Exhibit 1.1 EXECUTION COPY
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HORACE MANN EDUCATORS CORPORATION
$315,800,000
Senior Convertible Notes due 2032
PURCHASE AGREEMENT
Dated: May 8, 2002
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TABLE OF CONTENTS
PURCHASE AGREEMENT 1
SECTION 1. Representations and Warranties.........................................................3
(a) Representations and Warranties by the Company:.........................................3
(b) Officers' Certificates................................................................12
SECTION 2. Sale and Delivery to the Initial Purchasers; Closing..................................13
(a) Initial Securities....................................................................13
(b) Option Securities.....................................................................13
(c) Delivery; Payment.....................................................................13
(d) Denominations; Registration...........................................................14
SECTION 3. Covenants of the Company..............................................................14
(a) Offering Memorandum...................................................................14
(b) Notice and Effect of Material Events..................................................14
(c) Amendment to Offering Memorandum and Supplements......................................15
(d) Qualification of Securities for Offer and Sale........................................15
(e) Rating of Securities..................................................................15
(f) The Depository Trust Company..........................................................15
(g) PORTAL Designation....................................................................15
(h) Listing of Common Stock...............................................................16
(i) Reporting Requirements................................................................16
(j) Reservation of Common Stock...........................................................16
(k) Restriction on Sale of Common Stock...................................................16
SECTION 4. Payment of Expenses...................................................................17
(a) Expenses..............................................................................17
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(b) Termination of Agreement..............................................................17
SECTION 5. Conditions of Initial Purchasers' Obligations.........................................17
(a) Opinion of Counsel for Company........................................................17
(b) Opinion of Counsel for Initial Purchasers.............................................17
(c) Officers' Certificates................................................................18
(d) Accountants' Comfort Letters..........................................................18
(e) Bring-down Comfort Letter.............................................................19
(f) Additional Documents..................................................................19
(g) Maintenance of Rating.................................................................19
(h) Over-Allotment Option.................................................................19
(i) Lock-Up Agreements....................................................................20
(j) PORTAL................................................................................20
(k) Termination of Agreement..............................................................20
SECTION 6. Subsequent Offers and Resales of the Securities.......................................21
(a) Offer and Sale Procedures.............................................................21
(b) Covenants of the Company..............................................................22
(c) Qualified Institutional Buyer.........................................................22
SECTION 7. Delivery of Offering Memorandum.......................................................22
SECTION 8. Restricted Securities.................................................................23
SECTION 9. Consent to Electronic Delivery........................................................23
SECTION 10. Indemnification.......................................................................23
(a) Indemnification of Initial Purchasers.................................................23
(b) Indemnification of Company............................................................24
(c) Actions against Parties; Notification.................................................24
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SECTION 11. Contribution..........................................................................25
SECTION 12. Representations, Warranties and Agreements to Survive Delivery........................26
SECTION 13. Termination of Agreement..............................................................26
(a) Termination; General..................................................................26
(b) Liabilities...........................................................................27
SECTION 14. Notices...............................................................................27
SECTION 15. Parties. 27
SECTION 16. GOVERNING LAW AND TIME................................................................27
SECTION 17. Effect of Headings....................................................................27
Schedule I. List of Initial Purchasers..............................................................I-1
Schedule II. Signatories of the Lock-Up Agreement...................................................II-1
Exhibit A. Registration Rights Agreement...........................................................A-1
Exhibit B-1 Opinion of Gibson, Dunn & Crutcher, LLP.................................................B-1
Exhibit B-2 Opinion of Ann Caparros, Esq............................................................B-4
Exhibit C Form of Lock-Up Agreement...............................................................C-1
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HORACE MANN EDUCATORS CORPORATION
$315,800,000 SENIOR CONVERTIBLE NOTES DUE 2032
PURCHASE AGREEMENT
May 8, 2002
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Horace Mann Educators Corporation., a Delaware corporation
(the "COMPANY"), upon the terms and conditions set forth herein confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH"), Banc of America Securities LLC and Credit Suisse
First Boston Corporation (the "INITIAL PURCHASERS"), with respect to the issue
and sale by the Company and the purchase by the Initial Purchasers, of
$315,800,000 aggregate principal at maturity of the Company's Senior Convertible
Notes due 2032 (the "NOTES"), and with respect to the grant by the Company to
the Initial Purchasers of the option described in Section 2(b) hereof to
purchase all or any part of an additional $52,700,000 aggregate principal at
maturity of Notes to cover over-allotments, if any. The aforesaid $315,800,000
aggregate principal amount at maturity of Notes (the "INITIAL SECURITIES") to be
purchased by the Initial Purchasers and all or any part of the $52,700,000
aggregate principal amount at maturity of Notes subject to the option described
in Section 2(b) hereof (the "OPTION SECURITIES") are hereinafter called,
collectively, the "SECURITIES."
The Securities are to be issued pursuant to an indenture to be
dated May 14, 2002 (the "INDENTURE") between the Company and JPMorgan Chase
Bank, as trustee (the "TRUSTEE"), to be executed at the Closing Time (as defined
below) between the Company and the Trustee. The Indenture will conform in all
material respects to the respective statements relating thereto in the Offering
Memorandum (as defined below) and will be substantially in the form last
delivered to the Initial Purchasers prior to the date of this Purchase Agreement
(the "AGREEMENT").
When used herein, "COMMON STOCK" means the common stock, par
value $0.001 per share.
The holders of Securities will be entitled to the benefits of
a registration rights agreement, in substantially the form attached hereto as
Exhibit A with such changes as shall be agreed to by the parties hereto (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company will file a
registration statement (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "COMMISSION") registering the resales of the Securities
and the shares of Common Stock issuable upon conversion thereof, as referred to
in the Registration Rights Agreement, under the Securities Act of 1933, as
amended (the "1933 ACT").
The Company understands that the Initial Purchasers propose to
make an offering of the Securities on the terms and in the manner set forth
herein and agrees that the Initial Purchasers may resell, subject to the
conditions set forth herein, all or a portion of the Securities to purchasers
("SUBSEQUENT PURCHASERS") at any time after this Agreement has been executed and
delivered. The Securities are to be offered and sold through the Initial
Purchasers without being registered under the 1933 Act, in reliance upon
exemptions from such registration requirements. Pursuant to the terms of the
Securities and the Indenture, investors that acquire Securities may resell or
otherwise transfer such Securities only if such Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("RULE 144A") under the rules and regulations promulgated under the
1933 Act by the Commission).
The Company has prepared and delivered to each Initial
Purchaser an electronic copy of a preliminary offering memorandum dated May 6,
2002 (the "PRELIMINARY OFFERING MEMORANDUM") and will have prepared and will
deliver to each Initial Purchaser, on the date hereof or as soon as practicable
prior to the Closing, copies of a final offering memorandum (the "FINAL OFFERING
MEMORANDUM"), each for use by the Initial Purchasers in connection with their
solicitation of purchasers of, or offering of, the Securities. "OFFERING
MEMORANDUM" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
such document), including the annexes and exhibits thereto and any documents
incorporated therein by reference (such documents shall be considered to be
delivered to the Initial Purchasers to the extent that such documents are
available on the Commission's website), which has been prepared and delivered by
the Company to the Initial Purchasers in connection with their solicitation of
purchases of, or offering of, the Securities.
Simultaneously with the execution hereof, the Company has
received the opinion, dated as of the date hereof, of Gibson, Dunn & Crutcher,
LLP, counsel for the Company, relating to certain tax law matters.
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included," "disclosed,"
"described" or "stated" in the Offering Memorandum (or other references of like
import) shall be deemed to include all such financial statements and schedules
and other information that are incorporated by reference in the Offering
Memorandum; and all references in this Agreement to amendments or supplements to
the Offering Memorandum shall be deemed to include the filing of any document
under the
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Securities Exchange Act of 1934 (the "1934 ACT") which is incorporated
by reference in the Offering Memorandum.
This Agreement, the Indenture, the Securities and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "TRANSACTION DOCUMENTS."
SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company:
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(i) Offering Memorandum.
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The Offering Memorandum does not, and at the Closing Time will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly
for use in the Offering Memorandum.
(ii) Incorporated Documents.
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The Offering Memorandum as delivered from time to time shall
incorporate by reference the most recent Annual Report of the Company
on Form 10-K filed with the Commission and each Quarterly Report of the
Company on Forms 10-Q filed with the Commission since the filing of the
end of the fiscal year to which the most recent Annual Report relates,
if any. The documents incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed, or, if
amended, as so amended, with the Commission complied and will comply in
all material respects with the requirements of the 1934 Act and the
rules and regulations of the Commission thereunder (the "1934 ACT
REGULATIONS"), and, when read together with the other information in
the Offering Memorandum, at the time the Offering Memorandum was issued
and at the Closing Time, did not and will not include 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.
(iii) Independent Accountants.
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The accountants who certified the financial statements and
supporting schedules included or referenced in the Offering Memorandum
are independent public accountants with respect to the Company within
the meaning of Regulation S-X under the 1933 Act.
(iv) Financial Statements.
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The financial statements, together with the related schedules
and notes, if any, included or incorporated by reference in the
Offering Memorandum present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown
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and their results of operations, stockholder's equity and cash flows
for the periods shown, and, except as otherwise disclosed in the
Offering Memorandum, such financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis; the schedules included in the
Offering Memorandum, if any, present fairly the information required to
be stated therein.
(v) No Material Adverse Change.
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Since the respective dates as of which information is given in
the Offering Memorandum, except as otherwise stated therein, (A) there
has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "MATERIAL
ADVERSE EFFECT"), (B) there have been no transactions entered into by
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, (C) there
has not been any increase in the long-term debt of, or guaranteed by,
the Company and its subsidiaries considered as one enterprise, and (D)
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(vi) Good Standing of the Company.
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The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate or other) to own its properties and
conduct its business as described in the Prospectus and to own, lease
and operate its properties; all of the issued and outstanding capital
stock of the Company has been duly authorized and validly issued and is
fully paid; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect.
(vii) Good Standing of the Company's Subsidiaries.
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Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation or organization, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum and to own, lease and
operate its properties; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to be so qualified would not have a Material Adverse
Effect; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable and is held legally
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and beneficially by the Company directly or through wholly-owned
subsidiaries, free from liens, encumbrances and defects, except as set
forth in the Offering Memorandum. The Company has no subsidiaries other
than Horace Mann Insurance Company, Teachers Insurance Company, Horace
Mann Life Insurance Company, Horace Mann Property & Casualty Insurance
Company, Horace Mann Lloyds, Allegiance Life Insurance Company,
Educators Life Insurance Company of America, Horace Mann Educator
Benefits Consulting Corporation, Horace Mann General Agency, Horace
Mann Investors, Inc., Horace Mann Service Corporation, AIC Acquisition
Corp., Horace Mann Lloyds Management Corporation, Senior Marketing
Insurance Service Corporation, Insuror Management Company and Well-Care
Inc.
(viii) Authorization of this Agreement.
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This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) Authorization of the Securities.
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The Securities have been duly authorized by the Company and at
the Closing Time, will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers) reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(x) Description of the Securities, the Indenture and the
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Registration Rights Agreement.
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As of the Closing Time, the Securities, the Indenture and the
Registration Rights Agreement will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms last
delivered to the Initial Purchasers prior to the date of this
Agreement.
(xi) Authorization and Description of Common Stock.
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The Common Stock conforms in all material respects to all
statements relating thereto contained in the Offering Memorandum. Upon
issuance and delivery of the Securities in accordance with this
Agreement and the Indenture, the Securities will be convertible at the
option of the holder thereof for Common Stock in accordance with the
terms of the Securities and the Indenture; the shares of Common Stock
issuable upon conversion of the Securities have been duly authorized
and reserved for issuance upon such conversion by all necessary
corporate action and such shares, when issued upon
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such conversion, will be validly issued and will be fully paid and
non-assessable; and the issuance of such shares upon such conversion
will not be subject to the preemptive or other similar rights of any
security holder of the Company.
(xii) Authorization of Indenture.
--------------------------
The Indenture has been duly authorized by the Company and,
when duly executed and delivered by the Company and the Trustee, will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xiii) Authorization of Registration Rights Agreement.
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The Registration Rights Agreement has been duly authorized by
the Company and, when duly executed and delivered by the Company and
the Initial Purchasers, will constitute a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally, except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and except as rights to indemnification, contribution
or exculpation thereunder may not be enforceable.
(xiv) Absence of Defaults and Conflicts.
---------------------------------
None of the Company or any of its subsidiaries as of the date
of this Agreement is in violation of its charter or by-laws or other
organizational documents or 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, except for such defaults that would not
result in a Material Adverse Effect. None of the execution, delivery or
performance of any of the Transaction Documents, or the consummation of
the transactions contemplated thereby will result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (a) any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any
of their properties, except as could not reasonably be expected to have
a Material Adverse Effect or materially adversely affect the ability of
the Company and its subsidiaries to consummate the transactions
contemplated hereby, (b) any agreement or instrument to
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which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, except as
could not reasonably be expected to have a Material Adverse Effect or
materially and adversely affect the ability of the Company and its
subsidiaries to consummate the transactions contemplated hereby, or (c)
the charter, by-laws or similar organizational document of the Company
or any such subsidiary.
(xv) No Consent Required.
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No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the sale
of the Securities, except such as have been obtained and made under the
Act and such as may be required under state securities laws and except
where the failure to obtain any such consent, approval, authorization
or order, or to make any such filing, would not be reasonably expected
to have a Material Adverse Effect.
(xvi) Title to Property; Leases.
-------------------------
Except as disclosed in the Offering Memorandum, the Company
and its subsidiaries have good and marketable title to all real
properties and good and valid title to all other properties and assets
owned by them, in each case free from liens, encumbrances and defects
except such that do not materially affect the value thereof or
materially interfere with the use made or to be made thereof by them;
and except as disclosed in the Offering Memorandum, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(xvii) Possession of Licenses and Permits.
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The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to own, lease, license and operate its
respective properties and to conduct the business now operated by them
and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(xviii) Absence of Labor Disputes.
-------------------------
No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might be reasonably expected to have a Material Adverse Effect.
(xix) Possession of Intellectual Property.
-----------------------------------
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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, except where the failure to own or possess
or otherwise be able to acquire such intellectual property rights could
not reasonably be expected to, singly or in the aggregate, have a
Material Adverse Effect; and neither the Company nor any subsidiary has
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.
(xx) Environmental Laws.
------------------
Except as disclosed in the Offering Memorandum, neither the
Company nor any of its subsidiaries is in violation of any statute or
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 Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(xxi) Absence of Proceedings.
----------------------
Except as disclosed in the Offering Memorandum, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; and no such actions,
suits or proceedings are, to the Company's knowledge, threatened; there
are no statutes, regulations, contracts or other documents that are
required to be described in the Offering Memorandum that are not so
described as required.
(xxii) Internal Controls.
-----------------
The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general
or specific authorization, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific
authorization and (D) the recorded
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accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxiii) Compliance with Insurance Laws and Regulations.
----------------------------------------------
Each of the Company's subsidiaries is in compliance with the
requirements of the insurance laws and regulations of its jurisdictions
of incorporation and the insurance laws and regulations of the
jurisdictions which are applicable to each such subsidiary, and has
filed all notices, reports, documents or other information required to
be filed thereunder, except where the failure to so comply or file
would not have, individually or in the aggregate with other such
failures, a Material Adverse Effect.
(xxiv) No Material Changes in Insurance Reserving
-------------------------------------------
Practices.
----------
Except as disclosed in the Offering Memorandum, the Company
and its subsidiaries have made no material changes in their insurance
reserving practices since the most recent audited financial statements
included or incorporated in the Offering Memorandum.
(xxv) Validity of Reinsurance Treaties.
--------------------------------
All reinsurance treaties and arrangements to which any
subsidiary is a party are in full force and effect and no subsidiary is
in violation of or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition
contained therein; no subsidiary has received any notice from any of
the other parties to such treaties, contracts or agreements that such
other party intends not to perform such treaty and, to the best
knowledge of the Company, the Company and the subsidiaries have no
reason to believe that any of the other parties to such treaties or
arrangements will be unable to perform such treaty or arrangement;
except, in each of the above cases, (i) to the extent adequately and
properly reserved for in the consolidated financial statements of the
Company included in the Offering Memorandum and (ii) for such
violations or defaults that would not result in a Material Adverse
Effect.
(xxvi) Statutory Statements.
--------------------
The statutory annual and quarterly statements of the Company's
subsidiaries required to file such statutory statements and the
statutory balance sheets and income statements included in such
statutory annual and quarterly statements, most recently filed in each
jurisdiction, have been prepared in all material respects in conformity
with required or permitted or prescribed statutory accounting
principles or practices applied on a consistent basis, except as may
otherwise be indicated in the notes thereto, and present fairly the
financial position of such subsidiaries (on a statutory basis) for the
period covered thereby.
(xxvii) Broker-Dealer and Investment Advisor Subsidiaries.
--------------------------------------------------
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Each of the Company's subsidiaries which is engaged in the
business of acting as a broker-dealer, or an investment advisor (the
"Broker-Dealer Subsidiaries" and "Investment Advisor Subsidiaries",
respectively) is duly licensed or registered as a broker-dealer or
investment advisor, as the case may be, in each jurisdiction (including
the United States) where it is required to be so licensed or registered
to conduct its business, in each case, with such exceptions,
individually or in the aggregate, as would not have a Material Adverse
Effect; each Broker-Dealer Subsidiary or Investment Advisor Subsidiary
has all other necessary approvals of and from all applicable regulatory
authorities to conduct their respective businesses, in each case with
such exceptions, individually or in the aggregate, as would not have a
Material Adverse Effect. None of the Broker-Dealer Subsidiaries or
Investment Advisor Subsidiaries has received any notification from any
applicable regulatory authority to the effect that any additional
approvals from such regulatory authority are needed to be obtained by
such subsidiary in any case where it could be reasonably be expected
that (x) any of the Broker-Dealer Subsidiaries or Investment Advisor
Subsidiaries would in fact be required either to obtain any such
additional approvals or otherwise limit engaging in certain business
and (y) the failure to have such approvals or limiting business would
have a Material Adverse Effect; and each Broker-Dealer Subsidiary or
Investment Advisor Subsidiary is in compliance with the requirements of
the applicable broker-dealer and investment advisor laws and
regulations of each jurisdiction which is applicable to such
subsidiary, and has filed all notices required to be filed thereunder,
in each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect.
(xxviii) Separate Accounts.
-----------------
Each of the separate accounts of the Company's subsidiaries
that are insurance companies that is required to be registered as an
investment company under the Investment Company Act of 1940, as amended
(the "1940 ACT"), is so registered. All forms, reports, statements and
other documents required by law to be filed with the Commission by or
on behalf of each of the separate accounts of such subsidiaries,
including, without limitation, all registration statements and all
amendments and supplements to all such registration statements, in
connection with sales of variable life insurance policies and variable
annuity contracts, have been so filed by or on behalf of such separate
accounts except where failure to file would not have a Material Adverse
Effect; and all such forms, reports, statements and other documents,
including, without limitation, those to be filed after the date hereof,
did not at the time they were filed (at the time they become effective
and so long as they remain effective in the case of registration
statements and amendments thereto), or will not at the time they are
filed (at the time they become effective and so long as they remain
effective in the case of registration statements and amendments
thereto), contain any untrue statements 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, in light of the circumstances
under which they were made, not misleading.
(xxix) Ratings.
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The various ratings assigned to the Company's subsidiaries as
of May 8, 2002 have not been lowered or threatened to be lowered by
A.M. Best Company, Inc. ("A.M. BEST"), Fitch, Inc. ("FITCH"), Standard
& Poor's Ratings Services, a division of McGraw Hill, Inc. ("S&P") or
Moody's Investors Service, Inc. ("MOODY'S"), as applicable, nor, to the
Company's knowledge, have such ratings been placed under surveillance
or review by A.M. Best, S&P, Fitch, or Moody's, as applicable, except
that the Initial Purchasers acknowledge that the Company has been
informed that A.M. Best intends to lower the ratings of the Company's
property and casualty subsidiaries to A on or around May 9, 2002.
(xxx) Investment Company Act.
----------------------
The Company is not and, after giving effect to the issuance of
the Securities, to the other transactions contemplated in the Offering
Memorandum and to the application of the net proceeds therefrom as
described in the Offering Memorandum, will not be an "investment
company" or an entity "controlled" by an "investment company" as such
terms are defined in the 1940 Act.
(xxxi) Similar Offerings.
-----------------
Neither the Company nor any of its affiliates, as such term is
defined in Rule 501(b) under the 1933 Act (each, an "AFFILIATE"), has,
directly or indirectly, solicited any offer to buy, sold or offered to
sell or otherwise negotiated in respect of, or will solicit any offer
to buy, sell or offer to sell or otherwise negotiate in respect of, in
the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Securities in a manner that would require any of the Securities to be
registered under the 1933 Act.
(xxxii) Rule 144A Eligibility.
---------------------
The Securities are eligible for resale pursuant to Rule 144A
and will not be, at the Closing Time, of the same class as securities
listed on a national securities exchange registered under Section 6 of
the 1934 Act, or quoted in a U.S. automated interdealer quotation
system.
(xxxiii) No General Solicitation.
-----------------------
None of the Company, its Affiliates or any person acting on
its or any of their behalf (other than the Initial Purchasers, as to
whom the Company makes no representation) has engaged or will engage,
in connection with the offering of the Securities, in any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
(xxxiv) No Registration Required.
------------------------
Subject to compliance by the Initial Purchasers with the
procedures set forth in Section 6 hereof and assuming the accuracy of
the representations and warranties and
11
compliance with the covenants and agreements of the Initial Purchasers
herein, and except as set forth in the Registration Rights Agreement,
it is not necessary in connection with the offer, sale and delivery of
the Securities to the Initial Purchasers and to each Subsequent
Purchaser in the manner contemplated by this Agreement and the Offering
Memorandum to register any of the Securities under the 1933 Act.
(xxxv) Reporting Company.
-----------------
The Company's Common Stock is registered under Section 12(g)
of the 1934 Act; accordingly, the Company is subject to the reporting
requirements of Section 13 of the 1934 Act.
(xxxvi) ERISA.
-----
Each of the Company and its subsidiaries has fulfilled their
respective obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security
Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company or any of its subsidiaries are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations, other than such
non-fulfillment or non-compliance that would not reasonably be expected
to result in a Material Adverse Effect. The Company and its respective
subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA,
except for such liability as would not be reasonably expected to result
in a Material Adverse Effect.
(xxxvii) No Registration Rights.
----------------------
Except as described in the Offering Memorandum, there are no
holders of securities (debt or equity) of the Company, or holders of
rights (including without limitation preemptive rights) with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxxviii) No Brokerage Commission; Finder's Fee.
-------------------------------------
Except as disclosed in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Initial Purchaser for a brokerage commission, finder's fee or other
like payment in connection with this offering.
(b) Officers' Certificates.
----------------------
Any certificate signed by an officer of the Company, delivered
to the Initial Purchasers or to counsel for the Initial Purchasers in
connection with the closing of the
12
offering of the Securities, shall to the extent stated therein be
deemed a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
SECTION 2. Sale and Delivery to the Initial Purchasers; Closing.
----------------------------------------------------
(a) Initial Securities.
------------------
On the basis of the representations, warranties and agreements
herein contained and subject to the terms and conditions herein set forth, the
Company agree to issue and sell to the Initial Purchasers and the Initial
Purchasers agrees to purchase from the Company $315,800,000 aggregate principal
amount at maturity of the Initial Securities, at the price of $475.00 per $1,000
principal amount at maturity.
(b) Option Securities.
-----------------
In addition, on the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Initial Purchasers to
purchase up to an additional $52,700,000 aggregate principal amount at maturity
of Securities at the same price per Security set forth in Section 2(a) above for
the Initial Securities from the Closing Date to the Date of Delivery (as defined
below). The option hereby granted will expire thirty days after the date of the
Final Offering Memorandum and may be exercised in whole or in part from time to
time within such thirty day period only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Initial Purchasers to
the Company setting forth the number of Option Securities as to which the
Initial Purchasers are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "DATE OF DELIVERY") shall be determined by the Initial Purchasers,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, unless otherwise agreed upon
by the Initial Purchasers and the Company. If the option is exercised as to all
or any portion of the Option Securities, the Initial Purchasers will purchase
that number of Option Securities.
(c) Delivery; Payment.
-----------------
Payment of the purchase price for, and delivery of the global
certificates for, the Initial Securities shall be made at the offices of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 W. 55th Street, New York, New York
10019, or at such other place as shall be agreed upon by the Company and the
Initial Purchasers, at 9:00 a.m., on the fourth business day after the date
hereof, or such other time not later than the fifth business day after such date
as shall be agreed upon by the Company and the Initial Purchasers (such time and
date of payment and delivery being herein called the "CLOSING TIME" and the date
upon which the Closing Time occurs is herein called the "CLOSING DATE"). In
addition, in the event that the Initial Purchasers have exercised their option
to purchase all or any of the Option Securities, payment of the purchase price
for, and delivery of one or more global certificates for such Option Securities,
shall be made at the above-mentioned offices of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., or at such
13
other place as shall be agreed upon by the Company and the Initial Purchasers on
the relevant Date of Delivery as specified in the notice from the Initial
Purchasers to the Company.
On the Closing Date (or Date of Delivery, in the case of the
Option Securities), payment shall be made to the Company by wire transfer of
immediately available funds to its respective bank account designated by the
Company, against delivery to the Initial Purchasers for the respective accounts
of each Initial Purchaser of the Securities (or Option Securities, if
applicable) to be purchased by it.
(d) Denominations; Registration.
---------------------------
Certificates for the Securities shall be in global form. The
global certificates representing the Securities shall be made available for
examination by the Initial Purchasers in the City of New York not later than
10:00 a.m. on the last business day prior to the Closing Time.
SECTION 3. Covenants of the Company.
------------------------
The Company covenants with the Initial Purchasers as follows:
(a) Offering Memorandum.
-------------------
The Company, as promptly as reasonably possible, shall furnish
to the Initial Purchasers, without charge, such number of copies of the Offering
Memorandum and any amendments and supplements thereto and documents incorporated
by reference therein (not including exhibits) as the Initial Purchasers may
reasonably request.
(b) Notice and Effect of Material Events.
------------------------------------
The Company will immediately notify the Initial Purchasers,
and confirm such notice in writing, of (x) any filing made by the Company of
information relating to the offering of the Securities with any securities
exchange or any other regulatory body or tax authority in the United States or
any other jurisdiction, and (y) prior to the completion of the placement of the
Securities by the Initial Purchasers as evidenced by a notice in writing from
the Initial Purchasers to the Company, any material changes in or affecting the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries, that requires any amendment or
supplement to the Offering Memorandum so that it (i) will not contain any 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 light of the
circumstances under which they were made, not misleading, or (ii) will comply
with applicable law. In such event set forth in (x) above or if during such time
set forth in (y) above any event shall occur as a result of which it is
necessary, in the opinion of the Company and its counsel or the Initial
Purchasers and counsel for the Initial Purchasers, to amend or supplement the
Offering Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in the light of the circumstances
then existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to the Initial Purchasers an amendment or
14
amendments of, or a supplement or supplements to, the Offering Memorandum (in
form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchasers) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing as of the date of such amended or
supplemental Offering Memorandum not misleading.
(c) Amendment to Offering Memorandum and Supplements.
------------------------------------------------
The Company will advise the Initial Purchasers promptly of any
proposal to amend or supplement the Offering Memorandum and will not effect such
amendment or supplement without the consent of the Initial Purchasers, which
will not unreasonably be withheld or delayed. Neither the consent of the Initial
Purchasers, nor the delivery of any such amendment or supplement by the Initial
Purchasers, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale.
----------------------------------------------
The Company will use its reasonable efforts, in cooperation
with the Initial Purchasers, to qualify the Securities for offering and sale
under the applicable securities laws of such jurisdictions as the Initial
Purchasers may designate and will maintain such qualifications in effect as long
as required for the sale of the Securities; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or take any action that would
subject itself to general service of process in suits or to taxation in any
jurisdiction in which it is not otherwise so subject.
(e) Rating of Securities.
--------------------
The Company shall take reasonable action to enable S&P and
Moody's to provide their respective credit ratings of the Securities issued by
the Company.
(f) The Depository Trust Company.
----------------------------
The Company will cooperate with the Initial Purchasers and use
commercially reasonable efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of The Depository Trust Company.
(g) PORTAL Designation.
------------------
The Company will use its reasonable efforts under the
circumstances to permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
15
(h) Listing of Common Stock.
-----------------------
The Company will use commercially reasonable efforts to cause
all shares of Common Stock issuable upon conversion of the Securities to be
quoted on the New York Stock Exchange or listed on a "national securities
exchange" registered under Section 6 of the 1934 Act.
(i) Reporting Requirements.
----------------------
The Company, during the period when the Offering Memorandum is
required to be delivered pursuant to Section 7 hereof, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act Regulations.
(j) Reservation of Common Stock.
---------------------------
The Company will reserve and keep available at all times, free
of preemptive or other similar rights, a sufficient number of authorized and
unissued shares of Common Stock for the purpose of enabling the Company to
satisfy any obligations to issue the Common Stock issuable upon conversion of
the Notes.
(k) Restriction on Sale of Common Stock.
-----------------------------------
During the period commencing on the Closing Date and ending 90
days from the date thereof the Final Offering Memorandum, the Company will not,
without the prior written consent of Merrill Lynch, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, lend or otherwise transfer or dispose of any Common Stock or any
securities convertible into or exchangeable or exercisable for or repayable with
Common Stock or file any registration statement under the 1933 Act with respect
to any primary offerings of the Common Stock for cash or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder or the Common Stock to be delivered upon
conversion thereof, (B) any Common Stock issued by the Company upon the exercise
of an option or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Offering Memorandum, (C) any Common Stock issued
including upon option exercises or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Offering Memorandum, and (D) any Common Stock sold by the Company to pay taxes
applicable to the exercise of options in accordance with the Company's stock
option arrangements. Nothing in this Agreement shall prohibit the Company from
purchasing the shares of Common Stock of a terminated employee in accordance
with an employment or similar contract.
16
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses.
--------
The Company will pay all reasonable expenses incident to the
performance of the Company's obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the reproduction and delivery to the
Initial Purchasers of this Agreement and of any such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the fees and disbursements of counsel, accountants and
other advisors for the Company, (iv) any necessary qualification of the
Securities under securities laws in accordance with the provisions of Section 3
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection therewith and in connection
with the preparation of any Blue Sky Survey and any supplement thereto and (v)
any fees payable in connection with the rating of the Securities.
(b) Termination of Agreement.
------------------------
If this Agreement is terminated by the Initial Purchasers in
accordance with the provisions of Section 5 or Section 13(a)(i) hereof, the
Company shall reimburse the Initial Purchasers for all of its out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations.
---------------------------------------------
The obligations of the Initial Purchasers hereunder are
subject to the accuracy, as of the date hereof and as of the Closing Date, of
the representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company delivered pursuant to the
provisions hereof which are deemed represented pursuant to Section 1(b), to the
performance by the Company of their covenants and other obligations hereunder
and to the following further conditions:
(a) Opinion of Counsel for Company.
------------------------------
At the Closing Time, the Initial Purchasers shall have
received (i) the opinion, dated as of the Closing Time, of Gibson, Dunn &
Crutcher, LLP, counsel for the Company, substantially to the effect set forth in
Exhibit B-1 hereto and (ii) the opinion, dated as of the Closing Time, of Ann
Caparros, Esq., general counsel of the Company, substantially to the effect set
forth in Exhibit B-2 hereto.
(b) Opinion of Counsel for Initial Purchasers.
-----------------------------------------
At the Closing Time, the Initial Purchasers shall have
received the opinion, dated as of the Closing Time, of LeBoeuf, Lamb, Greene &
MacRae, L.L.P., special counsel for the Initial Purchasers, in form and
substance satisfactory to the Initial Purchasers. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than
17
the laws of the State of New York and the federal law of the United States, upon
the opinions of counsel satisfactory to the Initial Purchasers. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and certificates of public officials.
(c) Officers' Certificates.
----------------------
At the Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Offering Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Initial Purchasers shall
have received certificates of the Company executed on its behalf by the
President or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) no action, suit or
proceeding at law or in equity shall be pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary that would be required
to be set forth in the Offering Memorandum other than as set forth therein and
no proceedings shall be pending or, to the knowledge of the Company, threatened
against the Company before or by any government, governmental instrumentality or
court, domestic or foreign, that could reasonably be expected to result in any
Material Adverse Effect, (iii) no event of default shall exist under any
contract, indenture, mortgage, loan agreement, note, lease rights plan or other
agreement or instrument to which the Company or any subsidiary is a party or to
which the Company or any subsidiary is subject, that would result in a Material
Adverse Effect, (iv) except for representations and warranties that speak of a
particular date (which representations need be true and correct in all material
respects, or, if qualified by materiality, in all respects, as of such date) the
representations and warranties in Section 1 hereof are true and correct in all
material respects, or, if qualified by materiality, in all respects, with the
same force and effect as though expressly made at and as of the Closing Time,
(v) the Company has complied in all material respects with all agreements and
satisfied in all material respects all conditions on its part to be performed or
satisfied at or prior to the Closing Time and (vi) the Offering Memorandum, as
it may then be amended or supplemented, 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.
(d) Accountants' Comfort Letters.
----------------------------
At the time of the execution of this Agreement, the Initial
Purchasers shall have received a letter, dated as of such date from KPMG LLP
with respect to the financial information included or incorporated by reference
in the Offering Memorandum pertaining to the Company, in form and substance
satisfactory to the Initial Purchasers, containing statements and information of
the type ordinarily included in accountants' "comfort letters" in transactions
similar to the Offering with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
18
(e) Bring-down Comfort Letter.
-------------------------
At the Closing Time, the Initial Purchasers shall have
received from KPMG LLP a letter, dated as of the Closing Time, to the effect
that they reaffirm the statement made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to the Closing Time.
(f) Additional Documents.
--------------------
At the Closing Time, counsel for the Initial Purchasers shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated or on the other transactions contemplated
in the Offering Memorandum, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated and in connection
with the other transactions contemplated in the Offering Memorandum shall be
reasonably satisfactory in form and substance to the Initial Purchasers and
counsel for the Initial Purchasers.
(g) Maintenance of Rating.
---------------------
At Closing Time, the Securities shall be rated at least Baa2
by Moody's Investors Service Inc. and BBB+ by S&P and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Securities or any of the Company's other securities by any "nationally
recognized statistical rating agency", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization
shall have publicly announced that it has under surveillance or review its
rating of the Securities or any of the Company's other securities.
(h) Over-Allotment Option.
---------------------
In the event that the Initial Purchasers exercise their option
to purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any of its subsidiaries hereunder shall
be true and correct as of the Date of Delivery, and, at the relevant Date of
Delivery, the Initial Purchasers shall have received:
(i) A certificate, dated such Date of Delivery, of an
officer of the Company, confirming that the
certificate delivered at the Closing Time pursuant to
Section 5(c) hereof remains true and correct as of
such Date of Delivery.
(ii) The opinion of Gibson, Dunn & Crutcher, LLP, counsel
for the Company, in form and substance reasonably
satisfactory to counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the
opinion delivered pursuant to Section 5(a)(i) hereof.
19
(iii) The opinion of Ann Caparros, Esq., general counsel of
the Company, in form and substance reasonably
satisfactory to counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the
opinion delivered pursuant to Section 5(a)(ii)
hereof.
(iv) The opinion of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., special counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the
opinion delivered pursuant to Section 5(c) hereof.
(v) A letter from KPMG LLP in form and substance
satisfactory to the Initial Purchasers and dated such
Date of Delivery, substantially in the same form and
substance as the letter furnished to the Initial
Purchasers pursuant to Section 5(d) hereof, except
that the "specified date" on the letter furnished
pursuant to this paragraph shall be a date not more
than three business days prior to such Date of
Delivery.
(vi) Since the time of execution of this Agreement, there
shall not have occurred a downgrading in, or
withdrawal of, the rating, if any, assigned to the
Securities or any of the Company's other securities
by any such rating organization, and no such rating
organization shall have publicly announced that it
has under surveillance or review its rating of the
Securities or any of the Company's other securities.
(i) Lock-Up Agreements.
------------------
On the Closing Date, the Initial Purchasers shall have
received lock-up agreements substantially in the form attached hereto as Exhibit
C signed by the Company's executive officers and directors listed on Schedule II
hereto.
(j) PORTAL.
------
At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
(k) Termination of Agreement.
------------------------
If any condition specified in this Section shall not have been
fulfilled in any material respect when and as required to be fulfilled, this
Agreement (or, with respect to the Initial Purchaser's exercise of any
over-allotment option for the purchase of Option Securities on a Date of
Delivery after the Closing Time, the obligations of the Initial Purchasers to
purchase the Option Securities on such Date of Delivery) may be terminated by
the Initial Purchasers by notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 1
(subject to Section 12), 10, 11 and 12 shall survive any such termination and
remain in full force and effect.
20
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures.
-------------------------
The Initial Purchasers and the Company hereby establish and
agree to observe the following procedures in connection with the offer and sale
of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers.
-------------------------------------------------------
Offers and sales of the Securities shall only be made to
persons in the United States whom the Initial Purchasers reasonably
believe to be qualified institutional buyers, as defined in Rule 144A
under the 1933 Act ("QUALIFIED INSTITUTIONAL BUYERS").
(ii) No General Solicitation.
-----------------------
No general solicitation or general advertising (within the
meaning of Rule 502(c) under the 1933 Act) will be used in the United
States in connection with the offering or sale of the Securities.
(iii) Purchases by Non-Bank Fiduciaries.
---------------------------------
In the case of a non-bank Subsequent Purchaser of Securities
acting as a fiduciary for one or more third parties, each third party
shall, in the reasonable belief of the Initial Purchasers, be a
Qualified Institutional Buyer to whom the notice required in subsection
(iv) has been given.
(iv) Subsequent Purchaser Notification.
---------------------------------
The Initial Purchasers will take reasonable steps to inform,
and cause each of their United States affiliates to take reasonable
steps to inform persons acquiring Securities from the Initial
Purchasers or Securities from an affiliate of the Initial Purchasers
that the Securities (A) have not been and will not be registered under
the 1933 Act, (B) are being sold to them without registration under the
1933 Act in reliance on Rule 144A or in accordance with another
exemption from registration under the 1933 Act, as the case may be, and
(C) may not be offered, sold or otherwise transferred except (1) to the
Company or (2) in accordance with Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer,
sale or transfer is being made in reliance on Rule 144A or (3) pursuant
to another available exemption from registration under the 1933 Act.
(v) Restrictions on Transfer.
------------------------
The transfer restrictions and the other provisions set forth
in the Offering Memorandum under the heading "Transfer Restrictions",
including the legend required thereby, shall apply to the Securities
except as otherwise agreed by the Company and the Initial Purchasers.
21
(b) Covenants of the Company.
------------------------
The Company covenants with the Initial Purchasers as follows:
(i) Integration.
The Company agrees that it will not and will cause its
Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect
of, securities of the Company or any Affiliate thereof of any class if,
as a result of the doctrine of "integration" referred to in Rule 502
under the 1933 Act, such offer or sale would render inapplicable (for
the purpose of (i) the sale of the Securities by the Company to the
Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) the resale of the
Securities by such Subsequent Purchasers to others) the exemption from
the registration requirements of the 1933 Act provided by Section 4(2)
thereof or by Rule 144A thereunder or otherwise.
(ii) Rule 144A Information.
---------------------
The Company agrees that, in order to render the Securities
eligible for resale pursuant to Rule 144A under the 1933 Act, while any
of the Securities remain outstanding, it will make available, upon
request, to any holder of Securities or prospective purchasers of
Securities the information specified in Rule 144A(d)(4), unless the
Company furnishes information to the Commission pursuant to Section 13
or 15(d) of the 1934 Act.
(iii) Restriction on Resales.
----------------------
Until the expiration of two years after the original issuance
of the Securities, the Company will not, and will cause its respective
Affiliates not to, resell any Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the
1933 Act), whether as beneficial owner or otherwise (except as agent
acting as a securities broker on behalf of and for the account of
customers in the ordinary course of business in unsolicited broker's
transactions).
(c) Qualified Institutional Buyer.
-----------------------------
Each Initial Purchaser represents and warrants to, and agrees
with, the Company that it is a Qualified Institutional Buyer and an "accredited
investor" within the meaning of Rule 501(a) under the 1933 Act.
SECTION 7. Delivery of Offering Memorandum.
-------------------------------
The Initial Purchasers will deliver to each purchaser of the
Securities from the Initial Purchasers, in connection with their original
distribution of the Securities, a copy of the Offering Memorandum, as amended
and supplemented at the date of such delivery.
22
SECTION 8. Restricted Securities.
---------------------
The Initial Purchasers understand that the Securities have not
been and, except as required pursuant to the Registration Rights Agreement, will
not be registered under the 1933 Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from the registration requirements of the 1933 Act.
SECTION 9. Consent to Electronic Delivery.
------------------------------
The Company hereby consents to the electronic delivery of the
Preliminary Offering Memorandum by the Initial Purchasers to Subsequent
Purchasers who themselves consent to electronic delivery of the Preliminary
Offering Memorandum.
SECTION 10. Indemnification.
---------------
(a) Indemnification of Initial Purchasers.
-------------------------------------
The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls each Initial Purchaser within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Final Offering Memorandum
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any untrue statement or omission
described in subparagraph (i) above, or any such alleged untrue
statement or omission; provided that (subject to Section 10(d) below)
any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
the Initial Purchasers), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any untrue statement or omission
described in subparagraph (i) above, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue
23
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum or the Final Offering
Memorandum (or any amendment or supplement thereto).
(b) Indemnification of Company.
---------------------------
The Initial Purchasers agree to indemnify and hold harmless
the Company and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Initial Purchasers expressly for
use in the Preliminary Offering Memorandum or the Final Offering Memorandum (or
any amendment or supplement thereto).
(c) Actions against Parties; Notification.
--------------------------------------
Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 10(a) above, counsel to the indemnified
parties shall be selected by the Initial Purchasers, and, in the case of parties
indemnified pursuant to Section 10(b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall an
indemnifying party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action, or separate but similar
or related actions, in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld, conditioned or delayed), settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section or Section 11 hereof (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
24
SECTION 11. Contribution.
------------
If the indemnification to which an indemnified party is
entitled under Section 10 hereof is for any reason unavailable to or
insufficient although applicable in accordance with its terms to hold harmless
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above, but also the relative fault of the Company on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total initial purchasers' discount received by the Initial
Purchasers.
The relative fault of the Company on the one hand and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact, or omission or alleged omission to state a material fact, relates to
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section shall be deemed to
include any out-of-pocket legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, the Initial
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities purchased and sold by
them hereunder exceeds the amount of any damages which they have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
25
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who
controls any of the Initial Purchasers within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Initial Purchaser, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company.
SECTION 12. Representations, Warranties and Agreements to
---------------------------------------------
Survive Delivery.
-----------------
All representations, warranties and agreements contained in
this Agreement or in certificates of officers of the Company submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Initial Purchasers or any controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers; provided that, a representation or
warranty shall survive delivery of the Securities to the Initial Purchasers only
to the extent that any such representation or warranty related directly to or
involves the same subject matter as a claim being made against the Initial
Purchasers by a third party for which the Initial Purchasers are entitled to
indemnification or contribution under Sections 10 or 11 hereof.
SECTION 13. Termination of Agreement.
------------------------
(a) Termination; General.
--------------------
The Initial Purchasers may terminate this Agreement, by notice
to the Company, at any time at or prior to the Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Offering Memorandum (exclusive of
any amendment or supplement thereto), any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Initial Purchasers, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance
26
services in the United States, or (iv) if a banking moratorium has been declared
by either Federal or New York authorities.
(b) Liabilities.
-----------
If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided that Sections 1 (subject to Section
12), 10, 11 and 12 shall survive such termination and remain in full force and
effect.
SECTION 14. Notices.
-------
All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Initial Purchasers shall
be directed to Merrill Lynch & Co. at 4 World Financial Center, 250 Vesey
Street, New York, New York 10080, attention of Jeff Consolino, telephone: (212)
449-8333, fax: (212) 449-6739; notices to the Company shall be directed to
Horace Mann Educators Corp. at One Horace Mann Plaza, Springfield, Illinois
62715, attention of General Counsel, telephone: (217) 788-5757, fax: (217)
788-5776 with a copy to Gibson, Dunn & Crutcher, LLP, at 200 Park Avenue, New
York, NY 10166-0193, attention of Conor D. Reilly, telephone: (212) 351-3850,
fax: (212) 351-4035.
SECTION 15. Parties.
-------
This Agreement shall inure to the benefit of and be binding
upon the Initial Purchasers and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Initial
Purchasers and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 10 and 11 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Initial Purchasers and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason of such purchase.
SECTION 16. GOVERNING LAW AND TIME.
----------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 17. Effect of Headings.
------------------
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
27
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
HORACE MANN EDUCATORS CORPORATION
By /s/ Bret A. Conklin
________________________________
Name: Bret A. Conklin
Title: Senior Vice President and
Controller
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Joseph E. (Jeff) Consolino
________________________________
Name: Joseph E. (Jeff) Consolino
Title: Director
SCHEDULE I
Principal Amount at
Name of Initial Purchaser Maturity of Initial Notes
------------------------- -------------------------
Merrill, Lynch, Pierce, Fenner & Smith
Incorporated.................................................. $ 157,900,000
Banc of America Securities LLC......................................... $ 126,320,000
Credit Suisse First Boston Corporation................................. $ 31,580,000
I-1
SCHEDULE II
Signatories of the Lock-Up Agreement
William W. Abbott
Mary H. Futrell
Donald E. Kiernan
Louis G. Lower II
Joseph J. Melone
Jeffrey L. Morby
Shaun F. O'Malley
Charles A. Parker
William J. Schoen
Peter H. Heckman
Daniel M. Jensen
Douglas W. Reynolds
George J. Zock
Bret A. Conklin
Ann M. Caparros
J. Michael Henderson
II-1
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into as of May 14, 2002 by and among Horace Mann Educators
Corporation, a Delaware corporation (the "Company") and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), and each
of the other Initial Purchasers named in Schedule I to the Purchase Agreement
(as defined below) (the "Initial Purchasers"), for whom Merrill Lynch, Banc of
America Securities LLC and Credit Suisse First Boston Corporation are acting as
representatives (in such capacity, the "Representatives"), pursuant to the
Purchase Agreement, dated May 8, 2002 (the "Purchase Agreement"), among the
Company and the Initial Purchasers. In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchasers, (i) for their
benefit as Initial Purchasers and (ii) for the benefit of the beneficial owners
(including the Initial Purchasers) from time to time of the Notes (as defined
herein), and the beneficial owners from time to time of the Underlying Common
Stock (as defined herein) issued upon conversion of Notes (each of the foregoing
a "Holder" and together the "Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. In addition to the terms that are defined elsewhere in this
Agreement, the following terms shall have the following meanings:
"Affiliate" with respect to any specified person, has the
meaning specified in Rule 144.
"Applicable Conversion Price" means, as of any date of
determination, the Applicable Principal Amount per $1,000 principal amount at
maturity of Notes as of such date of determination divided by the Conversion
Rate in effect as of such date of determination or, if no Notes are then
outstanding, the Conversion Rate that would be in effect were Notes then
outstanding.
"Applicable Principal Amount" means, as of any date of
determination, (1) with respect to each $1,000 principal amount at maturity of
Notes, the sum of the initial issue price of such Notes ($475.00) plus accrued
original issue discount and any accrued cash interest with respect to such Notes
through such date of determination, (2) if the Notes have been converted to
Semi-Annual Coupon Notes upon a Tax Event, the Restated Principal Amount with
respect to the Notes, or (3) if no Notes are then outstanding, such sum
calculated as if such Notes were then outstanding.
A-1
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
"Common Stock" means any shares of the common stock, $0.001
par value, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.
"Conversion Rate" has the meaning assigned to such term in the
Indenture.
"Damages Accrual Period" has the meaning specified in Section
2(e) hereof.
"Damages Payment Date" means each May 14 and November 14.
"Deferral Notice" has the meaning specified in Section 3(i)
hereof.
"Deferral Period" has the meaning specified in Section 3(i)
hereof.
"Effectiveness Deadline Date" has the meaning specified in
Section 2(a) hereof.
"Effectiveness Period" means the period of two years from the
Issue Date or such shorter period ending on the date that all Registrable
Securities have ceased to be Registrable Securities.
"Event" has the meaning specified in Section 2(e) hereof.
"Event Date" has the meaning specified in Section 2(e) hereof.
"Event Termination Date" has the meaning specified in Section
2(e) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Filing Deadline Date" has the meaning specified in Section
2(a) hereof.
"Holder" has the meaning specified in the second paragraph of
this Agreement.
"Indenture" means the Indenture dated as of the date hereof
between the Company and JPMorgan Chase Bank, as trustee, pursuant to which the
Notes are being issued.
"Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Credit
Suisse First Boston Corporation.
"Initial Shelf Registration Statement" has the meaning
specified in Section 2(a) hereof.
A-2
"Issue Date" means May 14, 2002.
"Liquidated Damages Amount" has the meaning specified in
Section 2(e) hereof.
"Losses" has the meaning specified in Section 6 hereof.
"Material Event" has the meaning specified in Section 3(i)
hereof.
"Notes" means the Senior Convertible Notes due 2032 of the
Company to be purchased pursuant to the Purchase Agreement.
"Notice and Questionnaire" means a written notice delivered to
the Company containing substantially the information called for by the Selling
Security Holder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated May 8, 2002 relating to the Notes.
"Notice Holder" means on any date, any Holder that has
delivered a Notice and Questionnaire to the Company on or prior to such date.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 415 promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.
"Purchase Agreement" has the meaning specified in the first
paragraph of this Agreement.
"Record Holder" means with respect to any Damages Payment Date
relating to any Note or shares of Underlying Common Stock as to which any
Liquidated Damages Amount has accrued, the registered Holder of such Note or
such shares of Underlying Common Stock, as the case may be, on the 15th day
immediately prior to the next succeeding Damages Payment Date.
"Registrable Securities" means the Notes and the Underlying
Common Stock until such securities have been converted or exchanged and, at all
times subsequent to any such conversion or exchange, any securities into or for
which such securities have been converted or exchanged, and any security issued
with respect thereto upon any stock dividend, split, merger or similar event
until, in the case of any such security, the earliest of (i) its effective
registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) expiration of the holding period that
would be applicable thereto under Rule 144(k) were it not held by an Affiliate
of the Company, or (iii) its sale to the public pursuant to Rule 144.
"Registration Expenses" has the meaning specified in Section 5
hereof.
A-3
"Registration Statement" means any registration statement of
the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all materials incorporated by reference or explicitly deemed
to be incorporated by reference in such registration statement.
"Restated Principal Amount" has the meaning assigned to such
term in the Indenture.
"Restricted Securities" has the meaning assigned to such term
in Rule 144.
"Rule 144" means Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Semi-Annual Coupon Notes" has the meaning assigned to such
term in the Indenture.
"Shelf Registration Statement" has the meaning specified in
Section 2(a) hereof.
"Subsequent Shelf Registration Statement" has the meaning
specified in Section 2(b) hereof.
"Tax Event" has the meaning assigned to such term in the
Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means JPMorgan Chase Bank (or any successor entity),
the Trustee under the Indenture.
"Underlying Common Stock" means the Common Stock into which
the Notes are convertible or issued upon any such conversion.
SECTION 2. Shelf Registration.
(a) The Company shall prepare and file or cause to be prepared
and filed with the SEC no later than a date which is one-hundred and twenty
(120) days after the Issue Date (the "Filing Deadline Date") a Registration
Statement for an offering to be made on a
A-4
delayed or continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders of
all of the Registrable Securities (the "Initial Shelf Registration Statement").
The Initial Shelf Registration Statement shall be on an appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in accordance with the methods of distribution reasonably elected by the
Holders and set forth in the Initial Shelf Registration Statement; provided,
that in no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company (such consent to be withheld or granted in the Company's sole and
absolute discretion). The Company shall use reasonable efforts to cause the
Initial Shelf Registration Statement to be declared effective under the
Securities Act no later than the date (the "Effectiveness Deadline Date") that
is one-hundred and eighty (180) days after the Issue Date, and to keep the
Initial Shelf Registration Statement (or any Subsequent Shelf Registration
Statement) continuously effective under the Securities Act until the expiration
of the Effectiveness Period. Each Holder that became a Notice Holder on or prior
to the date 10 Business Days prior to the time that the Initial Shelf
Registration Statement became effective shall be named as a selling security
holder in the Initial Shelf Registration Statement and the related Prospectus in
such a manner as to permit such Holder to deliver such Prospectus to purchasers
of Registrable Securities in accordance with applicable law (other than laws not
generally applicable to all such Holders). Notwithstanding the foregoing, no
Holder shall be entitled to have the Registrable Securities held by it covered
by such Shelf Registration Statement unless such Holder has provided a Notice
and Questionnaire in accordance with Section 2(d) and is in compliance with
Section 4. None of the Company's security holders (other than the Holders of
Registrable Securities) shall have the right to include any of the Company's
securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any
Subsequent Shelf Registration Statement ceases to be effective for any reason at
any time during the Effectiveness Period, the Company shall use reasonable
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration Statement in a manner
reasonably expected by the Company to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional Shelf Registration
Statement covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use
reasonable efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is reasonably practicable after such filing or,
if filed during a Deferral Period, after the expiration of such Deferral Period,
and to keep such Registration Statement (or subsequent Shelf Registration
Statement) continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement, if required by the Securities Act or, to the extent to
which the Company does not reasonably object, as reasonably requested by the
Initial Purchasers or by the Trustee on behalf of the registered Holders.
A-5
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with this
Section 2(d) and Sections 3(i) and 4 of the Agreement. Each Holder of
Registrable Securities wishing to sell Registrable Securities pursuant to a
Shelf Registration Statement and related Prospectus agrees to deliver a Notice
and Questionnaire to the Company at least five (5) Business Days prior to any
intended distribution of Registrable Securities under the Shelf Registration
Statement. From and after the date the Initial Shelf Registration Statement is
declared effective, the Company shall, as promptly as is reasonably practicable
after the date a Notice and Questionnaire is delivered, (i) if required by
applicable law, file with the SEC a post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other document required
by the SEC so that the Holder delivering such Notice and Questionnaire is named
as a selling security holder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
(other than laws not generally applicable to all Holders of Registrable
Securities wishing to sell Registrable Securities pursuant to the Shelf
Registration Statement and related Prospectus) and, if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use reasonable
efforts to cause such post-effective amendment to be declared effective under
the Securities Act as promptly as is reasonably practicable; (ii) provide such
Holder copies of any documents filed pursuant to Section 2(d)(i); and (iii)
notify such Holder as promptly as is reasonably practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 2(d)(i); provided, that if such Notice and Questionnaire is
delivered during a Deferral Period, the Company shall so inform the Holder
delivering such Notice and Questionnaire and shall take the actions set forth in
clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in
accordance with Section 3(i), provided, further, that if under applicable law
the Company has more than one option as to the type or manner of making any such
filing, it will make the required filing or filings in the manner or of a type
that is reasonably expected to result in the earliest availability of the
Prospectus for effecting resales of Registrable Securities. Notwithstanding
anything contained herein to the contrary, the Company shall be under no
obligation to name any Holder that is not a Notice Holder as a selling security
holder in any Registration Statement or related Prospectus; provided, however,
that any Holder that becomes a Notice Holder pursuant to the provisions of
Section 2(d) of this Agreement (whether or not such Holder was a Notice Holder
at the time the Registration Statement was initially declared effective) shall
be named as a selling security holder in the Registration Statement or related
Prospectus subject to and in accordance with the requirements of this Section
2(d).
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
Statement has not been filed on or prior to the Filing Deadline Date, (ii) the
Initial Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, or (iii) the
aggregate duration of Deferral Periods in any period exceeds the number of days
permitted in respect of such period pursuant to Section 3(i) hereof (each of the
events of a type described
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in any of the foregoing clauses (i) through (iii) are individually referred to
herein as an "Event," and the Filing Deadline Date in the case of clause (i),
the Effectiveness Deadline Date in the case of clause (ii), and the date on
which the aggregate duration of Deferral Periods in any period exceeds the
number of days permitted by Section 3(i) hereof in the case of clause (iii),
being referred to herein as an "Event Date"). Events shall be deemed to continue
until the "Event Termination Date," which shall be the following dates with
respect to the respective types of Events: the date the Initial Shelf
Registration Statement is filed in the case of an Event of the type described in
clause (i), the date the Initial Shelf Registration Statement is declared
effective under the Securities Act in the case of an Event of the type described
in clause (ii), termination of the Deferral Period that caused the limit on the
aggregate duration of Deferral Periods in a period set forth in Section 3(i) to
be exceeded in the case of the commencement of an Event of the type described in
clause (iii).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date after an Event Termination Date (a
"Damages Accrual Period"), the Company agrees to pay, as liquidated damages and
not as a penalty, an amount (the "Liquidated Damages Amount"), payable on the
Damages Payment Dates to Record Holders of then outstanding Notes that are
Registrable Securities or of then outstanding shares of Underlying Common Stock
issued upon conversion of Notes that are Registrable Securities, as the case may
be, accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidation Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-quarter of one percent (0.25%) for the first 90-day period from the
Event Date, and thereafter at a rate per annum equal to one-half of one percent
(0.5%) of the aggregate Applicable Principal Amount of such Notes or the
aggregate Applicable Conversion Price of the shares of Underlying Common Stock,
as the case may be, in each case determined as of the Business Day immediately
preceding the next Damages Payment Date; provided, that any Liquidated Damages
Amount accrued with respect to any Note or portion thereof called for redemption
on a redemption date or converted into Underlying Common Stock on a conversion
date or to Semi-Annual Coupon Notes prior to the Damages Payment Date, shall, in
any such event, be paid instead to the Holder who submitted such Note or portion
thereof for redemption or conversion on the applicable redemption date or
conversion date, as the case may be, on such date (or promptly following the
conversion date, in the case of conversion). Notwithstanding the foregoing, no
Liquidated Damages Amounts shall accrue as to any Registrable Security from and
after the earlier of (x) the date such security is no longer a Registrable
Security and (y) expiration of the Effectiveness Period. The rate of accrual of
the Liquidated Damages Amount with respect to any period shall not exceed the
rate provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events. Following the cure of all Events requiring the payment by the
Company of Liquidated Damages Amounts to the Holders of Registrable Securities
pursuant to this Section, the accrual of Liquidated Damages Amounts will cease
(without in any way limiting the effect of any subsequent Event requiring the
payment of the Liquidated Damages Amount by the Company).
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The Trustee, subject to the applicable provisions of the
Indenture, shall be entitled, for the benefit of Holders of Notes, Underlying
Common Stock or Semi-Annual Coupon Notes, to seek any available remedy for the
enforcement of this Agreement, including for the payment of any Liquidated
Damages Amount. Notwithstanding the foregoing, the parties agree that the sole
monetary damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such
liquidated damages. Nothing shall preclude a Notice Holder or Holder of
Registrable Securities from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
All of the Company's obligations set forth in this Section
2(e) that are outstanding with respect to any Registrable Security at the time
such security ceases to be a Registrable Security shall survive until such time
as all such obligations with respect to such security have been satisfied in
full (notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided
for in this Section 2(e) constitute a reasonable estimate of the damages that
may be incurred by Holders of Registrable Securities by reason of the failure of
the Shelf Registration Statement to be filed or declared effective or available
for effecting resales of Registrable Securities in accordance with the
provisions hereof.
SECTION 3. Registration Procedures. In connection with the
registration obligations of the Company under Section 2 hereof, the Company
shall:
(a) Before filing any Registration Statement or Prospectus or
any amendments or supplements (other than supplements that do nothing more
substantive than name one or more Notice Holders as selling security holders)
thereto with the SEC, furnish to the Initial Purchasers copies of all such
documents proposed to be filed and use reasonable efforts to reflect in each
such document when so filed with the SEC such comments as the Initial Purchasers
reasonably shall propose within three (3) Business Days of the delivery of such
copies to the Initial Purchasers.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and use reasonable efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.
(c) As promptly as reasonably practicable give notice to the
Notice Holders and the Initial Purchasers (i) when any Prospectus, Prospectus
supplement, Registration Statement or post-effective amendment to a Registration
Statement has been
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filed with the SEC and, with respect to a Registration Statement or any
post-effective amendment, when the same has been declared effective (provided,
however, that the Company shall not be required by this clause (i) to notify (A)
the Initial Purchasers of the filing of a Prospectus supplement that does
nothing more substantive than name one or more Notice Holders as selling
security holders or (B) any Notice Holder of the filing of a Prospectus
supplement that does nothing more substantive than name one or more other Notice
Holders as selling security holders), (ii) of any request, following the
effectiveness of the Initial Shelf Registration Statement under the Securities
Act, by the SEC or any other federal or state governmental authority for
amendments or supplements to any Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order or injunction
suspending or enjoining the use of any Prospectus or the effectiveness of any
Registration Statement or the initiation or threatening of any proceedings for
that purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (v) of the
occurrence of (but not the nature of or details concerning) a Material Event
(provided, however, that no notice by the Company shall be required pursuant to
this clause (v) in the event that the Company either promptly files a Prospectus
supplement to update the Prospectus or a Current Report on Form 8-K or other
appropriate Exchange Act report that is incorporated by reference into the
Registration Statement, which, in either case, contains the requisite
information with respect to such Material Event that results in such
Registration Statement no longer containing any untrue statement of material
fact or omitting to state a material fact necessary to make the statements
contained therein not misleading) and (vi) of the determination by the Company
that a post-effective amendment to a Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as required
pursuant to Section 3(i)), state that it constitutes a Deferral Notice, in which
event the provisions of Section 3(i) shall apply.
(d) Use reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or the lifting of
any suspension of qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case as soon as reasonably possible or, if any
such order or suspension is made effective during any Deferral Period, as soon
as reasonably possible after the expiration of such Deferral Period.
(e) If reasonably requested by the Initial Purchasers or any
Notice Holder, as promptly as reasonably practicable incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Initial Purchasers or such Notice Holder shall, on the basis
of a written opinion of nationally-recognized counsel experienced in such
matters, determine to be required to be included therein by applicable law and
make any required filings of such Prospectus supplement or such post-effective
amendment; provided, that the Company shall not be required to take any actions
under this Section 3(e) that are not, in the reasonable opinion of counsel for
the Company, in compliance with applicable law.
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(f) As promptly as reasonably practicable after the filing of
such documents with the SEC furnish to each Notice Holder and the Initial
Purchasers, upon their written request and without charge, at least one (1)
conformed copy of the Registration Statement and any amendment thereto,
including financial statements, but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing to the Company by such Notice Holder or the Initial
Purchasers, as the case may be).
(g) During the Effectiveness Period, deliver to each Notice
Holder in connection with any sale of Registrable Securities pursuant to a
Registration Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such Notice Holder may
reasonably request; and the Company hereby consents (except during such periods
that a Deferral Notice is outstanding and has not been revoked) to the use of
such Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Subject to Section 3(i), prior to any public offering of
the Registrable Securities pursuant to the Shelf Registration Statement, use
reasonable efforts to register or qualify or cooperate with the Notice Holders
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Notice Holder reasonably requests in writing (which request may be
included in the Notice and Questionnaire), it being agreed that no such
registration or qualification will be made unless so requested; prior to any
public offering of the Registrable Securities pursuant to the Shelf Registration
Statement, use reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
in connection with such Notice Holder's offer and sale of Registrable Securities
pursuant to such registration or qualification (or exemption therefrom) and do
any and all other acts or things necessary to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, that the
Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it is not otherwise qualified or
(ii) take any action that would subject it to general service of process in
suits or to taxation in any such jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of proceedings with respect to the Shelf Registration Statement under
Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or
the existence of any fact (a "Material Event") as a result of which any
Registration Statement shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or any Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (including, in
any such case, as a result of the non-availability of financial
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statements), or (C) the occurrence or existence of any pending development that,
in the discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration Statement and the related Prospectus, (i)
in the case of clause (B) above, subject to the next sentence, as promptly as
practicable prepare and file a post-effective amendment to such Registration
Statement or a supplement to the related Prospectus or any document incorporated
therein by reference or file any other required document that would be
incorporated by reference into such Registration Statement and Prospectus so
that such Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and such Prospectus
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective amendment
to a Registration Statement, subject to the next sentence, use reasonable
efforts to cause it to be declared effective as promptly as is reasonably
practicable, and (ii) give notice to the Notice Holders that the availability of
the Shelf Registration Statement is suspended (a "Deferral Notice") and, upon
receipt of any Deferral Notice, each Notice Holder agrees not to sell any
Registrable Securities pursuant to the Registration Statement until such Notice
Holder's receipt of copies of the supplemented or amended Prospectus provided
for in clause (i) above, or until it is advised in writing by the Company that
the Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use reasonable efforts to ensure that the
use of the Prospectus may be resumed (x) in the case of clause (A) above, as
promptly as is practicable, (y) in the case of clause (B) above, as soon as, in
the sole judgment of the Company, public disclosure of such Material Event would
not be prejudicial to or contrary to the interests of the Company or, if
necessary to avoid unreasonable burden or expense, as soon as reasonably
practicable thereafter and (z) in the case of clause (C) above, as soon as, in
the discretion of the Company, such suspension is no longer appropriate. So long
as the period during which the availability of the Registration Statement and
any Prospectus is suspended (the "Deferral Period") does not exceed forty-five
(45) days during any three (3) month period or one hundred and twenty (120) days
during any twelve (12) month period, the Company shall not incur any obligation
to pay liquidated damages pursuant to Section 2(e).
(j) If reasonably requested in writing in connection with a
disposition of Registrable Securities pursuant to a Registration Statement, make
reasonably available for inspection during normal business hours by a
representative for the Notice Holders of such Registrable Securities and any
broker-dealers, attorneys and accountants retained by such Notice Holders, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
executive officers, directors and designated employees of the Company and its
subsidiaries to make reasonably available for inspection during normal business
hours all relevant information reasonably requested by such representative for
the Notice Holders or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for similar "due
diligence" examinations; provided, however, that such persons shall first agree
in writing with the Company that any information that is reasonably designated
by the
A-11
Company in writing as confidential at the time of delivery of such information
shall be kept confidential by such persons and shall be used solely for the
purposes of exercising rights under this Agreement, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement; and
provided further, that the foregoing inspection and information gathering shall,
to the greatest extent possible, be coordinated on behalf of all the Notice
Holders and the other parties entitled thereto by the counsel referred to in
Section 5.
(k) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earning statements
(which need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold pursuant to a Registration Statement, and cause such Registrable Securities
to be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two Business
Days prior to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities
covered by each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee for the Notes and the transfer
agent for the Common Stock with certificates for the Registrable Securities that
are in a form eligible for deposit with The Depository Trust Company.
(n) Make reasonable effort to provide such information as is
required for any filings required to be made with the National Association of
Securities Dealers, Inc.
(o) Upon (i) the filing of the Initial Shelf Registration
Statement and (ii) the effectiveness of the Initial Shelf Registration
Statement, announce the same, in each case by release to Businesswire, Reuters
Economic Services, Bloomberg Business News or any other means of dissemination
reasonably expected to make such information known publicly.
(p) Take all actions necessary, or reasonably requested by the
Holders of a majority of the Registrable Securities being sold, in order to
expedite or facilitate disposition of such Registrable Securities; provided that
the Company shall not be required to take any
A-12
action in connection with an underwritten offering without its consent (such
consent to be withheld or granted in the Company's sole and absolute
discretion); and
(q) Cause the Indenture to be qualified under the TIA not
later than the effective date of any Registration Statement; and in connection
therewith, cooperate with the Trustee to effect such changes to the Indenture as
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA and execute, and use reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner.
SECTION 4. Holder's Obligations. Each Holder agrees, by
acquisition of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell any of such Registrable Securities pursuant
to a Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with a Notice and Questionnaire as
required pursuant to Section 2(d) hereof (including the information required to
be included in such Notice and Questionnaire) and the information set forth in
the next sentence. Each Notice Holder agrees promptly to furnish to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading, any
other information regarding such Notice Holder and the distribution of such
Registrable Securities as may be required to be disclosed in the Registration
Statement under applicable law or pursuant to SEC comments and any information
otherwise required by the Company to comply with applicable law or regulations.
Each Holder further agrees, following termination of the Effectiveness Period,
to notify the Company within 10 Business Days of a request, of the amount of
Registrable Securities sold pursuant to the Registration Statement and, in the
absence of a response, the Company may assume that all of the Holder's
Registrable Securities were so sold.
SECTION 5. Registration Expenses. The Company shall bear all
fees and expenses incurred in connection with the performance by the Company of
its obligations under Sections 2 and 3 of this Agreement whether or not any of
the Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws to the extent such
filings or compliance are required pursuant to this Agreement (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, and
(v) reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock. In addition, the Company
shall bear or reimburse the Notice Holders for the fees and disbursements of one
firm of legal counsel
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for the Holders, which shall, upon the written consent of the Initial Purchasers
(which shall not be unreasonably withheld), be another nationally recognized law
firm experienced in securities law matters designated by the Company. In
addition, the Company shall pay the internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange on which the same securities of the
Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.
SECTION 6. Indemnification; Contribution.
------------------------------
(a) The Company agrees to indemnify and hold harmless the
Initial Purchasers and each Holder of Registrable Securities and each person, if
any, who controls any Initial Purchaser or any Holder of Registrable Securities
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of 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;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided
that (subject to Section 6(d) below) any such settlement is effected
with the prior written consent of the Company; and
(iii) subject to Section 6(c) below, against any and all
expense whatsoever, as incurred (including the fees and disbursements
of counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged
A-14
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Initial
Purchasers, such Holder of Registrable Securities (which also acknowledges the
indemnity provisions herein) or any person, if any, who controls any Initial
Purchaser or any such Holder of Registrable Securities expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); provided, further,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense (1) arising from an offer or sale of Registrable Securities
occurring during a Deferral Period, if a Deferral Notice was given to such
Notice Holder in accordance with Section 8(b), or (2) if the Holder fails to
deliver at or prior to the written confirmation of sale, the most recent
Prospectus, as amended or supplemented, and such Prospectus, as amended or
supplemented, would have corrected such untrue statement or omission or alleged
untrue statement or omission of a material fact and the delivery thereof was
required by law.
(b) In connection with any Shelf Registration in which a
Holder, including, without limitation, the Initial Purchasers, of Registrable
Securities is participating, in furnishing information relating to such Holder
of Registrable Securities to the Company in writing expressly for use in such
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto, the Holders of such Registrable Securities
agree, severally and not jointly, to indemnify and hold harmless the Initial
Purchasers and each person, if any, who controls any Initial Purchaser within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and the Company, and each person, if any, who controls the Company
within the meaning of either such Section, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder of Registrable Securities (which also acknowledges the indemnity
provisions herein) or any person, if any, who controls any such Holder of
Registrable Securities expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
The Initial Purchasers agree to indemnify and hold harmless
the Company, the Holders of Registrable Securities, and each person, if any, who
controls the Company or any Holder of Registrable Securities within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company or on behalf of by the Initial Purchasers expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
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(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of these indemnity provisions. The
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain a
separate firm as its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. In no event shall
an indemnifying party be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action, or separate but
similar or related actions, in the same jurisdiction arising out of the same
general allegations or circumstances. In the event a separate firm is retained
for the Initial Purchasers, Holders of Registrable Securities, and control
persons of any Initial Purchaser and Holders of Registrable Securities, such
firm shall be designated in writing by the Initial Purchasers. In the event a
separate firm is retained for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 45
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement; provided, that an indemnifying
party shall not be liable for any such settlement effected without its consent
if such indemnifying party (1) reimburses such indemnified party in accordance
with such request to the extent it considers such request to be reasonable and
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(2) provides written notice to the indemnified party describing any unpaid
balance it believes is unreasonable and the reasons therefor, in each case prior
to the date of such settlement.
(e) If the indemnification to which an indemnified party is
entitled under this Section 6 is for any reason unavailable to or insufficient
although applicable in accordance with its terms to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative fault of the Company on the one hand and the
Holders of the Registrable Securities or the Initial Purchasers on the other
hand shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Holder of the Registrable Securities or the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(e) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 6(e). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(e) shall be
deemed to include any out-of-pocket legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6, neither the
Holder of any Registrable Securities nor the Initial Purchasers, shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such Holder of
Registrable Securities or by the Initial Purchasers, as the case may be, and
distributed to the public were offered to the public exceeds the amount of any
damages that such Holder of Registrable Securities or the Initial Purchasers
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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For purposes of this Section 6(e), each person, if any, who
controls any Initial Purchaser or any Holder of Registrable Securities within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Initial Purchasers or such
Holder, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.
SECTION 7. Information Requirements.
-------------------------
The Company covenants that, if at any time before the end of
the Effectiveness Period the Company is not subject to the reporting
requirements of the Exchange Act, it will cooperate with any Holder of
Registrable Securities and take such further reasonable action as any Holder of
Registrable Securities may reasonably request in writing (including, without
limitation, making such reasonable representations as any such Holder may
reasonably request), all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitations of Rule 144 and Rule 144A under the Securities Act
and customarily taken in connection with sales pursuant to such exemptions. Upon
the written request of any Holder of Registrable Securities, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such filing requirements, unless such a statement has been included in the
Company's most recent report required to be filed and filed pursuant to Section
13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities under any section of the Exchange Act.
SECTION 8. Miscellaneous
-------------
(a) No Conflicting Agreements. The Company is not, as of the
date hereof, a party to, nor shall it, on or after the date of this Agreement,
enter into, any agreement with respect to the Company's securities that
conflicts with the rights granted to the Holders of Registrable Securities in
this Agreement. The Company represents and warrants that the rights granted to
the Holders of Registrable Securities hereunder do not in any way conflict with
the rights granted to the holders of the Company's securities under any other
agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes or Semiannual Coupon Notes deemed
to be the Holders, for purposes of this Section, of the number of outstanding
shares of Underlying Common Stock into which such Notes or Semiannual Coupon
Notes are or would be convertible or exchangeable as of the date on which such
consent is requested). Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities may
be given by Holders of at least a majority of the Registrable Securities being
sold by such Holders pursuant to such Registration Statement;
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provided, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence. Each Holder of Registrable Securities outstanding at the
time of any such amendment, modification, supplement, waiver or consent or
thereafter shall be bound by any such amendment, modification, supplement,
waiver or consent effected pursuant to this Section 8(b), whether or not any
notice, writing or marking indicating such amendment, modification, supplement,
waiver or consent appears on the Registrable Securities or is delivered to such
Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, by telecopier,
by courier guaranteeing overnight delivery or by first-class mail, return
receipt requested, and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business
Day after being deposited with such courier, if made by overnight courier or
(iv) on the date indicated on the notice of receipt, if made by first-class
mail, to the parties as follows:
if to a Holder of Registrable Securities that is not a Notice
Holder, at the address for such Holder then appearing in the Registrar (as
defined in the Indenture);
if to a Notice Holder, at the most current address given by
such Holder to the Company in a Notice and Questionnaire or any amendment
thereto;
if to the Company, to:
Horace Mann Educators Corp.
One Horace Mann Plaza
Springfield, Illinois 62715
Telephone No. (217) 788-5757
Facsimile No. (217) 788-5776
Attention: General Counsel
and
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Telephone No. (212) 351-4000
Facsimile No. (212) 351-4035
Attention: Conor D. Reilly, Esq.
and
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if to the Initial Purchasers, to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Attention: Jeff Consolino
Telecopier: 212-449-6739
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its Affiliates (other
than the Initial Purchasers or subsequent Holders of Registrable Securities if
such subsequent Holders are deemed to be such affiliates solely by reason of
their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
and, without requiring any express assignment, shall inure to the benefit of and
be binding upon each Holder of any Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, and the parties hereto
shall use reasonable efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
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(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. Except as provided in the Purchase Agreement, there are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and undertakings among the parties with respect to such
registration rights.
(k) Termination. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
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IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
Very truly yours,
HORACE MANN EDUCATORS CORPORATION
By
-------------------------------
Name:
Title:
Accepted as of the date
first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Name:
Title:
For themselves and as representatives of the Initial Purchasers named in
Schedule I to the Purchase Agreement
EXHIBIT B-1
OPINION OF GIBSON, DUNN & CRUTCHER, LLP
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Final Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement and
the Indenture;
(ii) The issuance and sale of the Securities is not subject to
preemptive rights arising by operation of law or any agreement known to us to
which the Company is a party;
(iii) The issuance of the Common Stock upon conversion of the
Notes is not subject to preemptive rights arising by operation of law or any
agreement known to us to which the Company is a party;
(iv) The stockholders of the Company have no preemptive rights
provided by statute or the Restated Certificate of Incorporation of the Company
with respect to the Securities or any agreement known to us to which the Company
is a party;
(v) The Indenture and the Registration Rights Agreement have
been duly authorized, executed and delivered by the Company and (assuming the
due authorization, execution and delivery thereof by the Trustee in the manner
set for in the Indenture) each constitutes the valid and binding agreement of
the Company, enforceable against the Company in accordance with its respective
terms, except (A) to the extent that the enforceability thereof may be limited
by (1) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (B) we do not express any
opinion with respect to the enforceability or effect of Sections ___ and ___ of
the Indenture;
(vi) The Notes (in the form of a single global certificate
theretofore examined by us) are in the form contemplated by the Indenture and
have been duly authorized, executed and delivered by the Company, and when
authenticated by the Trustee in the manner provided for in the Indenture and
delivered against payment therefor by the Company, will constitute the valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, and will be entitled to the benefits of the
Indenture, except (A) to the extent that the enforceability thereof may be
limited by (1) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (2) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (B) we do not express any
opinion with respect to the enforceability or effect of Sections ___ and ___ of
the Indenture;
(vii) No registration under the Act of the Securities is
required in connection with the sale of the Securities to the Initial Purchasers
as contemplated by the Purchase Agreement and the Final Offering Memorandum or
in connection with the initial resale of the Securities by the
B-1
Initial Purchasers in accordance with the Purchase Agreement, and prior to the
effectiveness of the Registration Statement, the Indenture is not required to be
qualified under the Trust Indenture Act, in each case assuming (i) that the
purchasers who buy such Securities in the initial resale thereof are Qualified
Institutional Buyers; (ii) the accuracy of the Initial Purchasers'
representations in the Purchase Agreement and those of the Company contained in
the Purchase Agreement regarding the absence of a general solicitation in
connection with the sale of such Securities to the Initial Purchasers and the
initial resale thereof and (iii) the due performance by the Initial Purchasers
of the agreements set forth in the Purchase Agreement, it being understood that
we express no opinion as to any subsequent resale of the Securities.
(viii) Upon issuance and delivery of the Securities in
accordance with the Purchase Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof for common stock of the Company
in accordance with the terms of the Securities and the Indenture; the common
stock of the Company issuable upon conversion of the Securities will have been
duly authorized and reserved for issuance upon such conversion by all necessary
corporate action; and such shares, when issued upon such conversion, will be
validly issued and will be fully paid and non-assessable.
(ix) The information in the Final Offering Memorandum under
"Description of the Notes," "Material United States Federal Income Tax
Consequences", "Description of Our Other Indebtedness" and "Description of Our
Capital Stock," to the extent that such information constitutes summaries of
legal matters, is correct in all material respects.
(x) The Securities, the Indenture and the Registration Rights
Agreement conform as to legal matters in all material respects to the
descriptions thereof contained in the Final Offering Memorandum;
(xi) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or, to our knowledge, any court is
required for the consummation of the transactions contemplated by the Purchase
Agreement and the Indenture, in connection with the offering, issuance or sale
of the Securities to the Initial Purchasers as contemplated by the Purchase
Agreement and the Indenture, respectively, except such as are required by the
New York Stock Exchange and such as may be required under state securities laws;
(xii) The execution, delivery and performance by the Company
of the Purchase Agreement, the Registration Rights Agreement and the Indenture,
and consummation by the Company of the transactions provided for in the Purchase
Agreement, the Registration Rights Agreement and the Indenture, including, but
not limited to, the issuance and sale of the Securities to be sold by the
Company under the Purchase Agreement and the application of the net proceeds
thereof as described in the Offering Memorandum, will not conflict with, result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary of the
Company pursuant to, any federal or New York State statute or the Delaware
General Corporation Law or any rule, regulation or order known to us of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties (other than Section 10 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
applicable rules and regulations promulgated thereunder, and similar
B-2
provisions under state securities laws as to which we express no opinion in this
clause (ix)), or any material agreement or instrument known to us to which the
Company or any such subsidiary is a party or by which the Company is subject, or
the charter or by-laws of the Company, and the Company has full power and
authority to authorize, issue and sell the Securities as contemplated by the
Purchase Agreement and the Indenture, respectively;
(xiii) The Purchase Agreement has been duly authorized,
executed and delivered by the Company; and
(xiv) The Company is not, and, as a result of the offering and
sale of the Securities as contemplated in the Purchase Agreement, will not
become, an "investment company" as defined in the Investment Company Act of
1940.
In addition, we advise you that, based on the procedures
referred to below in this paragraph and relying thereon, no facts have come to
our attention that have caused us to believe that the Final Offering Memorandum
on the date thereof or hereof included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, it being understood that we express no view as to the financial
statements and the notes thereto, the financial schedules and any other
financial data included or incorporated by reference therein (including any
financial projections). In making the statements set forth in this paragraph,
although during the course of the preparation of the Final Offering Memorandum
we participated in conferences with representatives of the Company, their
auditors, the Initial Purchasers and their counsel, at which conferences the
contents of the Final Offering Memorandum and related matters were discussed, we
did not undertake to determine independently, and therefore are not passing upon
and do not assume any responsibility, explicitly or implicitly, for, the
accuracy, completeness or fairness of the statements contained in the Final
Offering Memorandum and give no assurance that the procedures described in this
paragraph would necessarily reveal matters of significance with respect to the
matters covered by this paragraph.
B-3
EXHIBIT B-2
OPINION OF ANN CAPARROS, ESQ.
(a) Each of the Company and its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the laws of
its jurisdiction of organization, with corporate power and authority to own its
properties and conduct its business as described in the Preliminary Offering
Memorandum and the Final Offering Memorandum, and is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which it owns or leases real properties or in which the conduct of its business
requires such qualification except where such failures to be so qualified or be
in good standing would not have, individually or in the aggregate, a material
adverse effect on the business, properties, financial condition or prospects of
the Company and its subsidiaries taken as a whole;
(b) All of the issued capital stock of the subsidiaries of the
Company is owned by the Company, directly or indirectly, in each case free and
clear of any lien, encumbrance or security interest, and all shares of such
capital stock are validly issued, fully paid and nonassessable;
(c) There are no contracts, agreements or understandings known
to me between the Company and any person granting such person the right to
acquire any Securities or which require the Company to include any Securities in
the securities registered pursuant to the Registration Statement;
(d) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or, to my knowledge, any court is required
to be obtained or made by the Company for the issuance or sale of the Securities
by the Company, except such as have been obtained and made under the Securities
Act of 1933 or such as may be required under state securities laws and the
qualification of the Indenture under the Trust Indenture Act;
(e) The execution, delivery acid performance by the Company of
the terms of the Purchase Agreement, the Registration Rights Agreement and the
Indenture, the issuance and sale of the Securities to be sold by the Company
under the Purchase Agreement, and the application of the proceeds thereof as
described in the Preliminary Offering Memorandum and the Final Offering
Memorandum will not conflict with, result in a breach or violation of any of the
terms and provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary of the Company pursuant to, any statute
or any, rule, regulation or order known to me of any governmental agency or body
or duty court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their properties, or any material agreement or instrument
known to me to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Securities as contemplated by the Purchase
Agreement and the Indenture;
(f) The statements made in the Company's Annual Report on form
10-K for the year ended December 31, 2001 under the caption
"Business-Regulation," insofar as such statements
B-4
relate to the laws or regulations under Illinois law or provisions of documents
therein described, are accurate summaries of such laws, regulations or
provisions in all material respects.
(g) The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company was issued in violation of preemptive or similar rights arising under
Delaware law, the articles of incorporation or by-laws of the Company or, to
such counsel's knowledge, any agreement to which the Company is or was a party.
(h) Each of the Company's subsidiaries that are insurance
companies is duly organized and licensed as an insurance company in its
respective jurisdiction of incorporation and, to such counsel's knowledge, each
such subsidiary is duly licensed or authorized as an insurance company in each
other jurisdiction in which such licensing or authorization is required, except
where the failure to be so licensed or authorized in any such jurisdiction would
not have a Material Adverse Effect. The Company is not required to be licensed
as an insurance company in any jurisdiction, including its jurisdiction of
organization.
(i) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of its articles of incorporation or bylaws,
and no default by the Company or any of its subsidiaries exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument that is described or referred to in the Preliminary
Offering Memorandum and the Final Offering Memorandum or in documents
incorporated by reference therein, except where such default would not have a
Material Adverse Effect.
(j) To such counsel's knowledge, except as otherwise disclosed
in the Preliminary Offering Memorandum and the Final Offering Memorandum, (a)
the Company and its subsidiaries possess such permits, licenses, approvals,
consents and other authorizations issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies (including, without limitation,
the insurance licenses) that are material to the Company and its subsidiaries
taken as a whole and are necessary to conduct the business now operated by them;
(b) the Company and its principal subsidiaries are in compliance with the terms
and conditions of all of the insurance licenses, except where the failure so to
comply would not, singly or in the aggregate, result in a Material Adverse
Effect; and (c) all of the insurance licenses of the Company's subsidiaries are
valid and in full force and effect, except where the invalidity of such
insurance licenses or the failure of such insurance licenses to be in full force
and effect would not result in a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation, suspension or modification of any such insurance
licenses which, singly or in the aggregate, may reasonably be expected to result
in a Material Adverse Effect.
(k) To such counsel's knowledge, (A) there are no pending
actions, suits or proceedings against the Company or any of its subsidiaries
that, if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate, have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to perform its
obligations under the Indenture, the Registration Rights Agreement or the
Purchase Agreement; and (B) no such actions, suits or proceedings have been
threatened against the Company or any of its subsidiaries.
B-5
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
May [ ], 2002
MERRILL LYNCH & CO.
MERRILL, LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Re: Proposed Offering by Horace Mann Educators
Corporation of Senior Convertible Notes due 2032
Ladies and Gentlemen:
The undersigned, a stockholder and an executive officer and/or
director of Horace Mann Educators Corporation, a Delaware corporation (the
"Offeror"), understands that MERRILL, MERRILL, LYNCH, PIERCE, FENNER & SMITH
INCORPORATED ("Merrill") Banc of America Securities LLC and Credit Suisse First
Boston Corporation (the "Initial Purchasers") propose to enter into a Purchase
Agreement (the "Purchase Agreement") with the Offeror providing for the
offering, pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), of the Offeror's Senior Convertible Notes due 2032 (the
"Initial Securities") and the grant by the Offeror to the Initial Purchasers of
the option to purchase additional Senior Convertible Notes due 2032 to cover
over-allotments, if any (the "Option Securities"). The Initial Securities,
together with the Option Securities, are collectively referred to as the
"Securities". In recognition of the benefit that such an offering will confer
upon the undersigned as a stockholder and an executive officer and/or director
of the Offeror, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the undersigned agrees with the
Initial Purchasers that, during the period commencing on the date hereof and
ending 90 days from the date of the Final Offering Memorandum the undersigned
will not, without the prior written consent of Merrill, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or lend or otherwise dispose of or transfer any shares
of the Offeror's common stock, par value $0.001 per share (the "Common Stock"),
or any securities convertible into or exchangeable or exercisable for or
repayable with Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or cause to be filed any registration statement under
the Securities Act, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
C-1
Common Stock or any securities convertible into or exchangeable or exercisable
for or repayable with Common Stock, whether any such swap or transaction is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise.
The foregoing sentence shall not apply to (i) offers, sales,
gifts, assignments or transfers of shares of Common Stock or options to purchase
shares of Common Stock made to (A) members of the immediate family of the
undersigned, (B) corporations, partnerships, limited liability companies or
other entities to the extent such entities are wholly-owned by the undersigned
and/or members of the immediate family of the undersigned, (C) charitable
organizations, or (D) pledges of shares of Common Stock to a bank or other
financial institution, solely to the extent that in the case of clauses (A),
(B), (C) and (D) each recipient agrees to be bound by the restrictions set forth
herein, (ii) transfers of shares of Common Stock or options to purchase shares
of Common Stock made to any trust for the direct or indirect benefit of the
undersigned or any party listed in (i) above, provided that the trustee of the
trust agrees to be bound by the restrictions set forth herein, or (iii) the
exercise of options and transfers of shares of Common Stock to the Offeror used
to pay taxes applicable to the exercise of options and reloading those options
in accordance with the Offeror's stock option arrangements.
It is understood that, if the Offeror notifies you that it
does not intend to proceed with the proposed offering, if the Purchase Agreement
does not become effective by May 31, 2002, or if the Purchase Agreement (other
than the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Securities, the undersigned
will be, immediately and without any further action, released from the
obligations under this letter agreement.
Very truly yours,
Signature:
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Print Name:
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