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EXHIBIT 4.8
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of December 30, 1994, between ALLIED
GROUP, INC., an Iowa corporation (the "Company"), and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company (the "Trustee"), solely in its
capacity as trustee under the Plan defined below and not individually.
WITNESSETH;
WHEREAS, the Company has established and maintains The ALLIED Group
Employee Stock Ownership Plan (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 April 16, 1991 (the "Trust
Agreement");
WHEREAS, the Trust Agreement provides that the assets of the trust
created thereunder shall be invested in, among other things, shares of common
stock of the Company ("Common Stock") or convertible preferred stock of the
Company;
WHEREAS, the Company has previously designated 85,000 shares as a
series of preferred stock, with no par value, called the Series C ESOP
Convertible Preferred Stock, of which 75,753 shares were previously issued and
the Company has offerred 9,247 shares for sale to the Trustee (the "Series C
Preferred Stock");
WHEREAS, the Company has designated 500,000 shares as a series of
convertible preferred stock, with no par value, called the Series D ESOP
Convertible Preferred Stock, of which 30,762 shares were previously issued and
of which the Company has offered 12,976 shares for sale to the Trustee (the
"Series D Preferred Stock");
WHEREAS, as directed by the ESOP Committee (the "Committee") under the
terms of the Trust Agreement, the Trustee is authorized to purchase shares of
Series C Preferred Stock and Series D Preferred Stock and the Company wishes to
issue and sell such shares of Series C Preferred Stock and Series D Preferred
Stock to the Trustee, and no commission will be paid by the Trustee in
connection with the purchase of such shares of Series C Preferred Stock and
Series D Preferred Stock; and
WHEREAS, the Trustee is required under the Trust Agreement to
independently determine (i.e., without direction from the Company) the purchase
price that shall be paid for any stock of the Company, and the Trustee has
received an opinion of Whitman Heffernan & Rhein Co., Inc. (the "Valuation
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Opinion") that the purchase of the shares of Series C Preferred Stock and Series
D Preferred Stock pursuant to the terms to this Agreement is fair and equitable
to the participants in the Plan and the price to be paid for the Series C
Preferred Stock and Series D Preferred Stock is not in excess of adequate
consideration.
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. The Trustee hereby agrees to purchase (the "Purchase") with the Proceeds, and
the Company hereby agrees to issue and sell for cash to the Trust 9,247 shares
of Series C Preferred Stock and 12,976 shares of Series D Preferred Stock (the
"Shares") for an aggregate purchase price (the "Purchase Price") of $825,000.00
(or approximately $37.125 per share). The Company will pay all stamp and other
transfer taxes, if any, which may be payable in respect of the issuance, sale
and delivery of the Shares and shall be entitled to any refund thereof.
2. The Purchase shall be consummated at or about 5:30 P.M. Central
Standard Time on December 30, 1994 (such date of delivery being hereinafter
called the "Delivery Date") at the offices of the Company, Des Moines, Iowa or
as otherwise agreed by the parties hereto. On the Delivery Date, the Trustee
shall deliver to the Company the Purchase Price in immediately available funds
together with an opinion of Goodwin, Proctor & Hoar, counsel to the Trustee, in
the form attached as Annex A hereto and a copy of the Valuation Opinion, and the
Company will deliver to the Trustee a certificate or certificates representing
the Shares which shall be registered in the name of the Trustee, as trustee
under the Plan, or in the name of its nominee, together with an opinion of
Katherine E. Schmidt, Associate Corporate Counsel of the Company, in the form
attached as Annex B hereto.
3. The Comp any hereby represents, warrants and covenants to
the Trustee as follows:
a. the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Iowa and (ii) has full corporate power and authority
to execute and deliver this Agreement, to carry out the
transactions contemplated hereby, to own, lease and
operate its assets and properties, and to carry on its
business as now being conducted;
b. this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights generally and to general principles of
equity (regardless of whether considered in a proceeding
at law or in equity);
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c. the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions
contemplated hereby will not violate (i) the Company's
Certificate of Incorporation or By-laws, each as amended
to date or, (ii) any provision of any agreement,
instrument, order, award, judgment or decree to which the
Company is a party or by which it or any of its
businesses or properties are bound, or (iii) any statute,
rule or regulation of any federal, state or local
government or governmental agency applicable to the
Company except in the case of subparagraphs (ii) or (iii)
of this Section 3(c) for any such violations which either
individually or in the aggregate do not have a material
adverse effect on the business or properties of the
Company and its subsidiaries taken as a whole;
d. except for any necessary applications with the National
Association of Securities Dealers Automated Quotation
system with respect to any newly issued shares of Common
Stock which may be issued upon conversion of the Shares,
no approval, authorization or other action by, or filing
(other than such filings of the Company as may be
necessary in connection with any registration for sale of
the common stock that may be issuable upon conversion of
the Shares) with, any government authority is required to
be obtained or made by the Company in connection with the
execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions
contemplated hereby;
e. the Shares have been duly and validly authorized and,
when issued and delivered to and paid for by the Trustee
pursuant to this Agreement, (i) will be validly issued,
fully paid and nonassessable and not liable to any
further call or assessment, (ii) the certificates
representing the Shares comply with the applicable
requirements of Iowa law and (iii) the Trustee will
acquire full right, title and interest in and to the
Shares free and clear of any and all liens, claims,
charges and encumbrances (other than rights of
participants in the Plan);
f. the Company (i) has duly and validly authorized and
reserved for issuance a sufficient number of shares of
Common Stock, as may be issued, from time to time, upon
conversion of the Shares and (ii) such shares of Common
Stock, when issued upon conversion of the Shares in
accordance with the Certificate of Designations, will be
validly issued, fully paid and nonassessable and not
liable to any further call or assessment and will not be
subject to preemptive rights;
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g. the Plan has been duly authorized and established, and
the Trust Agreement has been duly authorized, by all
necessary corporate action on the part of the Company;
the Plan constitutes in all material respects in form an
employee stock ownership plan within the meaning of
Section 4975(e)(7) of the Code, Code Regulation Section
54.4975-11 and Section 407(d)(6) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"); and each of the Shares constitute a qualifying
employer security within the meaning of Section
4975(e)(8) of the Code; provided, however, that in making
the representations contained in this Section 3(g) the
Company has relied upon the correctness of the Trustee's
representations contained in Section 4(f) of this
Agreement;
h. the Company's Reports on Form 10-Q for the quarterly
period ended September 30, 1994, on the date filed with
the Securities and Exchange Commission ("SEC"), conformed
in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended;
i. no person or other entity is entitled to any fees or
commissions due to the Company's actions in connection
with the purchase and sale of the Shares;
j. the Company shall use its best efforts during the term of
the Trust to cause the Plan to maintain its qualification
as an employee stock ownership plan within the meaning of
Section 4975 of the Code; and
k. the Company has furnished and will continue to furnish to
the Trustee from time to time copies of all reports and
financial statements which the Company shall send or make
available to its public stockholders generally, all other
written communications from the Company to public
shareholders generally and each regular or periodic
report, proxy statement, registration statement or
prospectus, if any, filed by the Company with the SEC;
and
4. The Trustee represents and warrants to the Company as
follows:
a. the Trustee (i) is a duly organized and validly existing
Massachusetts trust company in good standing and with
full power and authority to act as Trustee and exercise
trust powers, including without limitation, the trust
powers provided in and contemplated by the Trust
Agreement, and (ii) has full corporate power and
authority to execute and deliver this Agreement and to
carry out the transactions contemplated hereby;
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b. this Agreement has been duly authorized, executed and
delivered by the Trustee and constitutes a valid and
binding obligation of the Trustee, enforceable against
the Trustee in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights generally and to general principles of
equity (regardless of whether considered in a proceeding
at law or in equity);
c. the execution, delivery and performance of this Agreement
by the Trustee and the consummation of the transactions
contemplated hereby will not violate (i) the Trustee's
Corporate Charter or By-laws, each as amended to date, or
(ii) any provision of any agreement, instrument, order,
award, judgment or decree to which the Trustee is a party
or by which it or any of its businesses or properties are
bound or (iii) any statute, rule or regulation of any
federal, state or local government or governmental agency
applicable to the Trustee except in the case of
subparagraphs (ii) or (iii) of this Section 4(c) for any
such violations which either individually or in the
aggregate do not have a material adverse effect on the
business or properties of the Trustee; provided, however,
that in making the representations contained in clause
(iii) of this Section 4(c), the Trustee has relied upon
the correctness of the Company's representations in
Sections 3(g) of this Agreement, as limited by the
proviso therein, and 3(i) and (2) the Committee's
direction letter dated December 29, 1994;
d. no approval, authorization or other action by, or filing
with, any governmental authority is required to be
obtained or made by the Trustee in connection with the
execution, delivery and performance by the Trustee of
this Agreement and the consummation of the transactions
contemplated hereby;
e. the Trustee is acquiring the Shares on behalf of the Plan
solely for investment purposes and not with a view to, or
for sale in connection with, any distribution thereof;
provided, however, that the Shares will be allocated to
the accounts of the participants in the Plan pursuant to
the terms of the Plan and distributions may be made to
participants and beneficiaries of the Plan in shares of
Common Stock issuable upon conversion of the Series C
Preferred Stock and Series D Preferred Stock or payable
upon redemption of the Series C Preferred Stock and
Series D Preferred Stock, including upon exercise of the
rights set forth in Section 7 of the Certificate of
Designations, or in shares of Common Stock otherwise
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acquired by the Trustee pursuant to the terms of the
Plan, it being understood that the Shares are being sold
to the Trustee pursuant to an exemption from the
registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), in reliance upon this
representation and warranty;
f. the purchase of the Shares on the Delivery Date by the
Trust for the Purchase Price is for not greater than
"adequate consideration" as that phrase is defined in
Section 3(18) of ERISA, and proposed regulations
thereunder, and will not constitute a prohibited
transaction under Section 406 of ERISA or Section 4975(c)
of the Code by reason of the exemptions set forth in
Section 408(e) of ERISA and Section 4975(d) (13) of the
Code; provided that in making the representations
contained in this Section 4(f), the Trustee has relied
upon the correctness of the Company's representations
contained in Sections 3(g), as limited by the proviso
therein, and 3(i) of this Agreement as well as the
Valuation Opinion;
g. the Shares purchased by the Trust have a conversion price
which is reasonable as of the date hereof; provided,
however, that in making the representations contained in
this Section 4(g), the Trustee has relied upon the
correctness of the Valuation Opinion; and
h. no person or other entity is entitled to any commissions
due to the Trustee's actions in connection with the
purchase and sale of the Shares.
5. The Trustee hereby (i) acknowledges that the Shares purchased on
behalf of the Trust pursuant to this Agreement may, by their terms, be issued
only to the Trustee or a successor trustee acting on behalf of the Trust, (ii)
acknowledges that the Trust Agreement provides that none of the Series C
Preferred Shares and Series D Preferred Shares shall be transferred in any
manner to participants under the Plan but in lieu thereof shares of Common Stock
shall be distributed to participants or transferred to the participants' Section
401(k) accounts pursuant to the terms of the Plan, (iii) acknowledges that the
Certificate of Designations provides that any Shares that are transferred sold
or otherwise disposed of by the Trustee shall be automatically, and without any
action on the part of the Company, converted into shares of Common Stock, and
(iv) agrees not to transfer, sell or otherwise dispose of any of the Shares or
other shares of Series C Preferred Stock and Series D Preferred Stock or to
attempt to do so, except in compliance with the Trust Agreement. Nothing
contained in this Section 5 shall be deemed to restrict the ability of the
Trustee to convert shares of Series C Preferred Stock and Series D Preferred
Stock into shares of Common Stock or to require the Company to redeem shares of
Series C Preferred Stock and Series D Preferred
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Stock, in each case in accordance with the Certificate of Designations, or the
ability of the Trustee to transfer, sell or otherwise dispose of shares of
Common Stock of the Company issued upon conversion of shares of Series C
Preferred Stock and Series D Preferred Stock or upon a redemption of shares of
Series C Preferred Stock and Series D Preferred Stock.
6. The Trustee understands that the certificate(s) representing the
Shares will bear the following legend and that a notation restricting their
transfer will be made on the stock transfer books of the Company:
a. Series C: The shares of Series C preferred stock
represented by this certificate have not been registered
under the Securities Act of 1933, as amended. Such shares
of stock may not be sold, assigned, pledged or otherwise
transferred in the absence of an effective registration
statement under said Securities Act covering such
transfer or an opinion of counsel satisfactory to the
issuer that registration under said Securities Act is not
required.
The shares of stock represented by this certificate are
subject to restrictions on transfer set forth in the
Certificate of Designations relating to the Corporation's
Series C ESOP Convertible Preferred Stock and in a Stock
Purchase Agreement dated as December 30, 1994. The
Corporation will furnish a copy of such agreement to the
holder of this certificate without charge upon written
request.
b. Series D: The shares of Series D preferred stock
represented by this certificate have not been registered
under the Securities Act of 1933, as amended. Such shares
of stock may not be sold, assigned, pledged or otherwise
transferred in the absence of an effective registration
statement under said Securities Act covering such
transfer or an opinion of counsel satisfactory to the
issuer that registration under said Securities Act is not
required.
The shares of stock represented by this certificate are
subject to restrictions on transfer set forth in the
Certificate of Designations relating to the Corporation's
Series D ESOP Convertible Preferred Stock and in a Stock
Purchase Agreement dated as December 30, 1994. The
Corporation will furnish a copy of such agreement to the
holder of this certificate without charge upon written
request.
7. Upon the reasonable written request of the Trustee, the Company
agrees that, at the Company's expense, it will prepare and file, as promptly as
practicable after such request, and use its best efforts to cause to become
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effective, a registration statement on an appropriate form, including a final
prospectus (the "Registration Statement"), under and complying with the
Securities Act and the rules and regulations thereunder, relating to the number
of shares of the Company's Common Stock into which the Shares are from time to
time convertible or as are acquired upon a redemption or repurchase, including a
redemption pursuant to the provisions of Section 7 of the Certificate of
Designations, as shall be necessary, in the opinion of counsel to the Company,
for the Trustee to carry out its responsibilities under the Plan and Trust
Agreement. Whenever shares of Common Stock are so registered, the Company shall
also use its best efforts to register of qualify such shares covered by the
Registration Statement under the "blue sky" or securities laws of such
jurisdictions within the United States as the Trustee may reasonably request;
provided, however, that the Company shall not be required to consent to the
general service of process for all purposes in any jurisdiction where it is not
then qualified to do business.
8. 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) of the Code and (ii) maintain such qualification at all times
prior to the termination of the Plan.
9. The representations, warranties and agreements in this
Agreement shall survive the date hereof and the Delivery Date.
10. 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 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
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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.
11. 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.
12. 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.
13. 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.
14. 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.
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 _______________________________
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Annex A
December 30, 1994
ALLIED Group, Inc.
701 Fifth Avenue
Des Moines, Iowa 50391-2003
Re: The ALLIED Group Employee Stock Ownership Trust
-----------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company ("State Street"), as trustee (the "Trustee") of The ALLIED Group
Employee Stock Ownership Trust (the "Trust"), which forms a part of the ALLIED
Group Employee Stock Ownership Plan ("Plan"), and which is evidenced by the
Trust Agreement dated April 16, 1991 (the "ESOP Trust Agreement") between
Trustee and ALLIED Group, Inc. (the "Company") in connection with the purchase
by the Trustee of 9,247 shares of Series C ESOP Convertible Preferred Stock and
_______ shares Series D ESOP Convertible Preferred Stock of the Company, no par
value (the "Preferred Stock") pursuant to the Stock Purchase Agreement between
the Company and the Trustee dated as of December 30, 1994 (the "Stock Purchase
Agreement"). Capitalized terms used herein that are not defined herein have the
meanings set forth in the Stock Purchase Agreement.
In connection therewith, we have reviewed executed copies of: (i) the
Stock Purchase Agreement; (ii) the ESOP Trust Agreement; (iii) the Certificate
of Designations of Series C ESOP Convertible Preferred Stock and Series D ESOP
Convertible Preferred Stock of ALLIED Group, Inc.; (iv) the corporate charter
and by-laws of State Street, both as amended to date; (v) other records,
documents, and instruments relating to the powers and organization of State
Street and to State Street's acceptance of fiduciary duties, obligations and
trusts; and (vi) such other certificates and documents as we have deemed
relevant or necessary as a basis for the opinion expressed below.
In our examination, we have assumed without any investigation (i) the
legal capacity of each natural person, (ii) the full power and authority of each
person other than State Street to execute, deliver and perform its obligations
under each document heretofore executed and delivered or hereafter to be
executed and delivered and to do each other act heretofore done or hereafter to
be done by such person, (iii) the due authorization, execution and delivery by
each person other than
State Street of each document heretofore executed and delivered by such person,
(iv) the legality, validity, binding effect and enforceability as to each person
other than State Street of each document heretofore executed and delivered or
hereafter to be
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ALLIED Group, Inc.
December 30, 1994
executed and delivered and of each other act heretofore done or hereafter to be
done by such person, (v) the genuineness of each signature other than those of
officers of State Street and the completeness and authenticity of each document
submitted to us as an original, (vi) the conformity to the original of each
document submitted to us as a copy, (vii) the authenticity of the original of
each document submitted to us as a copy and (viii) no amendment or modification
hereafter of any provision of any document. Insofar as our opinion relates to,
or depends on, any matter of fact, we have relied on representations as set
forth in the Stock Purchase Agreement, and upon written statements and
certificates of officers of State Street and of public officials.
We are members of the Bar of the Commonwealth of Massachusetts and,
accordingly, we express no opinion herein concerning any law other than the laws
of the Commonwealth of Massachusetts and the Federal laws of the United States
of America, to the extent specifically referred to herein.
As used in this opinion with respect to any matter, the qualifying
phrase "to the best of our knowledge" means that, without independent review or
verification, nothing has come to our attention in the course of our performing
legal services for the
Trustee with respect to said matter.
We express no opinion as to matters governed by the Internal Revenue
Code of 1986 (the "Code") or the Employee Retirement Income Security Act of 1974
("ERISA"), both as amended, or federal or state
securities laws.
Based on and subject to the foregoing, we are of the opinion that:
1. State Street, acting solely in its capacity as Trustee, has all
requisite power and authority to execute, deliver and perform its obligations
under the Stock Purchase Agreement.
2. The execution, delivery and performance of the Stock Purchase
Agreement by State Street, as Trustee, will not violate the charter or the
by-laws of State Street or, to the best of our knowledge, any order, judgment or
decree binding on State Street (individually or as trustee).
3. The Stock Purchase Agreement has been duly executed and
delivered by State Street, as Trustee.
4. No authorization, approval or consent of, and no filings or
registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by State Street of the
Stock Purchase Agreement or for the validity or enforceability thereof, except
for filings with the Internal Revenue Service or the Department of Labor which
may from time to time be required by ERISA or the Code.
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ALLIED Group, Inc.
December 30, 1994
We express no opinion as to any matter other than as expressly set
forth above, and no other opinion is intended to be implied nor may be inferred
herefrom. The opinions expressed herein are given as of the date hereof and we
undertake no obligation hereby and disclaim any obligation to advise you of any
change after the date hereof pertaining to any matter referred to herein.
Neither this opinion nor any part hereof may be delivered to, used or relied
upon by any person or entity other than you without our prior written consent.
Very truly yours,
------------------------------
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Annex B
December 30, 1994
State Street Bank and Trust Company
Legal Division, Q6N
200 Newport Avenue
North Quincy, MA 02171
Ladies and Gentlemen:
I have acted as legal counsel of ALLIED Group, Inc., an Iowa corporation (the
"Company"), and in such capacity I have advised the Company in connection with
The ALLIED Group Employee Stock Ownership Trust (the "ESOP Trust"), a trust
established under that certain Trust Agreement amended and restated as of April
16, 1991 (the "Trust Agreement"), between the Company and State Street Bank and
Trust Company, as trustee (the "Trustee" or "State Street"), which implements
and forms a part of the ALLIED Group Employee Stock Ownership Plan (the "Plan"),
and in connection with the purchase by the Trustee of 9,247 shares of Series C
ESOP Convertible Preferred Stock and _______ shares of Series D ESOP Convertible
Preferred Stock of the Company, no par value (the "Preferred Stock"), pursuant
to the Stock Purchase Agreement between the Company and the Trustee dated
December 30, 1994 (the "Stock Purchase Agreement"). Capitalized terms used
herein without definition shall have the meanings ascribed to them in the Stock
Purchase Agreement.
In connection therewith, I have reviewed executed copies of (i) the Stock
Purchase Agreement, (ii) the Certificate of Designations in respect to the
Series C Convertible Preferred Stock and Series D Convertible Preferred Stock
(the "Certificate of Designations"), and (iii) such other certificates and
documents as I have deemed relevant or necessary as a basis for the opinion
expressed below.
In such connection, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all documents submitted to me as photostatic or certified
copies, and the authenticity of the originals of such copies. I have relied, to
the extent I deem such reliance proper, upon representations made in the
documents and certificates or representations made in writing by duly authorized
representatives of the Company.
In rendering the opinions contained herein, I have assumed that (a) State
Street, as Trustee, has all requisite power and authority to execute, deliver,
and perform its obligations under the Stock Purchase Agreement; (b) that the
execution, delivery, and performance of the Stock Purchase Agreement by State
Street, as Trustee, will not violate the charter or bylaws of State Street; and
(c) that the Stock Purchase Agreement has been executed and delivered by State
Street as Trustee and constitutes the legal,
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December 30, 1994
valid, and binding obligation of the ESOP Trust, enforceable in accordance with
its terms, except as enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, or similar laws affecting the enforcement of creditors' rights
generally, or (ii) equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or law).
I express no opinion with respect to the laws of any jurisdiction other than the
State of Iowa and the United States of America. These opinions are expressed as
of the date hereof and are therefore subject to subsequent interpretive,
regulatory, legislative, and
judicial developments.
Based on and subject to the foregoing, I am of the opinion that:
1. The Company is validly existing and in good standing under the
laws of the State of Iowa and has all requisite corporate power
to execute, deliver, and perform the Stock Purchase Agreement.
The Company has taken all necessary corporate action to
authorize the execution, delivery, and performance of the Stock
Purchase Agreement.
2. The Stock Purchase Agreement has been duly executed and
delivered by the Company and is the legal, valid, and binding
agreement of the Company, enforceable against the Company in
accordance with its respective terms, except as the
enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
or similar laws affecting the enforcement of creditors' rights
generally or (ii) equitable principles of general applicability
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. The Preferred Shares have the rights, preferences, and
qualifications set forth in the Certificate of Designations,
have been validly authorized, and upon payment therefor as
provided in the Stock Purchase Agreement, will be validly
issued and outstanding and will constitute fully-paid and
nonassessable shares of Series C ESOP Convertible Preferred
Stock and Series D Convertible Preferred Stock of the Company.
The shares of the Company's common stock, no par value ("Common
Stock") initially reserved for issuance and to be issued upon
conversion of the Preferred Shares in accordance with their
terms have been duly and validly authorized and are sufficient
in number for conversion of all the Preferred Shares, and such
Common Stock, when so issued upon such conversion, will be duly
and validly issued, fully-paid, and nonassessable.
4. Upon payment by the Trust as provided in the Stock Purchase
Agreement, the Company will convey to the Trust good and valid
title to the Preferred Shares free and
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December 30, 1994
clear of any liens, claims, security interests, and
encumbrances, except for beneficial interests accruing to Plan
participants and their beneficiaries.
5. As of the date hereof, the Plan and the ESOP Trust in form meet
in all material respects (a) the applicable requirements of
Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), (b) the requirements applicable to an employee
stock ownership plan for purposes of Section 4975(e)(7) of the
Code and the regulations promulgated thereunder, and (c) the
requirements for exemption from tax under Section 501(a) of the
Code.
6. The shares of Preferred Stock to be purchased by the ESOP Trust
constitute "employer securities" within the meaning of Section
409(1) of the Code and "qualifying employer securities" within
the meaning of Section 407(d)(5) of ERISA.
7. The shares of Preferred Stock to be purchased by the ESOP Trust
have voting rights equivalent to the common stock into which
such shares may be converted, and the Plan meets the voting
rights requirements of Section 409(e)(2) of the Code with
respect to such shares.
In rendering the foregoing opinions and any other opinions expressed
in this letter, I have relied on the following assumptions:
a. Except as to matters expressly opined on herein, the
Plan and ESOP Trust have been, and will continue to be,
administered and operated at all times strictly in
accordance with their terms and with all requirements of
applicable law including, but not limited to, all of the
requirements applicable to a qualified plan under
Section 401(a); the requirements applicable to an
"employee stock ownership plan" (within the meaning of
Section 4975(e)(7)) under Section 4975 and 409 of the
Code; and the requirements applicable to a tax- exempt
trust under Section 501(a); and with the provisions of
ERISA and all regulations thereunder.
b. The conversion price at which the shares of Preferred
Stock may be converted to common stock of the Company is
reasonable as of the date of acquisition of such
Preferred Stock by the ESOP Trust.
c. No fiduciary of the Plan has received any consideration
of the type described in Section 4975(c)(1)(F) of the
Code and Section 406(b)(3) of ERISA in connection with
the transactions described herein.
98
December 30, 1994
d. The fiduciaries of the Plan and the ESOP Trust have
acted prudently and in good faith, and have given
appropriate consideration to those facts and
circumstances that are relevant to the transactions in
accordance with the fiduciary requirements of part 4
of Title I of ERISA.
In connection with the assumptions made in paragraph (b) above, I understand
that the Trustee has received an opinion from Whitman Heffernan and Rhein Co.,
Inc. to effect that (i) the price to be paid by the ESOP Trust per share of
Preferred Stock is not in excess of fair market value or adequate consideration,
as defined under Title I of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations thereunder ("ERISA"); and (ii) the terms
and conditions of the proposed transaction, including the terms governing the
right to convert the Preferred Stock into Common Stock of the Company, are fair
and reasonable to the ESOP Trust from a financial point of view.
These opinions are rendered solely to the Trustee in connection with the
transactions of the Trustee contemplated by the Stock Purchase Agreement. No
other person, firm, or corporation may rely upon these opinions for any purpose
without my prior written consent.
Yours very truly,
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