$65,000,000
___ % Convertible Subordinated Notes due 2003
PIONEER FINANCIAL SERVICES, INC.
UNDERWRITING AGREEMENT
----------------------
___________ __, 1996
BEAR, XXXXXXX & CO. INC.
EVEREN SECURITIES, INC.
XXXXXXXXXXX & CO., INC.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 10167
Dear Sirs:
Pioneer Financial Services, a corporation organized and existing under the
laws of Illinois (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Bear, Xxxxxxx & Co. Inc., Everen Securities,
Inc. and Xxxxxxxxxxx & Co., Inc. (the "Underwriters") $65,000,000 aggregate
principal amount of its ___% Convertible Subordinated Notes due 2003 (the
"Initial Notes"), to be issued under an Indenture (the "Indenture") to be dated
as of __________ __, 1996, between the Company and The First National Bank of
Chicago, as trustee (the "Trustee"), and, for the sole purpose of covering over-
allotments in connection with the sale of the Initial Notes, at the option of
the Underwriters, up to an additional $9,750,000 aggregate principal amount of
its ___% Convertible Subordinated Notes due 2003 (the "Additional Notes"). The
Initial Notes and any Additional Notes purchased by the Underwriters are
referred to herein as the "Notes." The Notes are convertible into an
indeterminate number of shares of Common Stock, $1.00 par value, of the Company
(the "Com-
mon Stock"); such number of shares deliverable upon conversion from time to time
being hereinafter called the "Shares." The Notes and the Shares are more fully
described in the Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and may have filed an amendment or
amendments thereto, on Form S-3 (No. 333-01119), for the registration of the
Notes and the Shares under the Securities Act of 1933, as amended (the "Act").
Such registration statement, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as a part thereof, as amended
at the time of effectiveness of the registration statement, including any
information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations of the
Commission under the Act (the "Regulations"), is herein called the "Registration
Statement" and the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is
required, is herein called the "Prospectus." The term "preliminary prospectus"
as used herein means a preliminary prospectus as described in Rule 430 of the
Regulations. Any reference herein to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the effective date of the Registration Statement,
the date of such preliminary prospectus or the date of the Prospectus, as the
case may be, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include (i) the
filing of any document under the Exchange Act after the effective date of the
Registration Statement, the date of such preliminary prospectus or the date of
the Prospec-
2
tus, as the case may be, which is incorporated therein by reference and (ii) any
such document so filed.
(b) At the time of the effectiveness of the Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act is filed and at the Closing Date and the Additional Closing Date,
if any, (as hereinafter defined), the Registration Statement and the Prospectus
and any amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Act and the
Regulations and the Exchange Act and the respective rules and regulations
thereunder and does not or will not contain an untrue statement of a material
fact and does not or will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein (i) in the
case of the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading. When the preliminary prospectus, dated March 12, 1996, was first
filed with the Commission and when any amendment thereof or supplement thereto
was first filed with the Commission, such preliminary prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Act and the Regulations and the Exchange
Act and the respective rules and regulations thereunder and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
No representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related preliminary prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through you as herein stated expressly for use in connection with
the preparation thereof. If Rule 434 is used, the Company will comply with the
requirements of Rule 434.
3
(c) Xxxxx & Young LLP, who have audited the consolidated financial
statements and supporting schedules included or incorporated by reference in the
Registration Statement, are independent public accountants as required by the
Act and the Regulations.
(d) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, (i) there has been no material
adverse change or any development involving a prospective material adverse
change in the business, prospects, properties, assets, operations, condition
(financial or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, (ii) since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations which are
reflected or specifically described in the Registration Statement and the
Prospectus, (iii) neither the Company nor any of its subsidiaries have entered
into any transactions, other than those in the ordinary course of business or
disclosed in the Registration Statement and Prospectus, which are material to
the Company and its subsidiaries taken as a whole, (iv) there has been no
dividend or distribution of any kind declared, made or paid by the Company on
its capital stock (except for regular quarterly dividends on common stock and
preferred stock in each case as described in the Prospectus), and (v) there has
not been (A) any change in the capital stock of the Company or any of its
subsidiaries (other than the issuance of Common Stock pursuant to the conversion
of the $2.125 Preferred Stock or 8% Debentures (each as defined in the
Prospectus) or pursuant to the exercise of options granted under the Company's
existing employee stock and stock option plans in the ordinary course of
business) or (B) any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock of the Company (other than the grant
of options pursuant to the Company's existing employee stock and stock option
plans in the ordinary course of business) or any of its subsidiaries.
4
(e) The Company is registered as an insurance holding company in Illinois,
Arizona and Pennsylvania and all other states, if any, in which such
registration is required. The Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the Indenture. All necessary
corporate proceedings of the Company have been duly taken to authorize the
execution, delivery and performance of this Agreement and the Indenture by the
Company. This Agreement and the Indenture have been duly authorized by the
Company, and this Agreement has been and the Indenture (as of the Closing Date)
will be, duly executed and delivered by the Company, and this Agreement is, and
the Indenture will be, a legal, valid, and binding obligation of the Company,
and the Indenture will be enforceable as to the Company in accordance with its
terms subject, as to enforceability, to applicable bankruptcy, reorganization,
moratorium or other similar laws of general application affecting the rights of
creditors generally and by general equitable principles. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state or local insurance regulatory, or
other governmental authority or any court or other tribunal is required by the
Company or any subsidiary for the execution, delivery, or performance of this
Agreement and the Indenture by the Company (except filings under the Act, the
Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") which have been or will be made before the Closing Date and
under "blue sky" or state securities laws). No consent of any party to any
material contract, agreement, instrument, lease, license, arrangement, or
understanding, or under the terms of any series of the Company's outstanding
preferred stock, to which the Company or any subsidiary is a party, or to which
any of their respective properties or assets are subject, is required for the
execution, delivery, or performance of this Agreement or the Indenture; and the
execution, delivery and performance of this Agreement and the Indenture, the
issuance and sale of the Notes as contemplated hereby, the conversion thereof,
the issuance of the Shares as contemplated thereby or the consummation of any
other of the transactions herein or therein contemplated or the fulfillment of
the terms hereof or thereof, will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time or both)
entitle any party to termi-
5
nate or call a default under any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate or result in a breach of any
term of the certificate of incorporation or by-laws of the Company or any of its
subsidiaries or violate, result in a breach of, or conflict with any law, rule,
or regulation, or any order, judgment, or decree binding on the Company or any
of its subsidiaries or to which any of their respective operations, businesses,
properties, or assets are subject which violation, breach, conflict or
entitlement would, individually or in the aggregate, have a material adverse
effect upon the business, prospects, properties, assets, operations, condition
(financial or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole, or would impair materially the ability of the
Company to perform its obligations hereunder or thereunder.
(f) Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any other party, is now, or is reasonably expected by the Company or
any of its subsidiaries to be, in violation or breach of, or default
(disregarding any grace or notice provision) with respect to any material
provision of any contract, agreement, instrument, lease, license, policy,
reinsurance treaty, arrangement, or understanding to which the Company or any of
its subsidiaries is a party, which violation, breach or default or violations,
breaches or defaults, singly or in the aggregate has, or can reasonably be
expected in the future to have, a material adverse effect on the business,
prospects, properties, assets, operations, condition (financial or other), net
worth or results of operations of the Company and its subsidiaries taken as a
whole; and each such contract, agreement, instrument, lease, license, policy,
reinsurance treaty, arrangement, and understanding is in full force and is the
legal, valid and binding obligation of the Company or its subsidiaries, as the
case may be, and, to the Company's knowledge, the other parties thereto, and is
enforceable as to the Company or its subsidiaries, as the case may be, and, to
the Company's knowledge, the other parties thereto in accordance with its terms
subject, as to enforceability, to applicable bankruptcy, reorganization,
moratorium or other similar laws of general application affecting the rights of
creditors generally, except where such failure to be in full force or to be a
legal, valid and binding obligation or to be
6
enforceable, as the case may be, has not had, or would not reasonably be
expected in the future to have, a material adverse effect on the business,
prospects, properties, assets, operations, condition (financial or other), net
worth or results of operations of the Company and its subsidiaries taken as a
whole.
(g) The Company and its subsidiaries have good and marketable title to all
real property and material assets disclosed in the Registration Statement and
Prospectus as being owned by them, free and clear of all liens, mortgages,
claims, security interests or other encumbrances, except such as are disclosed
in the Registration Statement and Prospectus and except for liens (i) incurred
in the ordinary course of business which do not materially effect the use or
value thereof and (ii) in respect of agent commissions and receivables from
agents incurred in connection with the sale of agent debit balances; the
property held under lease by the Company or its subsidiaries is held by them
under valid, subsisting and binding leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with
the conduct of the business of the Company and its subsidiaries taken as a whole
or as do not materially affect the value of such property as used by the Company
or are not material in amount and do not interfere in any material respect with
the use of the property or the conduct of the business of the Company and its
subsidiaries taken as a whole.
(h) All of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable, and
were not issued in violation of or subject to any preemptive or similar rights
to subscribe for or to purchase any such shares of Common Stock. The Company
had, at ________ __, 1996, an authorized and outstanding capitalization as set
forth in the Prospectus under the column "Actual" under the caption
"Capitalization." Except as disclosed in the Registration Statement and
Prospectus, the Company is not, and the Underwriters will not be, subject to any
preemptive or similar rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of Common Stock pursuant to the
Company's certificate of incorporation, bylaws or any agreement or other
instrument to which the Company is a party or by which the Company is bound.
Except as dis-
7
closed in the Registration Statement and Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of the capital stock of the Company.
(i) All of the issued and outstanding capital stock of each subsidiary of
the Company has been duly authorized and validly issued and is fully paid and
nonassessable and was not issued in violation of preemptive or similar rights to
subscribe for or to purchase any shares of such capital stock and, except as
disclosed in the Prospectus or Schedule II hereto, is owned directly or
indirectly by the Company, free and clear of any lien, encumbrance, claim,
security interest, restriction on transfer, stockholders' agreement, voting
trust or other defect of title whatsoever (except for restrictions imposed by
state insurance laws on the transfer of shares of subsidiaries engaged in the
insurance business). Except as disclosed on Schedule II hereto, there are no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of capital stock or other equity interest in any
of the Company's subsidiaries in which the Company owns 50% or more of the
equity of such subsidiary.
(j) The Notes and the Shares conform in all material respects to all
statements relating thereto contained in the Registration Statement and the
Prospectus; the Notes have been duly authorized and, when issued, authenticated
as specified in the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be validly issued and free and clear of all
liens and restrictions on transfer and will constitute valid binding obligations
of the Company enforceable in accordance with their terms; the Indenture
complies as to form in all material respects with the requirements of the Trust
Indenture Act, and the rules and regulations of the Commission thereunder; and
upon effectiveness of the Registration Statement, will be duly qualified under
the Trust Indenture Act; the Shares issuable upon conversion of the Notes have
been duly authorized and, when issued and delivered upon conversion of the Notes
in accordance with the Indenture, will be validly issued, fully paid and non-
assessable and free and clear of all liens and restrictions on transfer
8
(provided, however, that the Company may have to amend its Articles of
Incorporation to authorize additional shares of Common Stock in the event that,
as a result of the anti-dilutive provisions in the Indenture, a greater number
of shares of Common Stock are issuable upon conversion of the Notes); the Shares
initially issuable upon conversion of the Notes are eligible for trading on the
New York Stock Exchange; and the holders of outstanding shares of capital stock
of the Company are not entitled to preemptive or other rights to subscribe for
the Notes or for the Shares issuable upon conversion of the Notes.
(k) Each of the Company and its subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its subsidiaries is duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will not in the
aggregate have a material adverse effect on the business, prospects, properties,
assets, operations, condition (financial or other), net worth or results of
operations of the Company and its subsidiaries taken as a whole. The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit 21 to the Annual
Report on Form 10-K for the Company's most recent fiscal year or as set forth on
Schedule II hereto.
(l) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, contemplated
against the Company or any of its subsidiaries which could reasonably be
expected to result in a material adverse change in the business, prospects,
properties, assets, operations, condition (financial or other), net worth or
results of operations of the Company and its subsidiaries taken as a whole or
which is required to be disclosed in the Registration Statement and the
Prospectus.
9
(m) The Company and its subsidiaries have filed all necessary federal,
state, local and foreign income, franchise and sales tax returns and have paid
all taxes shown thereon as due, and the Company has no knowledge of any tax
deficiency which has been asserted against the Company or any of its
subsidiaries which would materially and adversely affect the business or
properties of the Company and its subsidiaries, taken as a whole. To the
Company's knowledge, tax liabilities in the aggregate are adequately provided
for on the consolidated books of the Company. The Company has not received
notice of any material proposed additional tax assessments against it or any of
its subsidiaries.
(n) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Notes or the Company's Common Stock to facilitate the sale or
resale of the Notes.
(o) The financial statements, including the notes thereto, and supporting
schedules included in the Registration Statement and the Prospectus present
fairly the financial position of the Company and its subsidiaries as of the
dates indicated and the results of its operations for the periods specified; and
the policy reserves shown thereon are, to the best of the Company's knowledge,
adequate to meet policy liabilities in the ordinary course of business and
properly stated in all material respects; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. The statutory
financial statements of each of the Subsidiaries engaged in the insurance
business, from which certain financial information and certain ratios and other
statistical data contained in the Registration Statement have been derived, have
for each relevant period been prepared in accordance with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the Insurance Department of the respective states of domicile of such
Subsidiaries, and such accounting practices have been
10
applied on a consistent basis throughout the periods involved, except as may be
set forth therein.
(p) Except as described in the Prospectus, no holder of securities of the
Company has any rights to the registration of securities of the Company because
of the filing of the Registration Statement or otherwise in connection with the
sale of the Notes contemplated hereby.
(q) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
(r) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(s) The documents incorporated or deemed to be incorporated by reference
in the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
under the Exchange Act, and, when read together with the other information in
the Prospectus, at the time the Registration Statement and any amendments
thereto become effective and at the Closing Date, 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, in the light of the
circumstances under which they were made, not misleading.
(t) The certificates of authority issued by the Insurance Division of the
respective domiciliary state of each of the Company's subsidiaries engaged in
the insurance business are in full force and effect, and no proceedings to
revoke any of the certificates are pending or, to the best knowledge of the
Company, threatened. Each of the Company's subsidiaries engaged in the
insurance business holds such licenses, certificates, permits and other required
authorizations from insurance regulatory or other governmental authorities as
are adequate to conduct the business of the Company and its subsidiaries as
described in the Prospectus and necessary for qualification as an insurer or
insurance
11
agent/broker, as the case may be, in each jurisdiction in which the conduct of
its business requires such qualification; and all licenses, certificates,
permits and other required authorizations are in full force and effect, and no
proceedings to revoke any of them are pending or, to the best knowledge of the
Company, threatened except where the failure to be in full force or effect,
singly or in the aggregate, do not or will not have a material adverse effect on
the business, prospects, properties, assets, operations, condition (financial or
other), net worth or results of operations of the Company and its subsidiaries
taken as a whole.
(u) Neither the Company nor any of its subsidiaries is in violation of any
law, ordinance, governmental rule or regulation (including, without limitation,
federal, state and local rules and regulations relating to the protection of the
environment or concerning the handling, storage, disposal or discharge of toxic
materials (collectively, "Environmental Laws")) or court decree or order to
which it or any of its property is subject, except for such violations which
(individually or in the aggregate) do not or will not have a material adverse
effect on the business, prospects, properties, assets, operations, condition
(financial or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole. Each of the Company and its subsidiaries has
obtained any permits, consents and authorizations required to be obtained by it
under applicable laws, rules, ordinances or regulations including, without
limitation, Environmental Laws and any such permits, consents and authorizations
remain in full force and effect, except as to any of the foregoing the absence
of which (individually or in the aggregate) will not have a material adverse
effect on the business, prospects, properties, assets, operations, condition
(financial or other), net worth or results of operations of the Company and its
subsidiaries taken as a whole. There is no pending or, to the Company's or any
of its subsidiaries' knowledge, threatened, action or proceeding against the
Company or any of its subsidiaries alleging violations of any applicable laws,
rules, ordinances or regulations including, without limitation, any
Environmental Laws, other than any such actions or proceedings which,
individually or in the aggregate, if adversely determined, is not reasonably
likely to have a material adverse effect on the business, prospects, properties,
12
assets, operations, condition (financial or other), net worth or results of
operations of the Company and its subsidiaries taken as a whole.
(v) The reinsurance treaties currently in effect between any subsidiary of
the Company, or "pool" of insurers in which a subsidiary participates, if any,
and reinsurers are accurately summarized in the Prospectus under the caption
"Business--Reinsurance." Neither any such pool, if any, nor any of the
Company's subsidiaries is in violation of or in default in any material respect
under any term or provision of any such treaty and, to the best knowledge of the
Company, no other party to any such treaty is in default or breach thereof in
any material respect.
(w) Schedule III hereto constitutes a complete list of every jurisdiction
in which the Company and Pioneer Life Insurance Company, Design Benefit Plans,
Inc., National Group Life Insurance Company., Continental Life & Accident
Company, Connecticut National Life Insurance Company, National Benefit Plans,
Inc. and Administrators Service Corporation (collectively, the "Designated
Subsidiaries") are registered to do business as a foreign corporation. The
Company and the Designated Subsidiaries are not required to be qualified in any
other jurisdiction except when the failure to be so qualified would not have a
material adverse effect on the business, prospects, properties, assets,
operations, condition (financial or other), net worth or results of operations
of the Company and its subsidiaries taken as a whole.
(x) No default or event of default with respect to any Senior Indebtedness
(as such term is defined in the Indenture) entitling the holders thereof to
accelerate the maturity thereof exists or will exist as a result of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and each of the Company and its subsidiaries has duly
performed or observed all material obligations, agreements, covenants or
conditions contained in any contract, indenture, mortgage, agreement or
instrument relating to any Senior Indebtedness.
(y) The Company and its subsidiaries maintain a system of internal
accounting controls suffi-
13
cient to provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(z) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts generally deemed adequate for its business, including
but not limited to, general liability insurance and insurance covering real and
personal property owned or leased by the Company or any of its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(aa) Neither the Company nor any of its subsidiaries has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof
(bb) The Company has complied with (or is exempt from) all of the
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issues doing
business with the Government of Cuba or with any affiliate located in Cuba.
(cc) Except pursuant to this Agreement, neither the Company nor any of its
subsidiaries has incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
14
2. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, Initial Notes in
the respective principal amounts set forth opposite the name of such Underwriter
in Schedule I hereto at a purchase price equal to _____% of the principal amount
thereof, plus accrued interest from ________ __, 1996 (plus any additional
principal amount which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof).
(b) Payment of the purchase price for the Initial Notes shall be made at
the office of XxXxxxxxx, Will & Xxxxx in Chicago, Illinois, and delivery of the
certificates for the Initial Notes shall be made at the office of Bear, Xxxxxxx
& Co. Inc., New York, New York, 10167 or at such other place as shall be agreed
upon by you and the Company, at 10:00 A.M. on the third or fourth business day
(as permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in
accordance with the provisions of Section 9 hereof) following the date of the
effectiveness of the Registration Statement (or, if the Company has elected to
rely upon Rule 430A of the Regulations, the third or fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) after the determination of
the initial public offering price of the Notes), or such other time not later
than ten business days after such date as shall be agreed upon by you and the
Company (such time and date of payment and delivery being herein called the
"Closing Date"). Payment shall be made to the Company by wire transfer or
certified or official bank check or checks drawn in New York Clearing House
funds or similar next day funds payable to the order of the Company, against
delivery to you for the respective accounts of the Underwriters of certificates
for the Notes to be purchased by them. Certificates for the Notes shall be
registered in such name or names and in such authorized denominations as you may
request in writing at least two full business days prior to the Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Closing Date.
15
(c) In addition, the Company hereby grants to the Underwriters the option
to purchase all or a portion of the Additional Notes at the same purchase price
per Note to be paid by the Underwriters to the Company for the Initial Notes as
set forth in this Section 2 plus accrued interest from _______________ to the
applicable Additional Closing Date, for the sole purpose of covering over-
allotments in the sale of Initial Notes by the Underwriters. This option may be
exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate principal amount of Additional Notes
as to which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Notes are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Notes shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least one full business day prior to the Additional Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
The principal amount of Additional Notes to be sold to each Underwriter
shall be the principal amount which bears the same ratio to the aggregate
principal amount of Additional Notes being purchased as the principal amount of
Initial Notes set forth opposite the name of such Underwriter in Schedule I
hereto (or such number increased as set forth in Section 9 hereof) bears to
$65,000,000, subject, however, to such adjustments as you in your sole
discretion shall make so that the aggregate principal amount of Additional Notes
to be purchased by each Underwriter shall be in integrals of $1,000.
Payment for the Additional Notes shall be made by wire transfer or
certified or official bank check or checks, in New York Clearing House or
similar next day
16
funds, payable to the order of the Company at the offices of XxXxxxxxx, Will &
Xxxxx, Chicago, Illinois, or such other location as may be mutually acceptable,
upon delivery of the certificates for the Additional Notes to the Underwriters.
3. Offering. Upon your authorization of the release of the Initial Notes,
the Underwriters propose to offer the Notes for sale to the public upon the
terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) If the Registration Statement has not yet been declared effective the
Company will use its best efforts to cause the Registration Statement and any
amendments thereto to become effective as promptly as possible, and if Rule 430A
is used or the filing of the Prospectus is otherwise required under Rule 424(b)
or Rule 434, the Company will file the Prospectus (properly completed if Rule
430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to you of such timely filing.
If the Company elects to rely on Rule 434, the Company will prepare and file a
term sheet that complies with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by you, will
confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any post-
effective amendment thereto or of the initiation, or the threatening, of any
proceedings therefor, (v) of the receipt of any comments from the Commission or
the "blue sky" or insurance securities authority of any jurisdiction regarding
the Registration Statement, any post-effective amendment thereto, the
Prospectus, or any amendment or supplement thereto, and (vi) of the receipt by
the Company of any notification
17
with respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement or
file any document under the Exchange Act if such document would be deemed to be
incorporated by reference into the Prospectus to which you shall reasonably
object in writing after being timely furnished in advance a copy thereof;
provided, however, that such objection shall not prevent the filing of any such
amendment or supplement or document under the Act or the Exchange Act which, in
the written opinion of outside counsel for the Company, is required to be filed
pursuant to the Act, the Exchange Act or the Regulations.
(b) If at any time when a prospectus relating to the Notes is required to
be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would, in the judgment of the
Underwriters or the Company, include an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement to comply with the Act or
the Regulations, or to file under the Exchange Act so as to comply therewith any
document incorporated by reference in the Registration Statement or the
Prospectus or in any amendment thereof or supplement thereto, the Company will
notify you promptly and prepare and file with the Commission an appropriate
amendment or supplement (except as set forth above in paragraph (a) of this
Section 4) which will correct such statement or omission or which will effect
such compliance and will use its best efforts to have any amendment to the
Registration Statement declared effec-
18
tive as soon as possible for as long as any Underwriter is required to deliver a
prospectus in connection with sales of the Notes.
(c) The Company will promptly deliver to you three signed copies of the
Registration Statement, including exhibits and all documents incorporated by
reference therein and all amendments thereto (if requested by you), and the
Company will promptly deliver to each of the Underwriters such number of copies
of any preliminary prospectus, the Prospectus, the Registration Statement, all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, without exhibits, as you may reasonably
request for as long as any Underwriter is required to deliver a prospectus in
connection with sales of the Notes.
(d) The Company will endeavor in good faith, in cooperation with you, at
or prior to the time of effectiveness of the Registration Statement, to qualify
the Notes for offering and sale under the "blue sky" or insurance securities
laws relating to the offering or sale of the Notes of such jurisdictions as you
may designate and to maintain such qualification in effect for so long as
required for the distribution thereof; except that in no event shall the Company
be obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 120 days from the date of the Prospectus, the
Company will not, without your prior written consent, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly ("Transfer"), any
19
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock or any rights to acquire Common Stock), and the
Company will obtain the undertaking of each of its executive officers and
directors not to engage in any of the aforementioned transactions on their own
behalf, other than (i) the Company's sale of Notes hereunder; (ii) the Company's
issuance of Common Stock upon the exercise of presently outstanding stock
options or upon the conversion of the outstanding $2.125 Preferred Stock or of
the 8% Debentures; (iii) under the Company's stock option, stock purchase plans
or other employee incentive plans existing on the date hereof; or (iv) the
Transfer of Common Stock (or securities convertible into or exchangeable for
Common Stock or any rights to acquire Common Stock) not in excess of 10% of such
officer's or director's holdings in Common Stock (or any securities convertible
into or exchangeable or exercisable for Common Stock or any rights to acquire
Common Stock).
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the Notes as set
forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Notes to be listed
on the New York Stock Exchange ("NYSE") and for so long as any of the Notes are
outstanding and the Company is subject to the reporting requirements of the
Exchange Act, use its best efforts to maintain the NYSE listing of the Common
Stock and for so long as any of the Notes are outstanding use its best efforts
to maintain the NYSE listing of the Notes.
(j) The Company, during the period when the Prospectus is required to be
delivered under the Act or the Exchange Act, will file all documents required to
be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange
Act within the time periods re-
20
quired by the Exchange Act and the rules and regulations thereunder.
(k) So long as any of the Notes remain outstanding, the Company agrees to
keep reserved such number of shares of its Common Stock as are necessary to
permit the conversion of all of the Notes at the conversion price in effect from
time to time; and in connection therewith, the Company agrees to take any and
all such legal and other action necessary to permit the conversion of all the
Notes at any time including, if required by law, the filing and maintaining
effective of any registration statement with the Commission or under any state
"blue sky" or insurance securities laws, except that in no event shall the
Company be obligated in connection therewith to execute a general consent to
service of process.
(l) Until the Closing Date, neither the Company nor any of the
subsidiaries shall, without your prior written consent (which shall not be
unreasonably withheld), issue, directly or indirectly, any press release or
other communication or hold any press conference with respect to the Company,
any of the subsidiaries, their respective activities or the offering
contemplated hereby, other than trade releases issued in the ordinary course of
the Company's business consistent with past practices with respect to the
Company's operations, unless in the written opinion of legal counsel to the
Company such press release is required to comply with applicable law.
5. Payment of Expense. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents and all other
documents related to the public offering of the Notes (including those supplied
to the Underwriters in quantities as hereinabove
21
stated), (ii) the issuance, transfer and delivery of the Notes to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
qualification of the Notes under state or foreign securities or Blue Sky laws
and insurance securities laws, including the costs of printing and mailing a
preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters (which fees of counsel shall not exceed $20,000) and such counsel's
disbursements in relation thereto, (iv) listing the Notes and the Shares on the
NYSE, (v) filing fees of the Commission and the National Association of
Securities Dealers, Inc., (vi) the cost of printing certificates representing
the Notes, (vii) the cost and charges of any trustee, transfer agent or
registrar and (viii) all other costs and expenses incident to the performance of
the Company's obligations hereunder and not otherwise specifically provided for
in this Section. It is understood, however, that the Underwriters will pay all
travel expenses incurred by the Underwriters in connection with the consummation
of the transactions contemplated by this Agreement and all expenses incurred by
the Underwriters in marketing the Notes.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Initial Notes and the Additional Notes,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Initial Notes and any Additional Closing Date, if
different, for the Additional Notes), to the absence from any certificates,
opinions, written statements or letters furnished to you or to Skadden, Arps,
Slate, Xxxxxxx & Xxxx ("Underwriters' Counsel") pursuant to this Section 6 of
any misstatement or omission, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement (including the Statement of Eligibility and
Qualification of the Trustee on Form T-1 (the "T-1") shall have become effective
not later than 5:30 P.M., New York time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by you; if
the Company shall have elected to rely upon Rule 430A or Rule
22
434 of the Regulations, the Prospectus shall have been filed with the Commission
in a timely fashion in accordance with Section 4(a) hereof; and, at or prior to
the Closing Date no stop order suspending the effectiveness of the Registration
Statement (including the T-1) or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the opinion of XxXxxxxxx,
Xxxx & Xxxxx, counsel for the Company, dated the Closing Date addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel, to
the effect that:
(i) Each of the Company and its Designated Subsidiaries has been
duly incorporated and is validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each of the Company and its
Designated Subsidiaries is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction listed on Schedule
III hereto. Each of the Company and its Designated Subsidiaries has full
corporate power and authority to conduct its business in the manner
described in the Prospectus (with such exceptions as are in the aggregate
not material to the business or financial condition of the Company and its
subsidiaries taken as a whole).
(ii) The Company has an authorized capital stock as set forth in
the Registration Statement and the Prospectus in the column entitled
"Actual" under the caption "Capitalization." All of the outstanding shares
of Common Stock are duly and validly authorized and issued, are fully paid
and nonassessable and were not issued in violation of or subject to any
preemptive rights (whether created by statute or by the Company's
certificate of incorporation or bylaws or, to the knowledge of such
counsel, based on a certificate from officers of the Company, any agreement
or other instrument to which the Company is a party or by which the Company
is bound). The Common Stock, Shares and the Notes conform
23
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus under the captions "Description
of Capital Stock" and "Description of the Notes.
(iii) The Common Stock currently outstanding is listed, and the
Notes to be sold under this Agreement to the Underwriters are duly
authorized for listing, on the NYSE.
(iv) To the knowledge of such counsel (based on a certificate
from officers of the Company) and except as disclosed in the Prospectus, no
holder of securities of the Company has any rights to the registration of
securities of the Company because of the filing of the Registration
Statement or otherwise in connection with the sale of the Notes
contemplated hereby.
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(vi) The Company has all requisite corporate power and authority
to execute, deliver and perform the Indenture, and all necessary corporate
proceedings of the Company have been taken to authorize the execution,
delivery and performance of the Indenture; the Indenture has been duly
authorized, executed and delivered by the Company, has been qualified under
the Trust Indenture Act, and constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or equity); the issuance and sale of the Notes have
been duly authorized by requisite corporate action on the part of the
Company and, when executed and authenticated in accor-
24
dance with the provisions of the Indenture and delivered to and paid for by
the Underwriters pursuant to this Agreement, will constitute valid and
binding obligations of the Company entitled to the benefits of the
Indenture (except as such benefits may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and general
principles of equity); the Shares issuable upon conversion of the Notes
have been duly authorized and Shares have been reserved for issuance upon
conversion of the Notes issued on the Closing Date, and, when issued and
delivered upon conversion of the Notes in accordance with the Indenture,
the Shares will be validly issued, fully paid and nonassessable (provided,
however, that the Company may have to amend its Articles of Incorporation
to authorize additional shares of Common Stock in the event that, as a
result of the anti-dilutive provisions in the Indenture, a greater number
of shares of Common Stock are issuable upon conversion of the Notes); no
holder of any outstanding shares of the Company's capital stock has any
preemptive rights (whether created by statute or by the Company's
certificate of incorporation or bylaws or, to the knowledge of such counsel
based on a certificate from officers of the Company, any agreement or other
instrument to which the Company is party or by which the Company is bound)
to subscribe for or purchase the Notes or the Shares issuable upon the
conversion thereof; and the certificates representing the Notes and the
Shares are in the form prescribed by the Indenture and the requirements of
the NYSE.
(vii) To the best of such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory or
governmental agency or body pending or threatened against, or involving the
properties or business of, the Company or any of its subsidiaries, which is
of a character required to be disclosed in the
25
Registration Statement and the Prospectus which has not been properly
disclosed therein.
(viii) The execution, delivery, and performance of this
Agreement and the Indenture and the consummation of the transactions
contemplated hereby and thereby including the sale of and issuance of the
Notes or issuance of the Shares upon conversion of the Notes by the Company
do not and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, any agreement or instrument filed as an exhibit to, or
incorporated by reference in, the Registration Statement or (B) violate or
conflict with any provision of the certificate of incorporation or by-laws
of the Company, or, to the best knowledge of such counsel, any statute,
rule or regulation of any Illinois, New York or United States public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any Illinois, New York or United States court or any
Illinois, New York or United States public, governmental, or regulatory
agency or body having jurisdiction over the Company or any of its
properties or assets is required for the execution, delivery and
performance of this Agreement and the Indenture or the consummation of the
transactions contemplated hereby or thereby, except for (1) such as may be
required under state securities or Blue Sky laws or insurance securities
laws in connection with the purchase and distribution of the Notes by the
Underwriters (as to which such counsel need express no opinion) and (2)
such as have been made or obtained under the Act, the Exchange Act and the
Trust Indenture Act. To the best knowledge of such counsel, no consent of
any
26
party to any contract or agreement filed as an exhibit to, or incorporated
by reference in, the Registration Statement, or under the provisions of any
outstanding series of the Company's preferred stock, is required for the
execution, delivery, or performance of this Agreement or the Indenture.
(ix) To the best knowledge of such counsel, any contract,
agreement, instrument, lease, policy, reinsurance treaty or license
required to be described in the Registration Statement or the Prospectus
has been properly described in all material respect therein. To the best
knowledge of such counsel, any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration Statement
has been filed with the Commission as an exhibit to the Registration
Statement.
(x) Insofar as statements in the Prospectus purport to summarize
the provisions of laws, rules, regulations, contracts, agreements,
instruments, or licenses, to the best knowledge of such counsel, such
statements constitute accurate summaries in all material respects.
(xi) The Company and each of its subsidiaries are, and upon sale
of the Notes will be, exempt from registration under the Investment Company
Act of 1940.
(xii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto appeared on their face to be
appropriately responsive in all material respects with the requirements of
the Act and the Trust Indenture Act and the respective rules and
regulations, except that such counsel does not express any opinion as to
the financial statements, schedules and other financial data included or
incorporated by reference therein or excluded therefrom, the exhibits to
the Registration Statement (except to the extent set forth in paragraph
(ix)), and
27
such counsel does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement and
the Prospectus except to the extent set forth below or in paragraphs (ii),
(vii), (ix) or (x) of this opinion. The documents filed under the Exchange
Act and incorporated by reference in the Registration Statement and the
Prospectus or any amendment thereof or supplement thereto when they became
effective or were filed with the Commission, as the case may be, appeared
on their face to be appropriately responsive in all material respects with
the Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, except that such counsel does not express
any opinion as to the financial statements, schedules and other financial
data included or incorporated by reference therein or excluded therefrom,
the exhibits to the Registration Statement (except to the extent set forth
in paragraph (ix)), and such counsel does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus except to the extent set forth
below or in paragraphs (ii), (vii), (ix) or (x) of this opinion, and no
facts have come to such counsel's attention to lead such counsel to believe
that any of such documents, when such documents became effective or were so
filed or, if amended, on the date of such amendment, as they case may be,
contained, in the case of a registration statement which became effective
under the Act, 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, in the case of other documents which
were filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made when such documents were so filed, not misleading.
28
(xiii) Such counsel has been advised that the Registration
Statement is effective under the Act, and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof has been issued and no
proceedings therefor have been initiated or threatened by the Commission
and all filings required by Rule 424(b) of the Regulations have been made.
(xiv) In addition, such opinion shall also contain a statement
that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents of
the Registration Statement and the Prospectus were discussed. Although
such counsel shall not be required to pass upon or assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except to extent
set forth in paragraphs (ii), (vii), (ix) or (x) of this opinion) and
shall not be required to make an independent check or verification thereof,
no facts have come to such counsel's attention to lead such counsel to
believe that as of its Effective Date, the Registration Statement
(including all information deemed to be part of such registration statement
as of the Effective Time pursuant to Rule 430(A)(b) under the Act),
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or the Prospectus as of its date and as
of the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need not express any opinion or belief
as to the financial statements, schedules and other financial data included
or excluded from the Registration
29
Statement or the Prospectus or the exhibits to the Registration Statement
(except to the extent set forth in paragraph (ix) of this opinion).
In rendering such opinion, such counsel (A) shall only be required to opine with
respect to the laws of the States of Illinois and New York, the General
Corporation Law of Delaware and the laws of the United States; and (B) may rely
as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and its
subsidiaries, provided that copies of any such statements or certificates shall
be delivered to Underwriters' Counsel. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and, in their opinion, you and they are justified
in relying thereon.
(c) At the Closing Date you shall have received the opinion of X.
Xxxxx Xxxx XXX, Secretary and Counsel of the Company, dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company and each of its subsidiaries has full corporate
power and authority has received all consents, authorizations, approvals,
orders, licenses, permits and certificates of and from, and has made all
declarations and filings with, all federal, state or local regulatory
agencies or bodies, including insurance regulatory authorities, and other
governmental authorities and all courts and other tribunals, necessary to
own, lease, license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus (with such exceptions as
in the aggregate will not have a material adverse effect on the condition
(financial or otherwise), results of operations, business, properties or
assets of the Company and its subsidiaries taken as a whole). Each of the
Company
30
and, to the extent required, its subsidiaries is duly qualified to conduct
its business and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets or the conduct
of its business makes such qualification necessary, except where the
failure to be so qualified or in good standing does not have a material
adverse effect on the condition (financial or other), results of
operations, business, properties, or assets of the Company and its
subsidiaries taken as a whole.
(ii) To such counsel's knowledge, neither the Company nor any
subsidiary is in breach of, or default under any term or provision of any
material certificate, authorization, license, franchise or permit.
(iii) To the best knowledge of such counsel, neither the
Company nor any subsidiary of the Company is in violation or breach of, or
default (disregarding any grace or notice provision) with respect to, any
provision of any contract, policy, reinsurance treaty, agreement,
instrument, lease, license, arrangement, or understanding to which the
Company or any of its subsidiaries is a party, which violation, breach or
default is reasonably likely to have a material adverse effect on the
condition (financial or otherwise), results of operations, business,
properties or assets of the Company and its subsidiaries taken as a whole.
(iv) The Company is not in violation or breach of, or in default
with respect to, any term of its articles of incorporation or bylaws.
(v) To the best of such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory or
governmental agency or body pending or threatened against, or involving the
properties or business of, the
31
Company or any of its subsidiaries, which is of a character required to be
disclosed in the Registration Statement and the Prospectus which has not
been properly disclosed therein.
(vi) All of the issued and outstanding capital stock of each
subsidiary of the Company has been duly and validly issued and is fully
paid and nonassessable and was not issued in violation of any insurance
regulatory provision or any preemptive rights and, except as described in
Schedule II hereto, is owned directly or indirectly by the Company, free
and clear of any lien, encumbrance, claim, security interest, restriction
or transfer, shareholders' agreement, voting trust or other defect of title
whatsoever.
(vii) The execution, delivery, and performance of this Agreement
and the Indenture and the consummation of the transactions contemplated
hereby and thereby including the sale of and issuance of the Notes or
issuance of the Shares upon conversion of Notes by the Company do not and
will not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or event which with notice of lapse
of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to any
material agreement, instrument, lease, license, policy, reinsurance treaty,
arrangement or understanding to which the Company or any of its
subsidiaries is a party or by which any of their respective properties or
assets may be bound or (B) violate or conflict with any provision of the
certificate or articles of incorporation or by-laws of the Company or any
of its subsidiaries, or any judgment, decree, order, statute, rule or
regulation of any court or governmental agency or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets. To the best knowledge of such
counsel, no con-
32
sent of any party to any material contract, agreement, instrument, lease,
license, policy, reinsurance treaty, arrangement, or understanding to which
the Company or any subsidiary is a party or to which any of their
respective properties or assets are subject is required for the execution,
delivery, or performance of this Agreement or the Indenture.
(viii) Insofar as statements in the Prospectus purport to
summarize the status of litigation, to the best knowledge of such counsel,
such statements constitute accurate summaries in all material respects.
In rendering such opinion, such counsel shall only be required to opine with
respect to the laws of the State of Illinois and the General Corporation Law of
Delaware and the laws of the United States.
(d) All proceedings taken in connection with the sale of the Notes as
herein contemplated shall be reasonably satisfactory in form and substance to
you and to Underwriters' Counsel, and the Underwriters shall have received from
said Underwriters' Counsel a favorable opinion, dated as of the Closing Date
with respect to the issuance and sale of the Notes, the Registration Statement
and the Prospectus and such other related matters as you may reasonably require,
and the Company shall have furnished to Underwriters' Counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(e) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date, to the effect that (i) the condition set forth in subsection (a)
of this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained any material loss or interference with their
33
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a material adverse change, in the
business, prospects, properties, operations, condition (financial or otherwise),
or results of operations of the Company and its subsidiaries taken as a whole,
except in each case as described in or contemplated by the Prospectus.
(f) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from Ernst & Young LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance reasonably satisfactory to you, to the effect that: (i) they are
independent certified public accountants with respect to the Company within the
meaning of the Act and the Regulations; (ii) stating that, in their opinion, the
financial statements and schedules of the Company included or incorporated by
reference in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the applicable
published rules and regulations of the Commission thereunder; (iii) on the basis
of procedures consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company, and its subsidiaries, a
reading of the minutes of meetings and consents of the shareholders and boards
of directors of the Company and its subsidiaries and the committees of such
boards subsequent to December 31, 1995, inquiries of officers and other
employees of the Company and its subsidiaries who have responsibility for
financial and accounting matters of the Company and its subsidiaries with
respect to transactions and events subsequent to December 31, 1995 and other
specified procedures and inquiries to a date not more than five days prior to
the date of such letter, nothing has come to their attention that would cause
them to believe that: (A) with respect to the period subsequent to December 31,
1995 there were, as of the date of the most recent available monthly
consolidated financial statements of the Company and its subsidiaries, if any,
and as of a specified date not more than five days prior
34
to the date of such letter, any changes in the capital stock or long-term
indebtedness of the Company or any decrease in the net consolidated assets or
stockholders' equity of the Company, in each case as compared with the amounts
shown in the most recent balance sheet presented in the Registration Statement
and the Prospectus, except for changes or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur or which are
set forth in such letter or (B) that during the period from December 31, 1995 to
the date of the most recent available monthly consolidated financial statements
of the Company and its subsidiaries, if any, and to a specified date not more
than five days prior to the date of such letter, there was any decrease, as
compared with the corresponding period in the prior fiscal year, in total
revenues, or total or per share net income, except for decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter; and (iv) stating that they have compared
specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company and its
subsidiaries set forth in the Registration Statement and the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from the
general accounting and financial records of the Company and its subsidiaries or
from schedules furnished by the Company, and excluding any questions requiring
an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in agreement.
(g) Prior to the Closing Date the Company shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
(h) You shall have received from each person who is a director or
officer of the Company an agreement to the effect that such person will not
Transfer (or announce any Transfer of) any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for shares of Common
Stock or any rights to acquire Common Stock in excess of 10% of such officer's
or director's holdings in the Common Stock or
35
any securities convertible into or exchangeable or exercisable (currently or in
the future) for Common Stock or any rights to acquire Common Stock as of the
date of the Prospectus for a period of 120 days after the date of the
Prospectus.
(i) Evidence satisfactory to the Underwriters that Duff & Xxxxxx
Credit Rating Company has assigned to the Notes a rating of [__] or better.
(j) At the Closing Date, the Notes shall have been approved for
listing on the NYSE.
(k) No amendment to the Registration Statement or any amendment or
supplement to the Prospectus or document under the Exchange Act shall have been
filed by the Company to which the Underwriters shall reasonably object in
writing.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Notes may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to reasonable attorneys' fees and any and all
reasonable expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all
36
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Notes, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided
further, that the foregoing indemnity shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Notes, or any controlling person of such Underwriter, if a
copy of the Prospectus (including any amendment or supplement thereto) was not
sent or given by on or behalf of such Underwriter to such person at or prior to
the written confirmation of the sale of the Notes to such person, and if the
Prospectus (including any amendment or supplement thereto) would have cured the
defect giving rise to such losses, claims, damages or liabilities, unless such
failure to deliver a copy of the Prospectus was a result of the failure of the
Company to provide a sufficient number of copies of such prospectus in a timely
manner. This indemnity agreement will be in addition to any liability which the
Company may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of
37
the Act or Section 20(a) of the Exchange Act, against any losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Notes, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Notes purchased
by such Underwriter hereunder. This indemnity will be in addition to any
liability which any Underwriter may otherwise have including under this
Agreement. The Company acknowledges that the statements set forth in the last
paragraph of the cover page and in the seven (7) paragraphs under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the registration
statement relating to the Notes as originally filed or in any amendment thereof,
any related preliminary prospectus or the Prospectus or in any amendment thereof
or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party
38
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnifica-
39
tion provision (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 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
40
to above. Notwithstanding the provisions of this Section 8, (i) in no case shall
any Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Notes purchased by such Underwriter
hereunder, and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 8, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Initial Notes or Additional Notes hereunder, and if the
Initial Notes or Additional Notes with respect to which such default relates do
not (after giving effect to
41
arrangements, if any, made by you pursuant to subsection (b) below) exceed in
the aggregate 10% of the principal amount of Initial Notes or Additional Notes,
to which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to the respective proportions which the principal
amount of Initial Notes set forth opposite their respective names in Schedule I
hereto bear to the aggregate principal amount of Initial Notes set forth
opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
principal amount of the Initial Notes or Additional Notes, as the case may be,
you may in your discretion arrange for yourself or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Initial Notes or Additional Notes, as the case may be, to which
such default relates on the terms contained herein. In the event that within 5
calendar days after such a default you do not arrange for the purchase of the
Initial Notes or Additional Notes, as the case may be, to which such default
relates as provided in this Section 9, this Agreement or, in the case of a
default with respect to the Additional Notes, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Notes shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Section 5, 7 and 8 hereof) or the
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Initial Notes or Additional Notes to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus
42
which, in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Initial Notes and Additional
Notes.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of when
(i) you and the Company shall have received notification of the effectiveness of
the Registration Statement or (ii) the execution of this Agreement. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you or by you notifying the Company. Notwithstanding the foregoing,
the provisions of this Section 11 and of Sections 1, 5, 7 and 8 hereof shall at
all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Notes at any time prior to the Additional Closing Date,
as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on
43
the New York or American Stock Exchanges shall have been suspended, or minimum
or maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, on the New York or American
Stock Exchanges by the New York or American Stock Exchanges or by order of the
Commission or any other governmental authority having jurisdiction; or (C) if a
banking moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the Initial
Notes or the Additional Notes, as the case may be, shall have become effective;
or (D) if any downgrading in the rating of the Company's debt securities or
preferred stock by any "nationally recognized statistical rating-organization"
(as defined for purposes of Rule 436(g) under the Act; or (E) (i) if the United
States becomes engaged in hostilities or there is an escalation of hostilities
involving the United States or there is a declaration of a national emergency or
war by the United States or (ii) if there shall have been such change in
political, financial or economic conditions if the effect of any such event in
(i) or (ii) as in your judgment makes it impracticable or inadvisable to proceed
with the offering, sale and delivery of the Initial Notes or the Additional
Notes, as the case may be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
reasonable out-of-pocket expenses (including the reasonable fees and expenses of
their counsel), incurred by the Underwriters in connection herewith.
44
12. Notice. All communications hereunder,except as may be otherwise
specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and
confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, X.X. 10167, Attention:_____________; if sent to the
Company, shall be mailed, delivered, or telegraphed and confirmed in writing to
the Company, 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, XX 00000, Attention: President,
with a copy to General Counsel.
13. Parties. This Agreement shall insure solely to the benefit of, and
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Notes from any of the Underwriters.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
45
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
PIONEER FINANCIAL SERVICES, INC.
By ____________________________
Accepted as of the date
first above written
BEAR, XXXXXXX & CO. INC.
EVEREN SECURITIES, INC.
XXXXXXXXXXX & CO., INC.
By ____________________
On behalf of themselves
and the other Underwriters
named in Schedule I hereto.
46
SCHEDULE I
Principal Amount of
Initial Notes to be
Name of Underwriter Purchased
-------------------------- --------------------
Bear, Xxxxxxx & Co. Inc...
EVEREN Securities, Inc....
Xxxxxxxxxxx & Co., Inc....
Total ....... $ ==========
47
