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EXHIBIT 1.1
UNDERWRITING AGREEMENT
4,000,000 PREFERRED SECURITIES
AMERICAN FINANCIAL CAPITAL TRUST I
(A DELAWARE TRUST)
_____% TRUST ORIGINATED PREFERRED SECURITIES ("TOPrS")
(LIQUIDATION AMOUNT OF $25 PER PREFERRED SECURITY)(SM)
UNDERWRITING AGREEMENT
____________, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
as the Representatives of the several Underwriters
c/o Merrill Lynch & Co.
5500 Sears Tower
Chicago, Illinois 60606
Ladies and Gentlemen:
American Financial Capital Trust I (the "Trust"), a statutory business
trust organized under the Business Trust Act (the "Delaware Act") of the State
of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections
3801 et seq.), and American Financial Group, Inc., an Ohio corporation (the
"Company" and, together with the Trust, the "Offerors"), confirm their agreement
(the "Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), CS First Boston Corporation, Dean Witter
Reynolds Inc., Donaldson Lufkin & Jenrette Securities Corporation, PaineWebber
Incorporated and Prudential Securities Incorporated as representatives (in such
capacity, collectively, the "Representatives") of the several Underwriters named
in Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), with respect to the sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
____% Trust Originated Preferred Securities (liquidation amount of $25 per
preferred security) of the Trust ("Preferred Securities") set forth in said
Schedule A and with respect to the grant by the Trust to the Underwriters,
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(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks
of Merrill Lynch & Co. Inc.
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acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of additional Preferred Securities to cover
over-allotments, in each case except as may otherwise be provided in the Pricing
Agreement, as hereinafter defined. The aforesaid Preferred Securities (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the additional Preferred Securities subject to the option described in Section
2(b) hereof (the "Option Securities") are collectively hereinafter called the
"Designated Securities." The Preferred Securities will be guaranteed by the
Company, to the extent described in the Prospectus (as defined below), with
respect to distributions and payments upon liquidation, redemption and otherwise
(the "Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement"), dated as
of ______________, 1996, between the Company and The Bank of New York, as
trustee (the "Guarantee Trustee") and, in certain circumstances described in the
Prospectus, the Trust will distribute Subordinated Debentures (as defined
herein) to holders of Designated Securities. The Preferred Securities, together
with the related Preferred Securities Guarantee and the Subordinated Debentures,
are collectively referred to herein as the "Securities."
Prior to the purchase and public offering of the Preferred Securities
by the several Underwriters, the Offerors and the Representatives, acting on
behalf of the several Underwriters, shall enter into an agreement substantially
in the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Offerors and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering of
the Securities will be governed by this Agreement, as supplemented by the
Pricing Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-12537) and
pre-effective amendment nos. 1 and 2 thereto covering the registration of
securities of the Company and the Trust, including up to a combination of
$115,000,000 of (i) the Preferred Securities, (ii) the Preferred Securities
Guarantees and (iii) the Subordinated Debentures, under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus,
and the offering thereof in accordance with the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and the Offerors have
filed such post-effective amendments thereto as may be required prior to the
execution of the Pricing Agreement. Such registration statement, as so amended,
including the exhibits and schedules thereto, if any, and the information, if
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any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations (the "Rule 430A Information"), is referred to herein as the
"Registration Statement"; and the final prospectus relating to the offering of
the Securities, in the form first furnished to the Underwriters by the Offerors
for use in connection with the offering of the Securities, is referred to herein
as the "Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Pricing Agreement. A "preliminary prospectus" shall be deemed to refer to any
prospectus used before the registration statement became effective and any
prospectus that omitted, as applicable, the Rule 430A Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of the
applicable Pricing Agreement. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus 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").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
the Pricing Agreement has been executed and delivered, and the Declaration (as
defined herein), the Indenture (as defined herein), and the Preferred Securities
Guarantee Agreement have been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). The entire proceeds from the sale of the Designated
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of its common securities (the "Common Securities" and, together
with the Designated Securities, the "Trust Securities"), as guaranteed by the
Company, to the extent set forth in the Prospectus, with respect to
distributions and
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payments upon liquidation and redemption (the "Common Securities Guarantee" and,
together with the Preferred Securities Guarantee, the "Guarantees") pursuant to
the Common Securities Guarantee Agreement (the "Common Securities Guarantee
Agreement" and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of _____________, 1996, between the Company
and the Guarantee Trustee, as Trustee, and will be used by the Trust to purchase
$_______________ (up to $_______________ if the option described in Section 2(b)
hereof is exercised in full) of _____% Subordinated Debentures due
______________, 2026 (the "Subordinated Debentures") issued by the Company. The
Preferred Securities and the Common Securities will be issued pursuant to the
Declaration of Trust, dated as of September 13, 1996, as amended and restated on
_____________, 1996 (the "Declaration"), among the Company, as Sponsor, James E.
Evans and Thomas E. Mischell (the "Regular Trustees"), The Bank of New York, as
property trustee (the "Property Trustee"), and The Bank of New York (Delaware)
as Delaware Trustee (the "Delaware Trustee," and, together with the Property
Trustee and the Regular Trustees, the "Trustees"), for the benefit of the
holders from time to time of undivided beneficial interests in the assets of the
Trust. The Subordinated Debentures will be issued pursuant to an indenture,
dated as of ________________, 1996 (the "Indenture"), between the Company and
The Bank of New York, as trustee (the "Debt Trustee").
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the date of the Pricing Agreement
(such later date being hereinafter referred to as the "Representation Date")
that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge of the Offerors, threatened by the
Commission.
(ii) Each of the Offerors meets, and at the respective times
of commencement and consummation of the Offering of the Securities will meet,
the requirements for the use of Form S-3 under the 1933 Act.
(iii) At the time the Registration Statement becomes effective
and at the Representation Date, the Registration Statement will conform in all
material respects to the requirements of the 1933 Act and the 1933 Act
Regulations and will not contain an untrue statement of a material fact and will
not omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Prospectus, at the time the
Registration Statement becomes effective (unless the term "Prospectus" refers to
a prospectus which has been provided to the Underwriters by the Company for
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use in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use) and at the Representation Date and at the Closing
Time referred to in Section 2, will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements contained in or omitted from
the Registration Statement or the Prospectus in reliance upon, and in conformity
with, (A) information furnished to the Offerors in writing by any Underwriter
through Merrill Lynch expressly for use in the Registration Statement or the
Prospectus, or (B) that part of the Registration Statement which shall
constitute the Statement of Eligibility (Form T-1) under the 1939 Act.
(iv) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the time they
were or hereafter are filed or last amended, as the case may be, with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act, and the rules and regulations of Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of the
time of any subsequent amendment, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects to the
requirements of the 1934 Act and the 1934 Act Regulations 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 statements therein not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to any statements contained in or omitted from such documents
made in reliance upon and in conformity with information furnished to the
Offerors in writing by any Underwriter through Merrill Lynch expressly for use
in such documents.
(v) The accountants who certified the financial statements and
supporting schedules included or incorporated by reference in the Registration
Statement are, to the knowledge of the Offerors, independent public accountants
as required by the 1933 Act and the 1933 Act Regulations.
(vi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with
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management's authorization; and (ii) assets are safeguarded and transactions are
recorded to permit preparation of financial statements in conformity with
generally accepted accounting principles and, as of the Closing Time, the
Company will continue to maintain such a system.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no development
which could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Trust or the Company and its Subsidiaries (as defined
below) considered as one enterprise, whether or not arising in the ordinary
course of business or referred to in or contemplated by the Registration
Statement, (B) there have been no transactions entered into by the Trust or the
Company or any of the Subsidiaries which are material with respect to the Trust
or the Company and its Subsidiaries considered as one enterprise, other than
those in the ordinary course of business or those referred to in or contemplated
by the Registration Statement and (C) there has not been any material increase
in the long term debt of the Company.
(viii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of Ohio,
with corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Prospectus; and 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 to so qualify or
be in good standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its Subsidiaries considered as one enterprise.
(ix) Each of the corporations of which a majority of the
outstanding voting equity securities are owned, directly or indirectly, by the
Company ("Subsidiaries") and which is listed on Schedule I annexed hereto
("Designated Subsidiaries") has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
described in the Prospectus, 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 to so qualify or
be in good standing would not have a
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material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and the
Subsidiaries considered as one enterprise.
(x) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus; since the date indicated in the
Prospectus there has been no change in the issued and outstanding capital stock
of the Company and the Designated Subsidiaries (other than changes in
outstanding Common Stock resulting from employee benefit plan or dividend
reinvestment and stock purchase plan transactions); and all of the issued and
outstanding capital stock of the Company has been duly authorized and validly
issued, is fully paid and non-assessable.
(xi) Each Subsidiary of the Company which is engaged in the
business of insurance or reinsurance (collectively, the "Insurance
Subsidiaries") holds such insurance licenses, certificates and permits from
governmental authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts business (the
"Insurance Licenses")) as are necessary to the conduct of its business as
described in the Prospectus; the Company and each Insurance Subsidiary have
fulfilled and performed all obligations necessary to maintain the Insurance
Licenses; except as disclosed in the Prospectus, there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or investigation
that could reasonably be expected to result in the revocation, termination or
suspension of any Insurance License; and except as disclosed in the Prospectus,
no insurance regulatory agency or body has issued, or commenced any proceeding
for the issuance of, any order or decree impairing, restricting or prohibiting
the payment of dividends by any Insurance Subsidiary to its parent.
(xii) Except as disclosed in the Prospectus, the Company and
the Insurance Subsidiaries have made no material changes in their insurance
reserving practices since the most recent audited financial statements included
or incorporated in the Prospectus.
(xiii) All reinsurance treaties and arrangements to which any
Insurance Subsidiary is a party are in full force and effect and no Insurance
Subsidiary is in violation of or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition contained
therein; no Insurance Subsidiary has received any notice from any of the other
parties to such treaties, contracts or agreements that such other party intends
not to perform such treaty and, to the best knowledge of the Company and the
Insurance Subsidiaries, the Company and the Insurance Subsidiaries have no
reason to believe that any of the other parties to such treaties or arrangements
will be unable to perform such treaty or arrangement except to the extent
adequately and properly reserved for in the
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consolidated financial statements of the Company included in the
Prospectus.
(xiv) The statutory financial statements of the Insurance
Subsidiaries from which certain ratios and other statistical data filed as part
of the Registration Statement or included or incorporated in the Prospectus have
been derived have for each relevant period been prepared in conformity with
statutory accounting principles or practices required or permitted by the
National Association of Insurance Commissioners and by the appropriate Insurance
Department of the jurisdiction of domicile of each Insurance Subsidiary, and
such statutory accounting practices have been applied on a consistent basis
throughout the periods involved, except as may otherwise be indicated therein or
in the notes thereto, and present fairly the statutory financial position of the
Insurance Subsidiaries as of the dates thereof, and the statutory basis results
of operations of the Insurance Subsidiaries for the periods covered thereby.
(xv) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the Preferred
Securities, the Common Securities and the Declaration; the Trust is not a party
to or otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will, under current law, be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation.
(xvi) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus, will
be validly issued and will represent undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at the Closing Time all
of the issued and outstanding Common Securities of the Trust will be directly
owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equitable right.
(xvii) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by each of the Offerors.
(xviii) The Declaration has been duly authorized by the
Company and, at the Closing Time, will have been duly executed and delivered by
the Company and the Trustees, and assuming due authorization, execution and
delivery of the
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Declaration by the Property Trustee and the Delaware Trustee, the Declaration
will, at the Closing Time, be a valid and binding obligation of the Company and
the Regular Trustees, enforceable against the Company and the Regular Trustees
in accordance with its terms, except to the extent that enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity) (the "Bankruptcy Exceptions") and will conform in all material
respects to the description thereof contained in the Prospectus.
(xix) Each of the Guarantee Agreements has been duly
authorized by the Company and, when validly executed and delivered by the
Company, and, in the case of the Preferred Securities Guarantee Agreement,
assuming due authorization, execution and delivery of the Preferred Securities
Guarantee by the Guarantee Trustee, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and each of the Guarantees and the Guarantee Agreements
will conform in all material respects to the description thereof contained in
the Prospectus.
(xx) The Preferred Securities have been duly authorized and,
when issued and delivered against payment therefor as provided herein, will be
validly issued and fully paid and non-assessable undivided beneficial interests
in the assets of the Trust and will conform in all material respects to the
description thereof contained in the Prospectus; the issuance of the Designated
Securities is not subject to preemptive or other similar rights.
(xxi) The Indenture has been duly authorized and qualified
under the 1939 Act and, at the Closing Time, will have been duly executed and
delivered and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions; the
Indenture will conform in all material respects to the description thereof
contained in the Prospectus.
(xxii) The Subordinated Debentures have been duly authorized
by the Company and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions, and will be in the form
contemplated by, and entitled
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to the benefits of, the Indenture and will conform in all
material respects to the description thereof in the Prospectus.
(xxiii) Each of the Regular Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to execute
and deliver the Declaration.
(xxiv) None of the Offerors is an "investment company" or a
company "controlled" by an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
(xxv) The Trust is not in violation of the Declaration or its
certificate of trust filed with the State of Delaware on ______________, 1996
(the "Certificate of Trust"); none of the execution, delivery and performance of
this Agreement, the Pricing Agreement, the Declaration, the Designated
Securities, the Common Securities, the Indenture, the Subordinated Debentures,
the Guarantee Agreements and the Guarantees and the consummation of the
transactions contemplated herein and therein and compliance by the Offerors with
their respective obligations hereunder and thereunder did or will result in a
breach of any of the terms or provisions of, or constitute a default or require
the consent of any party under the Certificate of Trust or the Company's
Articles of Incorporation or Code of Regulations, any material agreement or
instrument to which either Offeror is a party, any existing applicable law, rule
or regulation or any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over either
Offeror or any of its properties or assets, or did or will result in the
creation or imposition of any lien on the properties or assets of either
Offeror.
(xxvi) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and no filing, recording, publication or
registration in any public office or any other place, was or is now required in
connection with the issuance and sale of the Common Securities or the offering
of the Designated Securities, the Subordinated Debentures or the Guarantees
hereunder, except for such as may be required under the 1933 Act or state
securities laws and the qualification of the Declaration, the Preferred
Securities Guarantee Agreement and the Indenture under the 1939 Act.
(xxvii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a
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material adverse effect on the consolidated position, shareholders' equity or
results of operations of the Company and its Subsidiaries considered as one
enterprise; and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(xxviii) No "forward looking statement" (as defined in Rule
175 under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any Trustee of the Trust or any officer
of the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Trust or the
Company, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Trust, at the price per
security set forth in the Pricing Agreement, the number of Initial Securities
set forth in Schedule A hereto opposite the name of such Underwriter, plus any
additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(1) If the Offerors have elected not to rely upon Rule 430A of
the 1933 Act Regulations, the initial public offering price per Preferred
Security and the purchase price per Initial Security to be paid by the several
Underwriters for the Initial Securities have each been determined and set forth
in the Pricing Agreement, dated the date hereof, and any necessary amendments to
the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(2) If the Offerors have elected to rely upon Rule 430A of the
1933 Act Regulations, the purchase price per Initial Security to be paid by the
several Underwriters shall be an amount equal to the initial public offering
price per Initial Security. The initial public offering price per Initial
Security shall be a fixed price to be determined by agreement between the
Underwriters and the Offerors. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing Agreement.
In the event that such prices have not been agreed upon and the Pricing
Agreement has not been executed and delivered by all parties thereto by the
close of business on the fourth business day following the date of this
Agreement,
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this Agreement shall terminate forthwith, without liability of any party to any
other party, unless otherwise agreed to by the Offerors and the Underwriters.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Trust hereby grants an option to the Underwriters, severally and not jointly, to
purchase up to an additional 600,000 Option Securities at the price per security
set forth in the Pricing Agreement, less an amount per share equal to any
dividends declared by the Trust and payable on the Initial Securities but not
payable on the Option Securities. The option hereby granted will expire 30 days
after the Representation Date 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 Securities upon
notice by the Representative to the Trust setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
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, unless otherwise agreed by the Representative and the
Trust. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities (except as otherwise provided in the Pricing Agreement), subject in
each case to such adjustments as the Representative in its discretion shall make
to eliminate any sales or purchases of fractional securities.
(c) Delivery of certificates for the Securities shall be made at the
offices of the Underwriters in New York, and payment of the purchase price for
the Securities shall be made by wire transfer of funds contemporaneous with
closing at the offices of Taft, Stettinius & Hollister, 1800 Star Bank Center,
425 Walnut Street, Cincinnati, Ohio 45202, or at such other place as shall be
agreed upon by the Underwriters and the Offerors, at 10:00 a.m. (New York time)
on the third business day after the date the Registration Statement becomes
effective (or, if the Offerors have elected to rely upon Rule 430A, the third
full business day after execution of the Pricing Agreement (or, if pricing of
the Securities occurs after 4:30 p.m. Eastern time, on the fourth full business
day thereafter)), or such other time not later than ten business days after such
date as shall be agreed upon by the Underwriters and the Offerors (such time and
date of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the Option Securities are
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purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made by wire transfer of
funds and by the delivery of certificates at the above mentioned offices of
Taft, Stettinius & Hollister, or at such other place as shall be agreed upon by
the Representative and the Trust, on each Date of Delivery as specified in the
notice from the Representative to the Trust. Payment for the Securities
purchased by the Underwriters shall be made to the Trust by wire transfer of
immediately available funds, payable to the order of the Trust, against delivery
to the respective accounts of the Underwriters of certificates for the Initial
Securities and the Option Securities, if any, to be purchased by them.
Certificates for the Initial Securities and the Option Securities, if any, shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least two full business days before the Closing Time or
the relevant Date of Delivery, as the case may be. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities, or the Option
Securities, if any, to be purchased by any 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 Underwriter from its obligations
hereunder. The certificates for the Securities, will be made available for
examination and packaging by the Underwriters no later than 10:00 a.m. (New York
City time) on the last business day prior to the Closing Time or the relevant
Date of Delivery, as the case may be.
(d) As compensation to the Underwriters for their commitments hereunder
and in view of the fact that the proceeds of the sale of the Designated
Securities will be used to purchase the Subordinated Debentures of the Company,
the Company hereby agrees to pay at the Closing Time, or the relevant Date of
Delivery, as the case may be, to the Representatives, for the accounts of the
several Underwriters, a commission per Designated Security determined by
agreement between the Representatives and the Company for the Designated
Securities to be delivered by the Trust hereunder at Closing Time, or the
relevant Date of Delivery, as the case may be. The commission, when so
determined, shall be set forth in the Pricing Agreement.
SECTION 3. Covenants of the Offerors. Each of the Offerors jointly and
severally agrees with each Underwriter as follows:
(a) The Offerors will comply with the requirements of Rule 430A of the
1933 Act Regulations if and as applicable, and will notify the Underwriters
immediately, and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto (including any post-effective
amendment) or the filing of any supplement or amendment to the Prospectus, (ii)
of any request by the Commission for any
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14
amendment to the Registration Statement and any amendment thereto (including any
post-effective amendment) or any amendment or supplement to the Prospectus or
for additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose and (iv) of the issuance by any
state securities commission or other regulatory authority of any order
suspending the qualification or the exemption from qualification of the
Preferred Securities under state securities or Blue Sky laws or the initiation
or threatening of any proceeding for such purpose. The Offerors 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) The Offerors will give the Representatives notice of their
intention to file or prepare (i) any amendment to the Registration Statement
(including any post-effective amendment) or (ii) any amendment or supplement to
the Prospectus (including any revised prospectus which the Offerors propose for
use by the Underwriters in connection with the offering of the Preferred
Securities which differs from the prospectus on file at the Commission at the
time the Registration Statement became effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations); will furnish the Representatives with copies of any such amendment
or supplement a reasonable amount of time prior to such proposed filing or use,
as the case may be; and will not file any such amendment or supplement or use
any such prospectus to which the Representatives or counsel for the Underwriters
shall reasonably object.
(c) The Offerors will deliver to each of the Representatives one signed
copy of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference therein
and documents incorporated or deemed to be incorporated by reference therein)
and will also deliver to the Representatives, without charge, as many conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) as the Representatives may reasonably request. If
applicable, the copies of the Registration Statement and each amendment 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.
(d) The Offerors will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Offerors hereby consent to the use of such copies for purposes
permitted by the 1933 Act. The Offerors will furnish to each Underwriter, from
time to time during the period when the Prospectus is required to
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15
be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. If applicable, the 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) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Securities, any event shall occur
as a result of which it is necessary, in the opinion of counsel for the
Underwriters, to amend or supplement the Prospectus or to file under the 1934
Act any document incorporated by reference in the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, the Offerors will forthwith amend or
supplement the Prospectus or file such document (in form and substance
satisfactory to counsel for the Underwriters) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading, and the Company will furnish to the Underwriters
a reasonable number of copies of such amendment or supplement.
(f) The Offerors will endeavor, in cooperation with the Underwriters,
to qualify the Preferred Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Underwriters may designate; provided, however, that the Offerors shall not
be obligated to qualify as a foreign corporation in any jurisdiction in which
they are not so qualified. In each jurisdiction in which the Preferred
Securities have been so qualified, the Offerors will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with
distribution of the Preferred Securities.
(g) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will
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16
provide the Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
(h) The Company will make generally available to the holders of the
Preferred Securities as soon as practicable, but not later than 45 days (or 90
days, in the case of a period that is also the Company's fiscal year) after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a
twelve-month period beginning not later than the first day of the Trust's fiscal
quarter next following the "effective date" (as defined in said Rule 158 of the
Registration Statement.
(i) The Trust will use the proceeds received by it from the sale of the
Preferred Securities, and the Company will use the proceeds received by it from
the sale of the Subordinated Debentures, in the manners specified in the
Prospectus under "Use of Proceeds".
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A of the 1933 Act
Regulations, then immediately following the execution of the Pricing Agreement,
the Offerors will prepare, and file or transmit for filing with the Commission
in accordance with such Rule 430A and Rule 424(b) of the 1933 Act Regulations,
copies of an amended Prospectus or, if required by such Rule 430A, a
post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(k) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the Exchange Act and the 1934 Act Regulations.
(l) The Company will use its best efforts to effect the listing of the
Designated Securities (including the Preferred Securities Guarantee with respect
thereto) on the New York Stock Exchange and to cause the Designated Securities
to be registered under the 1934 Act. If the Preferred Securities are exchanged
for Subordinated Debentures, the Company will use its best efforts to effect the
listing of the Subordinated Debentures on the exchange on which the Designated
Securities were then listed and to cause the Subordinated Debentures to be
registered under the 1934 Act.
(m) During a period of 90 days from the date of the Pricing Agreement,
neither the Trust nor the Company will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, or enter into any agreement to sell,
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17
any Preferred Securities, any security convertible into or exchangeable or
exercisable for Preferred Securities, or the Subordinated Debentures or any debt
securities substantially similar to the Subordinated Debentures or any equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Debentures and the Preferred Securities issued pursuant to this
Agreement).
(n) During a period of two years from the Closing Time, the Company
will make generally available to the Underwriters copies of all reports and
other communications (financial or other) mailed to shareholders, and deliver to
the Underwriters promptly after they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and shall furnish such additional information concerning the business and
financial condition of the Company as the Underwriters may from time to time
reasonably request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission).
SECTION 4. Payment of Expenses. The Company agrees with the several
Underwriters to pay all expenses incident to the performance of each Offeror's
obligations under this Agreement and the Pricing Agreement, including, without
limitation, expenses related to the following, if incurred (i) the preparation,
delivery, printing and filing of the Registration Statement and Prospectus as
originally filed (including financial statements and exhibits) and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the Pricing Agreement, any Agreement among Underwriters and such
other documents as may be required in connection with offering, purchase, sale
and delivery of the Securities; (iii) the preparation, issuance and delivery of
the certificates for the Preferred Securities; (iv) the fees and disbursements
of the Company's counsel, accountants and other advisors or agents (including
the transfer agents and registrars); (v) the qualification of the Preferred
Securities under securities laws in accordance with the provisions of Section
3(f), including filing fees and the reasonable fees and disbursements of counsel
for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any Legal Investment Survey; (vi) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each preliminary
prospectus and of the Prospectus and any amendments thereto; (vii) the printing
and delivery to the Underwriters of copies of the Blue Sky Survey and any Legal
Investment Survey; (viii) any fees payable in connection with the rating of the
Preferred Securities by nationally recognized statistical rating organizations;
(ix) the filing fees incident to, and the fees and
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18
disbursements of counsel to the Underwriters in connection with, the review, if
any, by the National Association of Securities Dealers, Inc. (the "NASD") of the
terms of the sale of the Designated Securities; (x) any fees payable to the
Commission; (xi) the fees and expenses incurred in connection with the listing
of the Designated Securities (and the related Preferred Securities Guarantee)
and, if applicable, the Subordinated Debentures on the New York Stock Exchange;
(xii) the fees and expenses of the Debt Trustee, the Property Trustee and the
Guarantee Trustee, including fees and disbursements of counsel for such
trustees, in connection with the Indenture and the Subordinated Debentures, the
Declaration, the Certificate of Trust and the Guarantee; and (xiii) the cost of
qualifying the Designated Securities with the Depository Trust Company.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of Taft, Stettinius & Hollister and
Skadden, Arps, Meagher & Flom, counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Offerors herein contained, to the performance by the
Offerors of their obligations hereunder, and to the following further
conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m., New York City time, on the date hereof, and on the date hereof
and at the Closing Time, no stop order suspending the effectiveness of the
Registration Statement or any part thereof 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 satisfaction of counsel to the Underwriters. A prospectus,
if required, shall have been filed with the Commission in accordance with Rule
424(b), as applicable (or any required post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Keating, Muething & Klekamp, PLL, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) Each of the Company and the Designated
Subsidiaries has been duly incorporated and is validly existing under
the laws of the state of its incorporation, in each case with
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corporate power and authority to carry on the business in which it is
engaged and to own, lease and operate its properties and conduct its
business as described in the Prospectus, 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 to so qualify or be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its Subsidiaries considered as one enterprise.
(ii) The Preferred Securities conform in all material
respects to the description thereof in the Prospectus.
(iii) The Trust is not required to be qualified and
in good standing as a foreign company in Ohio, unless the failure to so
qualify or be in good standing would not have a material adverse effect
on the Trust; and the Trust is not a party to or otherwise bound by any
agreement other than those described in the Prospectus.
(iv) The Declaration has been duly authorized,
executed and delivered by the Company and the Trustees and is a valid
and binding obligation of the Company, enforceable against the Company
and each of the Regular Trustees in accordance with its terms, except
as enforcement thereof may be limited by the Bankruptcy Exceptions; and
the Declaration has been duly qualified under the 1939 Act.
(v) All legally required proceedings in connection
with the authorization, issuance and validity of the Securities and the
sale of the Securities in accordance with this Agreement (other than
the filing of post-issuance reports, the non-filing of which would not
render the Securities invalid) have been taken and all legally required
orders, consents or other authorizations or approvals of any other
public boards or bodies in connection with the authorization, issuance
and validity of the Securities and the sale of the Securities in
accordance with this Agreement (other than in connection with or in
compliance with the provisions of the securities or Blue Sky laws of
any jurisdictions, as to which no opinion need be expressed) have been
obtained and are in full force and effect.
(vi) The Registration Statement is effective under
the 1933 Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act, and no proceedings therefor have been
initiated or threatened by the Commission.
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(vii) The Registration Statement as of its effective
date and the Prospectus and each amendment thereto as of its issue date
(in each case, other than the operating statistics, the financial
statements and the notes thereto, the financial schedules, and any
other financial data included or incorporated by reference therein, as
to which such counsel need express no belief), complied as to form in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations; and the Declaration, the Indenture, the Preferred
Securities Guarantee Agreement and the Statements of Eligibility on
Forms T-1 with respect to each of the Property Trustee, the Debt
Trustee, and the Guarantee Trustee filed with the Commission as part of
the Registration Statement complied as to form in all material respects
with the requirements of the 1939 Act and the 1939 Act Regulations.
(viii) Each of the documents incorporated by
reference in the Registration Statement or the Prospectus at the time
they were filed or last amended (other than the financial statements
and the notes thereto, the financial schedules, and any other financial
or statistical data included or incorporated by reference therein, as
to which such counsel need express no belief) complied as to form in
all material respects with the requirements of the 1934 Act, and the
1934 Act Regulations, as applicable.
(ix) Each of the Offerors meets the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(x) The Common Securities, the Preferred Securities,
the Subordinated Debentures, each of the Guarantees, the Declaration,
the Indenture and each of the Guarantee Agreements conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(xi) The descriptions in the Registration Statement
and the Prospectus and each amendment or supplement thereto of
regulations, statutes, legal and governmental proceedings and contracts
and other documents are accurate in all material respects and fairly
present the information required to be shown and such counsel does not
know of any legal or governmental proceedings required to be described
in the Registration Statement or the Prospectus or any amendment or
supplement thereto that are not so described (or the descriptions of
which are not incorporated by reference) or of any contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or any amendment or supplement thereto or
to be filed as exhibits to the Registration Statement or any amendment
thereto that are not so described
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21
(or the descriptions of which are not incorporated by
reference) or so filed.
(xii) All of the issued and outstanding Common
Securities of the Trust are directly owned by the Company free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equitable right.
(xiii) This Agreement and the Pricing Agreement have
been duly authorized, executed and delivered by each of the Trust and
the Company.
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, constitutes a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except to the extent that enforcement
thereof may be limited by Bankruptcy Exceptions; and the Preferred
Securities Guarantee Agreement has been duly qualified under the 1939
Act.
(xv) The Indenture has been duly executed and
delivered by the Company and, assuming due authorization, execution,
and delivery thereof by the Debt Trustee, is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions; and the Indenture
has been duly qualified under the 1939 Act.
(xvi) The Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee in
the manner provided for in the Indenture and delivered against payment
therefor as provided in this Agreement, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xvii) Neither the Company nor the Trust is an
"investment company" or a company "controlled" by an "investment
company" which is required to be registered under the 1940 Act.
(xviii) The execution, delivery and performance of
this Agreement, the Pricing Agreement, the Declaration, the Preferred
Securities, the Common Securities, the Indenture, the Subordinated
Debentures, the Guarantee Agreements, and the Guarantees; the
consummation of the
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transactions contemplated herein and therein; and the compliance by
each of the Offerors with their respective obligations hereunder and
thereunder do not and will not conflict with, result in a breach of, or
constitute a default under the Articles or the Code of Regulations of
the Company or the governing documents of any of its Subsidiaries or
the terms of any indenture or other agreement or instrument known to
such counsel and to which the Company or any of its Subsidiaries is a
party or bound, or result in a violation of any statute or regulation,
or any order or decree known to such counsel to be applicable to the
Company or any of its Subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its Subsidiaries;
(xix) Each Insurance Subsidiary holds such insurance
licenses, certificates and permits from governmental authorities
(including, without limitation, Insurance Licenses) which are necessary
to the conduct of its business as described in the Prospectus; to the
best knowledge of such counsel, there is no pending or threatened
action, suit, proceeding or investigation that could reasonably be
expected to result in the revocation, termination or suspension of any
Insurance License; and, except as disclosed in the Prospectus, to the
knowledge of such counsel, no insurance regulatory agency or body has
issued, or commenced any proceeding for the issuance of, any order or
decree impairing, restricting or prohibiting the payment of dividends
by any Insurance Subsidiary to its parent; and
(xx) To the best knowledge of such counsel, all
reinsurance treaties and arrangements to which any Insurance Subsidiary
is a party are in full force and effect and no Insurance Subsidiary is
in violation of or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition
contained therein.
Moreover, such counsel shall confirm that nothing has come to
such counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to Rule 430A
(except for financial statements and related schedules and other financial data
included or incorporated by reference therein or in the related Forms T-1, as to
which counsel need express no opinion), at the time it became effective or at
the Representation Date, 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 Prospectus (except for
financial statements and related schedules and other financial data included or
incorporated by reference therein or in the related Forms T-1, as to which
counsel need express no
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23
opinion), at the Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the Prospectus
on file at the Commission at the time the Registration Statement became
effective, in which case at the time it is first provided to the Underwriters
for such use) 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 (A) as to
matters involving the application of laws other than the laws of Delaware, Ohio
and the federal law of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters and (B) as to matters of Delaware Law, upon the opinion of Morris,
Nichols, Arsht & Tunnell, special Delaware counsel to the Offerors, in which
case the opinion shall state that such counsel believes that you and such
counsel are entitled to so rely. Further, in rendering the foregoing opinion,
such counsel may rely, to the extent they deem such reliance proper, on the
opinions (in form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to Underwriters' counsel,
including counsel employed by the Company, as to matters governed by the laws of
jurisdictions other than the United States, the State of Ohio or the General
Corporation Law of the State of Delaware, and as to matters of fact, upon
certificates of officers of the Company and of government officials; provided
that such counsel shall state that the opinion of any other counsel is in form
satisfactory to such counsel and, in such counsel's opinion, such counsel and
the Underwriters are justified in relying on such opinions of other counsel.
Copies of all such opinions and certificates shall be furnished to counsel to
the Underwriters on each Closing Date. Such counsel to the Underwriters on each
Closing Date. Such counsel may state that they are not passing on matters
relating to patents and trademarks.
(2) The favorable opinion, dated as of Closing Time, of
Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Offerors, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made.
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(ii) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against
the Company and the Trustees in accordance with its terms, subject, as
to enforcement, to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii)
considerations of public policy or the effect of applicable law
relating to fiduciary duties.
(iv) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and the
Pricing Agreement and (ii) issue, and perform its obligations under,
the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement and the Pricing
Agreement, and the performance by the Trust of its obligations
hereunder and under the Pricing Agreement, have been duly authorized by
all necessary action on the part of the Trust.
(vi) The certificates for the Preferred Securities
are in due and proper form; the Preferred Securities have been duly
authorized by the Declaration and are duly and validly issued and,
subject to qualifications hereinafter expressed in this paragraph (vi),
fully paid and nonassessable undivided beneficial interests in the
assets of the Trust; the holders of the Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same limitation
of personal liability extended to shareholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware; said counsel may note that the holders of the Preferred
Securities may be obligated to make payments as set forth in the
Declaration.
(vii) The Common Securities have been duly authorized
by the Declaration and are duly and validly issued and represent
undivided beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the
Declaration, the issuance of the Trust Securities is not
subject to Preemptive rights.
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(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debentures,
the execution, delivery and performance by the Trust of this Agreement
and the Pricing Agreement, the consummation by the Trust of the
transactions contemplated hereby and by the Pricing Agreement and
compliance by the Trust with its obligations hereunder and thereunder
will not violate (i) any of the provisions of the Certificate of Trust
or the Declaration or (ii) any applicable Delaware law or
administrative regulation.
(3) The favorable opinion, dated as of Closing Time, of Emmet, Marvin &
Martin, LLP, counsel of The Bank of New York, as Property Trustee under the
Declaration, and Guarantee Trustee under the Preferred Securities Guarantee
Agreements, in form and substance satisfactory to counsel for the Underwriters,
to the effect that:
(i) The Bank of New York is a national banking
association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States with all necessary
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of the Declaration and the
Preferred Securities Guarantee Agreement.
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Preferred Securities
Guarantee Agreement have been duly authorized by all necessary
corporation action on the part of the Property Trustee and the
Guarantee Trustee, respectively. The Declaration and the Preferred
Securities Guarantee Agreement have been duly executed and delivered by
the Property Trustee and the Guarantee Trustee, respectively, and
constitute the legal, valid and binding obligations of the Property
Trustee and the Guarantee Trustee, respectively, enforceable against
the Property Trustee and the Guarantee Trustee, respectively, in
accordance with their terms, except to the extent the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Preferred Securities Guarantee Agreement by the
Property Trustee and the Guarantee Trustee, respectively, do not
conflict with or constitute a breach of the Articles of Organization or
Bylaws of the Property Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any state or federal banking authority
is required for the execution, delivery or
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26
performance by the Property Trustee and the Guarantee
Trustee of the Declaration and the Preferred Securities
Guarantee Agreement.
(4) The opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
special tax counsel to the Offerors, on the status of the Subordinated
Debentures as indebtedness for United States federal income tax purposes, on the
status of the Trust as a grantor trust for United States federal income tax
purposes, and on the status of the Subordinated Debentures as instruments that
are not OID instruments prior to an election by the Company to defer payments of
interest thereon. Such opinion may be conditioned on, among other things, the
initial and continuing accuracy of the facts, financial and other information,
covenants and representations set forth in certificates of officers of the
Company and the Trust and other documents deemed necessary for such opinion.
With regard to the balance of the discussion set forth in the Prospectus under
the heading "United States Federal Income Taxation," special tax counsel shall
have reviewed such discussion and shall have concluded, subject to the
qualifications set forth in the preceding sentence hereof, that such discussion
accurately summarizes the specific tax matters addressed therein.
(5) The favorable opinion, dated as of Closing Time, of Taft,
Stettinius & Hollister, counsel for the Underwriters, in form and substance
satisfactory to the Underwriters with respect to the incorporation and legal
existence of the Company, the Preferred Securities, the Indenture, the Preferred
Securities Guarantee Agreement, this Agreement, the Pricing Agreement, the
Registration Statement, the Prospectus and other related matters as the
Representative may require. In giving its opinion, Taft, Stettinius & Hollister
may rely upon the opinions of Keating, Muething & Klekamp, PLL and Morris,
Nichols, Arsht & Tunnell, counsel for the Offerors, which shall be delivered in
accordance with Section 5(b)(1) and 5(b)(2) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its Subsidiaries considered as one enterprise, whether
or not in the ordinary course of business.
(d) At Closing Time, the Representatives shall have received a
certificate of an executive officer of the Company and a certificate of a
Regular Trustee of the Trust, and dated as of Closing Time, to the effect that
to the best of such person's knowledge, information and belief (i) there has
been no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Trust or the Company
and its Subsidiaries considered as one enterprise, whether or not in the
ordinary course of business, (ii) the
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27
representations and warranties in Section 1 hereof are true and correct as
though expressly made at and as of Closing Time, (iii) the Trust and the Company
have complied with all agreements and satisfied all conditions on their 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) At the time of the execution of this Agreement and at the Closing
Time, Ernst & Young LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the date of this Agreement and as of the
Closing Time, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the applicable published rules and regulations
thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules incorporated in the Registration
Statement and the Prospectus and reported on by them comply in form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial information; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
shareholders, directors and executive and audit committees of the
Company; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and
its subsidiaries as to transactions and events subsequent to the date
of the most recent audited financial statements included or
incorporated into the Registration Statement, nothing came to their
attention which caused them to believe that:
(1) the unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do not
comply in form in all material respects with applicable accounting
requirements of the Act and the Exchange Act and with the published
rules and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form 10-Q
under the
- 27 -
28
Exchange Act; or any material modifications should be made to said
unaudited financial statements for them to be in conformity with
generally accepted accounting principles; or
(2) with respect to the period subsequent to the date
of the most recent financial statements, audited or unaudited, in or
incorporated in the Registration Statement and the Prospectus, there
were any changes, at a specified date not more than five business days
prior to the date of the letter, or any net increases in the long-term
debt or short-term debt (defined for this purpose as amounts payable
within twelve months to banks, factors or other financial institutions
and holders of commercial paper) of the Company and its subsidiaries or
capital stock of the Company or decreases in the shareholders' equity
of the Company as compared with the amounts shown on the most recent
consolidated balance sheet incorporated in the Registration Statement
and the Prospectus, or for the period from the date of the most recent
financial statements incorporated in the Prospectus to such specified
date there were any decreases, as compared with the corresponding
period in the preceding year, in net investment income, total revenues,
income before income taxes or net income of the Company and its
subsidiaries, except in all instances for changes or decreases set
forth in such letter, in which case the letter shall be accompanied by
an explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived
from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement and the
Prospectus, including, without limitation, the information set forth
under the caption "Ratio of Earnings to Fixed Charges" and such other
materials set forth under such other captions as the Representatives
may reasonably request in the Prospectus, the Registration Statement
and the documents incorporated by reference therein, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
(f) At Closing Time, counsel for the 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 Preferred
Securities as herein contemplated and related proceedings, 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 Offerors in connection with the issuance
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29
and sale of the Preferred Securities as herein contemplated shall be
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
(g) In the event that the Underwriters exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the Option Securities,
the representations and warranties of the Offerors contained herein and the
statements in any certificates furnished by the Offerors hereunder shall be true
and correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Representative shall have received:
(1) The certificates, each dated such Date of Delivery, of the
relevant officer of the respective Offeror confirming that the respective
certificates delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(2) The favorable opinion of Keating, Muething & Klekamp, PLL,
counsel for the Offerors, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, related to the Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Sections 5(b)(1).
(3) The favorable opinion of Morris, Nichols, Arsht & Tunnell,
Special Delaware counsel for the Offerors, in form and substance satisfactory to
counsel for the 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 opinion required by Sections 5(b)(2).
(4) The favorable opinion of the Law Department of The Bank of
New York, counsel for The Bank of New York, in form and substance satisfactory
to counsel for the 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 opinion required by Sections 5(b)(3).
(5) The favorable opinion of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., special tax counsel to the Offerors, in form and substance
satisfactory to counsel for the 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 opinion required by Sections 5(b)(4).
(6) The favorable opinion of Taft, Stettinius & Hollister,
counsel for the 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 opinion required by Sections 5(b)(5).
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30
(7) A letter from Ernst & Young LLP, in form and substance
satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to the
Representatives pursuant to Section 5(e) hereof, except that the "specified
date" in the letter furnished pursuant to this Section 5(g)(7) shall be a date
not more than five days prior to such Date of Delivery.
(h) At Closing Time, and at the relevant Date of Delivery, as the case
may be, the Preferred Securities shall be rated "BBB-" or higher by Standard &
Poor's Corporation ("S&P") or "ba1" or higher by Moody's Investors Services
("Moody's") and the Trust shall have delivered to the Representatives a letter,
dated the Closing Time, and at the relevant Date of Delivery, as the case may
be, from S&P or Moody's, or other evidence satisfactory to the Representatives,
confirming that the Preferred Securities have such ratings; and there shall not
have occurred any decrease in the ratings of any of the debt securities of the
Company or of the Preferred Securities by either S&P or Moody's and neither S&P
nor Moody's shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities of the Company or of the Preferred Securities.
(i) At Closing Time, and at the relevant Date of Delivery, as the case
may be, the Preferred Securities shall have been approved for listing on the New
York Stock Exchange upon notice of issuance.
(j) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Offerors at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4.
SECTION 6. Indemnification.
(a) The Offerors agree to jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto) or the omission
or alleged omission
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31
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
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Offerors; and
(iii) 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) or (ii) above;
provided, however, that the foregoing 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
Offerors by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430(A)
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto). The
foregoing indemnity with respect to any untrue statement contained in or
omission from a preliminary prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities that are the subject thereof if such person was not sent or given
a copy of the Prospectus (or the Prospectus as amended or supplemented) (in each
case exclusive of the documents from which information is incorporated by
reference) at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such
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32
preliminary prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, the Trust and each of its Trustees who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 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 430(A) Information deemed to be a
part thereof, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Offerors by such Underwriter through
Merrill Lynch expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, provided, however, that such counsel shall be
reasonably satisfactory to the Offerors. In the case of parties indemnified
pursuant to Section 6(b) above, counsel to the indemnified parties shall be
selected by the Offerors, provided, however, such counsel shall be reasonably
satisfactory to Merrill Lynch. 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
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33
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, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 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 such proportion as is
appropriate to reflect the relative benefits received by the Offerors on the one
hand and the Underwriters on the other hand from offering of the Designated
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 Offerors on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the Designated
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
Designated Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
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34
aggregate initial public offering price of the Designated Securities as set
forth on such cover.
The relative fault of the Offerors on the one hand and the 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 Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Offerors and the 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 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 any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 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 an
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 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
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the
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35
principal amount of 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 and the Pricing Agreement, or contained in certificates of officers of
the Company or trustees of the Trust submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Trust or the Company, and shall survive delivery of the Designated Securities to
the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Offerors at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change or any
development which could reasonably be expected to result in a prospective
material adverse change in the business or the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or Company and its Subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of hostilities or other calamity or
crisis, or any change or development involving a prospective change in national
or international political, financial or economic conditions the effect of which
is such as to make it, in the judgment of the Underwriters, impracticable to
market the Preferred Securities or to enforce contracts for the sale of the
Preferred Securities, or (iii) if trading in the Preferred Securities or any
securities of the Company has been suspended or limited by the Commission, NASD
or the New York Stock Exchange, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or by
order of the Commission or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal, New York or Ohio
authorities.
(b) If this Agreement and the Pricing Agreement are terminated pursuant
to this Section , such termination shall be without liability of any party to
any other party except as provided in Section 4, and provided, further, that
Sections 1, 6 and 7 shall survive such termination and remain in full force and
effect.
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36
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Securities
which it or they are obligated to enter into under this Agreement and the
Pricing Agreement (the "Defaulted Securities"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of such Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, the 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
total number of Securities, the non-defaulting Underwriters shall be obligated
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
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, either the Representatives or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
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
Underwriters shall be directed to c/o Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated at 5500 Sears Tower, Chicago, Illinois
60606, Attention of David C. Sherwood, Director, with a copy to Taft, Stettinius
& Hollister, 1800 Star Bank Center, 425 Walnut Street, Cincinnati, Ohio 45202,
Attention of Timothy E. Hoberg, Esq.; notices to the Offerors shall be directed
to American Financial Group, Inc., One East Fourth Street, Cincinnati, Ohio
45202, Attention of James C. Kennedy, Esq., Deputy General Counsel and
Secretary, with a copy to Keating, Muething & Klekamp, PLL, 1800 Provident
Tower, One East Fourth Street, Cincinnati, Ohio 45202, Attention of Gary P.
Kreider, Esq.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Offerors and their respective
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37
successors. Nothing expressed or mentioned in this Agreement or the Pricing
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Offerors 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 the
Pricing Agreement or any provision herein or therein contained. This Agreement
and the Pricing Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Offerors and their respective successors and legal representatives, 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 Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time unless otherwise
indicated.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Offerors in accordance with its terms.
Very truly yours,
AMERICAN FINANCIAL GROUP, INC.
By: ______________________________
Name:
Title:
AMERICAN FINANCIAL CAPITAL TRUST I
By: _____________________________
Title: Regular Trustee
By: _____________________________
Title: Regular Trustee
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38
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
CS FIRST BOSTON CORPORATION
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _____________________________________
Authorized Signatory
For themselves and as the Representatives of the several Underwriters
named in Schedule A hereto.
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39
SCHEDULE A
Name of Underwriter Number of Shares
------------------- ----------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................
CS First Boston Corporation........................
Dean Witter Reynolds Inc...........................
Donaldson Lufkin & Jenrette Securities
Corporation...............................
PaineWebber Incorporated...........................
Prudential Securities Incorporated.................
Total.............................................. 4,000,000
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40
EXHIBIT A
4,000,000 Preferred Securities
AMERICAN FINANCIAL CAPITAL TRUST I
(a Delaware business trust)
____% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Security)(SM)
PRICING AGREEMENT
MERRILL LYNCH & CO. ___________, 1996
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
CS FIRST BOSTON CORPORATION
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
as Representative of the several
Underwriters named in the
within-mentioned Underwriting
Agreement
Merrill Lynch World Headquarters
5500 Sears Tower
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
___________________, 1996 (the "Underwriting Agreement"), relating to the
purchase by the several Underwriters named in Schedule A thereto, for whom
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS
First Boston Corporation, Dean Witter Reynolds Inc., Donaldson Lufkin & Jenrette
Securities Corporation, PaineWebber Incorporated and Prudential Securities
Incorporated are acting as representatives (the "Representatives"), of the above
___% Trust Originated Preferred Securities (the "Preferred Securities"), of
American Financial Capital Trust I, a Delaware business trust (the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the
Trust and American Financial Group, Inc. (the "Company"), an Ohio
corporation, agree with each Underwriter as follows:
1. The initial public offering price per security for the Preferred
Securities, determined as provided in said Section 2, shall be $_____.
2. The purchase price per security for the Preferred Securities to be
paid by the several Underwriters shall be $ , being an amount equal to the
initial public offering price set forth above; provided that the purchase price
per Preferred Security for any Option Securities (as defined in the Purchase
Agreement) purchased upon exercise of the over-allotment option described in
Section 2(b) of the Purchase Agreement shall be reduced by an amount per share
equal to any distribution declared by the Trust and payable on the Initial
Securities (as defined in the Purchase Agreement) but not payable on the Option
Securities.
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3. The compensation per Preferred Security to be paid by the Company to
the several Underwriters in respect of their commitments hereunder shall be
$______; provided, however, that the compensation per Preferred Security for
sales of 10,000 or more Preferred Securities to a single purchaser shall be $
_______.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Trust and the Company in accordance
with its terms.
Very truly yours,
AMERICAN FINANCIAL GROUP, INC.
By: ______________________________
Name:
Title:
AMERICAN FINANCIAL GROUP CAPITAL
TRUST I
By: _____________________________
Title: Regular Trustee
By: _____________________________
Title: Regular Trustee
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(SM) "Trust Originated Preferred Securities" and "TOPrS" are
service marks of Merrill Lynch & Co. Inc.
A-2
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CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _____________________________________
Authorized Signatory
For themselves and as the Representatives of the several Underwriters
named in Schedule A to the Underwriting Agreement.