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Exhibit 1.1
American States Financial Corporation
8,000,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: May __, 1996
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TABLE OF CONTENTS
DRAFT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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SECTION 1. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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(a) Representations and Warranties by the Company and Lincoln. . . . . . . . . . . . . . . . . . . . 4
(i) Compliance with Registration Requirements . . . . . . . . . . . . . . . . . . . . . . 4
(ii) Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(iii) Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(iv) Statutory Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(v) No Material Adverse Change in Business . . . . . . . . . . . . . . . . . . . . . . . 6
(vi) Valid Existence of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(vii) Good Standing of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(viii) Valid Existence of Lincoln . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(ix) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(x) Authorization of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xi) Authorization and Description of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xii) Absence of Defaults and Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(xiii) Absence of Labor Dispute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(xiv) Absence of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(xv) Accuracy of Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xvi) Possession of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . 10
(xvii) Absence of Further Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xviii) Possession of Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . . 10
(xix) Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xx) Compliance with Cuba Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxi) Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxii) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(xxiii) Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Officer's Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. Sale and Delivery to Underwriters; Closing. . . . . . . . . . . . . . . . . . . . . . . . . .. 13
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(a) Initial Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) U.S. Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Denominations; Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. Covenants of the Company and Lincoln . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
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(a) Compliance with Securities Regulations and Commission Requests. . . . . . . . . . . . . . . 14
(b) Filing of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Delivery of Registration Statements. . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Delivery of Prospectuses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Continued Compliance with Securities Laws. . . . . . . . . . . . . . . . . . . . . 16
(f) Blue Sky Qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Rule 158. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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(h) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i) Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Restriction on Sale of Securities. . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(l) Rule 463. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(m) Compliance with NASD Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5. Conditions of U.S. Underwriters' Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . 19
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(a) Effectiveness of Registration Statement. . . . . . . . . . . . . . . . . . . . . . 19
(b) Opinions of Counsel for Company. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Opinion of Counsel for U.S. Underwriters. . . . . . . . . . . . . . . . . . . . . . 20
(d) Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Accountant's Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Bring-down Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Approval of Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) No Objection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Completion of Recapitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(k) Purchase of Initial International Securities. . . . . . . . . . . . . . . . . . . . 21
(l) Additional Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(m) Conditions to Purchase of U.S. Option Securities. . . . . . . . . . . . . . . . . . 22
(n) Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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(a) Indemnification of Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Indemnification of Company, Directors and Officers. . . . . . . . . . . . . . . . . 24
(c) Actions against Parties; Notification. . . . . . . . . . . . . . . . . . . . . . . 24
(d) Settlement without Consent if Failure to Reimburse. . . . . . . . . . . . . . . . . 25
SECTION 7. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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SECTION 8. Representations, Warranties and Agreements
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to Survive Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SECTION 9. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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(a) Termination; General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10. Default by One or More of the U.S.
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Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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SECTION 11. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 12. Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 13. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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SECTION 14. Effect of Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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American States Financial Corporation
8,000,000 Shares of Common Stock
(No Par Value)
PURCHASE AGREEMENT
May __, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Each of American States Financial Corporation, an Indiana
corporation (the "Company"), and Lincoln National Corporation, an Indiana
corporation ("Lincoln"), confirms its agreement with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Goldman,
Sachs & Co. ("Goldman Sachs"), and each of the other underwriters named in
Schedule A hereto (collectively, the "U.S. Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch and Goldman Sachs are acting as representatives
(in such capacity, the "U.S. Representatives"), with respect to the issue and
sale by the Company and the purchase by the U.S. Underwriters, acting severally
and not jointly, of the respective numbers of shares of Common Stock, no par
value, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the U.S. Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of 1,200,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 8,000,000 shares of Common Stock (the
"Initial U.S. Securities") to be purchased by the U.S. Underwriters and all or
any part of the 1,200,000 shares of Common Stock subject to the option
described in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter
called, collectively, the "U.S. Securities."
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It is understood that the Company is concurrently
entering into an agreement dated the date hereof (the "International
Purchase Agreement") providing for the offering by the Company of an
aggregate of 2,000,000 shares of Common Stock (the "Initial
International Securities") through arrangements with certain managers
outside the United States and Canada (the "International Managers")
for which Merrill Lynch International Limited and Goldman Sachs
International are acting as lead managers (the "Lead Managers"), and
the grant by the Company to the International Managers, acting
severally and not jointly, of an option to purchase all or any part of
the International Mangers' pro rata portion of up to 300,000
additional shares of Common Stock solely to cover over-allotments, if
any (the "International Option Securities" and, together with the U.S.
Option Securities, the "Option Securities"). The Initial
International Securities and International Option Securities are
collectively called the "International Securities." It is understood
that the Company is not obligated to sell and the U.S. Underwriters
are not obligated to purchase, any Initial U.S. Securities unless all
of the Initial International Securities are contemporaneously
purchased by the International Managers.
The U.S. Underwriters and the International Managers are
hereinafter collectively called the "Underwriters", the Initial U.S. Securities
and the Initial International Securities are hereinafter collectively called
the "Initial Securities," and the U.S. Securities and the International
Securities are hereinafter called the "Securities."
The Underwriters will concurrently enter into an
Intersyndicate Agreement of even date herewith (the "Intersyndicate Agreement")
providing for the coordination of certain transactions among the Underwriters
under the direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated (in such capacity, the "Global Coordinator").
Each of the Company and Lincoln understands that the U.S.
Underwriters propose to make a public offering of the Securities as soon as the
U.S. Representatives deem advisable after this Agreement has been executed and
delivered.
The Company, Lincoln and the U.S. Underwriters agree that up
to 500,000 shares of the U.S. Securities to be purchased by the U.S.
Underwriters (the "Reserved Securities") shall be reserved for sale by the U.S.
Underwriters to certain eligible employees and persons having business
relationships with the Company at the public offering price, as part of the
distribution of the U.S. Securities by the U.S. Underwriters, subject to the
terms of this Agreement, the applicable rules, regulations and interpretations
of the National Association of Securities Dealers, Inc. (the "NASD") and all
other applicable laws, rules and regulations. Any such reserved securities not
orally
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confirmed for purchase by such eligible employees and persons having business
relationships with the Company by the end of the first business day after
either (a) the later of the date on which the Original Registration Statement
and any Rule 462(b) Registration Statement has become effective or (b) if the
Company has elected to rely on Rule 430A, the date of this Agreement, will be
offered to the public by the U.S. Underwriters as set forth in the
Prospectuses.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-2434) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses. Promptly after execution and delivery of this
Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). Two forms of prospectus are
to be used in connection with the offering and sale of the Securities: one
relating to the U.S. Securities (the "Form of U.S. Prospectus" and one relating
to the International Securities (the "Form of International Prospectus"). The
Form of International Prospectus is identical to the Form of U.S. Prospectus
except for the front and back cover pages and the information under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each Form of U.S. Prospectus and Form of International Prospectus used before
such registration statement became effective, and any prospectus that omitted,
as applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits and any schedules, at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulation is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of U.S. Prospectus and
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Form of International Prospectus in the forms first furnished to the
Underwriters for use in connection with the offering of the Securities are
herein called the "U.S. Prospectus" and the "International Prospectus,"
respectively, and collectively, the "Prospectuses." If Rule 434 is relied on,
the terms "U.S. Prospectus" and "International Prospectus" shall refer to the
preliminary U.S. Prospectus dated ________, l996 and the preliminary
International Prospectus dated ________, l996, respectively, each together with
the applicable Term Sheet and all references in this Agreement to the date of
such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospects, the U.S. Prospectus, the International Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and Lincoln. Each
of the Company and Lincoln, jointly and severally, represents and warrants to
each U.S. Underwriter as of the date hereof, as of the Closing Time referred to
in Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agrees with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will 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
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statements therein not misleading. Neither of the Prospectuses nor
any amendments or supplements thereto, at the time of filing thereof
with the Commission, included or will include an untrue statement of a
material fact or omitted or will 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. If Rule 434
is used, the Company will comply with the requirements of Rule 434.
The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter through
Merrill Lynch expressly for use in the Registration Statement or the
Prospectuses.
Each preliminary prospectus and the Prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and, if applicable, each preliminary prospectus and the
Prospectuses delivered to the Underwriters for use in connection with
this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements
included in the Registration Statement and the Prospectuses, together
with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statements of income, shareholder's equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information included in the Prospectuses present fairly the
information as shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement.
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The pro forma financial statements and the related notes thereto
included in the Registration Statement and the Prospectuses present
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
(iv) Statutory Financial Statements. The statutory
financial statements of American States Insurance Company (a
wholly-owned subsidiary of the Company) ("ASI") and its subsidiaries,
from which certain ratios and other statistical data contained in the
Registration Statement have been derived, have for each relevant
period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners and the Indiana Department of Insurance or other
applicable regulatory authority, and such accounting practices have
been applied on a consistent basis throughout the periods involved,
except as disclosed therein.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, 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 (a "Material Adverse Effect"), whether or not arising
in the ordinary course of business, (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, other than as described in the Registration
Statement and the Prospectuses, and (C) except for the dividends
described in the Registration Statement and the Prospectuses, 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) Valid Existence of the Company. The Company has been
duly organized and is validly existing as a corporation under the laws
of the State of Indiana and has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as
a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is
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required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing (if the relevant jurisdiction has a
concept of "good standing") under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; all of the issued and outstanding
capital stock of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of the
Subsidiaries was issued in violation of the preemptive or similar
rights arising by operation of law, or under the charter or by-laws of
any subsidiary or under any agreement to which the Company or any
subsidiary is a party. The only subsidiaries of the Company are the
subsidiaries listed on Exhibit 21 to the Registration Statement.
(viii) Valid Existence of Lincoln. Lincoln has been duly
organized and is validly existing as a corporation under the laws of
the State of Indiana and has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement.
(ix) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in
the column entitled "Pro Forma" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of convertible securities or options referred
to in the Prospectuses). The shares of issued and outstanding capital
stock have been duly authorized and validly issued and are fully paid
and non-
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assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights arising by operation of law, under the charter or by-laws of
the Company, under any agreement to which the Company or any of its
subsidiaries is a party or otherwise.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by each of the Company and Lincoln.
(xi) Authorization and Description of Securities. The
Securities to be purchased by the U.S. Underwriters and the
International Managers have been duly authorized for issuance and sale
to the U.S. Underwriters pursuant to this Agreement and the
International Managers pursuant to the International Purchase
Agreements, respectively, and, when issued and delivered by the
Company pursuant to this Agreement and the International Purchase
Agreement, respectively, against payment of the consideration set
forth herein and in the International Purchase Agreement,
respectively, will be validly issued and fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectuses and such description conforms to
the rights set forth in the instruments defining the same; no holder
of the Securities will be subject to personal liability be reason of
being such a holder; and the issuance of the Securities is not subject
to preemptive or other similar rights arising by operation of law,
under the charter and by-laws of the Company, under any agreement to
which the Company or any of its subsidiaries is a party.
(xii) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
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 any of them may be bound, or to which any
of the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the International
Purchase Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the Securities, the Recapitalization and the use
of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Company
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with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any subsidiary pursuant to, the Agreements and Instruments except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect, nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any Subsidiary or any applicable law,
statute, rule, regulation, judgement, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets or properties. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Company or any
subsidiary.
(xiii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, agents, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of this
Agreement or the International Purchase Agreement or the performance
by either the Company or Lincoln of its obligations hereunder or under
the International Purchase Agreement; the aggregate of all pending
legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business,
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could not reasonably be expected to result in a Material Adverse
Effect.
(xv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xvi) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company and
Lincoln of its obligations hereunder in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of
the transactions contemplated by this Agreement and the International
Purchase Agreement, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.
(xviii) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them, including (without limitation) insurance licenses from the
insurance departments in the various states where the Company's
subsidiaries write insurance ("Insurance Licenses"); the Company and
its subsidiaries are in
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compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or
in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xix) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and
all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise, and under
which the Company or any of its subsidiaries holds properties
described in the Prospectuses, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights as
such the Company or such subsidiary of the continued possession of the
leases or subleased premises under any such lease or sublease.
(xx) Compliance with Cuba Act. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with
Cuba, codified as Section 517.075 of the Florida statutes, and the
rules and regulations thereunder or is exempt therefrom.
(xxi) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
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(xxii) Environmental Laws. Except as described in the
Registration Statement and except such violations as would not, singly
or in the aggregate, result in a Material Adverse Effect, (A) neither
the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law and any judicial or
administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemical, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to any Hazardous Materials or the
violation of any Environmental Laws.
(xxiii) Registration Rights. Except as described in the
Registration Statement, there are no persons with registration or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any subsidiary and delivered to the Global Coordinator, the
U.S. Representatives or to counsel for the U.S. Underwriters, shall be deemed a
representation and warranty by the Company and Lincoln to each U.S. Underwriter
as to the matters covered thereby.
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SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such U.S. Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) U.S. Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the U.S.
Underwriters, severally and not jointly, to purchase up to an additional
1,200,000 shares of Common Stock at the price per share set forth in Schedule
B, less an amount per share equal to any dividends or distributions declared by
the Company and payable on the Initial U.S. Securities but not payable on the
U.S. Option Securities. The option hereby granted will expire 30 days after
the date hereof and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial U.S. Securities upon notice
by the U.S. Representatives to the Company setting forth the number of U.S.
Option Securities as to which the several U.S. Underwriters are then exercising
the option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by the U.S. Representatives, 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, as hereinafter defined. If the option is exercised as to all or
any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the U.S. Representatives in their discretion
shall make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Securities shall be made at the office of
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or at such
other place as shall be agreed upon by the U.S. Representatives and the
Company, at 10:00 A.M. (Eastern Time) on the third (fourth, if the pricing
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occurs after 4:30 P.M. (Eastern Time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall be
agreed upon by the U.S. Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option
Securities are purchased by the U.S. Underwriters, payment of the purchase
price for, and delivery of certificates for, such U.S. Option Securities shall
be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the U.S. Representatives and the Company, on each Date of
Delivery as specified in the notice from the U.S. Representatives to the
Company. Payment shall be made to the Company by certified or official bank
check or checks drawn in Chicago Clearing House funds or similar next day funds
payable to the order of the Company, against delivery to the U.S.
Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose check
has not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder .
(d) Denominations; Registration. Certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in the City
of New York not later than 10:00 A.M. (Eastern Time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company and Lincoln. The Company
covenants, and with respect to Section 3(j) Lincoln covenants, with each U.S.
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A and will notify the U.S.
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Representatives immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement, shall become effective,
or any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectuses or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule
424(b) was received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the U.S.
Representatives notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term Sheet
or any amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the
Prospectuses will furnish the U.S. Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the U.S.
Representatives or counsel for the U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each
of the U.S. Underwriters. If applicable, the copies of the Registration
Statement and each amendment thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
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(d) Delivery of Prospectuses. The Company has delivered to each
U.S. Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The Company
will furnish to each U.S. Underwriter, without charge, during the period when
the U.S. Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. If applicable, the U.S. Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the U.S. Underwriters or for the
Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectuses
comply with such requirements, and the Company will furnish to the U.S.
Underwriters such number of copies of such amendment or supplement as the U.S.
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use all reasonable
efforts, in cooperation with the U.S. Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the U.S. Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to
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qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and
to provide the benefits contemplated by, the last paragraph of Section 11(a) of
the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds."
(i) Listing. The Company will use all reasonable efforts to
effect the listing of the Common Stock on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 120
days from the date of the Prospectuses, neither the Company nor Lincoln will,
without the prior written consent of Merrill Lynch, (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 to purchase or
otherwise transfer or dispose of, directly or indirectly, any share of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 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 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 (B) any options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectuses.
(k) Reporting Requirements. The Company, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the l934
Act, will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time
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periods required by the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations").
(l) Rule 463. The Company will file with the Commission such reports
on Form SR as may be required pursuant to Rule 463 of the 1933 Act Regulations.
(m) Compliance with NASD Rules. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by the
NASD or the NASD rules from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of the effectiveness of the
Registration Statement. The Underwriters will notify the Company as to which
persons will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer restriction
upon such securities for such period of time. Should the Company release, or
seek to release, from such restrictions any Reserved Securities, the Company
agrees to reimburse the U.S. Underwriters for any reasonable expenses
including, without limitation, legal expenses they incur directly in connection
with such release.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the U.S. Underwriters of this Agreement, any Agreement among
U.S. Underwriters and such other documents as may be required in connection
with the offering, purchase, sale and delivery of the U.S. Securities, (iii)
the preparation, issuance and delivery of the certificates for the U.S.
Securities to the U.S. Underwriters, including any stock or other transfer
taxes or duties payable upon the sale of the Securities to the Underwriters and
the transfer of the U.S. Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the U.S. Underwriters in connection therewith and in connection
with the preparation of the Blue Sky Survey and any supplement thereto, (vi)
the printing and delivery to the Underwriters of copies of each preliminary
prospectus, any Term Sheets and of the U.S. Prospectus and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the U.S.
Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the U.S. Underwriters in connection with, the
review by the
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National Association of Securities Dealers, Inc. (the "NASD") of the terms of
the sale of the Securities, (x) the fees and expenses incurred in connection
with the listing of the Securities on the New York Stock Exchange and (xi) all
reasonable costs and expenses of the U.S. Underwriters, including the fees and
disbursements of counsel for the U.S. Underwriters, in connection with matters
related to the Reserved Securities which are designated by the Company for sale
to employees and others having a business relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of each of the Company and
Lincoln contained in Section 1 hereof or in certificates of any officer of the
Company or any Subsidiary delivered pursuant to the provisions hereof in all
material respects (except that if any such representations or warranties are
qualified by materiality, the obligations of the several U.S. Underwriters
hereunder are subject to the accuracy of all such representations and
warranties in all respects), to the performance by each of the Company and
Lincoln of their covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective on the date hereof and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been filed
with the commission in accordance with Rule 424(b).
(b) Opinions of Counsel for Company. At Closing Time the U.S.
Representatives shall have received the favorable opinions, dated as of Closing
Time, of each of Barnes & Thornburg, Indianapolis, Indiana, counsel to the
Company ("Barnes &
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Thornburg"), Sommer & Barnard, Indianapolis, Indiana, counsel to the Company
("Sommer & Barnard") and Thomas H. Ober, Esq., Vice President, Secretary and
General Counsel of the Company ("Ober"), in form and substance satisfactory to
counsel for the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters to the effect set forth in
Exhibits A-1, A-2 and A-3, respectively, hereto and to such further effect as
counsel to the U.S. Underwriters may reasonably request. In giving such
opinions each of such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of Indiana and the federal law
of the United States, upon opinions of counsel satisfactory to the U.S.
Representatives. 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 public officials and, in the case of each of Barnes &
Thornburg and Sommer & Barnard, upon certificates of officers of the Company,
its subsidiaries and Lincoln.
(c) Opinion of Counsel for U.S. Underwriters. At Closing Time the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Sidley & Austin, Chicago, Illinois, counsel for the U.S.
Underwriters ("Sidley & Austin"), together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters with respect to the
matters set forth in (i)(as to the Company only), (v), (vi) (solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (viii) to (x), inclusive, (xiv) (solely as
to the information in the Prospectuses under "Description of Capital
Stock--Common Stock") and the penultimate paragraph of Exhibit A-1 hereto. In
giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of Illinois and the
federal law of the United States upon the opinions of counsel satisfactory to
the U.S. Representatives. 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, its subsidiaries and
Lincoln and certificates of public officials.
(d) Officers' Certificate. At Closing Time there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, 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
U.S. Representatives shall have received a certificate of the Chairman,
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties
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in Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Company and
Lincoln has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened by
the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Ernst & Young
LLP ("Ernst & Young") a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time the U.S.
Representatives shall have received from Ernst & Young a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
(g) Approval of Listing. At the Closing Time the Securities shall
have been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) No Objection. The NASD shall not have raised any objection
with respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule C hereto.
(j) Completion of Recapitalization. The Recapitalization shall have
occurred in the manner described in the Registration Statement and the
Prospectuses.
(k) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the Initial
U.S. Securities under this Agreement, the International Managers shall have
purchased the Initial International Securities under the International Purchase
Agreement.
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(l) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the U.S. Underwriters 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 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 shall be
satisfactory in form and substance to the U.S. Representatives and counsel for
the U.S. Underwriters.
(m) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercised their option provided in Section
2(b) hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be true
and correct as of each Date of Delivery and, at the relevant Date of Delivery,
the U.S. Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Chairman, President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the Closing Time
pursuant to Section 5(d) hereof remains true and correct as of such
Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinions
of each of Barnes & Thornburg, Sommer & Barnard and Ober, each in form
and substance satisfactory to counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinions required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable
opinion of Sidley & Austin, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section
5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young,
in form and substance satisfactory to the U.S. Representatives and
dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the U.S. Representatives pursuant
to Section 5(f) hereof, except that the "specified date" on the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
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(n) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery as
the case may be, 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,
6 and 7 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. Each of the Company and
Lincoln, jointly and severally, agrees to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter 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 Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectuses (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, arising out of (A) the failure of
eligible employees and persons having business relationships with the
Company to pay for and accept delivery of Reserved Securities which
were subject to a properly confirmed agreement to purchase;
(iii) 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
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that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), 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), (ii) or (iii) 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 statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the 430A Information and the
Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, 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 Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectuses (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
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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 6(a) above, counsel to the indemnified parties
shall be selected by Merrill Lynch, and, in the case of parties indemnified
pursuant to Section 6(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 the
indemnifying parties be liable for 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, 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 or Section 7 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, capability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. 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 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 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.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient 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
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30
such proportion as is appropriate to reflect the relative benefits received by
the Company and Lincoln on the one hand and the U.S. Underwriters 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 and
Lincoln on the one hand and of the U.S. Underwriters on the other hand in
connection with the statements or omissions, or in connection with any failure
of the nature referred to in Section 6(a)(ii)(A) hereof, 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 and Lincoln on the one
hand and the U.S. Underwriters on the other hand in connection with the
offering of the U.S. 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 underwriting discount received
by the U.S. Underwriters, in each case as set forth on the cover of the U.S.
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet bear to the aggregate initial public offering price of the U.S.
Securities as set forth on such cover.
The relative fault of the Company and Lincoln on the one hand and the
U.S. Underwriters 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 U.S. Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or any failure of the nature
referred to in Section 6(a)(ii)(A)hereof.
The Company, Lincoln and the U.S. Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the U.S. Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any 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
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any such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission or any
failure of the nature referred to in Section 6(a)(ii)(A) hereof.
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 7, each person, if any, who controls a
U.S. Underwriter 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 U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within he 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. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. 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 any U.S. Underwriter or controlling
person, or by or on behalf of the Company or Lincoln, and shall survive
delivery of the Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate
this Agreement, by notice to the Company, at any time at or prior to 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 U.S.
Prospectus, 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
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(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, 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 U.S. Representatives,
impracticable 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 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 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 (iv) if a banking moratorium has been declared by
either Federal, New York or Indiana 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 further that
Sections 1, 6 and 7 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If
one or more of the U.S. Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the U.S. Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the U.S.
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting U.S. Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the U.S. Representatives shall not have completed such
arrangements within such 24- hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
U.S. Underwriters shall be obligated, severally and not jointly, to purchase
the full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of the
U.S. Underwriters
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to purchase and of the Company to sell the U.S. Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability
on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the U.S. Underwriters to purchase and the Company to sell the
relevant U.S. Option Securities, as the case may be, either the U.S.
Representatives or the Company shall have the right to postpone Closing Time or
the relevant Date of Delivery, as the case may be, for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectuses or in any other documents or arrangements. As used
herein, the term "U.S. Underwriter" includes any person substituted for a U.S.
Underwriter under this Section 10.
SECTION 11. 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 U.S. Underwriters shall be directed to the Representatives c/o Merrill
Lynch & Co., 5500 Sears Tower, Chicago, Illinois 60606, Attention: David C.
Sherwood, Director, and notices to the Company or Lincoln shall be directed to
the Company at 500 North Meridian Street, Indianapolis, Indiana 46204,
Attention: F. Cedric McCurley.
SECTION 12. Parties. This Agreement shall inure to the benefit
of and be binding upon the U.S. Underwriters, the Company, Lincoln 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 U.S. Underwriters, the Company and Lincoln and their respective
successors and the controlling persons and officers and directors referred to
in Sections 6 and 7 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 U.S.
Underwriters, the Company and Lincoln 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 U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
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SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. 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.
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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 Underwriters, the Company and Lincoln in accordance with
its terms.
Very truly yours,
AMERICAN STATES FINANCIAL
CORPORATION
By:
-----------------------
Name:
Title:
LINCOLN NATIONAL CORPORATION
By:
-----------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
By
-------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
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SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................
Goldman, Sachs & Co...........................
------------
Total......................................... 8,000,000
============
Sch A-1
37
SCHEDULE B
AMERICAN States Financial Corporation
8,000,000 Shares of Common Stock
(No Par Value)
1. The initial public offering price per share
for the U.S. Securities, determined as provided in said
Section 2, shall be $__________.
2. The purchase price per share for the U.S.
Securities to be paid by the several U.S. Underwriters shall
be $__________, being an amount equal to the initial public
offering price set forth above less $__________ per share;
provided that the purchase price per share for any U.S. Option
Securities purchased upon the exercise of the over-allotment
option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by
the Company and payable on the Initial U.S. Securities but not
payable on the U.S. Option Securities.
Sch B - 1
38
SCHEDULE C
[List of persons and entities
subject to lock-up]
Sch C - 1
39
EXHIBIT A-1
FORM OF OPINION OF BARNES & THORNBURG
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly organized and is validly existing as a
corporation under the laws of the State of Indiana. Lincoln has been duly
organized and is validly existing as a corporation under the laws of the State
of Indiana.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and each of the Company and Lincoln has corporate power
and authority to enter into and perform its obligations under the International
Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "Pro Forma" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the International Purchase Agreement or pursuant to reservations, agreements,
employee benefit plans or the exercise of convertible securities or options
referred to in the Prospectuses); the shares of issued and outstanding capital
stock 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 the preemptive or other similar rights of
any stockholder or warrant-holder of the Company arising by operation of law,
under the charter or by-laws of the Company, under any agreement to which the
Company or any of its subsidiaries is a party or, to the best of our knowledge
and information, otherwise.
(v) The Securities have been duly authorized for issuance and sale to the
International Managers pursuant to the International Purchase Agreement and,
when issued and delivered by the Company pursuant to the International Purchase
Agreement against payment of the consideration set forth in the International
Prospectus, will be validly issued and fully paid and non-assessable.
A-1
40
(vi) The issuance of the Securities is not subject to preemptive or other
similar rights arising by operation of law, under the charter or by-laws of the
Company, under any agreement to which the Company or any of its Subsidiaries is
a party or, to the best of our knowledge and information, otherwise.
(vii) Each Subsidiary has been duly organized and is validly existing as
a corporation in good standing if the relevant jurisdiction has the concept of
"good standing" under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses; all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of our
knowledge and information, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(viii) The International Purchase Agreement has been duly authorized,
executed and delivered by the Company and Lincoln.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectuses pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and, to the best of our
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectuses and each amendment or supplement to the
Registration Statement and Prospectuses as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein, as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectuses were not
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective.
(xii) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.
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(xiii) To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any Subsidiary is a party, or to which the property of the Company or any
Subsidiary is subject, before or brought by any court or governmental agency or
body, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
International Purchase Agreement or the performance by the Company of its
obligations thereunder or the transactions contemplated by the Registration
Statement;
(xiv) The information in the Prospectuses under "Certain Relationships
and Related Transactions," "Description of Capital Stock" and "Certain Federal
Income Tax Consequences to Non-U.S. Holders" and in the Registration Statement
under item 15, to the extent that it constitutes matters of laws, summaries of
legal matters, the Company's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by and is correct in all material respects.
(xv) All descriptions in the Prospectuses of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects; to the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xvi) To the best of our knowledge, neither the Company nor any
Subsidiary is in violation of its charter or by-laws and no default by the
Company or any Subsidiary 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 agreement
or instrument that is described or referred to in the Registration Statement or
the Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xvii) No filing with, or authorization, approval, consent or order of any
court or governmental authority or agency (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is required in connection with the due authorization, execution and
delivery of the International Purchase Agreement or for the offering, issuance
or sale of the Securities to the Underwriters;
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(xviii) The execution, delivery and performance of the International
Purchase Agreement and the consummation of the transactions contemplated in the
International Purchase Agreement and in the Registration Statement (including
the issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectuses under the caption "Use
of Proceeds") and compliance by the Company with its obligations under the
International Purchase Agreement will not, whether with or without the giving
of notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the International
Purchase Agreement) 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 pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument, known to
us, to which the Company or any subsidiary 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 subsidiary is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a Material Adverse Effect),
nor will such action result in any violation of the provisions of the charter
or by-laws of the Company or any subsidiary, or any applicable law, statute,
rule, regulation, judgment, order, writ or decree, known to us of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their respective
properties, assets or operations.
(ixx) To the best of our knowledge and information, there are no persons
with registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act.
(xx) The Company is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the 1940 Act.
Nothing has come to our attention that would lead us to believe that the
Registration Statement, including the Rule 430A Information and Rule 434
Information (if applicable), (except for financial statements and schedules and
other financial data included therein, as to which counsel need make any
statement), at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein, as to which
such counsel need make no statement), at the time the Prospectuses were issued,
at the time any such amended or supplemented prospectus was issued or at the
Closing Time, included or
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includes an untrue statement of a material fact or omitted or omits 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.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
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EXHIBIT A-2
FORM OF OPINION OF SOMMER & BARNARD
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectuses and each amendment or supplement to the
Registration Statement and Prospectuses as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein, as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
Nothing has come to our attention that would lead us to believe that the
Registration Statement, including the Rule 430A Information and Rule 434
Information (if applicable), (except for financial statements and schedules and
other financial data included therein, as to which counsel need not make any
statement), at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein, as to which
such counsel need make no statement), at the time the Prospectuses were issued,
at the time any such amended or supplemented prospectus was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omitted or omits 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.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
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EXHIBIT A-3
FORM OF OPINION OF
THOMAS H. OBER, ESQ.
(i) To the best of my knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or any
Subsidiary is a party, or to which the property of the Company or any
Subsidiary is subject, before or brought by any court or governmental agency or
body, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
International Purchase Agreement or the performance by the Company of its
obligations thereunder or the transactions contemplated by the Registration
Statement;
(ii) The information in the Prospectuses under "Business--Regulation,"
"Business--Legal Proceedings," "Business--Properties," "Certain Relationships
and Related Transactions" and "Description of Capital Stock" and in the
Registration Statement under item 15, to the extent that it constitutes matters
of laws, summaries of legal matters, the Company's charter and bylaws or legal
proceedings, or legal conclusions, has been reviewed by and is correct in all
material respects.
(iii) To the best of my knowledge, there are no statutes or regulations
that are required to be described in the Prospectuses that are not described as
required.
(iv) All descriptions in the Prospectuses of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects; to the best of my knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(v) The Company and its Subsidiaries possess such Governmental Licenses
issued by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them, including
(without limitation) Insurance Licenses; to my knowledge the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply, singly or in the
aggregate would not have a Material Adverse Effect.
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46
(vi) To the best of my knowledge, neither the Company nor any Subsidiary
is in violation of its charter or by-laws and no default by the Company or any
Subsidiary 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 agreement or
instrument that is described or referred to in the Registration Statement or
the Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement.
(vii) Each Subsidiary is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
Nothing has come to my attention that would lead me to believe that the
Registration Statement, including the Rule 430A Information and Rule 434
Information (if applicable), (except for financial statements and schedules and
other financial data included therein, as to which counsel need make any
statement), at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein, as to which
such counsel need make no statement), at the time the Prospectuses were issued,
at the time any such amended or supplemented prospectus was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omitted or omits 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.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of public officials. Such opinion shall not state that it is to
be governed or qualified by, or that it is otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
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47
EXHIBIT B
May ___, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Goldman, Sachs & Co.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
Goldman Sachs International
as Representatives of the several International Managers
c/o Merrill Lynch International
25 Ropemaker Street
London EC 249L4
England
Re: Proposed Public Offering by American States
Financial Corporation
Ladies and Gentlemen:
The undersigned understands that American States Financial
Corporation, an Indiana corporation (the "Company"), Merrill Lynch, Pierce,
Fenner & Smith ("Merrill Lynch") and Goldman, Sachs & Co. ("Goldman Sachs")
propose to enter into a U.S. Purchase Agreement providing for the public
offering of shares (the "Securities") of the Company's common stock, no par
value (the "Common Stock") and that Merrill Lynch International ("Merrill Lynch
International") and Goldman Sachs International ("Goldman Sachs International")
propose to enter into an International Purchase Agreement with the Company also
providing for the public offering of the Common Stock. In recognition of the
benefit that such offerings will confer upon the undersigned as a director,
officer or stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the U.S. Purchase
Agreement and in the International Purchase Agreement that, during a period of
120 days from the date of the U.S. Purchase
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Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch and Merrill Lynch International, 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 for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for 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
file any registration statement under the Securities Act of 1933, as amended,
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 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 other securities, in cash or otherwise.
Very truly yours,
Signature: __________________________
Print Name:__________________________
B-2