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EXHIBIT 4.9
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of December 29, 1995, 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").
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 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 43,738 shares were previously issued and
of which the Company has offered 13,426 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 D Preferred Stock and the Company wishes to issue and sell such shares of
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 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
Opinion") that the purchase of the shares of 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 D Preferred Stock is not in excess
of adequate consideration.
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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 funds
directed by the Committee, and the Company hereby agrees to issue and sell for
cash to the Trust 13,426 shares of Series D Preferred Stock (the "Shares") for
an aggregate purchase price (the "Purchase Price") of $725,000 (or approximately
$54.00 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 29, 1995 (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 Company 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 Annual Report on Form 10-K for the year
ended December 31, 1994 and quarterly reports on Form
10-Q for the quarterly periods ended March 31, June 30,
and September 30, 1995, on the respective dates 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
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authority to execute and deliver this Agreement and to
carry out the transactions contemplated hereby;
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), as limited by the proviso therein, and
3(i) of this Agreement and (2) the Committee's direction
letter dated December 28, 1995;
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 D
Preferred Stock or payable upon redemption of Series D
Preferred Stock, including upon exercise of the rights
set forth
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in Section 7 of the Certificate of Designations, or in
shares of Common Stock otherwise 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 any 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 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 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 D Preferred Stock into
shares of Common
105
Stock or to require the Company to redeem shares of Series D Preferred 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 D Preferred Stock or upon
a redemption of shares of 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:
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 29, 1995. The Corporation will furnish a copy
of such agreement to the holder of this certificate without
charge upon written request.
7. The Company has at its expense, prepared, filed, and obtained the
effectiveness of, and will use its best efforts to cause to remain 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 or 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.
106
8. The Company agrees that it will use its best efforts to maintain the
qualification of the Plan as an employee stock ownership plan within the meaning
of Section 4975(e)(7) of the Code.
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 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.
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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 29, 1995
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 _______ 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 29, 1995 (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 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 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
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ALLIED Group, Inc.
December 29, 1995
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 29, 1995
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 29, 1995
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 _______ 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 29, 1995 (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 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, valid, and binding obligation of
the ESOP Trust, enforceable in
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December 29, 1995
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 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 clear of any liens,
claims, security interests, and
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December 29, 1995
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.
114
December 29, 1995
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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