their capacities as such, will be in compliance,
in all material respects, with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act to
which the Company will be subject at such time.
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(xxix) Registration Rights. Except as disclosed in the Registration
Statement and the Prospectus regarding Great American Insurance Company
and ▇▇▇▇ ▇▇▇▇▇▇▇▇, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xxx) Taxes. The Company and its subsidiaries have filed (or have
obtained currently valid extensions for) all federal, state, local and
foreign income tax returns that have been required to be filed on or
before the due date (taking into account all extensions of time to file)
except to the extent that the failure to so file would not, individually
or in the aggregate, have a Material Adverse Effect, and have paid or
provided for all taxes indicated by said returns and all assessments
received by it to the extent that taxes have become due, except those
taxes that are being contested or protested in good faith by the Company
or its Subsidiaries and any for which reserves required under GAAP have
been established as appropriate.
(xxxi) Insurance. The Company and its subsidiaries together carry or
are entitled to the benefits of insurance, with insurers that have a
reputation for being financially sound and reputable, in such amounts and
covering such risks as is reasonable in the opinion of the Company, and
all such insurance is in full force and effect.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally and not jointly represents and warrants to each
Underwriter as of the date hereof, as of the Closing Time, and, if the Selling
Shareholder is selling Option Securities on a Date of Delivery, as of each such
Date of Delivery, and agrees with each Underwriter, as follows:
(i) Accurate Disclosure. Such Selling Shareholder has reviewed and
is familiar with the Registration Statement and the Prospectus and the
information under the caption "Principal and Selling Shareholders" which
relates to such Selling Shareholder does not include any untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; such Selling Shareholder is not prompted
to sell the Securities to be sold by such Selling Shareholder hereunder by
any information concerning the Company or any subsidiary of the Company
which is not set forth in the Prospectus.
(ii) Authorization of this Agreement. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Shareholder.
(iii) Authorization of Power of Attorney and Custody Agreement. The
Power of Attorney and Custody Agreement, in the form heretofore furnished
to the Representative (the "Power of Attorney and Custody Agreement"), has
been duly authorized, executed and delivered by such Selling Shareholder
and is the valid and binding agreement of such Selling Shareholder, except
as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws or public policy underlying such law, and
except, as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and by equitable principles
(whether enforcements sought by proceedings in equity or law).
(iv) Noncontravention. The execution and delivery of this Agreement
and the Power of Attorney and Custody Agreement and the sale and delivery
of the Securities to be sold by such Selling Shareholder and the
consummation of the transactions contemplated herein and compliance by
such Selling Shareholder with its obligations hereunder and thereunder do
not and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Securities to be sold by such Selling Shareholder or
any property or assets of such Selling Shareholder pursuant to any
contract, indenture, mortgage, deed
9
of trust, loan or credit agreement, note, license, lease or other
agreement or instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder may be bound, or to which any of the
property or assets of such Selling Shareholder is subject, except for such
as would not adversely affect in any manner such Selling Shareholder's
ability to perform its obligations hereunder, nor will such action result
in any violation of the provisions of the trust instrument, charter or
by-laws or other organizational instrument of such Selling Shareholder, if
applicable, or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
such Selling Shareholder or any of its properties.
(v) Certificates Suitable for Transfer. The Securities to be sold by
such Selling Shareholder pursuant to this Agreement are certificated
securities in registered form and are not held in any securities account
or by or through any securities intermediary within the meaning of the
Uniform Commercial Code as in effect in the State of New York (the "UCC").
Certificates for all of the Securities to be sold by such Selling
Shareholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures guaranteed, have been placed in
custody with the Company (the "Custodian") with irrevocable conditional
instructions to deliver such Securities to the Underwriters pursuant to
this Agreement.
(vi) Valid Title. Such Selling Shareholder has, and at the Closing
Time and at any Date of Delivery will have, valid title to the Securities
to be sold by such Selling Shareholder free and clear of all security
interests, claims, liens, equities or other encumbrances and the legal
right and power, and all authorization and approval required by law, to
enter into this Agreement and the Power of Attorney and Custody Agreement
and to sell, transfer and deliver the Securities to be sold by such
Selling Shareholder in the manner provided in this Agreement.
(vii) Delivery of Securities. Upon the Underwriters' acquiring
possession of the Securities to be sold by such Selling Shareholder and
paying the purchase price therefor pursuant to this Agreement, the
Underwriters (assuming that no such Underwriter has notice of any "adverse
claim", within the meaning of Section 8-105 of the New York Uniform
Commercial Code, to such Securities) will acquire their respective
interests in such Securities (including, without limitation, all rights
that such Selling Shareholder had or has the power to transfer in such
Securities) free and clear of any adverse claim within the meaning of
Section 8-102 of the New York Uniform Commercial Code.
(viii) Absence of Manipulation. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or would be expected to cause or
result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(ix) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Selling Shareholder of
its obligations hereunder or in the Power of Attorney and Custody
Agreement, or in connection with the sale and delivery of the Securities
hereunder or the consummation of the transactions contemplated by this
Agreement or the Power of Attorney and Custody Agreement, except (i) such
as may have previously been made or obtained or as may be required under
the 1933 Act or the 1933 Act Regulations or state securities laws and (ii)
such as have been obtained under the laws and regulations of jurisdictions
outside the United States in which the Reserved Securities are offered, if
any.
10
(x) No Association with NASD. Neither such Selling Shareholder nor
any of his/her/its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or is a person associated with (within the meaning of Article I (dd)
of the By-laws of the National Association of Securities Dealers, Inc.
("NASD")), any member firm of the NASD.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representative or to counsel
for the Underwriters shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Shareholders as such and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
such Selling Shareholder to the Underwriters as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each Selling Shareholder, severally and not jointly, agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company and each Selling
Shareholder, at the price per share set forth in Schedule C, that proportion of
the number of Initial Securities set forth in Schedule B opposite the name of
the Company or such Selling Shareholder, as the case may be, which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representative in
its sole discretion shall make to eliminate any sales or purchases of fractional
securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional [ __ ] shares of Common Shares,
as set forth in Schedule B, at the price per share set forth in Schedule C, less
an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering overallotments that may be made in connection with the public
offering and distribution of the Initial Securities upon notice by ▇▇▇▇▇▇▇ ▇▇▇▇▇
to the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇, but shall
not be later than seven full business days after the exercise of said option,
nor in any event prior to the Closing Time, as hereinafter defined. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as ▇▇▇▇▇▇▇ ▇▇▇▇▇ in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of the Americas, New York, New York, or at such
other place as shall be agreed upon by the Representative and the Company and
the Selling Shareholders, at 9:00 A.M. (Eastern time) on the third (fourth, if
the pricing occurs after
11
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company and the Selling Shareholders (such
time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representative
and the Company, on each Date of Delivery as specified in the notice from the
Representative to the Company.
Payment shall be made to the Company and the Selling Shareholders by wire
transfer of immediately available funds to bank accounts designated by the
Company and the Custodian pursuant to each Selling Shareholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representative may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representative in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representative promptly, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof as soon as possible.
12
(b) Filing of Amendments. The Company will give the Representative notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)) or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, will furnish the Representative
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Representative or counsel for the Underwriters shall
object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representative and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act, such number of copies
of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representative may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
13
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and maintain
the quotation of the Securities on the Nasdaq National Market for so long as the
Common Shares are registered under the 1934 Act.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus, the Company will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of the Common Shares or any securities
convertible into or exercisable or exchangeable for Common Shares or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Shares, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Shares or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Securities to be sold hereunder, (B) any Common
Shares issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Prospectus, (C) any Common Shares issued or options to purchase Common Shares
granted pursuant to employee benefit plans of the Company referred to in the
Prospectus or (D) any Common Shares issued pursuant to any non-employee director
share plan or dividend reinvestment plan referred to in the Prospectus.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the rules and regulations
of the Commission thereunder
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the NASD
or the NASD rules from sale, transfer, assignment, pledge or hypothecation
following the date of this Agreement. The Underwriters will notify the Company
as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and the Selling Shareholders will pay or cause
to be paid all expenses incident to the performance of their respective
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters,
14
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters (in an amount not to exceed $10,000) in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the Securities, (ix) the costs
and expenses incurred by the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the Securities,
including without limitation, expenses associated with the production of road
show slides and graphics with the prior approval of the Company, which approval
shall not be unreasonably withheld, delayed or conditioned, fees and expenses of
any consultants engaged in connection with the road show presentations with the
prior approval of the Company, which approval shall not be unreasonably
withheld, delayed or conditioned, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of aircraft and other transportation chartered by the Company in connection
with the road show and (x) the filing fees incident to, and the reasonable fees
and disbursements of counsel to the Underwriters (in an amount not to exceed
$25,000) in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities, (xi) the fees and expenses incurred by the Company in connection
with the inclusion of the Securities in the Nasdaq National Market and (xii) all
out-of-pocket costs and expenses of the Underwriters, including the reasonable
fees and disbursements of counsel for the Underwriters (in an amount not to
exceed $15,000), in connection with matters related to the Reserved Securities
which are designated by the Company for sale to Invitees.
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and other advisors.
(c) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company and the Selling Shareholders shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters, incurred in
connection with the transactions contemplated hereby prior to the termination
date.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders may make for
the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Shareholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the
15
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for Company. At Closing Time, the Representative
shall have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇▇
▇▇▇▇ LLP, counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, together with signed or reproduced copies of such opinion
for each of the other Underwriters substantially in the form of Exhibit A hereto
and to such further effect as counsel to the Underwriters may reasonably
request. Such counsel may also state that they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials. Such opinion shall also state that ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP may rely upon such opinion with respect to matters governed by
the laws of the State of Ohio as if it were addressed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP.
(c) Opinion of Counsel for the Selling Shareholders. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the Selling Shareholders, in
form and substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such opinion for each of the other Underwriters
substantially in the form of Exhibit B hereto and to such further effect as
counsel to the Underwriters may reasonably request. Such special counsel may
also state that they have relied, to the extent they deem proper, upon
certificates of the Selling Shareholders and certificates of public officials.
Such opinion shall also state that ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may rely upon such
opinion with respect to matters governed by the laws of the State of Ohio as if
it were addressed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i), the first clause of (ii),
(v), (vi) (solely as to preemptive or other similar rights arising by operation
of law or under the charter or by-laws of the Company), (viii) through (x),
inclusive, (xi), (xiii) (solely as to the information in the Prospectus under
"Description of Capital Stock--Common Shares") and the penultimate paragraph of
Exhibit A hereto. In giving such opinion ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of New York and the federal law of the United States, upon the opinions of
counsel satisfactory to the Representative; provided however, that in giving
such opinion ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may rely as at all matters governed by Ohio
law upon the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representative shall have
received a certificate (as to which there shall be no personal, as opposed to
corporate liability) of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing
16
Time, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing Time,
and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to their knowledge, contemplated by the
Commission.
(f) Certificate of Selling Shareholders. At Closing Time, the
Representative shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Shareholder, dated as of Closing Time, to the effect that
(i) the representations and warranties of each Selling Shareholder contained in
Section 1(b) hereof are true and correct in all respects with the same force and
effect as though expressly made at and as of Closing Time and (ii) each Selling
Shareholder has complied with all agreements and satisfied all conditions on its
part to be performed under this Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus. Such letter may state that
certain procedures were carried out by Ernst & Young LLP to a date that is no
more than 3 business days prior to the execution of this Agreement.
(h) Bring-down Comfort Letter. At Closing Time, the Representative shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (g) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangement.
(k) Lock-up Agreements. At the date of this Agreement, the Representative
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule D hereto.
(l) Maintenance of Rating. Since the execution of this Agreement, there
shall not have occurred a downgrading in the (i) rating assigned to any
securities of either of the Company or any subsidiary of the Company or the
financial strength of the Company or any subsidiary of the Company or any
Insurance Subsidiary's claims paying ability or similar rating by any
"nationally recognized statistical rating agency", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the 1933 Act, or (ii) the
financial strength or claims paying ability of any Insurance Subsidiary by A.M.
Best Company, and no such securities rating agency shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any securities of the Company or the financial strength or claims
paying ability of any Subsidiary or Insurance Subsidiary.
(m) No Notice of Adverse Claim. No underwriter shall have notice of any
"adverse claim", within the meaning of Section 8-105 of the New York Uniform
Commercial Code, to the Securities.
(n) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the
17
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company and any subsidiary of
the Company hereunder shall be true and correct as of each Date of Delivery,
none of the events set forth in clauses (i) through (v) of Section 9(a) shall
have occurred and, at the relevant Date of Delivery, the Representative shall
have received:
(i) Officers' Certificate. A certificate (as to which there shall be
no personal, as opposed to corporate liability), dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(e)
hereof remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(iii) Opinion of Counsel for Underwriters. The favorable opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young LLP, in
form and substance satisfactory to the Representative and dated such Date
of Delivery, substantially in the same form and substance as the letter
furnished to the Representative pursuant to Section 5(g) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(v) No Downgrading. Subsequent to the date of this Agreement, no
downgrading shall have occurred in the (i) rating assigned to any
securities of the Company or the financial strength of the Company or any
Subsidiaries or any Insurance Subsidiary's claims paying ability or
similar rating by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the 1933 Act, or (ii) financial strength or claims
paying ability of any Insurance Subsidiary by A.M. Best Company, and no
such organization shall have publicly announced that it has under
surveillance or review its ratings of any securities of the Company or the
financial strength or claims paying ability of any Subsidiary or Insurance
Subsidiary.
(o) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Shareholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Representative and counsel for the Underwriters.
(p) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representative by notice to the Company and the Selling
Shareholders at any time at or prior to Closing
18
Time or such Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter, its affiliates, as such term is defined in Rule
501(b) under the 1933 Act (each, an "Affiliate"), its selling agents and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(e) below) any such settlement is effected with the written consent of
the Company;
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, further, that the Company shall not be liable under clause
(i) of subparagraph (a) above to the extent that any losses, claims, damages,
liabilities, or expense arise out of any untrue statement or omission or alleged
untrue statement or omission made in the preliminary prospectus if the Company
has previously furnished copies of the Prospectus (sufficiently in advance of
the Closing Time so as to allow for distribution by the Underwriters prior to
the Closing Time) to the Underwriters and the loss, claim, damage, liability or
expense resulted from an untrue statement or omission of a material fact
contained in or omitted from the preliminary prospectus that was corrected in
the Prospectus, and the failure to give or send the Prospectus prior to the
Closing Time constituted the sole cause for such loss, claim, damage, liability
or expense.
19
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Company, each Underwriter, its Affiliates and
selling agents and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the
extent and in the manner set forth in clauses (a)(i), (ii) and (iii) above and
in Section 6(e) but only with respect to information relating to such Selling
Shareholder furnished in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto. The Underwriters
acknowledge and agree that the statements relating to each Selling Shareholder
under the caption "Principal and Selling Shareholders" in the Prospectus
constitute the only information furnished in writing by or on behalf of such
Selling Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each Selling
Shareholder and each person, if any, who controls any Selling Shareholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and Rule 434 Information, if applicable, or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) and 6(b)
above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇,
and, in the case of parties indemnified pursuant to Section 6(c) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In any such action, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the contrary; (ii) the indemnifying party
has failed within a reasonable time to retain counsel reasonably satisfactory to
the indemnified party; (iii) the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the indemnifying party; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them; provided, however, that an indemnifying party
shall not, in connection with any one such action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all indemnified parties, except
to the extent that local counsel, in addition to its regular counsel, is
required in order to effectively defend against such action. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
20
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding 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.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) or settlement of any claim in connection with any violation
referred to in Section 6(f) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
(f) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees to indemnify and hold
harmless the Underwriters, their Affiliates and selling agents and each person,
if any, who controls any Underwriter within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending,
investigating or settling any such action or claim), as incurred, (i) arising
out of the violation of any applicable laws or regulations of foreign
jurisdictions where Reserved Securities have been offered; (ii) arising out of
any untrue statement or alleged untrue statement of a material fact contained in
any prospectus wrapper or other material prepared by or with the consent of the
Company for distribution to Invitees in connection with the offering of the
Reserved Securities or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (iii) caused by the failure of any Invitee to
pay for and accept delivery of Reserved Securities which have been orally
confirmed for purchase by any Invitee by the end of the first business day after
the date of the Agreement; or (iv) related to, or arising out of or in
connection with, the offering of the Reserved Securities.
(g) Other Agreements with Respect to Indemnification. The provisions
of this Section shall not affect any agreement among the Company and the
Selling Shareholders with respect to indemnification.
21
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Selling Shareholders on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions, or in connection
with any violation of the nature referred to in Section 6(f) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Shareholders
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the Selling Shareholders and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus bear to the aggregate initial public offering price of the Securities
as set forth on the cover of the Prospectus.
The relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Shareholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 6(f) hereof.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 any 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each Underwriter's Affiliates
22
and selling agents shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company or such Selling Shareholder, as the case may be. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries or the
Selling Shareholders submitted pursuant hereto, shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of any Underwriter or its Affiliates or selling agents, any person controlling
any Underwriter, its officers or directors, any person controlling the Company
or any person controlling any Selling Shareholder and (ii) delivery of and
payment for the Securities.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this Agreement,
by notice to the Company and the Selling Shareholders, at any time at or prior
to Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or Nasdaq National Market, or if trading generally on
the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(v) if a banking moratorium has been declared by either Federal, New York or
Ohio authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities
23
in such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Representative shall not have completed such arrangements within
such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the (i) Representative or (ii) the Company and any
Selling Shareholder shall have the right to postpone Closing Time or the
relevant Date of Delivery, as the case may be, for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Default by one or more of the Selling Shareholders or
the Company. (a) If a Selling Shareholder shall fail at Closing Time or at a
Date of Delivery to sell and deliver the number of Securities which such Selling
Shareholder or Selling Shareholders are obligated to sell hereunder, and the
remaining Selling Shareholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number to be sold by all Selling Shareholders as set
forth in Schedule B hereto, then the Underwriters may, at option of the
Representative, by notice from the Representative to the Company and the
non-defaulting Selling Shareholder, either (i) terminate this Agreement without
any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or
(ii) elect to purchase the Securities which the non-defaulting Selling
Shareholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve any Selling Shareholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by any Selling Shareholder as referred to in
this Section 11, each of the Representative, and the Company and the
non-defaulting Selling Shareholders shall have the right to postpone Closing
Time or Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or Prospectus or in any
other documents or arrangements.
(b) If the Company shall fail at Closing Time or at the Date of Delivery
to sell the number of Securities that it is obligated to sell hereunder, then
this Agreement shall terminate without any liability on the part of any
nondefaulting party; provided, however, that the provisions of Sections 1, 4, 6,
7 and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
24
SECTION 12. Tax Disclosure. Notwithstanding any other provision of
this Agreement, from the commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure (as such terms are
used in Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury
Regulations promulgated thereunder) of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided relating to such tax treatment and tax structure.
SECTION 13. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of Equity Capital Markets; notices
to the Company shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, attention of General Counsel; and notices to the Selling Shareholder(s)
shall be directed to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
SECTION 14. Parties. This Agreement shall each inure to the benefit
of and be binding upon the Underwriters, the Company and the Selling
Shareholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company and the Selling Shareholders
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAWS RULES OF SUCH STATE.
SECTION 16. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
SECTION 17. Counterparts. This Agreement may be executed 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 Agreement.
SECTION 18. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
NATIONAL INTERSTATE CORPORATION
By
----------------------------------
Title:
By
---------------------------------
As Attorney-in-Fact acting on behalf of
the Selling Shareholders named in
Schedule B hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By
-------------------------------------------
Authorized Signatory
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
26
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.................................
KeyBank Capital Markets, a division of McDonald
Investments Inc........................................
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc...........................
------------------
Total............................................ [ ]
==================
Sch A-1
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to Be Sold
--------------------- ---------------------
Total...................
Sch B - 1
SCHEDULE C
[ ]
[ ] Shares of Common Shares
(Par Value $[ ] Per Share)
1. The initial public offering price per share for the Securities, determined as
provided in said Section 2, shall be $[ ].
2. The purchase price per share for the Securities to be paid by the several
Underwriters shall be $[ ], being an amount equal to the initial public
offering price set forth above less $[ ] per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the overallotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
Sch C - 1
SCHEDULE D
[List of persons and entities
subject to lock-up]
C-1
SCHEDULE E
[List of Company Subsidiaries]
C-2
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b) OF THE PURCHASE AGREEMENT1
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Ohio.
2. The Company has power and authority (corporate and other) to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement. The Company is duly qualified to do business as a foreign corporation
and is in good standing (or local law equivalent) in all other jurisdictions in
which the ownership, lease or operation of its properties or the conduct of its
business, requires such qualification, except where the failure to qualify or to
be in good standing would not reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect.
3. The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus under the caption "Capitalization" in the column
entitled "Actual," in the line item entitled "Common Shares . . ." (except for
subsequent issuances, if any, pursuant to the Purchase Agreement or pursuant to
reservations, agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options referred to in
the Prospectus); the shares of issued and outstanding capital stock of the
Company (including the Common Shares to be purchased by the Underwriters from
the Selling Shareholders) immediately prior to the issuance and sale of the
Common Shares have been duly authorized and validly issued and are fully paid
and non-assessable. None of the outstanding shares of capital stock of the
Company was issued in violation of any statutory preemptive rights of any
securityholder of the Company arising under Ohio law or under the Company's
organizational documents or, to our knowledge, any other preemptive or other
similar rights of any securityholder of the Company.
4. The Common Shares to be issued and sold by the Company pursuant to the
Registration Statement have been duly authorized for issuance and sale to the
Underwriters pursuant to the Purchase Agreement and, when issued, delivered and
paid for in accordance with the terms of the Purchase Agreement, will be validly
issued and fully paid and non-assessable and no holder of such Common Shares is
or will be subject to personal liability by reason of being such holder.
5. The issuance of the Common Shares is not subject to any statutory
preemptive rights arising under Ohio Law or under the Company's organizational
documents or, to our knowledge, contractual or other similar rights of any
securityholder of the Company.
6. Each significant subsidiary of the Company (as such term is defined in
Rule 1-02 of Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly incorporated and is an existing corporation in
good standing (or local law equivalent) under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is duly
qualified to do business as a foreign corporation in good standing (or the local
law equivalent) in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification except where
the failure to so qualify would not reasonably be expected to have a Material
Adverse Effect. Except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each such Subsidiary immediately
prior to the issuance and sale of the Common Shares has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free from liens, encumbrances and defects.
There are no statutory, or to our knowledge, contractual preemptive rights or
----------------------------
1 Capitalized terms have the meaning set forth in the Purchase Agreement.
other rights to subscribe for or to purchase any capital stock of any Subsidiary
and none of such capital stock was issued in violation of any statutory
preemptive or other similar rights of any securityholder of such Subsidiary
arising under Ohio law or under such Subsidiary's organizational documents or,
to our knowledge, any other preemptive or other similar rights of any
securityholder of any Subsidiary.
7. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.
8. To our knowledge (based solely upon a telephonic conversation with the
staff of the Commission) the Registration Statement[, including any Rule 462(b)
Registration Statement,] has been declared effective under the 1933 Act. Any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement [or any Rule 462(b) Registration Statement] has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.
9. The Registration Statement, including [any Rule 462(b) Registration
Statement] and the Rule 430A Information, the Prospectus, and each amendment or
supplement to the Registration Statement and Prospectus, as of their respective
effective or issue dates (other than the financial statements and supporting
schedules and other financial data included therein or omitted therefrom, as to
which we express no opinion) complied as to form in all material respects with
the applicable requirements of the 1933 Act and the 1933 Act Regulations.
10. The form of certificate used to evidence the Common Shares complies in
all material respects with all applicable statutory requirements under Ohio law,
with any applicable requirements of the Amended and Restated Articles of
Incorporation and Code of Regulations of the Company and the requirements of the
Nasdaq National Market.
11. To our knowledge, there is not pending or threatened any action, suit,
proceeding, inquiry or investigation, to which the Company or any of its
subsidiaries is a party, or to which the property of either of the Company or
any of its subsidiaries is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which reasonably would be
expected to result in a Material Adverse Effect, or which reasonably would be
expected to materially and adversely affect the properties and assets of the
Company and its subsidiaries, taken as a whole, the consummation of the
transactions contemplated in the Purchase Agreement or the performance by the
Company of its obligations thereunder.
12. The information in the Prospectus under "Business - Facilities",
"Business - Legal Proceedings", "Regulation", "Management - Long Term Incentive
Plan - Federal Income Tax Consequences", "Management - Long Term Incentive Plan
- Tax Consequences to Participants", "Description of Capital Shares" "Shares
Eligible for Future Sale" and "Material United States Federal Tax Consequences
for Non-U.S. Holders of our Common Shares" and in the Registration Statement
under Item 14, to the extent that it constitutes matters of law, summaries of
legal matters or legal proceedings, or summaries of the Company's Amended and
Restated Articles of Incorporation or Amended Code of Regulations, has been
reviewed by us and fairly presents in all material respects the information
required to be described therein.
13. All descriptions in the Registration Statement of contracts,
indentures, mortgages, loan agreements, notes, leases or other agreements to
which the Company or its subsidiaries are a party are accurate in all material
respects. To our knowledge, there are no contracts, indentures, mortgages, loan
agreements, notes, leases, or other agreements to which the Company or any of
its subsidiaries is a party that are required to be described or referred to in
the Registration Statement or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed as exhibits
thereto.
14. No filing with or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency (other than under the 1933 Act and the 1933 Act Regulations, which have
been obtained, or as may be required under the securities or blue sky laws of
the various states, as to which we express no opinion) is necessary or required
for the due authorization, execution and delivery of the Purchase Agreement by
the Company or for the offering, issuance, sale or delivery of the Common Shares
by the Company.
15. The execution, delivery and performance of the Purchase Agreement and
any other agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the consummation of the transactions
contemplated in the Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Common Shares by the Company and the use
of the proceeds from the sale of the Common Shares as described in the
Prospectus under the caption "Use Of Proceeds") and compliance by the Company
with its obligations under the Purchase Agreement and such other agreements or
instruments do not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or default or
Repayment Event under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument, known to us,
to which the Company or any subsidiary is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
subsidiary is subject, except as would not reasonably be expected to have a
Material Adverse Effect, nor will such action result in any violation of (A) the
provisions of the articles of incorporation or code of regulations (or similar
corporate documents) of the Company or any subsidiary, (B) any judgement, order,
writ, or decree known to us of any government, government instrumentality or
court having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations, or (C) any law, statute, rule or
regulation applicable to the Company or its subsidiaries.
16. Other than as described in the Prospectus, to our knowledge, there are
no persons with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
17. The Company is not required, and upon the issuance and sale of the
Common Shares as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be required, to register as an
"investment company" under the 1940 Act.
18. To our knowledge, each Insurance Subsidiary holds such insurance
licenses, certificates and permits from governmental authorities (including,
without limitation, Insurance Licenses) as are necessary to the conduct of its
business as described in the Prospectus. To our knowledge, there is no pending
or threatened action, suit, proceeding or investigation that reasonably could be
expected to result in the revocation, termination, or suspension of any
Insurance License which would have a Material Adverse Effect. Except as
disclosed in the Prospectus, to our knowledge, no insurance regulatory agency or
body has issued, or commenced any proceeding for the issuance of, any order or
decree impairing, restricting or prohibiting the payment of dividends by any
Insurance Subsidiary to its parent company.
19. To our knowledge, all reinsurance treaties and arrangements to which
any Insurance Subsidiary is a party are in full force and effect and we are not
aware of any material violation of, or material default in, the performance,
observance or fulfillment of, any obligation, agreement, covenant or condition
contained therein by any Insurance Subsidiary.
On the basis of conferences with officers of the Company,
representatives of the independent registered public accounting firm, and you
and your counsel, at which conferences the contents of the Registration
Statement and related matters were discussed, and an examination of certain
documents referred to in the Registration Statement and Prospectus, and
although, except as set forth in Paragraphs 12 and 13 above, we have not
verified the accuracy, completeness or fairness of the statements contained in
the Registration Statement, nothing has come to our attention that would lead us
to believe (1) that the Registration Statement or any amendment thereto,
including the Rule 430A Information, (except for financial statements and
schedules and other financial data included therein or omitted therefrom, as to
which we make no statement), at the time such Registration Statement or any such
amendment became effective, 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 (2) that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included therein or omitted therefrom, as to which we
make no statement), at the time the Prospectus was issued, at the time of any
such amendment or supplement thereto was issued, or at the Closing Time included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Exhibit B
OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS
TO BE DELIVERED PURSUANT TO
SECTION 5(c) OF THE PURCHASE AGREEMENT(1)
1. No filing with, or consent, approval, authorization, license, order,
registration, qualification or decree of, any court or governmental authority or
agency (other than under the 1933 Act and the 1933 Act Regulations, which have
been obtained, or as may be required under the securities or blue sky laws of
the various states, as to which we express no opinion) is necessary or required
to be obtained by the Selling Shareholders for the performance by each Selling
Shareholder of its obligations under the Purchase Agreement, the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Common Shares being sold by such Selling Shareholders.
2. Each Power of Attorney and Custody Agreement has been duly authorized,
executed and delivered by the respective Selling Shareholder named therein and
constitutes the valid and binding agreement of such Selling Shareholder,
enforceable against such Selling Shareholder in accordance with its terms
(except enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally and subject to general
principles of equity).
3. The Purchase Agreement has been duly authorized (with respect to Selling
Shareholders that are entities), executed and delivered by or on behalf of each
Selling Shareholder.
4. Each Attorney-in-Fact has been duly authorized by each Selling
Shareholder to deliver the Common Shares on behalf of such Selling Shareholder
in accordance with the terms of the Purchase Agreement.
5. The execution, delivery and performance of the Purchase Agreement and
the Power of Attorney and Custody Agreement and the sale and delivery of the
Common Shares and the consummation of the transactions contemplated in the Power
of Attorney and Custody Agreement, the Purchase Agreement and in the
Registration Statement and compliance by the Selling Shareholders with their
respective obligations under the Purchase Agreement and Power of Attorney and
Custody Agreement have been duly authorized (with respect to Selling
Shareholders that are entities) by all necessary action on the part of the
Selling Shareholders and do not and will not, whether with or without the giving
of notice or passage of time or both, (A) conflict with in any way or constitute
a breach of, or default under or result in the creation or imposition of any
tax, lien, charge or encumbrance upon the Common Shares pursuant to a Material
Agreement(2) to which any Selling Shareholder is a party or by which they may be
bound, (B) impair the ability of the Selling Shareholder to sell its Common
Shares to the Underwriters as contemplated by the Purchase Agreement or to
perform its obligations thereunder or (C) result in any violation of the
provisions of the trust instrument, charter or by-laws or other organizational
instrument of the Selling Shareholders, if applicable, or any law, rule,
regulation or Material Order(3) of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or any of its properties.
6. Each of the Selling Shareholders has valid title to the Common Shares to
be sold by such Selling Shareholder, free and clear of all security interests,
claims, liens and other encumbrances, and assuming that each such Selling
Shareholder has legal capacity, each of the Selling Shareholders has the legal
right,
------------------
1 Capitalized terms used without definition have the meaning set forth
in the Purchase Agreement.
2 "Material Agreement" means the agreements, if any, of each Selling Shareholder
identified to us by such Selling Shareholder as being relevant to his, her or
its interest in, or ability to transfer, such Selling Shareholder's Common
Shares.
3 "Material Orders" means the judgments, orders and decrees, if any, identified
to us by each Selling Shareholder as being relevant to his, her or its interest
in, or ability to transfer, such Selling Shareholder's Common Shares.
1
power and all authorization and approval required by law to enter into the
Purchase Agreement and the Power of Attorney and Custody Agreement of such
Selling Shareholder and to sell, transfer and deliver the Common Shares to be
sold by such Selling Shareholder.
7. Upon the Underwriters' acquiring possession of stock certificates
representing the Common Shares to be sold by the Selling Shareholders, endorsed
to the Underwriters and paying the purchase price therefor pursuant to the
Purchase Agreement, the Underwriters (assuming that no such Underwriter has
notice of any "adverse claim", within the meaning of Section 8-105 of the New
York Uniform Commercial Code, to such Common Shares) will acquire their
respective interests in such Common Shares (including, without limitation, all
rights that such Selling Shareholder had or has the power to transfer in such
Common Shares) free and clear of any adverse claim within the meaning of Section
8-102 of the New York Uniform Commercial Code.
2
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER SHAREHOLDERS PURSUANT TO
SECTION 5(k)]
Exhibit C
[ ____ ], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
as Representative of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Proposed Public Offering by National Interstate Corporation
-----------------------------------------------------------
Dear Sirs:
The undersigned, a shareholder [and an officer and/or director] of
National Interstate Corporation, an Ohio corporation (the "Company"),
understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), as Representative of the several Underwriters to
be named therein, proposes to enter into a Purchase Agreement (the "Purchase
Agreement") with the Company and the Selling Shareholders providing for the
public offering of shares (the "Securities") of the Company's common stock, par
value $[ ] per share (the "Common Shares"). In recognition of the benefit that
such an offering will confer upon the undersigned as a shareholder [and an
officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreement
that, during a period of 180 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Shares or any securities convertible
into or exchangeable or exercisable for Common Shares, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file, or cause to be
filed, any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing (collectively, the "Lock-Up Securities") or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Lock-Up Securities, whether any such swap or transaction is
to be settled by delivery of Common Shares or other securities, in cash or
otherwise.
Notwithstanding the foregoing, the undersigned may transfer the Lock-Up
Securities without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) as a bona
fide gift or gifts, provided that the donee or donees thereof agree to be bound
in writing by the restriction set forth herein, or (ii) to any trust for the
direct or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of this lock-up
agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. The undersigned may exercise any options to
acquire Common Shares granted to the undersigned, however, any Common Shares
received upon such exercise of options will be subject to the lock-up
restrictions contained herein. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Lock-Up Securities except in compliance
with the foregoing restrictions.
The undersigned acknowledges that the Underwriters are relying on the
representations and agreements of the undersigned contained herein in carrying
out the public offering of Common Shares and in entering into underwriting
arrangements with respect to the public offering of Common Shares. This
agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the
undersigned. If (i) the Purchase Agreement does not become effective by Febuary
28, 2005, or (ii) the Purchase Agreement terminates or is terminated prior to
the payment for and delivery of the shares proposed for sale under the
Registration Statement, this agreement shall terminate immediately upon such
date and be of no further force and effect.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this agreement. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors and assigns of the undersigned.
Very truly yours,
Signature:
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Print Name:
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