Exhibit 1.2
AMERICAN FINANCIAL GROUP, INC.
$600,000,000 of Common Stock of American Financial Group, Inc.
(no par value)
AMERICAN PREMIER UNDERWRITERS, INC.
1,361,711 Shares of Common Stock of American Financial Group, Inc.
(no par value)
EQUITY DISTRIBUTION AGREEMENT
[ ], 2004
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
American Financial Group, Inc. ("AFG" or the "Company") and American
Premier Underwriters, Inc. (the "Selling Stockholder") each confirms its
agreement with UBS Securities LLC (the "Manager"), as follows:
SECTION 1. Description of Securities. The Company proposes to issue and
sell through or to the Manager, as non-exclusive sales agent and/or principal,
up to $600,000,000 in value of shares (the "Primary Shares") and the Selling
Stockholder proposes to issue and sell through or to the Manager, as sales agent
and/or principal, up to 1,361,711 shares (the "Secondary Shares") (the Primary
Shares and the Secondary Shares being referred to collectively herein as the
"Shares") of the AFG's common stock, no par value (the "Common Stock"), on the
terms set forth in Section 3 of this Agreement. The Company and the Selling
Stockholder each agree that whenever either determines to sell Shares directly
to the Manager as principal, both will enter into a separate agreement (each, a
"Terms Agreement") substantially in the form of Annex I hereto, relating to such
sale in accordance with Section 3 of this Agreement.
SECTION 2. Representations and Warranties of the Company. (i) The Company
represents and warrants to the Manager that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively called the "Act"). A registration statement on
Form S-3 (Registration No. [ ]) with respect to the Shares as well as other
securities that may be issued and sold by the Company and its subsidiaries,
including a form of prospectus and such amendments or supplements to such
registration statement as may have been required prior to the date of this
Agreement, has been prepared by the Company under the provisions of the
Act, has been filed with the Securities and Exchange Commission (the
"Commission"), and has become effective and which incorporates by reference
documents which the Company has filed and will file in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (collectively called the "Exchange Act").
The Company has prepared a prospectus supplement (the "Prospectus
Supplement"), including the prospectus included in the registration
statement referred to above and the documents incorporated by reference
therein, setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the
Company and its business. No stop order suspending the effectiveness of the
registration statement or any post-effective amendment thereto has been
issued and served on the Company, and no proceedings for that purpose are
pending or, to the knowledge of the Company, threatened by the Commission.
Copies of such registration statement and prospectus, any such amendment or
supplement and all documents incorporated by reference therein that were
filed with the Commission on or prior to the date of this Agreement have
been made available or delivered to the Manager. Such registration
statement, as it may have heretofore been amended, is referred to herein as
the "Registration Statement," and the final form of prospectus included in
the Registration Statement, as amended or supplemented from time to time,
is referred to herein as the "Prospectus." Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement
thereto shall be deemed to refer to and include the documents incorporated
(or deemed to be incorporated) by reference therein, and any reference
herein to the terms "amend," "amendment" or "supplement" with respect to
the Registration Statement or Prospectus shall be deemed to refer to and
include the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein. As of the close
of business on [ ], 2004, up to $600,000,000 in value of securities,
including Primary Shares, of the Company and its subsidiaries and 1,361,711
Secondary Shares were available for issuance pursuant to the Registration
Statement, which permits the sale of Shares in the manner contemplated by
this Agreement;
(b) Each part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each
Filing Date (as defined below), did or will in all material respects comply
with all applicable provisions of the Act and the Exchange Act. Each part
of the Registration Statement, when such part became or becomes effective,
did not or will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The Prospectus and any
amendment or supplement thereto, on the date of filing thereof with the
Commission, did not or will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have
been so described or filed. The foregoing representations and warranties in
this Section 2(b) do not apply to any statements or omissions made in
reliance on and in conformity with information relating to the Manager
furnished in writing to the Company by the Manager specifically for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto, which the parties agree consists of the name of UBS
Securities LLC in the first paragraph under the heading "Plan of
Distribution" in the Prospectus. The Company has not distributed any
offering material in connection with the offering or sale of the Shares
other than the Registration Statement, the Prospectus or any other
materials, if any, permitted by the Act;
(c) The documents which are incorporated by reference in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or from which information is so incorporated by reference, when
they become effective or were filed with the Commission, as the case may
be, complied in all material respects with the requirements of the Act or
the Exchange Act, 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 or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading and any further documents so filed and
incorporated by reference shall, when they became or become effective under
the Act or when they were or are filed with the Commission, conform in all
material respects with the requirements of the Act or the Exchange Act, as
applicable;
(d) 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 its properties and conduct
its business 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 its ownership or lease of
property or the conduct of business, requires such qualification except
where such failure to qualify would not, individually or in the aggregate,
result in a material adverse effect on the Company or any of its
subsidiaries or their respective business, properties, business prospects,
condition (financial or otherwise) or results of operations or on the
transactions contemplated hereby, or would materially and adversely affect
the ability of the Company or the Selling Stockholder to perform its
obligations under this Agreement, any Terms Agreement or the Shares (a
"Material Adverse Effect");
(e) 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 the Prospectus Supplement 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 as otherwise disclosed in the Prospectus, 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 A
hereto;
(f) The financial statements included or incorporated by reference in
the Registration Statement and the Prospectus as amended or supplemented,
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, stockholders' 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
or incorporated by reference in the Registration Statement present fairly
in accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Prospectus as amended or supplemented present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements included or incorporated by reference in the
Registration Statement;
(g) The accounting firm that certified the financial statements and
supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus is an independent registered
public accounting firm as required by the Act;
(h) All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws and were
not issued in violation of any preemptive right, resale right, right of
first refusal or similar right; the Shares to be issued and sold by the
Company and the Selling Stockholder pursuant to this Agreement and any
Terms Agreement have been duly authorized and upon such issuance will be
validly issued, fully paid and nonassessable and are not subject to any
preemptive right, resale right, right of first refusal or similar right and
the certificates for the Shares are in due and proper form and the holders
of the Shares will not be subject to personal liability by reason of being
such holders. The description of the Common Stock in the Prospectus is
complete and accurate in all material respects. Except as set forth in the
Prospectus, there are no options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible or exchangeable
into or exercisable for, or any contracts, commitments, plans or
arrangements to issue or sell, any shares of capital stock of the Company,
and except with respect to Great American Financial Resources, Inc. and
National Interstate Corporation, any shares of capital stock of any
Subsidiary or any such warrants, convertible, exercisable or exchangeable
securities or obligations. The descriptions of the Company's stock option
and other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth or incorporated by reference in
the Prospectus, accurately present the information required to be shown
with respect to such plans, arrangements, options and rights;
(i) 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 Effect, (B) there have been
no transactions entered into by either of 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 (C) other than regular quarterly dividends declared and
paid consistent with past practice and described in the Prospectus, there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its respective capital stock;
(j) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, or 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 which are otherwise
material in the context of the sale of the Shares; and no such actions,
suits or proceedings are threatened or, to the Company's knowledge,
contemplated;
(k) Neither the Company nor any of its Subsidiaries is in violation of
its articles of incorporation or code of regulations (or similar corporate
documents). Neither the Company nor any of its Subsidiaries is 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 of its Subsidiaries is subject (collectively, "Agreements
and Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement, any Terms Agreement and the Shares and any other agreement
or instrument entered into or issued or to be entered into or issued by the
Company and the Selling Stockholder in connection with the consummation of
the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Shares and the use of the proceeds
from the sale of the Shares as described in the Prospectus under the
caption "Use of Proceeds") and compliance by the Company and the Selling
Stockholder with their obligations hereunder and under any Terms Agreement
and the Shares and such other agreements or instruments have been duly
authorized by all necessary corporate action of the Company 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 of its Subsidiaries pursuant to, the Agreements and Instruments
(except for such conflicts, breaches, defaults or Repayment Events or
liens, charges or encumbrances that, singly 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 documents) of the Company or any of its
Subsidiaries 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 of
its Subsidiaries 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 of its Subsidiaries;
(l) This Agreement and any Terms Agreement have been duly authorized,
executed and delivered by the Company;
(m) 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 Insurance Licenses; 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;
(n) 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 Shares hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution,
delivery or performance of this Agreement or the Terms Agreement by the
Company, except such as have been already obtained or as may be required
under state securities laws;
(o) Except as disclosed in the Registration Statement, 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, individually or in the
aggregate, materially affect the value of such properties and assets, taken
as a whole, 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 them;
(p) 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;
(q) Except as disclosed in the Registration Statement, neither the
Company nor any of its Subsidiaries is in violation of any statute, any
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 investigation which might lead to
such a claim;
(r) The Company is not required, and upon the issuance and sale of the
Shares 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");
(s) 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;
(t) 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 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 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;
(u) 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 conformity
with statutory accounting principles or practices required or permitted by
the National Association of Insurance Commissioners and 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;
(v) The Company is, and if operated in the manner described in the
Prospectus shall remain, an insurance holding company;
(w) Neither the Company nor any affiliate of the Company has taken,
nor will the Company or any affiliate 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;
(x) The Common Stock is an "actively-traded security" excepted from
the requirements of Rule 101 of Regulation M under the Exchange Act by
subsection (c)(1) of such rule;
(y) The Shares are duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange (the "NYSE") and the
Nasdaq National Market ("Nasdaq");
(z) No labor dispute with the employees of either of the Company or
any of its Subsidiaries that might have a Material Adverse Effect exists
or, to the knowledge of the Company, is imminent;
(aa) Neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any officer, director, employee or agent acting
on behalf of the Company or any of its Subsidiaries has at any time (i)
made any contributions to any candidate for political office in violation
of law, or failed to disclose fully any contributions to any candidate for
political office in accordance with any applicable statute, rule,
regulation or ordinance requiring such disclosure, (ii) made any payment to
any local, state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or allowed by applicable law, (iii) made any payment
outside the ordinary course of business to any purchasing or selling agent
or person charged with similar duties of any entity to which the Company or
any Subsidiary sells or from which the Company or any Subsidiary buys
products for the purpose of influencing such agent or person to buy
products from or sell products to the Company or such Subsidiary, or (iv)
except as described in the Prospectus, engaged in any transaction,
maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in
the normally maintained books and records of the Company or such
Subsidiary;
(bb) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the business in which they
engage as described in the Prospectus; neither the Company nor any
Subsidiary has been refused any insurance coverage sought or applied for;
and the Company has no reason to believe that it or any Subsidiary will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its proposed business at a cost that would not result
in a Material Adverse Effect;
(cc) Neither the Company nor any of its Subsidiaries is, and if
operated in the manner described in the Prospectus, will be a "broker"
within the meaning of Section 3(a)(4) of the Exchange Act or a "dealer"
within the meaning of Section 3(a)(5) of the Exchange Act or required to be
registered pursuant to Section 15(a) of the Exchange Act;
(dd) Except as contemplated by Section 3 of this Agreement, the
Company has not incurred any liability for any finder's fees or similar
payments in connection with the transactions herein contemplated;
(ee) The Company has not entered into any other sales agency
agreements or other similar arrangements with any agent or other
representative in respect of the Shares and the equity shelf program
established by this Agreement;
(ff) Each of the principal executive officer and the principal
financial officer of the Company (or each former principal executive
officer of the Company and each former principal financial officer of the
Company as applicable) has made all certifications required by Sections 302
and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of
the Commission promulgated thereunder (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission. For
purposes of the preceding sentence, "principal executive officer" and
"principal financial officer" shall have the meanings given to such terms
in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act;
(gg) The Company and its consolidated subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's
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
authorization; (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences; (v) material information relating to the
Company and its consolidated subsidiaries is promptly made known to the
officers responsible for establishing and maintaining the system of
internal accounting controls; and (vi) any significant deficiencies or
weaknesses in the design or operation of internal accounting controls which
could adversely affect the Company's ability to record, process, summarize
and report financial data, and any fraud whether or not material that
involves management or other employees who have a significant role in
internal controls, are adequately and promptly disclosed to the Company's
independent auditors and the audit committee of the Company's board of
directors;
(hh) The Company and its consolidated subsidiaries employ disclosure
controls and procedures that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and
forms, and is accumulated and communicated to the Company's management,
including its principal executive officer or officers and principal
financial officer or officers, as appropriate to allow timely decisions
regarding disclosure; and
(ii) There are no transactions, arrangements and other relationships
between and/or among the Company, and/or, to the knowledge of the Company,
any of its affiliates and any unconsolidated entity, including, but not
limited to, any structural finance, special purpose or limited purpose
entity (each, an "Off Balance Sheet Transaction") that could reasonably be
expected to affect materially the Company's liquidity or the availability
of or requirements for its capital resources, including those Off Balance
Sheet Transactions described in the Commission's Statement about
Management's Discussion and Analysis of Financial Conditions and Results of
Operations (Release Nos. 33-8056; 34-45321; FR-61), required to be
described in the Prospectus which have not been described as required.
(ii) The Company and the Selling Stockholder jointly and severally
represent and warrant to the Manager that:
(a) The Selling Stockholder has valid and unencumbered title to the
Secondary Shares to be delivered by the Selling Stockholder hereunder and
full right, power and authority to enter into this Agreement and any Terms
Agreement and to sell, assign, transfer and deliver the Secondary Shares to
be delivered by the Selling Stockholder hereunder; and upon the delivery of
and payment for the Secondary Shares hereunder the purchasers thereof will
acquire valid and unencumbered title to the Secondary Shares to be
delivered by the Selling Stockholder; as of the date hereof, the Selling
Stockholder owns 1,361,711 shares of Common Stock of the Company;
(b) 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
Selling Stockholder of its obligations hereunder, in connection with the
offering, sale of the Shares hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution,
delivery or performance of this Agreement or the Terms Agreement by the
Selling Stockholder, except such as have been already obtained or as may be
required under state securities laws;
(c) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Selling Stockholder,
or any of its Subsidiaries or any of their respective properties that, if
determined adversely to the Selling Stockholder or any of its Subsidiaries,
would individually or in the aggregate have a Material Adverse Effect or
which are otherwise material in the context of the sale of the Shares; and
no such actions, suits or proceedings are threatened or, to the Selling
Stockholder's knowledge, contemplated;
(d) The execution, delivery and performance of this Agreement, any
Terms Agreement and the Shares and any other agreement or instrument
entered into or issued or to be entered into or issued by the Selling
Stockholder in connection with the consummation of the transactions
contemplated herein and in the Registration Statement (including the sale
of the Secondary Shares and the use of the proceeds from the sale of the
Secondary Shares as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Selling Stockholder with its obligations
hereunder and under any Terms Agreement and the Secondary Shares and such
other agreements or instruments have been duly authorized by all necessary
corporate action of the Selling Stockholder 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
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, the Agreements and Instruments (except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that, singly 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 by-laws (or similar
corporate documents) of the Selling Stockholder or any of its Subsidiaries
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 Selling Stockholder or any of its
Subsidiaries or any of their assets, properties or operations;
(e) This Agreement and any Terms Agreement have been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder;
(f) Neither the Selling Stockholder nor any affiliate of the Selling
Stockholder has taken, nor will the Selling Stockholder or any affiliate
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 Shares;
(g) Except as contemplated by Section 3 of this Agreement, the Selling
Stockholder has not incurred any liability for any finder's fees or similar
payments in connection with the transactions herein contemplated;
(h) The Selling Stockholder has not entered into any other sales
agency agreements or other similar arrangements with any agent or other
representative in respect of the Shares and the equity shelf program
established by this Agreement;
(i) The decision to enter into this Agreement and engage in the
transactions contemplated hereby was not prompted by any material
non-public information concerning the Company or any of its Subsidiaries in
the possession of the Selling Stockholder;
(j) Each part of the Registration Statement, when such part became or
becomes effective, did not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission, did not or will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed; provided that the
foregoing representations and warranties in this Section 2(ii)(j) relates
only to information in the Registration Statement relating to or dealing
with the Selling Stockholder.
SECTION 3. Sale and Delivery of Securities. (a) On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell, and
the Selling Stockholder agrees to sell, through the Manager, as sales agent, and
the Manager agrees to use its reasonable efforts to sell, as sales agent for the
Company and the Selling Stockholder, the Shares on the following terms:
(i) The Shares are to be sold on a daily basis or otherwise as shall
be agreed to by the Company, in the case of Primary Shares, the Selling
Stockholder, in the case of Secondary Shares, and the Manager, but in any
event the Shares are to be sold only in trades on the NYSE, on any day that
is a trading day for the NYSE (other than a day on which the NYSE is
scheduled to close prior to its regular weekday closing time). The Company
will designate in writing the maximum amount and minimum price of Primary
Shares and the Selling Stockholder will designate in writing the maximum
amount and minimum price of Secondary Shares to be sold by the Manager
daily as reasonably agreed to by the Manager and in any event not in excess
of the amount available for issuance under the currently effective
Registration Statement. Subject to the terms and conditions hereof, the
Manager shall use its reasonable efforts to sell all of the designated
Shares. The gross sales of any Shares sold under this Section 3(a) shall be
the market price for shares of the Company's Common Stock sold by the
Manager under this Section 3(a) on the NYSE at the time of such sale.
(ii) Notwithstanding the foregoing, the Company may instruct the
Manager in writing not to sell Primary Shares and the Selling Stockholder
may instruct the Manager in writing not to sell Secondary Shares if such
sales cannot be effected at or above the price designated by the Company or
the Selling Stockholder, as the case may be, in any such instruction.
Furthermore, the Company shall not authorize the issuance and sale of, and
the Selling Stockholder shall not authorize the sale of, and the Manager
shall not be obligated to use its reasonable efforts to sell, any Share at
a price lower than the minimum price therefor designated from time to time
by the Company's Board of Directors in the case of Primary Shares and the
Selling Stockholder's Board of Directors in the case of Secondary Shares
and notified to the Manager in writing. In addition, the Company, in the
case of the Primary Shares, the Selling Stockholder in the case of the
Secondary Shares or the Manager may, upon notice to the other parties
hereto by telephone (confirmed promptly by telecopy), suspend the offering
of the Shares; provided, however, that such suspension or termination shall
not affect or impair the parties' respective obligations with respect to
the Shares sold hereunder prior to the giving of such notice.
(iii) The Manager hereby covenants and agrees not to make any sales of
Shares on behalf of the Company or the Selling Stockholder, pursuant to
this Section 3(a), other than (a) by means of ordinary brokers'
transactions between members of the NYSE that qualify for delivery of a
Prospectus to the NYSE in accordance with Rule 153 under the Act (such
transactions are hereinafter referred to as "At the Market Offerings") and
(b) such other sales of Shares on behalf of the Company or the Selling
Stockholder in its capacity as agent of the Company and the Selling
Stockholder as shall be agreed by the Company in the case of Primary
Shares, the Selling Stockholder in the case of Secondary Shares, and the
Manager. The Company and the Selling Stockholder each acknowledges and
agrees that in the event a sale of Shares on behalf of the Company or the
Selling Stockholder would constitute the sale of a "block" under Rule
10b-18(a)(5) under the Exchange Act or a "distribution" within the meaning
of Rule 100 of Regulation M under the Exchange Act or the Manager
reasonably believes it may be deemed an "underwriter" under the Act in a
transaction that is not an At the Market Offering, the Company and the
Selling Stockholder, will provide to the Manager, at the Manager's request
and upon reasonable advance notice to the Company and the Selling
Stockholder, on or prior to the Settlement Date, the opinions of counsel,
accountants' letters and officers' certificates pursuant to Section 5
hereof that the Company and/or the Selling Stockholder would be required to
provide to the Manager in connection with a sale of Shares pursuant to a
Terms Agreement, each dated the Settlement Date (as defined below), and
such other documents and information as the Manager shall reasonably
request.
(iv) The compensation to the Manager for sales of Shares, as an agent
of the Company or the Selling Stockholder, shall be 2.0% of the gross sales
price of the Shares sold pursuant to this Section 3(a), and such rate of
compensation shall not apply when the Manager acts as principal. The
remaining proceeds with respect to Primary Shares sold, after further
deduction for any transaction fees imposed by any governmental or
self-regulatory organization in respect of such sales, shall constitute the
net proceeds to the Company and the remaining proceeds with respect to
Secondary Shares sold, after further deduction for any transaction fees
imposed by any governmental or self-regulatory organization in respect of
such sales, shall constitute the net proceeds to the Selling Stockholder
(the "Net Proceeds").
(v) The Manager shall provide written confirmation to the Company, in
the case of Primary Shares, and the Selling Stockholder in the case of
Secondary Shares, following the close of trading on the NYSE each day in
which Shares are sold under this Section 3(a) setting forth the amount of
Shares sold on such day, the Net Proceeds to the Company or the Selling
Stockholder, and the compensation payable by the Company or the Selling
Stockholder to the Manager with respect to such sales.
(vi) Settlement for sales of Shares pursuant to this Section 3(a) will
occur on the third business day following the date on which such sales are
made (each such day, a "Settlement Date"). On each Settlement Date, the
Shares sold through the Manager for settlement on such date shall be issued
and delivered by the Company, in the case of Primary Shares, and delivered
by the Selling Stockholder, in the case of Secondary Shares, to the Manager
against payment of the Net Proceeds for the sale of such Shares. Settlement
for all such Shares shall be effected by free delivery of Shares to the
Manager's account at The Depository Trust Company in return for payments in
same day funds delivered to the account designated by the Company, in the
case of Primary Shares, and the Selling Stockholder, in the case of
Secondary Shares. If the Company shall default on its obligation to deliver
Primary Shares on any Settlement Date or the Selling Stockholder shall
default on its obligation to deliver Secondary Shares on any Settlement
Date, the Company, in the case of a default in the delivery of Primary
Shares, and the Company and the Selling Stockholder jointly and severally,
in the case of a default in the delivery of Secondary Shares, shall (a)
hold the Manager harmless against any loss, claim or damage arising from or
as a result of such default by the Company or the Selling Stockholder as
the case may be and (b) pay the Manager any commission to which it would
otherwise be entitled absent such default. If the Manager breaches this
Agreement by failing to deliver proceeds on any Settlement Date for Primary
Shares delivered by the Company or Secondary Shares delivered by the
Selling Stockholder, the Manager will pay the Company in the case of a
breach in the payment of proceeds for Primary Shares or the Selling
Stockholder in the case of a breach in the payment of proceeds for
Secondary Shares, interest based on the effective overnight Federal Funds
rate.
(vii) At each Settlement Date and Filing Date (as defined below), each
of the Company and the Selling Stockholder shall be deemed to have affirmed
each of its representations and warranties contained in this Agreement. The
Company covenants and agrees with the Manager that (a) with respect to each
of the Company's first three fiscal quarters, on or prior to the date on
which the Company shall be obligated to file a quarterly report on Form
10-Q in respect of such quarter and (b) with respect to the Company's
fourth fiscal quarter for year 2004 and for each year thereafter, on or
prior to the thirty-fifth day after the end of such quarter in which sales
of Shares were made by the Manager pursuant to this Section 3(a) (each such
date, a "Filing Date"), the Company will file a prospectus supplement with
the Commission under the applicable paragraph of Rule 424(b), which
prospectus supplement will set forth, with regard to such quarter, the
number of Shares sold through the Manager as agent pursuant to this Section
3(a) in At the Market Offerings, the Net Proceeds to the Company and the
Selling Stockholder and the compensation paid by the Company and the
Selling Stockholder with respect to such sales of Shares pursuant to this
Section 3(a) and deliver such number of copies of each such prospectus
supplement to the NYSE as are required by such Exchange. Any obligation of
the Manager to use its reasonable efforts to sell the Shares on behalf of
the Company or the Selling Stockholder shall be subject to the continuing
accuracy of the representations and warranties of the Company and the
Selling Stockholder herein, to the performance by the Company and the
Selling Stockholder of their obligations hereunder and to the continuing
satisfaction of the additional conditions specified in Section 5 of this
Agreement.
(b) (i) If either of the Company or the Selling Stockholder wishes to issue
and sell Shares pursuant to this Agreement but other than as set forth in
Section 3(a) of this Agreement (each, a "Placement"), it will notify the Manager
of the proposed terms of such Placement. If the Manager, acting as principal,
wishes to accept such proposed terms (which it may decline to do for any reason
in its sole discretion) or, following discussions with the Company with respect
to Primary Shares or the Selling Stockholder with respect to Secondary Shares,
wishes to accept amended terms, the Manager, the Company and the Selling
Stockholder will enter into a Terms Agreement setting forth the terms of such
Placement.
(ii) The terms set forth in a Terms Agreement will not be binding on
the Company, the Selling Stockholder or the Manager unless and until the
Company, the Selling Stockholder and the Manager have each executed such
Terms Agreement accepting all of the terms of such Terms Agreement. In the
event of a conflict between the terms of this Agreement and the terms of a
Terms Agreement, the terms of such Terms Agreement will control.
(c) (i) Under no circumstances shall the number of Shares sold pursuant to
this Agreement and any Terms Agreement exceed the number set forth in Section 1
or the number of shares of Common Stock available for issuance under the
currently effective Registration Statement.
(ii) If any party has reason to believe that the exemptive provisions
set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not
satisfied with respect to the Shares, it shall promptly notify the other
party and sales of Shares under this Agreement and any Terms Agreement
shall be suspended until that or other exemptive provisions have been
satisfied in the judgment of each party. The Manager shall calculate on a
weekly basis the ADTV (as defined by Rule 100 of Regulation M under the
Exchange Act) of the Common Stock.
(d) Each sale of Shares to the Manager shall be made in accordance with the
terms of this Agreement and a Terms Agreement, which will provide for the sale
of such Shares to, and the purchase thereof by, the Manager. A Terms Agreement
may also specify certain provisions relating to the reoffering of such Shares by
the Manager. The commitment of the Manager to purchase Shares pursuant to any
Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company and the Selling Stockholder herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall specify the number of Shares to be purchased by the
Manager pursuant thereto, the price to be paid to the Company or the Selling
Stockholder for such Shares, any provisions relating to rights of, and default
by, underwriters acting together with the Manager in the reoffering of the
Shares, and the time and date (each such time and date being referred to herein
as a "Time of Delivery") and place of delivery of and payment for such Shares.
Such Terms Agreement shall also specify any requirements for opinions of
counsel, accountants' letters and officers' certificates pursuant to Section 5
of this Agreement and any other information or documents required by the
Manager.
SECTION 4. Covenants of the Company and the Selling Stockholder.
(i) The Company agrees with the Manager:
(a) During the period in which a prospectus relating to the Shares is
required to be delivered under the Act, to notify the Manager promptly of
the time when any subsequent amendment to the Registration Statement has
become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement
to the Registration Statement or Prospectus or for additional information;
to prepare and file with the Commission, promptly upon the Manager's
request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Manager's reasonable opinion, may be necessary or
advisable in connection with the offering of the Shares by the Manager; not
to file any amendment or supplement to the Registration Statement or
Prospectus (other than any prospectus supplement relating to the offering
of other securities (including, without limitation, Common Stock) other
than pursuant to this Agreement) unless a copy thereof has been submitted
to the Manager a reasonable period of time before the filing and the
Manager has not reasonably objected thereto; to file promptly all reports
and any definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares and to
advise the Manager of any such filing; and to furnish to the Manager, at
the time of filing thereof a copy of any document that upon filing is
deemed to be incorporated by reference in the Registration Statement or
Prospectus; and to cause each amendment or supplement to the Prospectus to
be filed with the Commission as required pursuant to the applicable
paragraph of Rule 424(b) of the Act or, in the case of any document to be
incorporated therein by reference, to be filed with the Commission as
required pursuant to the Exchange Act, within the time period prescribed;
(b) To promptly advise the Manager, of any request by the Commission
for amendments or supplements to the Registration Statement or Prospectus
or for additional information with respect thereto, or of notice of
institution of proceedings for, or the entry of a stop order suspending the
effectiveness of the Registration Statement and, if the Commission should
enter a stop order suspending the effectiveness of the Registration
Statement, to make every reasonable effort to obtain the lifting or removal
of such order as soon as possible; to promptly advise the Manager of any
proposal to amend or supplement the Registration Statement or Prospectus,
including by filing any documents that would be incorporated therein by
reference, and to file no such amendment or supplement to which the Manager
shall object in writing;
(c) To make available to the Manager, as soon as practicable after the
Registration Statement becomes effective, and thereafter from time to time
to furnish to the Manager, copies of the Prospectus (or of the Prospectus
as amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement)
in such quantities and at such locations as the Manager may reasonably
request for the purposes contemplated by the Act, which Prospectus and any
amendments or supplements thereto furnished to the Manager will be
materially identical to the version created to be transmitted to the
Commission for filing via ▇▇▇▇▇, except to the extent permitted by
Regulation S-T; and for so long as this agreement is in effect, the Company
will prepare and file promptly such amendment or amendments to the
Registration Statement and the Prospectus as may be necessary to comply
with the requirements of Section 10(a)(3) of the Act;
(d) To promptly notify the Manager to suspend the offering of Shares
upon the happening of any event known to the Company within the time during
which a prospectus relating to the Shares is required to be delivered under
the Act which, in the judgment of the Company, would require the making of
any change in the Prospectus then being used, or in the information
incorporated therein by reference, so that the Prospectus would not include
an untrue statement of material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, and, during such time and any
such time as is contemplated by Section 4(ii)(a), to prepare and furnish,
at the Company's expense, to the Manager promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change and, to the extent it relates solely to the Shares, to furnish the
Manager with a copy of such proposed amendment or supplement before filing
any such amendment or supplement with the Commission and thereafter
promptly to furnish at the Company's own expense to the Manager, copies in
such quantities and at such locations as the Manager may from time to time
reasonably request of an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so
amended or supplemented will (i) reflect such change, or (ii) not, in the
light of the circumstances when it is so delivered, be misleading, or (iii)
comply with applicable securities laws;
(e) To furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Manager may designate and
to maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Company shall not be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process with respect to
the offering and sale of the Shares); and to promptly advise the Manager of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;
(f) To furnish to the Manager (i) copies of any reports or other
communications which the Company shall send directly to its stockholders or
shall from time to time publish or publicly disseminate (except with
respect to information, other than press releases, on the Company's
website), (ii) copies of all annual, quarterly and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form
as may be designated by the Commission (except with respect to information
on the Company's website), (iii) copies of any financial statements or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as the
Manager may reasonably request regarding the Company or its Subsidiaries,
in each case as soon as such reports, communications, documents or
information becomes available;
(g) To make generally available to its security holders, and to
deliver to the Manager, an earnings statement of the Company (which will
satisfy the provisions of Section 11(a) of the Act) covering a period of
twelve months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) of the Act) as soon as is reasonably
practicable after the termination of such twelve-month period but not later
than September 30, 2005;
(h) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, to pay all of the Company's
expenses incident to the performance of its obligations hereunder,
including, but not limited to, such costs, expenses, fees and taxes in
connection with (i) the preparation and filing of the Registration
Statement, the Prospectus, each Prospectus Supplement, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Manager (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Shares, (iii) any power of
attorney and any closing documents (including compilations thereof) and the
reproduction and/or printing and furnishing of copies of each thereof to
the Manager (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as
aforesaid (including the reasonable legal fees and filing fees and other
disbursements of counsel for the Manager) and the printing and furnishing
of copies of any blue sky surveys to the Manager, (v) the listing of the
Shares on the NYSE and any registration thereof under the Exchange Act,
(vi) any filing for review of the public offering of the Shares by the NASD
(including the reasonable legal fees and other reasonable disbursements of
counsel for the Manager in connection with any such filing) and (vii) the
fees and disbursements of the Company's counsel and accountants. The
Manager will pay its own out-of-pocket costs and expenses incurred in
connection with entering into this Agreement and the transactions
contemplated by this Agreement, including, without limitation, travel,
reproduction, printing and similar expenses as well as the fees and
disbursements of its legal counsel; provided, however, that if, within one
year of the date of this Agreement, the Company terminates this Agreement
and $10,000,000 in value of Shares have not been sold through the Manager
pursuant to the terms of this Agreement or to the Manager pursuant to any
Terms Agreement then the Company will promptly, upon the request of the
Manager, reimburse the Manager for the reasonable fees and disbursements of
the Manager's legal counsel incurred in connection with the entering into
of this Agreement and the matters contemplated hereby but not to exceed an
aggregate of $50,000;
(i) To apply the net proceeds from the sale of the Primary Shares in
the manner set forth in the Prospectus;
(j) Not to sell, offer or agree to sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other securities of the Company that are substantially similar
to Common Stock or permit the registration under the Act of any shares of
Common Stock, except for (i) the registration of the Shares and the sales
through the Manager pursuant to this Agreement or to the Manager pursuant
to any Terms Agreement, (ii) sales of shares through any dividend
reinvestment and stock purchase plan of the Company and (iii) options
granted and shares of Common Stock awarded pursuant to employee benefit and
director compensation plans and shares of Common Stock issuable upon the
exercise of such outstanding options during the period from the date of
this Agreement through the final Filing Date for the sale of Shares
pursuant to Section 3(a) of this Agreement, without (a) giving the Manager
at least three business days' prior written notice specifying the nature of
the proposed sale and the date of such proposed sale and (b) the Manager
suspending activity under this program for such period of time as requested
by the Company;
(k) At any time during the term of this Agreement, as supplemented
from time to time, to advise the Manager immediately after it shall have
received notice or obtained knowledge, of any information or fact that
would alter or affect any opinion, certificate, letter and other document
provided to the Manager pursuant to Section 5 herein;
(l) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus shall
be amended or supplemented (other than a Prospectus Supplement filed
pursuant to Rule 424(b) under the Act pursuant to Section 3(a) of this
Agreement or relating solely to the offering of securities other than the
Shares), (ii) there is filed with the Commission any document incorporated
by reference into the Prospectus (other than a Current Report on Form 8-K,
unless the Manager shall otherwise reasonably request), or (iii) Shares are
delivered to the Manager pursuant to a Terms Agreement, to furnish or cause
to be furnished to the Manager forthwith a certificate dated and delivered
the date of effectiveness of such amendment, the date of filing with the
Commission of such supplement or other document, or the Time of Delivery,
as the case may be, in form satisfactory to the Manager to the effect that
the statements contained in the certificate referred to in Section 5(f) of
this Agreement which were last furnished to the Manager are true and
correct at the time of such amendment, supplement, filing, or delivery, as
the case may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to
in said Section 5(f), modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such certificate;
(m) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus is
amended or supplemented (other than a Prospectus Supplement filed pursuant
to Rule 424(b) under the Act pursuant to Section 3(a) of this Agreement or
relating solely to the offering of securities other than the Shares), (ii)
there is filed with the Commission any document incorporated by reference
into the Prospectus (other than a Current Report on Form 8-K, unless the
Manager shall otherwise reasonably request), or (iii) Shares are delivered
to the Manager pursuant to a Terms Agreement, to furnish or cause to be
furnished forthwith to the Manager and to counsel to the Manager a written
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.L.L., counsel to the Company
("Company Counsel"), or other counsel satisfactory to the Manager, dated
and delivered the date of effectiveness of such amendment, the date of
filing with the Commission of such supplement or other document, or the
Time of Delivery, as the case may be, in form and substance satisfactory to
the Manager, of the same tenor as the opinions referred to in Section 5(c)
of this Agreement, but modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such opinion;
(n) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus shall
be amended or supplemented to include additional amended financial
information, (ii) at the Manager's oral or written request and upon
reasonable advance oral or written notice to the Company, Shares are
delivered to the Manager pursuant to a Terms Agreement, (iii) the Company
shall file an annual report on Form 10-K or (iv) at the Manager's request
and upon reasonable advance notice to the Company, there is filed with the
Commission any document (other than an annual report on Form 10-K)
incorporated by reference into the Prospectus which contains additional or
amended financial information, to cause the accountants that certified the
financial statements and supporting schedules included or incorporated by
reference in the Registration Statement, or other independent accountants
satisfactory to the Manager, forthwith to furnish the Manager a letter,
dated the date of effectiveness of such amendment, the date of filing of
such supplement or other document with the Commission, or the Time of
Delivery, as the case may be, in form satisfactory to the Manager, of the
same tenor as the letter referred to in Section 5(e) of this Agreement but
modified to relate to the Registration Statement and the Prospectus, as
amended and supplemented to the date of such letter, provided however,
that such letter shall not be required to be furnished to the Manager based
on (x) the filing of a Form 10-Q containing financial information relating
solely to a quarter in which Shares will not be sold pursuant to this
Agreement or (y) the filing of any other document (other than an annual
report on Form 10-K) incorporated by reference into the Prospectus which
contains additional or amended financial information during a quarter in
which Shares will not be sold pursuant to this Agreement;
(o) That it consents to the Manager trading in the Company's Common
Stock for the Manager's own account and for the account of its clients at
the same time as sales of Shares occur pursuant to this Agreement or
pursuant to a Terms Agreement in accordance with applicable law;
(p) For three years from the date of this Agreement or of any Terms
Agreement, to furnish to its stockholders within 120 days after the end of
each fiscal year, for so long as the Company shall not be required to file
annual and periodic reports with the Commission under the Exchange Act,
audited financial statements (including a balance sheet and statements of
income, stockholders' equity and of cash flow of the Company for such
fiscal year), accompanied by a copy of the certificate or report thereon of
an independent registered public accounting firm;
(q) If to the knowledge of the Company, any condition set forth in
Section 5(a) or 5(h) of this Agreement shall not have been satisfied on the
applicable Settlement Date, to offer to any person who has agreed to
purchase Shares from the Company as the result of an offer to purchase
solicited by the Manager the right to refuse to purchase and pay for such
Shares;
(r) Not to at any time, directly or indirectly, take any action
intended, or which might reasonably be expected, to cause or result in, or
which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares; and not invest
in futures contracts, options on futures contracts or options on
commodities, unless the Company is exempt from the registration
requirements of the Commodity Exchange Act, as amended (the "Commodity
Act"), or otherwise complies with the Commodity Act. The Company will not
engage in any activities bearing on the Commodity Act, unless such
activities are exempt from the Commodity Act or otherwise comply with the
Commodity Act;
(s) To disclose in its quarterly reports on Form 10-Q and in its
annual report on Form 10-K the number of Shares sold through the Manager
under this Agreement, the Net Proceeds to the Company and the Selling
Stockholder and the compensation paid by the Company and the Selling
Stockholder with respect to sales of Shares pursuant to this Agreement
during the relevant quarter; and
(t) That each acceptance by the Company of an offer to purchase Shares
hereunder, and each execution and delivery by the Company of a Terms
Agreement, shall be deemed to be an affirmation to the Manager that the
representations and warranties of the Company contained in or made pursuant
to this Agreement are true and correct as of the date of such acceptance or
of such Terms Agreement as though made at and as of such date, and an
undertaking that such representations and warranties will be true and
correct as of the Settlement Date for the Shares relating to such
acceptance or as of the Time of Delivery relating to such sale, as the case
may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
relating to such Shares).
(ii) The Selling Stockholder agrees with the Manager:
(a) To promptly notify the Manager and the Company to suspend the
offering of Shares upon the happening of any event known to the Selling
Stockholder within the time during which a prospectus relating to the
Shares is required to be delivered under the Act which, in the judgment of
the Selling Stockholder, would require the making of any change in the
Prospectus then being used, or in the information incorporated therein by
reference, so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading;
(b) To furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Manager may designate and
to maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Selling Stockholder shall not
be required to qualify as a foreign corporation or to consent to the
service of process under the laws of any such state (except service of
process with respect to the offering and sale of the Shares); and to
promptly advise the Manager of the receipt by the Selling Stockholder of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(c) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, to pay all of the Selling
Stockholder's expenses incident to the performance of its obligations
hereunder, including, but not limited to, such costs, expenses, fees and
taxes in connection with (i) the preparation and filing of the Registration
Statement, the Prospectus, each Prospectus Supplement, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Manager (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Shares, (iii) any power of
attorney and any closing documents (including compilations thereof) and the
reproduction and/or printing and furnishing of copies of each thereof to
the Manager (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as
aforesaid (including the reasonable legal fees and filing fees and other
disbursements of counsel for the Manager) and the printing and furnishing
of copies of any blue sky surveys to the Manager, (v) the listing of the
Shares on the NYSE and any registration thereof under the Exchange Act,
(vi) any filing for review of the public offering of the Shares by the NASD
(including the reasonable legal fees and other reasonable disbursements of
counsel for the Manager in connection with any such filing) and (vii) the
fees and disbursements of the Selling Stockholder's counsel and
accountants. The Manager will pay its own out-of-pocket costs and expenses
incurred in connection with entering into this Agreement and the
transactions contemplated by this Agreement, including, without limitation,
travel, reproduction, printing and similar expenses as well as the fees and
disbursements of its legal counsel;
(d) To apply the net proceeds from the sale of the Secondary Shares in
the manner set forth in the Prospectus;
(e) Not to sell, offer or agree to sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other securities of the Company that are substantially similar
to Common Stock or permit the registration under the Act of any shares of
Common Stock, except for the registration of the Secondary Shares and the
sales through the Manager pursuant to this Agreement or to the Manager
pursuant to any Terms Agreement without (a) giving the Manager at least
three business days' prior written notice specifying the nature of the
proposed sale and the date of such proposed sale and (b) the Manager
suspending activity with respect to the Secondary Shares under this program
for such period of time as requested by the Selling Stockholder;
(f) At any time during the term of this Agreement, as supplemented
from time to time, to advise the Manager immediately after it shall have
received notice or obtain knowledge thereof, of any information or fact
that would alter or affect any opinion, certificate, letter and other
document provided to the Manager pursuant to Section 5 herein;
(g) Upon commencement of the offering of Secondary Shares under this
Agreement, and each time that (i) the Registration Statement or the
Prospectus shall be amended or supplemented (other than a Prospectus
Supplement filed pursuant to Rule 424(b) under the Act pursuant to Section
3(a) of this Agreement or relating solely to the offering of securities
other than the Shares), (ii) there is filed with the Commission any
document incorporated by reference into the Prospectus (other than a
Current Report on Form 8-K, unless the Manager shall otherwise reasonably
request), or (iii) Shares are delivered to the Manager pursuant to a Terms
Agreement, to furnish or cause to be furnished to the Manager forthwith a
certificate dated and delivered the date of effectiveness of such
amendment, the date of filing with the Commission of such supplement or
other document, or the Time of Delivery, as the case may be, in form
satisfactory to the Manager to the effect that the statements contained in
the certificate referred to in Section 5(g) of this Agreement which were
last furnished to the Manager are true and correct at the time of such
amendment, supplement, filing, or delivery, as the case may be, as though
made at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate
of the same tenor as the certificate referred to in said Section 5(g),
modified as necessary to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such
certificate;
(h) Upon commencement of the offering of Secondary Shares under this
Agreement, and each time that (i) the Registration Statement or the
Prospectus is amended or supplemented (other than a Prospectus Supplement
filed pursuant to Rule 424(b) under the Act pursuant to Section 3(a) of
this Agreement or relating solely to the offering of securities other than
the Shares), (ii) there is filed with the Commission any document
incorporated by reference into the Prospectus (other than a Current Report
on Form 8-K, unless the Manager shall otherwise reasonably request), or
(iii) Shares are delivered to the Manager pursuant to a Terms Agreement, to
furnish or cause to be furnished forthwith to the Manager and to counsel to
the Manager a written opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.L.L., or
other counsel satisfactory to the Manager, dated and delivered the date of
effectiveness of such amendment, the date of filing with the Commission of
such supplement or other document, or the Time of Delivery, as the case may
be, in form and substance satisfactory to the Manager, of the same tenor as
the opinions referred to in Section 5(d) of this Agreement, but modified as
necessary to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of delivery of such opinion;
(i) That it consents to the Manager trading in the Company's Common
Stock for the Manager's own account and for the account of its clients at
the same time as sales of Shares occur pursuant to this Agreement or
pursuant to a Terms Agreement;
(j) If to the knowledge of the Selling Stockholder, any condition set
forth in Section 5(a) or 5(h) of this Agreement shall not have been
satisfied on the applicable Settlement Date, to offer to any person who has
agreed to purchase Secondary Shares from the Selling Stockholder as the
result of an offer to purchase solicited by the Manager the right to refuse
to purchase and pay for such Secondary Shares;
(k) Not to at any time, directly or indirectly, take any action
intended, or which might reasonably be expected, to cause or result in, or
which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares; and not invest
in futures contracts, options on futures contracts or options on
commodities, unless the Company is exempt from the registration
requirements of the Commodity Act, or otherwise complies with the Commodity
Act. The Selling Stockholder will not engage in any activities bearing on
the Commodity Act, unless such activities are exempt from the Commodity Act
or otherwise comply with the Commodity Act; and
(l) That each acceptance by the Selling Stockholder of an offer to
purchase Shares hereunder, and each execution and delivery by the Company
of a Terms Agreement, shall be deemed to be an affirmation to the Manager
that the representations and warranties of the Selling Stockholder
contained in or made pursuant to this Agreement are true and correct as of
the date of such acceptance or of such Terms Agreement as though made at
and as of such date, and an undertaking that such representations and
warranties will be true and correct as of the Settlement Date for the
Secondary Shares relating to such acceptance or as of the Time of Delivery
relating to such sale, as the case may be, as though made at and as of such
date (except that such representations and warranties shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented relating to such Secondary Shares).
SECTION 5. Conditions of Manager's Obligations. The obligations of the
Manager hereunder and under any Terms Agreement are subject to (i) the accuracy
of the representations and warranties on the part of the Company and the Selling
Stockholder on the date hereof, any applicable date referred to in Section 4(l)
of this Agreement, the date of any executed Terms Agreement and as of each
Settlement Date and Time of Delivery, (ii) the performance by the Company and
the Selling Stockholder of their obligations hereunder and (iii) to the
following additional conditions precedent:
(a) No stop order with respect to the effectiveness of the Registration
Statement shall have been issued under the Act or proceedings initiated under
Section 8(d) or 8(e) of the Act, and no order directed at or in relation to any
document incorporated by reference therein and no order preventing or suspending
the use of the Prospectus has been issued by the Commission, and no suspension
of the qualification of the Shares for offering or sale in any jurisdiction, or
to the knowledge of the Company, the Selling Stockholder or the Manager of the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall 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 (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(b) No material and unfavorable change, financial or otherwise (other than
as referred to in the Registration Statement and Prospectus), in the business,
condition or prospects of the Company and its Subsidiaries taken as a whole
shall occur or become known and no transaction which is material and unfavorable
to the Company (other than as referred to in the Registration Statement and
Prospectus) shall have been entered into by the Company or any of its
Subsidiaries.
(c) The Company shall furnish to the Manager, at every date specified in
Section 4(i)(m) of this Agreement, an opinion of Company Counsel, addressed to
the Manager, and dated as of such date, and in form satisfactory to the Manager,
stating that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Ohio;
(ii) The Company has power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement and any Terms Agreement; and the Company is duly qualified to do
business as a foreign corporation and is in good standing (or the local law
equivalent) in all other jurisdictions in which its ownership or lease of
property or the conduct of business, requires such qualification except
where the failure to so qualify will not, individually or in the aggregate
have a Material Adverse Effect;
(iii) Each Subsidiary 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 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 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;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the financial statements, including the
schedules and notes thereto, included in the Registration Statement and
Prospectus. The Shares and all other shares of issued and outstanding
capital stock of the Company 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 the preemptive or
other similar rights of any securityholder of the Company. The description
of the Common Stock in the Prospectus is complete and accurate in all
material respects. Except as set forth in the Prospectus, there are no
options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible or exchangeable into or exercisable
for, or any contracts, commitments, plans or arrangements to issue or sell,
any shares of capital stock of the Company, any shares of capital stock of
any Subsidiary or any such warrants, convertible, exercisable or
exchangeable securities or obligations. The descriptions of the Company's
stock option and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth or incorporated by
reference in the Prospectus, accurately present the information required to
be shown with respect to such plans, arrangements, options and rights;
(v) The Shares have been duly authorized for listing by NYSE upon
official notice of issuance;
(vi) To such counsel's knowledge, except as disclosed in the
Registration Statement or the Prospectus, no person or entity has the right
to require the registration under the Act of shares of Common Stock or
other securities of the Company by reason of the filing or effectiveness of
the Registration Statement;
(vii) To such counsel's knowledge, none of the Subsidiaries is in
violation of its articles of incorporation or by-laws (or similar corporate
documents);
(viii) All descriptions in the Prospectus and the Prospectus
Supplement, as such descriptions have been updated by descriptions in the
Prospectus Supplement or incorporated by reference therein, of statutes,
regulations or legal or governmental proceedings to the extent that they
constitute matters of law or legal conclusions, are accurate in all
material respects and present in all material respects the information
required to be shown by the Act and the Exchange Act including those
contained in the Prospectus under the caption "Federal Income Tax
Considerations";
(ix) This Agreement and any Terms Agreement have been duly authorized,
executed and delivered by the Company;
(x) The 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 the best of such counsel's knowledge, no stop order suspending the
effectiveness of the 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;
(xi) The Registration Statement, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules and notes included therein or omitted therefrom, as to
which such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Act and the rules and
regulations of the Commission thereunder;
(xii) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules and notes included
therein or omitted therefrom, as to which such counsel need express no
opinion), when they became effective or were filed with the Commission, as
the case may be, complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder;
(xiii) To the best of such counsel's knowledge after reasonable
investigation, 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 would reasonably be
expected to result in a Material Adverse Effect, or which would reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement, any Terms Agreement or the performance by the Company of its
obligations thereunder;
(xiv) The information in the Prospectus, to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
articles of incorporation and code of regulations or legal proceedings, or
legal conclusions, has been reviewed by such counsel and is correct in all
material respects;
(xv) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments 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 or incorporated by reference as exhibits thereto;
(xvi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the Act and the
rules and regulations of the Commission thereunder, which have been
obtained, or as may be required under the securities or blue sky laws of
the various states as to which such counsel need express no opinion) is
necessary or required in connection with the due authorization, execution
and delivery of this Agreement or the due execution, delivery or
performance of the Terms Agreement by the Company or for the offering,
issuance, sale or delivery of the Shares;
(xvii) The execution, delivery and performance of this Agreement, any
Terms Agreement and the Shares 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 herein
and in the Registration Statement (including the issuance and sale of the
Shares and the use of the proceeds from the sale of the Shares as described
in the Prospectus under the caption "Use of Proceeds") and compliance by
the Company with its obligations under this Agreement, any Terms Agreement
and the Shares 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 of its
subsidiaries pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or instrument,
known to such counsel, 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 or the Selling
Stockholder is subject (except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances that would not have 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 documents) of the Company or any of its subsidiaries, or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to such counsel, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or the Selling Stockholder or any of its
respective properties, assets or operations;
(xviii) 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 Prospectus will not be required, to
register as an "investment company" under the 1940 Act;
(xix) Neither the Company nor any of its Subsidiaries is, and if
operated in the manner described in the Prospectus, will not be a "broker"
within the meaning of Section 3(a)(4) of the Exchange Act or a "dealer"
within the meaning of Section 3(a)(5) of the Exchange Act or required to be
registered pursuant to Section 15(a) of the Exchange Act;
(xx) To the knowledge of such counsel (after reasonable
investigation), 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 the knowledge of such counsel,
there is no pending or 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 have a Material Adverse
Effect; and except as disclosed in the Prospectus, to the knowledge of such
counsel (after reasonable investigation), 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;
(xxi) To the knowledge of such counsel (after reasonable
investigation), all reinsurance treaties and arrangements to which any
Insurance Subsidiary is a party are in full force and effect and such
counsel is not aware of any violation of, or default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained therein by any Insurance Subsidiary.
Such counsel shall also state that nothing has come to its attention that
would lead it to believe that the Registration Statement or any amendment
thereto, (except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to which
it need 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 that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and notes thereto and other financial data included or incorporated by reference
therein or omitted therefrom, as to which we need make no statement), at the
time the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at any Settlement Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
(d) The Selling Stockholder shall furnish to the Manager, at every date
specified in Section 4(ii)(h) of this Agreement, an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, P.L.L. in its capacity as counsel to the Selling Stockholder,
addressed to the Manager, and dated as of such date, and in form satisfactory to
the Manager, stating that:
(i) The Selling Stockholder has valid and unencumbered title to the
Secondary Shares to be delivered by the Selling Stockholder hereunder and
full right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Secondary Shares to be delivered by the
Selling Stockholder hereunder; and upon the delivery of and payment for the
Secondary Shares hereunder the purchasers thereof will acquire valid and
unencumbered title to the Secondary Shares to be delivered by the Selling
Stockholder;
(ii) 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
Selling Stockholder of its obligations hereunder, in connection with the
offering or sale of the Shares hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution,
delivery or performance of this Agreement or the Terms Agreement by the
Selling Stockholder, except such as have been already obtained or as may be
required under state securities laws;
(iii) To the best of such counsel's knowledge (after reasonable
investigation), except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Selling Stockholder,
or any of its Subsidiaries or any of their respective properties that, if
determined adversely to the Selling Stockholder or any of its Subsidiaries,
would individually or in the aggregate have a Material Adverse Effect, or
which are otherwise material in the context of the sale of the Shares; and
no such actions, suits or proceedings are threatened or pending;
(iv) The execution, delivery and performance of this Agreement, any
Terms Agreement and the Shares and any other agreement or instrument
entered into or issued or to be entered into or issued by the Selling
Stockholder in connection with the consummation of the transactions
contemplated herein and in the Registration Statement (including the sale
of the Shares and the use of the proceeds from the sale of the Shares as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company and the Selling Stockholder with their
obligations hereunder and under any Terms Agreement and the Shares and such
other agreements or instruments have been duly authorized by all necessary
corporate action of the Selling Stockholder 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 of
its Subsidiaries pursuant to, the Agreements and Instruments (except for
such conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that, singly 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 documents) of the Company or any of its Subsidiaries or
the Selling Stockholder 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 of its Subsidiaries or the Selling Stockholder or any of
their assets, properties or operations;
(v) This Agreement and any Terms Agreement have been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder;
(vi) The Registration Statements and the Prospectus include all
information regarding the Selling Stockholder required to be included by
Item 507 of Regulation S-K under the Act;
(e) At the times specified in Section 4(n) of this Agreement, the Manager
shall have received from the accounting firm that certified the financial
statements and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus letters dated the date of delivery
thereof and addressed to the Manager in form and substance substantially in the
form (unless otherwise mutually agreed) as the Company has delivered to the
underwriters in its most recently completed public offering of securities, but
in any case reasonably satisfactory to the Manager.
(f) The Company shall have delivered to the Manager a certificate, (i)
dated as of and delivered on each Filing Date and (ii) dated as of and delivered
on the Time of Delivery pursuant to any Terms Agreement, (each, a "Certificate
Date"), of two of its executive officers to the effect that (i) the
representations and warranties of the Company as set forth in this Agreement are
true and correct as of the Certificate Date, (ii) the Company has performed such
of its obligations under this Agreement as are to be performed at or before each
such Certificate Date, and (ii) the conditions set forth in paragraphs (a) and
(b) of Section 5 have been met.
In addition, on each Certificate Date, the certificate shall also state
that the Shares to be sold on that date have been duly and validly authorized by
the Company and that all corporate action required to be taken for the
authorization, issuance and sale of the Shares on that date has been validly and
sufficiently taken.
(g) The Selling Stockholder shall have delivered to the Manager a
certificate, (i) dated as of and delivered on each Filing Date and (ii) dated as
of and delivered on the Time of Delivery pursuant to any Terms Agreement, of two
of its executive officers to the effect that (i) the representations and
warranties of the Selling Stockholder as set forth in this Agreement are true
and correct as of the Certificate Date and (ii) the Selling Stockholder has
performed such of its obligations under this Agreement as are to be performed at
or before each such Certificate Date.
(h) All filings with the Commission required by Rule 424 under the Act to
have been filed by the Settlement Date or the Time of Delivery, as the case may
be, shall have been made within the applicable time period prescribed for such
filing by Rule 424.
(i) The Shares shall have been approved for listing on the NYSE, subject
only to notice of issuance at or prior to the Settlement Date or the Time of
Delivery, as the case may be.
SECTION 6. Indemnification and Contribution.
(a) The Company and the Selling Stockholder agree to jointly and severally
indemnify, defend and hold harmless the Manager, its partners, directors and
officers, and any person who controls the Manager within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and the successors and assigns
of all of the foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which the
Manager or any such person may incur under the Act, the Exchange Act, the common
law or otherwise, insofar as such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post effective amendment thereof by the
Company) or in a Prospectus (the term Prospectus for the purpose of this Section
6 being deemed to include the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by or on behalf of the Manager to the Company
expressly for use with reference to the Manager in such Registration Statement
or such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in such Registration Statement or such Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against the Manager or any such person in respect of which indemnity may be
sought against the Company and the Selling Stockholder pursuant to the foregoing
paragraphs, the Manager or such person shall promptly notify the indemnifying
party in writing of the institution of such Proceeding and the Company and the
Selling Stockholder shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify the Company and the Selling Stockholder shall not relieve the Company and
the Selling Stockholder from any liability which the Company and the Selling
Stockholder may have to the Manager or any such person or otherwise except to
the extent the Company and the Selling Stockholder was materially prejudiced by
such omission. The Manager or such person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Manager or of such person unless the employment
of such counsel shall have been authorized in writing by the Company and the
Selling Stockholder in connection with the defense of such Proceeding or the
Company and the Selling Stockholder shall not have, within a reasonable period
of time in light of the circumstances, employed counsel to have charge of the
defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to the
Company and the Selling Stockholder (in which case the Company and the Selling
Stockholder shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by the Company and the Selling Stockholder, and paid
as incurred (it being understood, however, that the Company and the Selling
Stockholder shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). The Company and the Selling
Stockholder shall not be liable for any settlement of any Proceeding effected
without their written consent but if settled with the written consent of the
Company and the Selling Stockholder, the Company and the Selling Stockholder
agree to indemnify and hold harmless the Manager and any such person from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested the
Company and the Selling Stockholder to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second sentence of this
paragraph, then the Company and the Selling Stockholder agree that they shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by the Company and the Selling Stockholder of the aforesaid request, (ii) the
Company and the Selling Stockholder shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying parties at least
30 days' prior notice of its intention to settle. The Company and the Selling
Stockholder shall not, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or may be a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Manager agrees to indemnify, defend and hold harmless the Company and
the Selling Stockholder, their directors and officers and any person who
controls the Company and the Selling Stockholder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and the successors and assigns
of all of the foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Company and the Selling Stockholder or any such person
may incur under the Act, the Exchange Act, the common law or otherwise, insofar
as such loss, damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by or on behalf of the
Manager to the Company expressly for use with reference to the Manager in the
Registration Statement (or in the Registration Statement as amended by any post
effective amendment thereof by the Company) or in a Prospectus, or arises out of
or is based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading.
If any Proceeding is brought against the Company or the Selling Stockholder
or any such person in respect of which indemnity may be sought against the
Manager pursuant to the foregoing paragraph, the Company and the Selling
Stockholder or such person shall promptly notify the Manager in writing of the
institution of such Proceeding and the Manager shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
the omission to so notify the Manager shall not relieve the Manager from any
liability which the Manager may have to the Company and the Selling Stockholder
or any such person or otherwise except to the extent that the Manager was
materially prejudiced by such omission. The Company and the Selling Stockholder
or such person shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the Company
and the Selling Stockholder or such person unless the employment of such counsel
shall have been authorized in writing by the Manager in connection with the
defense of such Proceeding or the Manager shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to the
Manager (in which case the Manager shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties, but
the Manager may employ counsel and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of the Manager), in
any of which events such fees and expenses shall be borne by the Manager and
paid as incurred (it being understood, however, that the Manager shall not be
liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Manager shall not be liable for any settlement of any such
Proceeding effected without the written consent of the Manager but if settled
with the written consent of the Manager, the Manager agrees to indemnify and
hold harmless the Company and the Selling Stockholder and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
the Manager to reimburse the indemnified party for fees and expenses of counsel
as contemplated by the second sentence of this paragraph, then the Manager
agrees that it shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered into more than 60
business days after receipt by the Manager of the aforesaid request, (ii) the
Manager shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the Manager at least 30 days' prior notice of its intention to
settle. The Manager shall not, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 6 in respect
of any losses, damages, expenses, liabilities or claims referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholder, on the one hand, and the
Manager, on the other hand, from the offering of the Shares or (ii) if, the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholder, on the one hand, and the Manager, on the other, in
connection with the statements or omissions which resulted in such losses,
damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholder, on the one hand, and the Manager, on the other, shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering (before deducting expenses) received by the Company and the Selling
Stockholder bear to the total compensation (before deducting expenses) received
by the Manager from the sale of Shares on behalf of the Company and the Selling
Stockholder or as principal. The relative fault of the Company and the Selling
Stockholder, on the one hand, and of the Manager, on the other, shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company and the Selling Stockholder or by
the Manager and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any Proceeding.
(d) The Company and the Selling Stockholder and the Manager agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 6, the Manager shall not
be required to contribute any amount in excess of any amount by which the total
price at which the Shares sold by the Manager exceeds the amount of any damage
which the Manager has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this Section 6
and the covenants, warranties and representations of the Company and the Selling
Stockholder contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of the Manager, its
partners, directors or officers or any person (including each partner, officer
or director of such person) who controls the Manager within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Company and the Selling Stockholder, their directors or officers or any
person who controls the Company or the Selling Stockholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the Shares. The
Company and the Selling Stockholder and the Manager agree promptly to notify
each other of the commencement of any Proceeding against it and, in the case of
the Company and the Selling Stockholder, against any of the Company's or the
Selling Stockholder's officers or directors in connection with the issuance and
sale of the Shares, or in connection with the Registration Statement or
Prospectus.
SECTION 7. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company and the Selling
Stockholder herein or in certificates delivered pursuant hereto or any Terms
Agreement, and the agreements of the Manager contained in Section 6 of this
Agreement, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Manager or any controlling persons, or
the Company and the Selling Stockholder (or any of their officers, directors or
controlling persons), and shall survive delivery of and payment for the Shares.
SECTION 8. Termination.
(a) (i) The Company shall have the right, by giving written notice as
hereinafter specified, to terminate the provisions of this Agreement relating to
the solicitation of offers to purchase Primary Shares in its sole discretion at
any time. Any such termination shall be without liability of any party to any
other party except that (i) if Shares have been sold through the Manager for the
Company, then Section 4(i)(g) and 4(i)(p) shall remain in full force and effect,
(ii) with respect to any pending sale, through the Manager for the Company, the
obligations of the Company, including in respect of compensation of the Manager,
shall remain in full force and effect notwithstanding the termination and (iii)
the provisions of Section 4(i)(h), Section 4(ii)(c), Section 6 and Section 7 of
this Agreement shall remain in full force and effect notwithstanding such
termination.
(ii) The Selling Stockholder shall have the right, by giving written
notice as hereinafter specified, to terminate the provisions of this
Agreement relating to the solicitation of offers to purchase Secondary
Shares in its sole discretion at any time. Any such termination shall be
without liability of any party to any other party except that (i) if Shares
have been sold through the Manager for the Selling Stockholder, then
Section 4(g) and (p) shall remain in full force and effect, (ii) with
respect to any pending sale, through the Manager for the Selling
Stockholder, the obligations of the Selling Stockholder, including in
respect of compensation of the Manager, shall remain in full force and
effect notwithstanding the termination and (iii) the provisions of Section
4(i)(h), Section 4(ii)(c), Section 6 and Section 7 of this Agreement shall
remain in full force and effect notwithstanding such termination.
(b) The Manager shall have the right, by giving written notice as
hereinafter specified, to terminate the provisions of this Agreement relating to
the solicitation of offers to purchase Shares in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that the provisions of Section 4(i)(h), Section 4(ii)(c), Section 6
and Section 7 of this Agreement shall remain in full force and effect
notwithstanding such termination.
(c) This Agreement shall remain in full force and effect, unless extended
by mutual agreement of the parties, until the second anniversary of the date set
forth on the first page of this Agreement unless terminated pursuant to Sections
8(a) or (b) above or otherwise by mutual agreement of the parties; provided that
any termination effected by this paragraph shall in all cases be deemed to
provide that Section 4(i)(h), Section 4(ii)(c), Section 6 and Section 7 shall
remain in full force and effect.
(d) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Manager, the Company or the Selling Stockholder, as the case may
be. If such termination shall occur prior to the Settlement Date for any sale of
Shares, such sale shall settle in accordance with the provisions of Section
3(a)(vi) of this Agreement.
(e) In the case of any purchase by the Manager pursuant to a Terms
Agreement, the obligations of the Manager pursuant to such Terms Agreement shall
be subject to termination in the absolute discretion of the Manager, if, since
the time of execution of the Terms Agreement or the respective dates as of which
information is given in the Registration Statement and Prospectus, there shall
have occurred a downgrading in the any 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 agency", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Act, or the financial
strength or claims paying ability of any Insurance Subsidiary by A.M. Best
Company, or 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 or, if at any time
prior to the Time of Delivery, trading in securities generally on the NYSE or
the Nasdaq National Market shall have been suspended or limitations or minimum
prices shall have been established on the NYSE or the Nasdaq National Market, or
trading of any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or limitations or minimum
prices on any securities of the Company shall have been established; or if a
banking moratorium shall have been declared either by the United States or New
York State authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in the Manager's judgment, to make it
impracticable to market the Shares. If the Manager elects to terminate its
obligations pursuant to this Section 8(e), the Company and the Selling
Stockholder shall be notified promptly in writing.
SECTION 9. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements under this Agreement and any Terms Agreement
shall be in writing and delivered by hand, overnight courier, mail or facsimile
and, if to the Manager, shall be sufficient in all respects if delivered or sent
to UBS Securities LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attention:
Syndicate Department, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy for information
purposes to UBS Securities LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇,
Attention: Legal and Compliance Department, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇; if to the
Company, it shall be sufficient in all respects if delivered or sent to the
Company at the offices of the Company at, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President (Fax No. (513)
▇▇▇-▇▇▇▇); or, if sent to the Selling Stockholder, it shall be sufficient in all
respects if delivered or sent to the Selling Stockholder at the Offices of the
Selling Stockholder at, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Deputy General Counsel and
Secretary (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇). Each party to this Agreement and any Terms
Agreement may change such address for notices by sending to the parties to this
Agreement and any Terms Agreement written notice of a new address for such
purpose.
SECTION 10. Parties. The Agreement herein set forth and any Terms Agreement
have been and are made solely for the benefit of the Manager, the Company and
the Selling Stockholder and to the extent provided in Section 6 of this
Agreement the controlling persons, directors and officers referred to in such
section, and their respective successors, assigns, heirs, personal
representatives and executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Manager) shall acquire or have any right under or by virtue of this
Agreement and any Terms Agreement.
SECTION 11. Adjustments for Stock Splits. The parties acknowledge and agree
that all share related numbers contained in this Agreement and any Terms
Agreement shall be adjusted to take into account any stock split effected with
respect to the Shares.
SECTION 12. Entire Agreement. This Agreement and any Terms Agreement
constitute the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof.
SECTION 13. Counterparts. This Agreement and any Terms Agreement may be
signed by the parties in one or more counterparts which together shall
constitute one and the same agreement among the parties.
SECTION 14. Applicable Law. This Agreement, any Terms Agreement and any
claim, counterclaim or dispute of any kind or nature whatsoever arising out of
or in any way relating to this Agreement or any Terms Agreement ("Claim"),
directly or indirectly, shall be governed by, and construed in accordance with,
the internal laws of the State of New York applicable to contracts entered into
and to be performed within such state without regard to conflicts of law
principles.
SECTION 15. Headings. The Section headings in this Agreement and any Terms
Agreement have been inserted as a matter of convenience of reference and are not
a part of this Agreement or any Terms Agreement.
SECTION 16. Submission to Jurisdiction. Except as set forth below, no Claim
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and the Selling Stockholder each consents to the non-exclusive jurisdiction of
such courts and personal service with respect thereto. The Company and the
Selling Stockholder each hereby consents to personal jurisdiction, service and
venue in any court in which any Claim arising out of or in any way relating to
this Agreement and any Terms Agreement is brought by any third party against the
Manager or any indemnified party. Each of the Manager, the Company and the
Selling Stockholder (in the case of the Company and the Selling Stockholder on
their behalf and, to the extent permitted by applicable law, on behalf of their
stockholders and affiliates) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement and any Terms Agreement.
The Company and the Selling Stockholder each agrees that a final, non-appealable
judgment in any such action, proceeding or counterclaim brought in any such
court shall be conclusive and binding upon the Company and the Selling
Stockholder and may be enforced in any other courts in the jurisdiction of which
the Company or the Selling Stockholder is or may be subject, by suit upon such
judgment.
SECTION 17. Miscellaneous. The Manager, an indirect, wholly-owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS AG. Because the Manager is a
separately incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by the Manager
are not deposits, are not insured by the Federal Deposit Insurance Corporation,
are not guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
A lending affiliate of the Manager may have lending relationships with
issuers of securities underwritten or privately placed by the Manager. To the
extent required under the securities laws, prospectuses and other disclosure
documents for securities underwritten or privately placed by the Manager will
disclose the existence of any such lending relationships and whether the
proceeds of the issue will be used to repay debts owed to affiliates of the
Manager.
If the foregoing correctly sets forth the understanding between the
Company, the Selling Stockholder and the Manager, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company, the Selling Stockholder and the Manager.
Alternatively, the execution of this Agreement by the Company and the Selling
Stockholder and its acceptance by or on behalf of the Manager may be evidenced
by an exchange of telegraphic or other written communications.
Very truly yours,
AMERICAN FINANCIAL GROUP, INC.
By:____________________________
Name:
Title:
AMERICAN PREMIER UNDERWRITERS, INC.
By:____________________________
Name:
Title:
ACCEPTED as of the date
first above written
UBS SECURITIES LLC
By:_______________________________
Name:
Title:
UBS SECURITIES LLC
By:_______________________________
Name:
Title:
AMERICAN FINANCIAL GROUP, INC.
AMERICAN PREMIER UNDERWRITERS, INC.
Common Stock
TERMS AGREEMENT
______, 20 __
UBS SECURITIES LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
[American Financial Group, Inc. (the "Company")] [and][American Premier
Underwriters, Inc. (the Selling Stockholder)] propose[s], subject to the terms
and conditions stated herein and in the Equity Distribution Agreement, dated
[date], 2004 (the "Equity Distribution Agreement"), among the Company, American
Premier Underwriters, Inc. and UBS Securities LLC, to issue and sell to UBS
Securities LLC the securities specified in the Schedule hereto (the "Purchased
Securities").
Each of the provisions of the Equity Distribution Agreement not
specifically related to the solicitation by UBS Securities LLC, as agent of the
Company and the Selling Stockholder, of offers to purchase securities is
incorporated herein by reference in its entirety, and shall be deemed to be part
of this Terms Agreement to the same extent as if such provisions had been set
forth in full herein. Each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Terms
Agreement [and] [,] the Time of Delivery, except that each representation and
warranty in Section 2 of the Equity Distribution Agreement which makes reference
to the Prospectus (as therein defined) shall be deemed to be a representation
and warranty as of the date of the Equity Distribution Agreement in relation to
the Prospectus, and also a representation and warranty as of the date of this
Terms Agreement [and] [,] the Time of Delivery in relation to the Prospectus as
amended and supplemented to relate to the Purchased Securities.
An amendment to the Registration Statement (as defined in the Equity
Distribution Agreement), or a supplement to the Prospectus, as the case may be,
relating to the Purchased Securities, in the form heretofore delivered to you is
now proposed to be filed with the Securities and Exchange Commission.
Subject to the terms and conditions set forth herein and in the Equity
Distribution Agreement which are incorporated herein by reference, [the Company]
[and] [the Selling Stockholder] agree[s] to issue and sell to UBS Securities LLC
and the latter agrees to purchase from [the Company] [and] [the Selling
Stockholder] the number of shares of the Purchased Securities at the time and
place and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this Terms Agreement, including
those provisions of the Equity Distribution Agreement incorporated herein by
reference, shall constitute a binding agreement between you and the Company.
AMERICAN FINANCIAL GROUP, INC.
By:____________________________
Name:
Title:
AMERICAN PREMIER UNDERWRITERS, INC.
By:______________________________
Name:
Title:
ACCEPTED as of the date
first above written
UBS SECURITIES LLC
By:____________________________
Name:
Title:
UBS SECURITIES LLC
By:_____________________________
Name:
Title:
Title of Purchased Securities:
Common Stock, no par value
Number of Shares of Purchased Securities:
[Price to Public:]
Purchase Price by UBS Securities LLC:
Method of and Specified Funds for Payment of Purchase Price:
By wire transfer to a bank account specified by the Company [the Selling
Stockholder] in same day funds.
Method of Delivery:
Free delivery of Shares to the Manager's account at the Depository Trust
Company in return for payment of the purchase price.
Time of Delivery:
Closing Location:
Documents to be Delivered:
The following documents referred to in the Equity Distribution Agreement
shall be delivered as a condition to the Closing:
(1) The officers' certificate referred to in Section 4(i)(l).
(2) The opinion referred to in Section 4(i)(m).
(3) The accountants' letter referred to in Section 4(i)(n).
(4) The officer's certificate referred to in Section 4(ii)(g)
(5) The opinion referred to in Section 4(ii)(h).
(6) Such other documents as the Manager shall reasonably request.
SCHEDULE A
List of Subsidiaries
The following is a list of Subsidiaries of AFG at June 30, 2004. All
corporations are subsidiaries of AFG and, if indented, subsidiaries of the
company under which they are listed.
merican Money Management Corporation
PU Holding Company
American Premier Underwriters, Inc.
Premier Lease & Loan Services Insurance Agency, Inc.
Premier Lease & Loan Services of Canada, Inc.
Republic Indemnity Company of America
Republic Indemnity Company of California
reat American Holding, Inc.
Great American Security Insurance Company
Great American Spirit Insurance Company
reat American Insurance Company
American Empire Surplus Lines Insurance Company
American Empire Insurance Company
Brothers Property Corporation
GAI Warranty Company
GAI Warranty Company of Florida
Great American Alliance Insurance Company
Great American Assurance Company
Great American Custom Insurance Services, Inc.
Professional Risk Brokers, Inc.
Great American E&S Insurance Company
Great American Fidelity Insurance Company
Great American Financial Resources, Inc.
AAG Holding Company, Inc.
American Annuity Group Capital Trust II
Great American Life Insurance Company
Annuity Investors Life Insurance Company
Loyal American Life Insurance Company
Manhattan National Life Insurance Company
United Teacher Associates Insurance Company
Great American Life Assurance Company of
Puerto Rico, Inc.
Great American Insurance Company of New York
Great American Management Services, Inc.
Great American Protection Insurance Company
National Interstate Corporation
National Interstate Insurance Company
National Interstate Insurance
Company of Hawaii, Inc.
Transport Insurance Company
Worldwide Insurance Company
Mid-Continent Casualty Company
Mid-Continent Insurance Company
Oklahoma Surety Company
Schedule to Annex I