STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of January 2, 1998, between ALLIED
LIFE FINANCIAL CORPORATION, an Iowa corporation (the "Company"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, solely in its
capacity as trustee under the Plan defined below and not individually (the
"Trustee").
WITNESSETH;
WHEREAS, the Company has established and maintains The ALLIED Life
Financial Corporation Employee Stock Ownership Plan (the "Plan"), for the
benefit of all employees eligible to participate therein;
WHEREAS, the Plan qualifies as an "employee stock ownership plan"
within the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986,
as amended (the "Code");
WHEREAS, the Company has established and maintains The ALLIED Life
Financial Corporation Employee Stock Ownership Trust (the "Trust") and the
Company has appointed the Trustee to act as the trustee thereof pursuant to a
trust agreement between the Company and the Trustee dated June 20, 1994 (the
"Trust Agreement");
WHEREAS, the Trust Agreement provides that the assets of the trust
created thereunder shall be invested in, among other things, shares of common
stock of the Company ("Common Stock") or convertible preferred stock of the
Company;
WHEREAS, the Company has designated 300,000 shares as a series of
convertible preferred stock, with no par value, called the Series A ESOP
Convertible Preferred Stock, of which 122,717 shares were previously issued and
of which it has offered 13,163 shares for sale to the Trustee (the "Series A
Preferred Stock");
WHEREAS, as directed by the ESOP Committee (the "Committee") under the
terms of the Trust Agreement, the Trustee is authorized to purchase shares of
Series A Preferred Stock and the Company wishes to issue and sell such shares of
Series A Preferred Stock to the Trustee, and no commission will be paid by the
Trustee in connection with the purchase of such shares of Series A Preferred
Stock; and
WHEREAS, the Trustee is required under the Trust Agreement to
independently determine (i.e., without direction from the Company) the purchase
price that shall be paid for any stock of the Company, and the Trustee has
received an opinion of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx (the "Valuation Opinion")
that the purchase of the shares of Series A Preferred Stock pursuant to the
terms to this Agreement is fair and equitable to the participants in the Plan
and the price to be paid for the Series A Preferred Stock is not in excess of
adequate consideration.
NOW THEREFORE, in consideration of these premises and the mutual
promises contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Trustee hereby agrees to purchase (the "Purchase") with the
funds directed by the Committee, and the Company hereby agrees to issue and sell
for cash to the Trust 13,163 shares of Series A Preferred Stock (the "Series A
Preferred Stock") for an aggregate purchase price (the "Purchase Price") of
$287,936.00 (or $21.875 per share). The Company will pay all stamp and other
transfer taxes, if any, which may be payable in respect of the issuance, sale
and delivery of the Series A Preferred Stock and shall be entitled to any refund
thereof.
2. The Purchase shall be consummated at or about 8:00 A.M. Central
Standard Time on January 2, 1998 (such date of delivery being hereinafter called
the "Delivery Date") at the offices of the Company, Des Moines, Iowa or as
otherwise agreed by the parties hereto. On the Delivery Date, the Trustee shall
deliver to the Company the Purchase Price in immediately available funds
together with an opinion of Xxxxxxx, Procter & Xxxx, LLP, counsel to the
Trustee, in the form attached as Annex A hereto and a copy of the Valuation
Opinion, and the Company will deliver to the Trustee a certificate or
certificates representing the Series A Preferred Stock which shall be registered
in the name of the Trustee, as trustee under the Plan, or in the name of its
nominee, together with an opinion of Xxxxxxxxx X. Xxxxxxx, Associate Corporate
Counsel of the Company, in the form attached as Annex B hereto.
83
3. The Company hereby represents, warrants and covenants to the Trustee
as follows:
a. the Company (i) is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Iowa and (ii) has full corporate
power and authority to execute and deliver this
Agreement, to carry out the transactions contemplated
hereby, to own, lease and operate its assets and
properties, and to carry on its business as now being
conducted;
b. this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally and to general
principles of equity (regardless of whether considered in
a proceeding at law or in equity);
c. the execution, delivery and performance
of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not violate (i)
the Company's Articles of Incorporation or By-laws, each
as amended to date or, (ii) any provision of any
agreement, instrument, order, award, judgment or decree
to which the Company is a party or by which it or any of
its businesses or properties are bound, or (iii) any
statute, rule or regulation of any federal, state or
local government or governmental agency applicable to the
Company except in the case of subparagraphs (ii) or (iii)
of this Section 3(c) for any such violations which either
individually or in the aggregate do not have a material
adverse effect on the business or properties of the
Company and its subsidiaries taken as a whole;
d. except for any necessary applications
with The NASDAQ Stock Market with respect to any newly
issued shares of Common Stock which may be issued upon
conversion of the Series A Preferred Stock, no approval,
authorization or other action by, or filing (other than
such filings of the Company as may be necessary in
connection with any registration for sale of the common
stock that may be issuable upon conversion of the Series
A Preferred Stock) with, any government authority is
required to be obtained or made by the Company in
connection with the execution, delivery and performance
by the Company of this Agreement and the consummation of
the transactions contemplated hereby;
e. the Certificate of Designations was
filed with the Secretary of State effective June 21, 1994
prior to which the Series A Preferred Stock were duly and
validly authorized and, when issued and delivered to and
paid for by the Trustee pursuant to this Agreement, (i)
will be validly issued, fully paid and nonassessable and
not liable to any further call or assessment, (ii) the
certificates representing the Series A Preferred Stock
comply with the applicable requirements of Iowa law and
(iii) the Trustee will acquire full right, title and
interest in and to the Series A Preferred Stock free and
clear of any and all liens, claims, charges and
encumbrances (other than rights of participants in the
Plan);
f. the Company (i) has duly and validly
authorized and reserved for issuance a sufficient number
of shares of Common Stock, as may be issued, from time to
time, upon conversion of the Series A Preferred Stock and
(ii) such shares of Common Stock, when issued upon
conversion of the Series A Preferred Stock in accordance
with the Certificate of Designations, will be validly
issued, fully paid and nonassessable and not liable to
any further call or assessment and will not be subject to
preemptive rights;
g. the Plan has been duly authorized and
established, and the Trust Agreement has been duly
authorized, by all necessary corporate action on the part
of the Company; the Plan constitutes in all material
respects in form an employee stock ownership plan within
the meaning of Section 4975(e)(7) of the Code, Code
Regulation Section 54.4975-11 and Section 407(d)(6) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); and the Series A Preferred Stock
constitutes a qualifying employer security within the
meaning of Section 4975(e)(8) of the Code; provided,
however, that in making the representations contained in
this Section 3(g) the Company has relied upon the
correctness of the Trustee's representations contained in
Section 4(g) of this Agreement;
84
h. the Company's annual report on 10-K for
the year ended December 31, 1996 and quarterly reports on
10-Q for the quarterly periods ended March 31, June 30
and September 30, 1997, on the respective dates filed
with the Securities and Exchange Commission ("SEC"),
conformed in all material respects to the requirements of
the Securities Exchange Act of 1934, as amended;
x.xx person or other entity is entitled to
any fees or commissions due to the Company's actions in
connection with the purchase and sale of the Series A
Preferred Stock;
j. the Company shall use its best efforts
during the term of the Trust to cause the Plan to
maintain its qualification as an employee stock ownership
plan within the meaning of Section 4975 of the Code; and
k. the Company has furnished and will
continue to furnish to the Trustee from time to time
copies of all reports and financial statements which the
Company shall send or make available to its public
stockholders generally, all other written communications
from the Company to public shareholders generally and
each regular or periodic report, proxy statement,
registration statement or prospectus, if any, filed by
the Company with the SEC; and
4. The Trustee represents and warrants to the Company as follows:
a. the Trustee (i) is a duly organized and
validly existing Massachusetts trust company in good
standing as a trust company and with full power and
authority to act as Trustee and exercise trust powers,
including without limitation, the trust powers provided
in and contemplated by the Trust Agreement, and (ii) has
full corporate power and authority to execute and deliver
this Agreement and to carry out the transactions
contemplated hereby;
b. this Agreement has been duly authorized,
executed and delivered by the Trustee and constitutes a
valid and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally and to general
principles of equity (regardless of whether considered in
a proceeding at law or in equity);
c. the execution, delivery and performance
of this Agreement by the Trustee and the consummation of
the transactions contemplated hereby will not violate (i)
the Trustee's Corporate Charter or By-laws, each as
amended to date, or (ii) any provision of any agreement,
instrument, order, award, judgment or decree to which the
Trustee is a party or by which it or any of its
businesses or properties are bound or (iii) any statute,
rule or regulation of any federal, state or local
government or governmental agency applicable to the
Trustee except in the case of subparagraphs (ii) or (iii)
of this Section 4(c) for any such violations which either
individually or in the aggregate do not have a material
adverse effect on the business or properties of the
Trustee; provided, however, that in making the
representations contained in clause (iii) of this Section
4(c), the Trustee has relied upon the correctness of (1)
the Company's representations in Section 3(g), as limited
by the proviso therein, and Section 3(i) of this
Agreement and (2) the Committee's direction letter dated
December 30, 1997;
d. no approval, authorization or other
action by, or filing with, any governmental authority is
required to be obtained or made by the Trustee in
connection with the execution, delivery and performance
by the Trustee of this Agreement and the consummation of
the transactions contemplated hereby;
85
e. the Trustee is acquiring the Series A
Preferred Stock on behalf of the Plan solely for
investment purposes and not with a view to, or for sale
in connection with, any distribution thereof; provided,
however, that the Series A Preferred Stock will be
allocated to the accounts of the participants in the Plan
pursuant to the terms of the Plan and distributions may
be made to participants and beneficiaries of the Plan in
shares of Common Stock issuable upon conversion of the
Series A Preferred Stock or payable upon redemption of
the Series A Preferred Stock, including upon exercise of
the rights set forth in Section 7 of the Certificateof
Designations, or in shares of Common Stock otherwise
acquired by the Trustee pursuant to the terms of the
Plan, it being understood that the Series A Preferred
Stock are being sold to the Trustee pursuant to an
exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon this representation and warranty;
f. the purchase of the Series A Preferred
Stock on the Delivery Date by the Trust for the Purchase
Price is for not greater than "adequate consideration" as
that phrase is defined in Section 3(18) of ERISA, and any
proposed regulations thereunder, and will not constitute
a prohibited transaction under Section 406 of ERISA or
Section 4975(c) of the Code by reason of the exemptions
set forth in Section 408(e) of ERISA and Section 4975(d)
(13) of the Code; provided that in making the
representations contained in this Section 4(f), the
Trustee has relied upon the correctness of the Company's
representations contained in Sections 3(g), as limited by
the proviso therein, and 3(i) of this Agreement as well
as the Valuation Opinion;
g. the Series A Preferred Stock purchased
by the Trust have a conversion price which is reasonable
as of the date hereof; provided, however, that in making
the representations contained in this Section 4(g), the
Trustee has relied upon the correctness of the Valuation
Opinion; and
h. no person or other entity is entitled to
any commissions due to the Trustee's actions in
connection with the purchase and sale of the Series A
Preferred Stock.
5. The Trustee hereby (i) acknowledges that the Series A Preferred
Stock purchased on behalf of the Trust pursuant to this Agreement may, by their
terms, be issued only to the Trustee or a successor trustee acting on behalf of
the Trust, (ii) acknowledges that the Trust Agreement provides that none of the
Series A Preferred Stock shall be transferred in any manner to participants
under the Plan but in lieu thereof shares of Common Stock shall be distributed
to participants or transferred to the participants' Section 401(k) accounts
pursuant to the terms of the Plan, (iii) acknowledges that the Certificate of
Designations provides that any Series A Preferred Stock that are transferred,
sold or otherwise disposed of by the Trustee shall be automatically, and without
any action on the part of the Company, converted into shares of Common Stock,
and (iv) agrees not to transfer, sell or otherwise dispose of any of the Series
A Preferred Stock or other shares of Series A Preferred Stock or to attempt to
do so, except in compliance with the Trust Agreement. Nothing contained in this
Section 5 shall be deemed to restrict the ability of the Trustee to convert
shares of Series A Preferred Stock into shares of Common Stock or to require the
Company to redeem shares of Series A Preferred Stock, in each case in accordance
with the Certificate of Designations, or the ability of the Trustee to transfer,
sell or otherwise dispose of shares of Common Stock of the Company issued upon
conversion of shares of Series A Preferred Stock or upon a redemption of shares
of Series A Preferred Stock.
6. The Trustee understands that the certificate(s) representing the
Series A Preferred Stock will bear the following legend and that a notation
restricting their transfer will be made on the stock transfer books of the
Company:
The shares of Series A preferred stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended. Such shares of stock may not
be sold, assigned, pledged or otherwise transferred in the
absence of an effective registration statement under said
Securities Act covering such transfer or an opinion of counsel
satisfactory to the issuer that registration under said
Securities Act is not required.
The shares of stock represented by this
certificate are subject to restrictions on transfer set forth in
the Certificate of Designations relating to the Corporation's
Series A ESOP Convertible Preferred Stock and in a Stock
Purchase Agreement dated as of January 2, 1998. The Corporation
will furnish a copy of such agreement to the holder of this
certificate without charge upon written request.
86
7. The Company has at its expense, prepared, filed, and obtained the
effectiveness of, and will use its best efforts to cause to remain effective, a
registration statement on an appropriate form, including a final prospectus (the
"Registration Statement"), under and complying with the Securities Act and the
rules and regulations thereunder, relating to the number of shares of the
Company's Common Stock into which the Series A Preferred Stock are from time to
time convertible or as are acquired upon a redemption or repurchase, including a
redemption pursuant to the provisions of Section 7 of the Certificate of
Designations, as shall be necessary, in the opinion of counsel to the Company,
for the Trustee to carry out its responsibilities under the Plan and Trust
Agreement. Whenever shares of Common Stock are so registered, the Company shall
also use its best efforts to register or qualify such shares covered by the
Registration Statement under the "blue sky" or securities laws of such
jurisdictions within the United States as the Trustee may reasonably request;
provided, however, that the Company shall not be required to consent to the
general service of process for all purposes in any jurisdiction where it is not
then qualified to do business.
8. The Company agrees that it will use its best efforts to maintain the
qualification of the Plan as an employee stock ownership plan within the meaning
of Section 4975(e)(7) of the Code.
9. The representations, warranties and agreements in this Agreement
shall survive the date hereof and the Delivery Date.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of Iowa applicable to contracts to be executed,
delivered and performed in such state, to the extent not preempted by the laws
of the United States of America. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of Iowa and the United States of America located in Polk County, Iowa
for any actions, suits or proceedings arising out of or relating to this
Agreement. This Agreement, the Plan and Trust Agreement (including documents
referred to therein or delivered pursuant thereto) set forth the entire
Agreement of the parties with respect to the subject matter contained herein and
supersede all prior oral and written agreements, if any, between the parties
with respect to such subject matter. This Agreement shall bind and inure to the
benefit of all successors to, and assigns of, the parties hereto; provided,
however, that the Trustee shall not assign or otherwise transfer its interest
in, or obligations under, this Agreement without the written consent of the
Company, except that the Trustee may assign, without the Company's written
consent, all its rights hereunder to any institution exercising trust powers in
connection with any such institution assuming the duties of a trustee under the
Trust Agreement. In the event that any provision of this Agreement shall be
declared unenforceable by a court of competent jurisdiction, such provision
shall be stricken herefrom and the remainder of this Agreement shall remain
binding on the parties hereto. In the event any such provision shall be so
declared unenforceable due to its scope or breadth, then it shall be narrowed to
the scope or breadth permitted by law.
87
11. This Agreement may be executed in two counterparts, each of which
shall be deemed an original, but each of which taken together shall constitute
one and the same instrument.
12. This Agreement may not be modified with respect to the obligations
of a party hereto except by an instrument in writing signed by such party.
13. The terms and provisions of the Trust Agreement relating to the
nature of the responsibilities of the Trustee and the indemnification by the
Company of the Trustee are incorporated herein by reference and made applicable
to this Agreement.
14. All notices, requests, or other communications required or
permitted to be delivered hereunder shall be in writing, delivered to each party
hereto at its address specified in the Trust Agreement and shall become
effective as therein provided. Any party hereto may from time to time, by
written notice given as aforesaid, designate any other address to which notices,
requests or other communications addressed to it shall be sent.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
ALLIED LIFE FINANCIAL CORPORATION
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President
STATE STREET BANK
AND TRUST COMPANY
solely in its capacity
as Trustee under the
Plan and Trust
Agreement referred to
herein and not
individually
By /s/ Xxxx Xxxxx Xxxxx
Name _________________________
Title ________________________
88
Annex A
January 2, 1998
ALLIED Life Financial Corporation
000 Xxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Re: The ALLIED Life Financial Corporation Employee Stock Ownership Trust
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company ("State Street"), as trustee (the "Trustee") of The ALLIED Life
Financial Corporation Employee Stock Ownership Trust (the "Trust"), which forms
a part of The ALLIED Life Financial Corporation Employee Stock Ownership Plan
(as amended and restated effective as of January 1, 1996, the "Plan"), and which
is evidenced by the Trust Agreement dated June 20, 1994 (the "ESOP Trust
Agreement") between the Trustee and ALLIED Life Financial Corporation (the
"Company"), in connection with the purchase by the Trustee of _______ shares of
Series A ESOP Convertible Preferred Stock of the Company, no par value (the
"Preferred Stock") pursuant to the Stock Purchase Agreement dated as of January
2, 1998 between the Company and the Trustee (the "Stock Purchase Agreement").
Capitalized terms used herein that are not defined herein have the meanings set
forth in the Stock Purchase Agreement.
In connection therewith, we have reviewed executed copies of: (i) the
ESOP Trust Agreement and the Stock Purchase Agreement; (ii) the Certificate of
Designations of Series A ESOP Convertible Preferred Stock of ALLIED Life
Financial Corporation; (iii) the corporate charter and by-laws of State Street,
both as amended to date; (iv) other records, documents, and instruments relating
to the powers and organization of State Street and to State Street's acceptance
of fiduciary duties, obligations and trusts; and (v) such other certificates and
documents as we have deemed relevant or necessary as a basis for the opinion
expressed below.
In our examination, we have assumed without any investigation (i) the
legal capacity of each natural person, (ii) the full power and authority of each
person other than State Street to execute, deliver and perform its obligations
under each document heretofore executed and delivered or hereafter to be
executed and delivered and to do each other act heretofore done or hereafter to
be done by such person, (iii) the due authorization, execution and delivery by
each person other than State Street of each document heretofore executed and
delivered or hereafter to be executed and delivered by such person, (iv) the
legality, validity, binding effect and enforceability as to each person other
than State Street of each document heretofore executed and delivered or
hereafter to be executed and delivered and of each other act heretofore done or
hereafter to be done by such person, (v) the genuineness of each signature other
than those of officers of State Street and the completeness and authenticity of
each document submitted to us as an original, (vi) the conformity to the
original of each document submitted to us as a copy, (vii) the authenticity of
the original of each document submitted to us as a copy and (viii) no amendment
or modification hereafter of any provision of any document. Insofar as our
opinion relates to, or depends on, any matter of fact, we have relied on
representations as set forth in the Stock Purchase Agreement, and upon written
statements and certificates of officers of State Street and of public officials.
We are members of the Bar of the Commonwealth of Massachusetts and,
accordingly, we express no opinion herein concerning any law other than the laws
of the Commonwealth of Massachusetts and the Federal laws of the United States
of America, to the extent specifically referred to herein.
As used in this opinion with respect to any matter, the qualifying
phrase "to the best of our knowledge" means that, without independent review or
verification, nothing has come to the attention of Xxxx X. Xxxxxx or Xxxx X.
Xxxxxx, the attorneys principally responsible for performing legal services for
the Trustee with respect to said matter.
We express no opinion as to matters governed by the Internal Revenue
Code of 1986 (the "Code") or the Employee Retirement Income Security Act of 1974
("ERISA"), both as amended, or federal or state securities laws.
89
Based on and subject to the foregoing, we are of the opinion that:
1. State Street, acting solely in its capacity as Trustee, has all
requisite power and authority to execute, deliver and perform its obligations
under the Stock Purchase Agreement.
2. The execution, delivery and performance of the Stock Purchase
Agreement by State Street, as Trustee, will not violate the charter or the
by-laws of State Street or, to the best of our knowledge, any order, judgment or
decree binding on State Street (individually or as trustee).
3. The Stock Purchase Agreement has been duly executed and delivered by
State Street, as Trustee.
4. No authorization, approval or consent of, and no filings or
registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by State Street of the
Stock Purchase Agreement or for the validity or enforceability thereof, except
for filings with the Internal Revenue Service or the Department of Labor which
may from time to time be required by ERISA or the Code.
We express no opinion as to any matter other than as expressly set
forth above, and no other opinion is intended to be implied nor may be inferred
herefrom. The opinions expressed herein are given as of the date hereof and we
undertake no obligation hereby and disclaim any obligation to advise you of any
change after the date hereof pertaining to any matter referred to herein.
Neither this opinion nor any part hereof may be delivered to, used or relied
upon by any person or entity other than you without our prior written consent.
Very truly yours,
XXXXXXX, PROCTER & XXXX, LLP
90
Annex B
January 2, 0000
Xxxxx Xxxxxx Bank and Trust Company
Legal Division, Q6N
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Ladies and Gentlemen:
I have acted as legal counsel of ALLIED Life Financial Corporation, an Iowa
corporation (the "Company"), and in such capacity I have advised the Company in
connection with The ALLIED Life Financial Corporation Employee Stock Ownership
Trust (the "ESOP Trust"), a trust established under that certain Trust Agreement
dated June 20, 1994 (the "Trust Agreement"), between the Company and State
Street Bank and Trust Company, as trustee (the "Trustee" or "State Street"),
which implements and forms a part of the ALLIED Life Financial Corporation
Employee Stock Ownership Plan (the "Plan"), and in connection with the purchase
by the Trustee of ______ shares of Series A ESOP Convertible Preferred Stock of
the Company, no par value (the "Preferred Stock" or "Preferred Shares"),
pursuant to the Stock Purchase Agreement between the Company and the Trustee
dated January 2, 1998 (the "Stock Purchase Agreement"). Capitalized terms used
herein without definition shall have the meanings ascribed to them in the Stock
Purchase Agreement.
In connection therewith, I have reviewed executed copies of (i) the Stock
Purchase Agreement, (ii) the Certificate of Designations in respect to the
Series A Preferred Stock (the "Certificate of Designations"), and (iii) such
other certificates and documents as I have deemed relevant or necessary as a
basis for the opinion expressed below.
In such connection, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all documents submitted to me as photostatic or certified
copies, and the authenticity of the originals of such copies. I have relied, to
the extent I deem such reliance proper, upon representations made in the
documents and certificates or representations made in writing by duly authorized
representatives of the Company.
In rendering the opinions contained herein, I have assumed that (a) State
Street, as Trustee, has all requisite power and authority to execute, deliver,
and perform its obligations under the Stock Purchase Agreement; (b) that the
execution, delivery, and performance of the Stock Purchase Agreement by State
Street, as Trustee, will not violate the charter or bylaws of State Street; and
(c) that the Stock Purchase Agreement has been executed and delivered by State
Street as Trustee and constitutes the legal, valid, and binding obligation of
the ESOP Trust, enforceable in accordance with its terms, except as enforcement
may be limited by (i) bankruptcy, insolvency, reorganization, or similar laws
affecting the enforcement of creditors' rights generally, or (ii) equitable
principles of general applicability (regardless of whether such enforceability
is considered in a proceeding in equity or law). I express no opinion with
respect to the laws of any jurisdiction other than the State of Iowa and the
United States of America. These opinions are expressed as of the date hereof
and are therefore subject to subsequent interpretive, regulatory,
legislative, and judicial developments.
91
Based on and subject to the foregoing, I am of the opinion that:
1. The Company is validly existing and in good
standing under the laws of the State of Iowa and has all
requisite corporate power to execute, deliver, and perform the
Stock Purchase Agreement. The Company has taken all necessary
corporate action to authorize the execution, delivery, and
performance of the Stock Purchase Agreement.
2. The Stock Purchase Agreement has been duly
executed and delivered by the Company and is the legal, valid,
and binding agreement of the Company, enforceable against the
Company in accordance with its respective terms, except as the
enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
or similar laws affecting the enforcement of creditors' rights
generally or (ii) equitable principles of general
applicability (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3. The Preferred Shares have the rights, preferences,
and qualifications set forth in the Certificate of
Designations, have been validly authorized, and upon payment
therefor as provided in the Stock Purchase Agreement, will be
validly issued and outstanding and will constitute fully-paid
and nonassessable shares of Series A ESOP Convertible
Preferred Stock of the Company. The shares of the Company's
common stock, no par value ("Common Stock") initially reserved
for issuance and to be issued upon conversion of the Preferred
Shares in accordance with their terms have been duly and
validly authorized and are sufficient in number for conversion
of all the Preferred Shares, and such Common Stock, when so
issued upon such conversion, will be duly and validly issued,
fully-paid, and nonassessable.
4. Upon payment by the Trust as provided in the Stock
Purchase Agreement, the Company will convey to the Trust good
and valid title to the Preferred Shares free and clear of any
liens, claims, security interests, and encumbrances, except
for beneficial interests accruing to Plan participants and
their beneficiaries.
5. As of the date hereof, the Plan and the ESOP Trust
in form meet in all material respects (a) the applicable
requirements of Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"), (b) the requirements applicable
to an employee stock ownership plan for purposes of Section
4975(e)(7) of the Code and the regulations promulgated
thereunder, and (c) the requirements for exemption from tax
under Section 501(a) of the Code.
6. The shares of Preferred Stock to be purchased by
the ESOP Trust constitute "employer securities" within the
meaning of Section 409(1) of the Code and "qualifying employer
securities" within the meaning of Section 407(d)(5) of ERISA.
7. The shares of Preferred Stock to be purchased by
the ESOP Trust have voting rights equivalent to the common
stock into which such shares may be converted, and the Plan
meets the voting rights requirements of Section 409(e)(2) of
the Code with respect to such shares.
92
In rendering the foregoing opinions and any other opinions expressed in
this letter, I have relied on the following assumptions:
a. Except as to matters expressly
opined on herein, the Plan and ESOP Trust have been,
and will continue to be, administered and operated at
all times strictly in accordance with their terms and
with all requirements of applicable law including,
but not limited to, all of the requirements
applicable to a qualified plan under Section 401(a);
the requirements applicable to an "employee stock
ownership plan" (within the meaning of Section
4975(e)(7)) under Section 4975 and 409 of the Code;
and the requirements applicable to a tax-exempt trust
under Section 501(a); and with the provisions of
ERISA and all regulations thereunder.
b. The conversion price at which the
shares of Preferred Stock may be converted to common
stock of the Company is reasonable as of the date of
acquisition of such Preferred Stock by the ESOP
Trust.
c. No fiduciary of the Plan has
received any consideration of the type described in
Section 4975(c)(1)(F) of the Code and Section
406(b)(3) of ERISA in connection with the
transactions described herein.
d. The fiduciaries of the Plan and
the ESOP Trust have acted prudently and in good
faith, and have given appropriate consideration to
those facts and circumstances that are relevant to
the transactions in accordance with the fiduciary
requirements of part 4 of Title I of ERISA.
In connection with the assumptions made in paragraph (b) above, I understand
that the Trustee has received an opinion from Xxxxxxxx Xxxxx Xxxxxx & Xxxxx to
the effect that (i) the price to be paid by the ESOP Trust per share of
Preferred Stock is not in excess of fair market value or adequate consideration,
as defined under Title I of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations thereunder ("ERISA"); and (ii) the terms
and conditions of the proposed transaction, including the terms governing the
right to convert the Preferred Stock into Common Stock of the Company, are fair
and reasonable to the ESOP Trust from a financial point of view.
These opinions are rendered solely to the Trustee in connection with the
transactions of the Trustee contemplated by the Stock Purchase Agreement. No
other person, firm, or corporation may rely upon these opinions for any purpose
without my prior written consent.
Yours very truly,
Xxxxxxxxx X. Xxxxxxx
Associate Corporate Counsel
93
