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EXHIBIT 4.7
AGREEMENT
THIS AGREEMENT dated as of March 7, 1996, between ALLIED GROUP, INC,. an
Iowa corporation (the "Company") and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, solely in its capacity as trustee under the Plan
defined below and not individually (the "Trustee"). Defined terms used herein
and not defined herein shall have the meaning ascribed to them in The ALLIED
Group Employee Stock Ownership Plan (the "Plan").
WITNESSETH:
WHEREAS, the Company has established and maintains the Plan for the
benefit of all employees eligible to participate therein;
WHEREAS, the Plan qualifies as an "employee stock ownership plan" within
the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, the Company has established and maintains The ALLIED Group
Employee Stock Ownership Trust (the "Trust") and the Company has appointed the
Trustee to act as the trustee thereof pursuant to a trust agreement between the
Company and the Trustee amended and restated as of January 7, 1991 (the "Trust
Agreement");
WHEREAS, the Trustee has determined to convert the Company Preferred
Stock held by the Trustee to Company Common Stock on March 7, 1996, based upon
such facts and circumstances which the Trustee has determined to be relevant
including, without limitation, the Company's execution of this Agreement and the
declaration by the Board of Directors of the Company of a $0.22 per share
dividend on the Company Common Stock for the first quarter 1996;
NOW THEREFORE, in consideration of these premises and the mutual
promises contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. This Agreement shall be effective on March 7, 1996.
2. For the purpose of this Agreement, the following terms shall have
the following meanings:
(a) "Mandatory Employer Contributions" shall mean and include all
contributions made to the Trust by the Company pursuant to Section 4.1
of the Plan (or any successor provision thereto).
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(b) "Credited Shortfall Amount", with respect to any Reconciliation
Date, shall mean the sum of the Shortfall Amounts with respect to all
prior Reconciliation Dates.
(c) "Reconciliation Date" shall mean each of December 31, 1996, December
31, 1997, December 31, 1998, December 31, 1999, and March 7, 2000.
(d) "Release Date" shall mean no later than the April 12th (or the
following business day) following a Reconciliation Date.
(e) "Shortfall Amount" with respect to any Reconciliation Date means the
excess, if any, of (i) the sum of the aggregate dividends which would
have been paid on the Company Preferred Stock held by the Trustee but
for its conversion to Company Common Stock from March 7, 1996 through
the Reconciliation Date over (ii) the sum of the aggregate dividends
paid on the Company Common Stock from March 7, 1996 through the
Reconciliation Date plus the Credited Shortfall Amount. The Shortfall
Amount with respect to a Reconciliation Date shall be calculated based
on the number of allocated shares of Company Common Stock held by the
Trustee on such Reconciliation Date (and the equivalent number of shares
of Company Preferred Stock).
3. Subject to compliance with all requirements of federal and state law,
the Company agrees to effectuate a release of Company Common Stock in excess of
the Mandatory Employer Contribution with a fair market value equal to the
Shortfall Amount. The Company shall effectuate a release of any shares of
Company Common Stock necessary to meet any such Shortfall Amount by the Release
Date. Subject to the requirements of federal law, the shares of Company Common
Stock released pursuant to this paragraph shall be allocated to make up the
Shortfall Amount among the active Participants in the Plan as of the applicable
Reconciliation Date.
4. The Company agrees that it will use its best efforts to (i) cause the
Plan to qualify as an employee stock ownership plan within the meaning of
Section 4975(e)(7) and 401(a) of the Code and (ii) maintain such qualification
at all times prior to the termination of the Plan.
5. The representations, warranties, and agreements in this Agreement
shall survive the date hereof.
6. This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa applicable to contracts to be executed, delivered
and performed in such state, to the extent not preempted by the laws of the
United States of America. The parties hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of the State of
Iowa and the United States of America located in Polk County, Iowa for any
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actions, suits or proceedings arising out of or relating to this Agreement. This
Agreement, the Plan and Trust Agreement (including documents referred to therein
or delivered pursuant thereto) set forth the entire Agreement of the parties
with respect to the subject matter contained herein and supersede all prior oral
and written agreements, if any, between the parties with respect to such subject
matter. This Agreement shall bind and inure to the benefit of all successors to,
and assigns of, the parties hereto; provided, however, that the Trustee shall
not assign or otherwise transfer its interest in, or obligations under, this
Agreement without the written consent of the Company, except that the Trustee
may assign, without the Company's written consent, all its rights hereunder to
any institution exercising trust powers in connection with any such institution
assuming the duties of a trustee under the Trust Agreement. In the event that
any provision of this Agreement shall be declared unenforceable by a court of
competent jurisdiction, such provision shall be stricken herefrom and the
remainder of this Agreement shall remain binding on the parties hereto. In the
event any such provision shall be so declared unenforceable due to its scope or
breadth, then it shall be narrowed to the scope or breadth permitted by law.
7. This Agreement may be executed in two counterparts, each of which
shall be deemed an original, but each of which taken together shall constitute
one and the same instrument.
8. This Agreement may not be modified with respect to the obligations of
a party hereto except by an instrument in writing signed by such party.
9. The terms and provisions of the Trust Agreement relating to the
nature of the responsibilities of the Trustee and the indemnification by the
Company of the Trustee are incorporated herein by reference and made applicable
to this Agreement.
10. All notices, requests, or other communications required or permitted
to be delivered hereunder shall be in writing, delivered to each party hereto at
its address specified in the Trust Agreement and shall become effective as
therein provided. Any party hereto may from time to time, by written notice
given as aforesaid, designate any other address to which notices, requests or
other communications addressed to it shall be sent.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
ALLIED GROUP, INC.
By ______________________________
Name _____________________________
Title ____________________________
STATE STREET BANK AND TRUST COMPANY
solely in its capacity as Trustee
under the Plan and Trust Agreement
referred to herein and not
individually
By _______________________________
Name _____________________________
Title ____________________________