Exhibit 1.1
OHIO CASUALTY CORPORATION
(an Ohio corporation)
$175,000,000
5.00% Convertible Notes due 2022
PURCHASE AGREEMENT
March 13, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
McDonald Investments Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Ohio Casualty Corporation, an Ohio corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("Salomon") and
McDonald Investments Inc. ("McDonald" and collectively with ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Salomon, the "Initial Purchasers", which term shall also include any initial
purchaser substituted as hereinafter provided in Section 11 hereof), with
respect to (i) the issue and sale by the Company and the purchase by the Initial
Purchasers, acting severally and not jointly, of the respective principal
amounts set forth in Schedule I of up to $175,000,000 aggregate principal amount
of the Company's 5.00% Convertible Notes due 2022 (the " Notes") and (ii) the
grant by the Company to the Initial Purchasers of the option described in
Section 2(b) hereof to purchase up to an additional $26,250,000 aggregate
principal amount of the Notes to cover over-allotments, if any. The aforesaid
$175,000,000 aggregate principal amount of the Notes (the "Firm Securities") to
be purchased by the Initial Purchasers and all or any part of the $26,250,000 of
the Notes subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called collectively, the "Securities." The
Securities are to be issued pursuant to an indenture dated as of March 19, 2002
(the "Indenture") between the Company and HSBC Bank USA, as trustee (the
"Trustee"). Securities issued in book-entry form will be issued to Cede & Co. as
nominee of The Depository Trust Company ("DTC") pursuant to a letter agreement,
to be dated as of the Closing Time (as defined in Section 2(b)), among the
Company, the Trustee and DTC.
The Securities are convertible into common shares, par value $.125 per
share, of the Company (the "Common Shares") in accordance with the terms of the
Securities and the Indenture, at the initial conversion price specified in
Schedule II hereto. The Securities will also have the benefit of the
registration rights provided under the Registration Rights Agreement, to be
dated March 19, 2002 (the "Registration Rights Agreement"), among the Company
and Initial Purchasers.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and delivered.
The Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A ("Rule
144A") of the rules and regulations promulgated under the 1933 Act (the "1933
Act Regulations) by the Securities and Exchange Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser copies
of a preliminary offering memorandum dated March 11, 2002 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated March 13, 2002 (the "Final Offering Memorandum"), each
for use by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
For purposes hereof, a "subsidiary" or "subsidiaries" of the Company
shall mean an entity that, directly or indirectly through one or more
intermediaries, is controlled by the Company.
SECTION 1. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
(a) Representations and Warranties. The Company represents and warrants
to each Initial Purchaser 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 Initial Purchaser, as follows:
(i) OFFERING MEMORANDUM. The Offering Memorandum does not, and at
Closing Time (and, if any Option Securities are purchased, at each Date
of Delivery) will not, include an 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. Notwithstanding the foregoing, the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Offering Memorandum made in reliance upon and in
conformity with information furnished to the Company in writing by any
Initial Purchaser expressly for use in the Offering Memorandum.
(ii) INCORPORATED DOCUMENTS. The documents incorporated by
reference in the Offering Memorandum, when they became effective or were
last amended or filed with the Commission, as the case may be, conformed
in all material respects to the requirements of the 1933 Act and the 1933
Act Regulations or the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), as applicable, and
none of such documents contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and any further documents so
filed and incorporated by reference in the Offering Memorandum, when such
documents become effective
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or are filed with the Commission, as the case may be, shall conform in
all material respects to the requirements of the 1933 Act and 1933 Act
Regulations or the 1934 Act and 1934 Act Regulations, as applicable, and
none of such documents shall contain 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 in light of the
circumstances under which they were made.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. (a) The financial statements included
in the Offering Memorandum present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and, except
as otherwise disclosed in the Offering Memorandum, such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the schedules included in the Offering Memorandum present fairly the
information required to be stated therein; and the assumptions used in
preparing the pro forma financial statements included in the Offering
Memorandum provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts. The selected financial data included in the
Offering Memorandum present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum.
(b) The statutory financial statements of each of
the Company's insurance subsidiaries, from which certain ratios and
other statistical data contained in the Offering Memorandum have been
derived, have for each relevant period been prepared in accordance
with accounting practices prescribed or permitted by the National
Association of Insurance Commissioners, and with respect to each
insurance subsidiary, the appropriate Insurance Department of the
state of domicile of such insurance subsidiary, and, except as
disclosed in the financial statements, such accounting practices have
been applied on a consistent basis throughout the periods involved.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Except as disclosed in
the Offering Memorandum, since the date of the latest audited financial
statements included in the Offering Memorandum there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other),
prospects, business, properties or results of operations of the Company
and its subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Offering Memorandum, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
incorporated and is an existing corporation in good standing under the
laws of the State of Ohio, with power and authority (corporate and other)
to own its properties and conduct its business as described in the
Offering Memorandum; and the Company is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business
requires such qualification.
(vii) AUTHORITY OF SUBSIDIARIES. Each subsidiary of the Company
has been duly incorporated and is an existing corporation 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 Offering Memorandum; and each subsidiary of the Company
is duly licensed or authorized in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such license or authorization; all of the issued and outstanding capital
stock of each subsidiary of the Company has been duly authorized and
validly issued and is fully paid and non-assessable; and the capital
stock of each
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subsidiary owned by the Company, directly or through subsidiaries, is
owned free from liens, encumbrances and defects.
(viii) CAPITALIZATION. All of the issued and outstanding capital
stock of the Company has been duly authorized and validly issued, is
fully paid and non-assessable. None of such shares of capital stock were
issued in violation of preemptive or other similar rights arising by
operation of law, under the charter or code of regulations of the Company
or under any agreement to which the Company or any of its subsidiaries is
a party, or otherwise.
(ix) AUTHORIZATION OF THIS AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF SECURITIES; ABSENCE OF DEFAULT. The
execution, delivery and performance of the Indenture and this Agreement,
and the issuance and sale of the Securities and compliance with the terms
and provisions thereof will not result in a material breach or violation
of any of the terms and provisions of, or constitute a material default
under, any statute, any rule, regulation or order of any governmental
agency or body (including, without limitation, any insurance regulatory
agency or body) or any court, domestic or foreign, having jurisdiction
over the Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company or any
such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such
subsidiary is subject, or the charter or code of regulations of the
Company or any such subsidiary, and the Company has full power and
authority to authorize, issue and sell the Securities as contemplated by
this Agreement.
(xi) AUTHORIZATION OF THE INDENTURE, THE REGISTRATION RIGHTS
AGREEMENT AND THE SECURITIES. The Indenture and the Registration Rights
Agreement have been duly authorized; the Securities have been duly
authorized; and when the Securities are delivered and paid for pursuant
to this Agreement at the Closing Time, the Indenture will have been duly
authorized, executed and delivered, such Securities will have been duly
executed, authenticated, issued and delivered and will conform to the
description thereof contained in the Offering Memorandum and the
Indenture, and such Securities will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles. At the
Closing Time, the Registration Rights Agreement will have been duly
authorized, executed and delivered and will constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles. The Indenture and the Registration Rights Agreement conform
and the Securities will conform to the descriptions thereof in the
Offering Memorandum. The use of proceeds of the offering of the
Securities as described in the Offering Memorandum has been duly
authorized by all necessary action on the part of the Company.
(xii) AUTHORIZATION AND DESCRIPTION OF COMMON SHARES. The Common
Shares conform to all statements relating thereto contained or
incorporated by reference in the Offering Memorandum and such description
conforms to the rights set forth in the instruments defining the same.
Upon issuance and delivery of the Securities in accordance with this
Agreement and the Indenture, the Securities will be convertible at the
option of the holder thereof for Common Shares in accordance with the
terms of the Securities and the Indenture; the Common Shares issuable
upon conversion of the Securities have been duly authorized and reserved
for issuance upon such conversion by all necessary corporate action and
such shares, when issued upon such conversion, will be validly issued and
will be fully paid and non-assessable; no holder of such shares will be
subject to personal liability by reason of being such a holder; and the
issuance of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the Company.
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(xiii) ABSENCE OF DEFAULTS OR CONFLICTS. Neither the Company nor
any of its subsidiaries is (a) in violation of its charter or code of
regulations; (b) in default in the performance or observance of any
material obligation, agreement, covenant, lease or any other 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 of its subsidiaries is subject; or (c) in violation of
any applicable law, administrative regulation or administrative or court
order or decree, which violation or default would, as described in
clauses (b) or (c) above, singly or in the aggregate, have a material
adverse effect on the condition (financial or other), prospects,
business, properties or results of operations of the Company and its
subsidiaries, considered as a whole ("Material Adverse Effect").
(xiv) ABSENCE OF PROCEEDINGS. Except as disclosed in the Offering
Memorandum, there are no pending actions, suits or legal or governmental
proceedings against or affecting the Company, any of its subsidiaries or
any of their respective properties that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under the Indenture or this Agreement, or which are otherwise material in
the context of the sale of the Securities; and, to the Company's
knowledge, no such actions, suits or legal or governmental proceedings
are threatened or contemplated.
(xv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Offering Memorandum or the
documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No consent, approval,
authorization, or order of, or filing with, any governmental agency or
body (including, without limitation, any insurance regulatory agency or
body) or any court is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and sale
of the Securities by the Company, except such as have been already
obtained and except such that the failure to obtain or make would not
have a Material Adverse Effect.
(xvii) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on commercially reasonable
terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on
the business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xviii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries hold 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 Offering Memorandum; the
Company and each subsidiary have fulfilled and performed all obligations
necessary to maintain the Insurance Licenses; except as disclosed in the
Offering Memorandum, 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; and except as disclosed in the
Offering Memorandum, 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
subsidiary to its parent.
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(xix) TITLE TO PROPERTY. Except as disclosed in the Offering
Memorandum, the Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use
made or to be made thereof by them; and except as disclosed in the
Offering Memorandum, 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 thereof by them.
(xx) INVESTMENT COMPANY ACT. The Company is not and, after giving
effect to the offering and sale of the Securities and the application of
the proceeds therefrom as described in the Offering Memorandum will not
be, an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
(xxi) COMPLIANCE WITH INSURANCE LAWS AND REGULATIONS. Each of the
subsidiaries is in compliance with the requirements of the insurance laws
and regulations of its jurisdiction of incorporation and the insurance
laws and regulations of other jurisdictions which are applicable to each
such subsidiary, and has filed all notices, reports, documents or other
information required to be filed thereunder, except where the failure to
so comply or file would not have, individually or in the aggregate with
other such failures, a Material Adverse Effect.
(xxii) NO MATERIAL CHANGES IN INSURANCE RESERVING PRACTICES.
Except as disclosed in the Offering Memorandum, the Company and its
subsidiaries have made no material changes in their insurance reserving
practices since the most recent audited financial statements included or
incorporated in the Offering Memorandum.
(xxiii) VALIDITY OF REINSURANCE TREATIES. All reinsurance treaties
and arrangements to which any subsidiary is a party are in full force and
effect and no subsidiary is in violation of or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein; no 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,
to the best knowledge of the Company and the subsidiaries, the Company
and the 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; except, in each of the above cases, (i) to the
extent adequately and properly reserved for in the consolidated financial
statements of the Company included in the Offering Memorandum and (ii)
for such violations or defaults that would not result in a Material
Adverse Effect.
(xxiv) NO TAXES OR DUTIES. There are no stamp or other issuance or
transfer taxes or duties or other similar fees or charges required to be
paid in connection with the execution and delivery of this Agreement or
the issuance or sale by the Company of the Securities or upon the
issuance of the Common Shares upon conversion thereof.
(xxv) SIMILAR OFFERINGS. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any offer
to buy, sold or offered to sell or otherwise negotiated in respect of, or
will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States
citizen or resident, any security which is or would be integrated with
the sale of the Securities in a manner that would require the Securities
to be registered under the 1933 Act.
(xxvi) RULE 144A ELIGIBILITY. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at Closing Time (and, if
any Option Securities are purchased, at each Date of Delivery), of the
same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted in a U.S. automated
interdealer quotation system.
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(xxvii) REPORTING COMPANY. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(xxviii) NO GENERAL SOLICITATION. None of the Company, its
Affiliates or any person acting on its or any of their behalf (other than
the Initial Purchasers, as to whom the Company makes no representation)
has engaged, in connection with the offering of the Securities, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
(xxix) NO COMPENSATED SOLICITATION. The Company has not paid or
agreed to pay to any person any compensation for soliciting another to
purchase any of the Securities (except as contemplated by this
Agreement).
(xxx) NO MARKET MANIPULATION. The Company has not taken, directly
or indirectly, any action designed to cause or which has constituted or
which might reasonably be expected to cause or result in, under the 1934
Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(xxxi) NO REGISTRATION REQUIRED. Subject to compliance by the
Initial Purchasers with the procedures set forth in Section 6 hereof, it
is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxxii) NO OUTSTANDING REGISTRATION RIGHTS. Except for the
registration rights to be granted to the Initial Purchasers pursuant to
the Registration Rights Agreement, there are no persons or entities with
registration or other similar rights to require the Company to include
any securities in any registration statement filed pursuant to a
registration agreement or in any offering made pursuant to any such
registration statement.
(xxxiii) PORTAL DESIGNATION. The Company has been advised that the
Securities have been designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities
Dealers, Inc. ("NASD") relating to trading in the PORTAL Market.
(b) Officer's Certificate. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company to each Initial Purchaser as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO INITIAL PURCHASERS; CLOSING.
(a) Firm Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, severally and not jointly, and
each Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule II hereto, the respective principal
amounts of the Firm Securities set forth in Schedule I opposite the name of such
Initial Purchaser, plus any additional principal amount of Securities which such
Initial Purchaser may become obligated to purchase pursuant to the provisions of
Section 11 hereof.
(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 Initial Purchasers,
severally and not jointly, to purchase up to an additional $26,250,000 aggregate
principal amount of the Option Securities, as set forth in Schedule I, at the
price set forth in Schedule II. 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 over-allotments which may be made in connection
with the offering and distribution of the Firm Securities upon notice by the
Initial Purchasers to the Company setting forth the number of Option Securities
as to which the Initial Purchasers are then exercising the option and the time
and date of payment and delivery for such Option
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Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by the Initial Purchasers, 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 Initial Purchasers, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Firm Securities set
forth in Schedule I opposite the name of such Initial Purchaser bears to the
total number of Firm Securities.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the Initial Purchasers, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon
by the Initial Purchasers and the Company, at 10:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 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 11), or such other time not later than ten business days
after such date as shall be agreed upon by the Initial Purchasers and the
Company (such time and date of payment and delivery being herein called the
"Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchasers, 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
Initial Purchasers and the Company, on each Date of Delivery as specified in the
notice from the Initial Purchasers to the Company. If settlement for the Option
Securities occurs after the Closing Time, the Company will deliver to the
Initial Purchasers on the relevant Date of Delivery, and the obligations of the
Initial Purchasers to purchase the Option Securities shall be conditioned upon
the receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered at the Closing Time
pursuant to Section 5(j) hereof.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Initial Purchasers for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Salomon each may (but shall not be obligated to) make payment of the purchase
price for the Firm Securities or the Option Securities, if any, to be purchased
by an Initial Purchaser 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 Initial Purchaser from its obligations hereunder.
(d) Denominations; Registration. The Securities or certificates for the
Firm Securities or the Option Securities, if any, as applicable, shall be in
such denominations (integral multiples of $1,000) and registered in such names
as the Initial Purchasers 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 Securities or certificates representing the Firm Securities and the Option
Securities, if any, as applicable, shall be made available for examination and
packaging by the Initial Purchasers in The City of New York not later than 10:00
A.M. on the last 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
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
8
considered as one enterprise which (i) make any statement in the Offering
Memorandum false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Final Offering Memorandum in order that
the Final Offering Memorandum not include any untrue statement 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 then existing, the
Company will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to each Initial Purchaser an amendment or amendments
of, or a supplement or supplements to, the Final Offering Memorandum (in form
and substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an 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 existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement without
the consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Initial Purchasers may designate and will
maintain such qualifications in effect as long as required for the sale of the
Securities; 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.
(e) Earnings Statement. 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.
(f) DTC. The Company will cooperate with the Initial Purchasers and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(g) 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 Offering
Memorandum under "Use of Proceeds".
(h) Restriction on Sale of Securities. Between the date hereof and the
later of termination of any trading restrictions or the Closing Time with
respect to the Securities, the Company will not, without the prior written
consent of the Initial Purchasers, directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise transfer or
dispose of, in any public offering or 144A offering, any debt securities of the
Company or securities of the Company that are convertible into, or exchangeable
for, the Securities or such other debt securities.
(i) Restriction on Sale of Common Shares. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of the Initial Purchasers, 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, lend or otherwise dispose of or transfer any 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, the economic consequence of ownership of
the Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares, whether any such swap or transaction 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
9
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 Offering
Memorandum, or (C) any Common Shares issued or options to purchase Common Shares
granted pursuant to existing and, subject to approval by the shareholders of the
Company at its 2002 Annual Meeting of Shareholders, proposed new employee
benefit plans of the Company referred to in the Offering Memorandum.
(j) Reporting Requirements. The Company, during the period when the
Offering Memorandum is required to be delivered pursuant to Section 6(a)(vii)
hereof, 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 1934 Act Regulations.
(k) Information to Publishers. Any information provided by the Company to
publishers of publicly available databases about the terms of the Securities
shall include a statement that the Securities have not been registered under the
Act and are subject to restrictions under Rule 144A under the 1933 Act.
(l) Reserve of Shares. The Company will reserve and keep available at all
times, free of pre-emptive rights, the full number of Common Shares issuable
upon conversion of the Securities.
(m) No Manipulation. The Company will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the 1934 Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(n) Investment Company Act. The Company will not, for so long as any
Securities are outstanding, be or become, or be or become owned by, an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the 1940 Act, and
will not be or become, or be or become owned by, a closed-end investment company
required to be registered but not registered thereunder.
(o) No Conversion Price Change. Between the date hereof and the Closing
Time or the relevant Date of Delivery, as the case may be, the Company will not
do or authorize any act or thing that would result in an adjustment of the
conversion price.
SECTION 4. PAYMENT OF EXPENSES.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchasers of this Agreement, any Agreement among Initial
Purchasers, the Indenture, the Registration Rights Agreement 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 Initial Purchasers,
including any transfer taxes, any stamp or other duties payable upon the sale,
issuance and delivery of the Securities to the Initial Purchasers and any
charges of DTC in connection therewith, (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(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection therewith and in connection
with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Securities,
(vii) any fees payable to rating agencies in connection with the rating of the
Securities, and (viii) any fees and expenses payable in connection with the
initial and continued designation of the Securities as PORTAL securities under
the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchasers in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
10
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
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) Opinion of Counsel for Company. At the Closing Time, the Initial
Purchasers shall have received the favorable opinions, dated as of Closing Time,
of Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP, counsel for the Company, and ▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq., Senior Vice President and General Counsel for the Company, in form
and substance satisfactory to counsel for the Initial Purchasers, to the effect
set forth in Exhibits A and B, respectively hereto and to such further effect as
counsel to the Underwriters may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Time, of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the Initial
Purchasers, with respect to the incorporation of the Company, the validity of
the Securities delivered at the Closing Time, and the Company shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters. In giving such opinion such
counsel 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 Initial Purchasers. 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.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, 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 a whole,
whether or not arising in the ordinary course of business, and the Initial
Purchasers shall have received a certificate of an executive officer of the
Company, dated as of the Closing Time, to the effect that, to the best of their
knowledge after reasonable investigation, (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1 hereof are
true and correct with the same force and effect as though expressly made at and
as of Closing Time, and (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Time.
(d) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchasers shall have received from
PricewaterhouseCoopers LLP and from Ernst & Young, LLP a letter dated such date,
in form and substance satisfactory to the Initial Purchasers, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to Initial Purchasers with respect to the financial statements
and certain financial information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchasers shall have received from Ernst & Young, LLP a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(f) Ratings. At the Closing Time (and, if any Option Securities are
purchased, at each Date of Delivery), the Securities shall be rated at least
Baa2 by Moody's Investor's Service Inc., BB by Standard & Poor's Ratings Group,
a division of McGraw Hill, Inc. and BBB- by Fitch Ratings, and the Company shall
have delivered to the Initial Purchasers a letter dated the Closing Time (or, if
any Option Securities are purchased, the relevant Date of Delivery), from each
such rating agency, or other evidence satisfactory to the Initial Purchasers,
confirming that the Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Securities or any of the Company's other securities or the Company's
financial strength or claims paying ability by any "nationally recognized
statistical rating agency", as that term is defined by the
11
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organizations shall have publicly announced that it has under surveillance or
review its rating of the Securities or any of the Company's other securities or
the Company's financial strength or claims paying ability.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Compliance Certificate for Bank Debt. At Closing Time, the Initial
Purchasers shall have received a certificate of the chief financial officer
("CFO") of the Company, dated as of the Closing Time, certifying that, (i) with
the application of the net proceeds from the offering of the Firm Securities,
the Company shall have sufficient additional funds to satisfy all of its
obligations under the Credit Agreement, dated October 27, 1997 (the "Credit
Agreement"), between the Company and JPMorgan Chase Bank, as agent, (ii) the
Company shall satisfy all of its obligations under the Credit Agreement prior to
the close of business on the day the Closing Time occurs, and (iii) to the
knowledge of the CFO, after due inquiry, there has not been any defaults or
events of default by the Company under the Credit Agreement.
(i) Lock-up Agreement. At the date of this Agreement, the Initial
Purchasers shall have received an agreement substantially in the form of Exhibit
C hereto signed by the persons listed on Schedule III hereto.
(j) Conditions to Purchase of Option Securities. In the event that the
Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the 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 and, at the
relevant Date of Delivery, the Initial Purchasers shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of an executive officer of the Company confirming that since
the Closing Time: (i) 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 a
whole, whether or not arising in the ordinary course of business, (ii)
the representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and as
of such Date of Delivery, and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to such Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinions of
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP, counsel for the Company, and ▇▇▇▇▇
▇. ▇▇▇▇▇, Esq., Senior Vice President and General Counsel for the
Company, each in form and substance satisfactory to counsel for the
Initial Purchasers, 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 INITIAL PURCHASERS. The favorable
opinion of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the
Initial Purchasers, 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(c) hereof.
(iv) BRING-DOWN COMFORT LETTER. A letter from Ernst & Young LLP,
in form and substance satisfactory to the Representatives and dated such
Date of Delivery, substantially in the same form and substance as the
letter furnished to the Initial Purchasers pursuant to Section 5(f)
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.
(k) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with such
documents and opinions as they may reasonably 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
12
contained; and all proceedings taken by the Company in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
(l) 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
Initial Purchasers to purchase the relevant Option Securities, may be terminated
by the Initial Purchasers by notice to the Company at any time at or prior to
the Closing 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, 7, 8 and 9 shall survive any
such termination and remain in full force and effect.
SECTION 6. SUBSEQUENT OFFERS AND RESALES OF THE SECURITIES.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) OFFERS AND SALES ONLY TO QUALIFIED INSTITUTIONAL BUYERS.
Offers and sales of the Securities shall only be made to persons whom the
offeror or seller reasonably believes to be qualified institutional
buyers, as defined in Rule 144A under the 1933 Act ("Qualified
Institutional Buyers"). Each Initial Purchaser severally agrees that it
will not offer, sell or deliver any of the Securities in any jurisdiction
outside the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its
own expense whatever action is required to permit its purchase and resale
of the Securities in such jurisdictions.
(ii) NO GENERAL SOLICITATION. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the ▇▇▇▇ ▇▇▇) will
be used in the United States in connection with the offering or sale of
the Securities.
(iii) PURCHASES BY NON-BANK FIDUCIARIES. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, each third party shall, in the judgment of the applicable
Initial Purchaser, be a Qualified Institutional Buyer or a non-U.S.
person outside the United States.
(iv) SUBSEQUENT PURCHASER NOTIFICATION. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring
Securities from such Initial Purchaser or affiliate, as the case may be,
in the United States that the Securities (A) have not been and will not
be registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Rule 144A or in accordance
with another exemption from registration under the 1933 Act, as the case
may be, and (C) may not be offered, sold or otherwise transferred except
(1) to the Company, (2) outside the United States in accordance with
Regulation S, or (3) inside the United States in accordance with (x) Rule
144A to a person whom the seller reasonably believes is a Qualified
Institutional Buyer that is purchasing such Securities for its own
account or for the account of a Qualified Institutional Buyer to whom
notice is given that the offer, sale or transfer is being made in
reliance on Rule 144A or (y) pursuant to another available exemption from
registration under the 1933 Act.
(v) RESTRICTIONS ON TRANSFER. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Notice to Investors", including the legend required thereby, shall apply
to the Securities except as otherwise agreed by the Company and the
Initial Purchasers.
(vi) DELIVERY OF OFFERING MEMORANDUM. Each Initial Purchaser will
deliver to each purchaser of the Securities from such Initial Purchaser,
in connection with its original distribution of the Securities, a copy of
the Offering Memorandum, as amended and supplemented at the date of such
delivery.
13
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) INTEGRATION. The Company agrees that it will not and will
cause its Affiliates not to, directly or indirectly, solicit any offer to
buy, sell or make any offer or sale of, or otherwise negotiate in respect
of, securities of the Company of any class if, as a result of the
doctrine of "integration" referred to in Rule 502 under the 1933 Act,
such offer or sale would render invalid (for the purpose of (i) the sale
of the Securities by the Company to the Initial Purchasers, (ii) the
resale of the Securities by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of
the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder
or otherwise.
(ii) RULE 144A INFORMATION. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act.
(iii) RESTRICTION ON REPURCHASES. Until the expiration of two
years after the original issuance of the Securities, the Company will
not, and will cause its Affiliates not to, resell any Securities which
are "restricted securities" (as such term is defined under Rule 144(a)(3)
under the 1933 Act), whether as beneficial owner or otherwise (except as
agent acting as a securities broker on behalf of and for the account of
customers in the ordinary course of business in unsolicited broker's
transactions).
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer").
SECTION 7. INDEMNIFICATION.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser 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 any Preliminary Offering Memorandum or the Final Offering
Memorandum (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 7(d) below) any such
settlement is effected with the written consent of the Company;
and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Initial Purchasers), 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;
14
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 Initial Purchaser expressly for use in the Offering Memorandum
(or any amendment thereto).
(b) Indemnification of Company. Each Initial Purchaser severally agrees
to indemnify and hold harmless the Company 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 against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a)(i) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by such
Initial Purchaser expressly for use in the Offering Memorandum.
(c) 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 7(a) above,
counsel to the indemnified parties shall be selected by the Initial Purchasers,
and, in the case of parties indemnified pursuant to Section 7(b) 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 no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. 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
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 7 or Section
8 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.
(d) 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 pursuant to Section 7(a) for fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) 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.
Section 8. CONTRIBUTION. If the indemnification provided for in Section 7
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 on the one
hand and the Initial Purchasers 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 on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
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The relative benefits received by the Company on the one hand and the
Initial Purchasers 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 total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers 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 by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section were determined by pro
rata allocation (even if the Initial Purchasers 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. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 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, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Initial Purchaser 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 such Initial
Purchaser, 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 shall have the same
rights to contribution as the Company. The Initial Purchasers' respective
obligations to contribute pursuant to this Section are several in proportion to
the principal amount of Securities set forth opposite their respective names in
Schedule I hereto and not joint.
Section 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers.
SECTION 10. TERMINATION OF AGREEMENT.
(a) Termination; General. The Initial Purchasers may terminate this
Agreement, by notice to the Company, 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 Offering Memorandum
(exclusive of any supplement thereto), 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, 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
Initial Purchasers, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
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securities of the Company has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on 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 NASD or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section
10, 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, 7,
8 and 9 shall survive such termination and remain in full force and effect.
Section 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS. If one or
more of the Initial Purchasers 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 Initial Purchasers shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other initial purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the Initial
Purchasers shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Securities to be
purchased hereunder, each of the non-defaulting Initial Purchasers
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 Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of
the aggregate principal amount of the Securities to be purchased
hereunder, this Agreement, or with respect to any Date of Delivery
which occurs after the Closing Time, the obligation of the Initial
Purchasers to purchase and 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 Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser 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
Initial Purchasers to purchase and the Company to sell the relevant Option
Securities, as the case may be, either the Initial Purchasers or the Company
shall have the right to postpone the 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 Offering Memorandum or in any other documents
or arrangements. As used herein, the term "Initial Purchaser" includes any
person substituted for an Initial Purchaser under this Section.
SECTION 12. 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 Initial
Purchasers shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇▇▇▇, to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇
▇▇▇▇▇, and to McDonald Investments Inc., ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; and notices to the Company shall be
directed to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇
▇▇▇▇▇, Senior Vice President and General Counsel.
SECTION 13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the Company 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
Initial Purchasers and the
17
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 7 and 8 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 Initial Purchasers and the Company 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 Initial Purchaser shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
OHIO CASUALTY CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------
Title: President and Chief Executive
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------
Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------
Authorized Signatory
MCDONALD INVESTMENTS INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
-----------------------------------------
Authorized Signatory
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