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EXHIBIT 1
UNDERWRITING AGREEMENT
3,000,000 PREFERRED SECURITIES
AMERICAN ANNUITY GROUP CAPITAL TRUST I
(A DELAWARE TRUST)
_____% TRUST ORIGINATED PREFERRED SECURITIES ("TOPRS")
(LIQUIDATION AMOUNT OF $25 PER PREFERRED SECURITY)SM
UNDERWRITING AGREEMENT
----------------------
____________, 1996
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇ BROTHERS
as the Representatives of the several Underwriters
c/o Merrill ▇▇▇▇▇ & Co.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
American Annuity Group Capital Trust I (the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Act") of
the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Sections 3801 et seq.), AAG Holding Company, Inc. ("AAG Holding"), an Ohio
corporation and American Annuity Group, Inc., a Delaware corporation (the
"Company" and, together with the Trust and AAG Holding, the "Offerors"),
confirm their agreement (the "Agreement") with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇ ▇▇▇▇ LLC, PaineWebber Incorporated, Prudential Securities
Incorporated and ▇▇▇▇▇▇ Brothers as representatives (in such capacity,
collectively, the "Representatives") of the several Underwriters named in
Schedule
__________________________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc.
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A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section
10 hereof), with respect to the sale by the Trust and the purchase by
the Underwriters, acting severally and not jointly, of the respective
number of ____% Trust Originated Preferred Securities (liquidation
amount of $25 per preferred security) of the Trust ("Preferred
Securities") set forth in said Schedule A and with respect to the
grant by the Trust to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase
all or any part of additional Preferred Securities to cover
over-allotments, in each case except as may otherwise be provided in
the Pricing Agreement, as hereinafter defined. The aforesaid
Preferred Securities (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the additional Preferred
Securities subject to the option described in Section 2(b) hereof (the
"Option Securities") are collectively hereinafter called the
"Designated Securities." The Preferred Securities will be guaranteed
by the Company, to the extent described in the Prospectus (as defined
below), with respect to distributions and payments upon liquidation,
redemption and otherwise (the "Preferred Securities Guarantee")
pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee Agreement"), dated as of
______________, 1996, between the Company and The Bank of New York, as
trustee (the "Guarantee Trustee") and, in certain circumstances
described in the Prospectus, the Trust will distribute Subordinated
Debentures (as defined herein) to holders of Designated Securities.
In addition, the Subordinated Debentures will be fully and
unconditionally guaranteed (the "Debt Guarantee") on a subordinated
basis as to principal and interest by the Company, pursuant to the
Indenture (as defined herein), which Debt Guarantee shall be set forth
in full on the reverse of the certificate or certificates evidencing
the Subordinated Debentures. The Preferred Securities, together with
the related Preferred Securities Guarantee, the Debt Guarantee and the
Subordinated Debentures, are collectively referred to herein as the
"Securities."
Prior to the purchase and public offering of the Preferred Securities
by the several Underwriters, the Offerors and the Representatives, acting on
behalf of the several Underwriters, shall enter into an agreement substantially
in the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
telecommunication between the Offerors and the Representatives and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Securities will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and
delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
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The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-12535) and
pre-effective amendment nos. 1 and _________ thereto covering the registration
of up to a combination of $86,250,000 of (i) the Preferred Securities, (ii) the
Preferred Securities Guarantees, (iii) the Subordinated Debentures and (iv) the
Debt Guarantee, under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus, and the offering thereof in
accordance with the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and the Offerors have filed such post-effective
amendments thereto as may be required prior to the execution of the Pricing
Agreement. Such registration statement, as so amended, including the exhibits
and schedules thereto, if any, and the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus relating to the offering of the Securities, in the form first
furnished to the Underwriters by the Offerors for use in connection with the
offering of the Securities, is referred to herein as the "Prospectus";
provided, however, that all references to the "Registration Statement" and the
"Prospectus" shall be deemed to include all documents incorporated therein by
reference pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), prior to the execution of the applicable Pricing Agreement. A
"preliminary prospectus" shall be deemed to refer to any prospectus used before
the registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information or other information to be included upon
pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations, that was used after such effectiveness and
prior to the execution and delivery of the applicable Pricing Agreement. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included", "set forth" or "stated"
in the Registration Statement, any preliminary prospectus or the Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in
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the Registration Statement, such preliminary prospectus or the Prospectus, as
the case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Preferred Securities, the Preferred Securities Guarantee and
the Debt Guarantee as soon as the Representatives deem advisable after the
Pricing Agreement has been executed and delivered, and the Declaration (as
defined herein), the Indenture (as defined herein), and the Preferred
Securities Guarantee Agreement have been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"). The entire proceeds from the sale of
the Designated Securities will be combined with the entire proceeds from the
sale by the Trust to AAG Holding of its common securities (the "Common
Securities" and, together with the Designated Securities, the "Trust
Securities"), as guaranteed by the Company, to the extent set forth in the
Prospectus, with respect to distributions and payments upon liquidation and
redemption (the "Common Securities Guarantee" and, together with the Preferred
Securities Guarantee and the Debt Guarantee, the "Guarantees") pursuant to the
Common Securities Guarantee Agreement (the "Common Securities Guarantee
Agreement" and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of _______________, 1996, between the Company
and the Guarantee Trustee, as Trustee, and will be used by the Trust to
purchase $_______________ (up to $_______________ if the option described in
Section 2(b) hereof is exercised in full) of _____% Subordinated Debentures due
______________, 2026 (the "Subordinated Debentures") issued by the AAG Holding.
The Preferred Securities and the Common Securities will be issued pursuant to
the Declaration of Trust, dated as of September 13, 1996, as amended and
restated on _____________, 1996 (the "Declaration"), among AAG Holding, as
Sponsor, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Regular Trustees"),
The Bank of New York, as property trustee (the "Property Trustee"), and The
Bank of New York (Delaware) as Delaware Trustee (the "Delaware Trustee," and,
together with the Property Trustee and the Regular Trustees, the "Trustees"),
for the benefit of the holders from time to time of undivided beneficial
interests in the assets of the Trust. The Subordinated Debentures will be
issued pursuant to an indenture, dated as of ________________, 1996 (the
"Indenture"), between AAG Holding, the Company as Guarantor and The Bank of New
York, as trustee (the "Debt Trustee").
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the date of the Pricing Agreement
(such later date being hereinafter referred to as the "Representation Date")
that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
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purpose has been initiated or, to the knowledge of the Offerors, threatened by
the Commission.
(ii) Each of the Offerors meets, and at the respective times
of commencement and consummation of the Offering of the Securities will meet,
the requirements for the use of Form S-3 under the 1933 Act.
(iii) At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement will
conform in all material respects to the requirements of the 1933 Act and the
1933 Act Regulations and will not contain an untrue statement of a material
fact and will not omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the Prospectus,
at the time the Registration Statement becomes effective (unless the term
"Prospectus" refers to a prospectus which has been provided to the Underwriters
by the Offerors for use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use) and at the Representation Date and
at the Closing Time referred to in Section 2, will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to statements
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon, and in conformity with, (A) information furnished to the
Offerors in writing by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use
in the Registration Statement or the Prospectus, or (B) that part of the
Registration Statement which shall constitute the Statement of Eligibility
(Form T-1) under the ▇▇▇▇ ▇▇▇.
(iv) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or the Prospectus, at the time they
were or hereafter are filed or last amended, as the case may be, with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act, and the rules and regulations of Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of the
time of any subsequent amendment, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects to the
requirements of the 1934 Act and the 1934 Act Regulations and will not contain
an untrue statement of
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a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
any statements contained in or omitted from such documents made in reliance
upon and in conformity with information furnished to the Offerors in writing by
any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in such documents.
(v) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement are, to the knowledge of the Offerors, independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(vi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization; and (ii) assets are
safeguarded and transactions are recorded to permit preparation of financial
statements in conformity with generally accepted accounting principles and, as
of the Closing Time, the Company will continue to maintain such a system.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no
development which could reasonably be expected to result in a material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Trust or the Company and its Subsidiaries
(as defined below) considered as one enterprise, whether or not arising in the
ordinary course of business or referred to in or contemplated by the
Registration Statement, (B) there have been no transactions entered into by the
Trust or the Company or any of its Subsidiaries which are material with respect
to the Trust or the Company and its Subsidiaries considered as one enterprise,
other than those in the ordinary course of business or those referred to in or
contemplated by the Registration Statement and (C) there has not been any
material increase in the long term debt of the Company.
(viii) Each of the Company and AAG Holding has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the States of Delaware and Ohio, respectively, with corporate power
and authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus; and each of
the Company and AAG Holding is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good
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standing would not have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
(ix) Each of the corporations of which a majority of the
outstanding voting equity securities are owned, directly or indirectly, by the
Company ("Subsidiaries") and which is listed on Schedule B annexed hereto
("Designated Subsidiaries") has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
described in the Prospectus, and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its Subsidiaries considered as one enterprise.
(x) The authorized, issued and outstanding capital stock of
the Company is as set forth in or incorporated into the Prospectus; since the
date indicated in the Prospectus there has been no change in the issued and
outstanding capital stock of the Company and the Designated Subsidiaries (other
than changes in outstanding Common Stock resulting from employee benefit plan,
director compensation plan or dividend reinvestment and stock purchase plan
transactions); and all of the issued and outstanding capital stock of the
Company has been duly authorized and validly issued, is fully paid and
non-assessable.
(xi) Each Subsidiary of the Company which is engaged in the
business of insurance or reinsurance (collectively, the "Insurance
Subsidiaries") holds such insurance licenses, certificates and permits from
governmental authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts business
(the "Insurance Licenses")) as are necessary to the conduct of its business as
described in the Prospectus; the Company and each Insurance Subsidiary have
fulfilled and performed all obligations necessary to maintain the Insurance
Licenses; except as disclosed in the Prospectus, there is no pending or, to the
knowledge of the Offerors, threatened action, suit, proceeding or investigation
that could reasonably be expected to result in the revocation, termination or
suspension of any Insurance License; and except as disclosed in the Prospectus,
no insurance regulatory agency or body has issued, or commenced any proceeding
for the issuance of, any order or decree impairing, restricting or prohibiting
the payment of dividends by any Insurance Subsidiary to its parent.
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(xii) Except as disclosed in the Prospectus, the Company and
the Insurance Subsidiaries have made no material changes in their insurance
reserving practices since the most recent audited financial statements included
or incorporated in the Prospectus.
(xiii) All reinsurance treaties and arrangements to which any
Insurance Subsidiary is a party are in full force and effect and no Insurance
Subsidiary is in violation of or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition contained
therein; no Insurance Subsidiary has received any notice from any of the other
parties to such treaties, contracts or agreements that such other party intends
not to perform such treaty and, to the best knowledge of the Company and the
Insurance Subsidiaries, the Company and the Insurance Subsidiaries have no
reason to believe that any of the other parties to such treaties or
arrangements will be unable to perform such treaty or arrangement except to the
extent adequately and properly reserved for in the consolidated financial
statements of the Company included in the Prospectus.
(xiv) The statutory financial statements of the Insurance
Subsidiaries from which certain ratios and other statistical data filed as part
of the Registration Statement or included or incorporated in the Prospectus
have been derived have for each relevant period been prepared in conformity
with statutory accounting principles or practices required or permitted by the
National Association of Insurance Commissioners and by the appropriate
Insurance Department of the jurisdiction of domicile of each Insurance
Subsidiary, and such statutory accounting practices have been applied on a
consistent basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly the statutory
financial position of the Insurance Subsidiaries as of the dates thereof, and
the statutory basis results of operations of the Insurance Subsidiaries for the
periods covered thereby.
(xv) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the Preferred
Securities, the Common Securities and the Declaration; the Trust is not a party
to or otherwise bound by any material agreement other than those described in
the Prospectus; the Trust is and will, under current law, be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
(xvi) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to
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AAG Holding against payment therefor as described in the Registration Statement
and Prospectus, will be validly issued and will represent undivided beneficial
interests in the assets of the Trust and will conform in all material respects
to the description thereof contained in the Prospectus; the issuance of the
Common Securities is not subject to preemptive or other similar rights; and at
the Closing Time all of the issued and outstanding Common Securities of the
Trust will be directly owned by AAG Holding free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable right.
(xvii) This Agreement and the Pricing Agreement have been
duly authorized, executed and delivered by each of the Offerors.
(xviii) The Declaration has been duly authorized by AAG
Holding and, at the Closing Time, will have been duly executed and delivered
by AAG Holding and the Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware Trustee,
the Declaration will, at the Closing Time, be a valid and binding obligation of
AAG Holding and the Regular Trustees, enforceable against AAG Holding and the
Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity) (the "Bankruptcy Exceptions") and will
conform in all material respects to the description thereof contained in the
Prospectus.
(xix) Each of the Guarantee Agreements has been duly
authorized by the Company and, when validly executed and delivered by the
Company and, in the case of the Preferred Securities Guarantee Agreement,
assuming due authorization, execution and delivery of the Preferred Securities
Guarantee by the Guarantee Trustee, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and each of the Guarantees and the Guarantee Agreements
will conform in all material respects to the description thereof contained in
the Prospectus.
(xx) The Debt Guarantee has been duly authorized by the
Company and, at the Closing Time, will have been validly executed and delivered
by the Company and will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except to
the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions, and will conform in all material respects to the description
thereof contained in the Prospectus.
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(xxi) The Preferred Securities have been duly authorized and,
when issued and delivered against payment therefor as provided herein, will be
validly issued and fully paid and non-assessable undivided beneficial interests
in the assets of the Trust and will conform in all material respects to the
description thereof contained in the Prospectus; the issuance of the Designated
Securities is not subject to preemptive or other similar rights.
(xxii) The Indenture has been duly authorized and qualified
under the 1939 Act and, at the Closing Time, will have been duly executed and
delivered and will constitute a valid and binding agreement of AAG Holding and
the Company, enforceable against each of AAG Holding and the Company in
accordance with its terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; the Indenture will conform in all
material respects to the description thereof contained in the Prospectus.
(xxiii) The Subordinated Debentures have been duly authorized
by AAG Holding and, at the Closing Time, will have been duly executed by AAG
Holding and, when authenticated in the manner provided for in the Indenture and
delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of AAG Holding, enforceable against
AAG Holding in accordance with their terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will be in
the form contemplated by, and entitled to the benefits of, the Indenture and
will conform in all material respects to the description thereof in the
Prospectus.
(xxiv) Each of the Regular Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to execute
and deliver the Declaration.
(xxv) None of the Offerors is an "investment company" or a
company "controlled" by an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
(xxvi) The Trust is not in violation of the Declaration or
its certificate of trust filed with the State of Delaware on September 13,
1996 (the "Certificate of Trust"); none of the execution, delivery and
performance of this Agreement, the Pricing Agreement, the Declaration, the
Designated Securities, the Common Securities, the Indenture, the Subordinated
Debentures, the Guarantee Agreements and the Guarantees and the consummation of
the transactions contemplated herein and therein and compliance by the Offerors
with their respective obligations hereunder and thereunder did or will result
in a breach of any of the terms or provisions of, or constitute a default or
require the consent of any party under the Certificate of Trust or the
Certificate of Incorporation or
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Articles of Incorporation or By-laws or Code of Regulations, as the case may
be, of the Company or AAG Holding, any material agreement or instrument to
which either Offeror is a party, any existing applicable law, rule or
regulation or any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over either
Offeror or any of its properties or assets, or did or will result in the
creation or imposition of any lien on the properties or assets of either
Offeror.
(xxvii) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and no filing, recording, publication or
registration in any public office or any other place, was or is now required in
connection with the issuance and sale of the Common Securities or the offering
of the Designated Securities, the Subordinated Debentures or the Guarantees
hereunder, except for such as may be required under the 1933 Act or state
securities laws and the qualification of the Declaration, the Preferred
Securities Guarantee Agreement and the Indenture under the 1939 Act.
(xxviii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a material
adverse effect on the consolidated position, shareholders' equity or results of
operations of the Company and its Subsidiaries considered as one enterprise;
and, to the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(xxix) No "forward looking statement" (as defined in Rule 175
under the ▇▇▇▇ ▇▇▇) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any Trustee of the Trust or any officer
of the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Trust or the
Company, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein
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set forth, the Trust agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Trust, at the price per security set forth in the Pricing Agreement,
the number of Initial Securities set forth in Schedule A hereto opposite the
name of such Underwriter, plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(1) If the Offerors have elected not to rely upon Rule 430A
of the 1933 Act Regulations, the initial public offering price per Preferred
Security and the purchase price per Initial Security to be paid by the several
Underwriters for the Initial Securities have each been determined and set forth
in the Pricing Agreement, dated the date hereof, and any necessary amendments
to the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(2) If the Offerors have elected to rely upon Rule 430A of
the 1933 Act Regulations, the purchase price per Initial Security to be paid by
the several Underwriters shall be an amount equal to the initial public
offering price per Initial Security. The initial public offering price per
Initial Security shall be a fixed price to be determined by agreement between
the Underwriters and the Offerors. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all parties thereto by
the close of business on the fourth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability of any
party to any other party, unless otherwise agreed to by the Offerors and the
Underwriters.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Trust hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to an additional 450,000 Option Securities at the price per
security set forth in the Pricing Agreement, less an amount per share equal to
any dividends declared by the Trust and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 30
days after the Representation Date and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Initial Securities
upon notice by the Representative to the Trust setting forth the number of
Option Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by the Representatives, but shall not be later than seven full
business
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13
days after the exercise of said option, nor in any event prior to the Closing
Time, as hereinafter defined, unless otherwise agreed by the Representative and
the Trust. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities (except as otherwise provided in the Pricing Agreement), subject in
each case to such adjustments as the Representative in its discretion shall
make to eliminate any sales or purchases of fractional securities.
(c) Delivery of certificates for the Securities shall be made at the
offices of the Underwriters in New York, and payment of the purchase price for
the Securities shall be made by wire transfer of immediately available funds
contemporaneous with closing at the offices of ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
1800 Star Bank Center, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Underwriters and the Offerors, at
10:00 a.m. (New York time) on the third business day after the date the
Registration Statement becomes effective (or, if the Offerors have elected to
rely upon Rule 430A, the third full business day after execution of the Pricing
Agreement (or, if pricing of the Securities occurs after 4:30 p.m. Eastern
time, on the fourth full business day thereafter)), or such other time not
later than ten business days after such date as shall be agreed upon by the
Underwriters and the Offerors (such time and date of payment and delivery being
herein called the "Closing Time"). In addition, in the event that any or all
of the Option Securities are purchased by the Underwriters, payment of the
purchase price for, and delivery of certificates for, such Option Securities
shall be made by wire transfer of immediately available funds and by the
delivery of certificates at the above mentioned offices of ▇▇▇▇, Stettinius &
Hollister, or at such other place as shall be agreed upon by the Representative
and the Trust, on each Date of Delivery as specified in the notice from the
Representative to the Trust. Payment for the Securities purchased by the
Underwriters shall be made to the Trust by wire transfer of immediately
available funds, payable to the order of the Trust, against delivery to the
respective accounts of the Underwriters of certificates for the Initial
Securities and the Option Securities, if any, to be purchased by them.
Certificates for the Initial Securities and the Option Securities, if any,
shall be in such denominations and registered in such names as the Underwriters
may request in writing at least two full business days before the Closing Time
or the relevant Date of Delivery, as the case may be. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Initial Securities,
or the Option Securities, if any, to be purchased by any Underwriter whose
check has not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but
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14
such payment shall not relieve such Underwriter from its obligations hereunder.
The certificates for the Securities, will be made available for examination and
packaging by the Underwriters no later than 10:00 a.m. (New York City time) on
the last business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
(d) As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the
Designated Securities will be used to purchase the Subordinated Debentures of
AAG Holding, AAG Holding and the Company hereby jointly and severally agree to
pay at the Closing Time, or the relevant Date of Delivery, as the case may be,
to the Representatives, for the accounts of the several Underwriters, a
commission per Designated Security determined by agreement between the
Representatives, AAG Holding and the Company for the Designated Securities to
be delivered by the Trust hereunder at Closing Time, or the relevant Date of
Delivery, as the case may be. The commission, when so determined, shall be set
forth in the Pricing Agreement.
SECTION 3. Covenants of the Offerors. Each of the Offerors jointly
and severally agrees with each Underwriter as follows:
(a) The Offerors will comply with the requirements of Rule 430A of
the 1933 Act Regulations if and as applicable, and will notify the Underwriters
immediately, and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto (including any post-effective
amendment) or the filing of any supplement or amendment to the Prospectus, (ii)
of any request by the Commission for any amendment to the Registration
Statement and any amendment thereto (including any post-effective amendment) or
any amendment or supplement to the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose and (iv) of the issuance by any state securities
commission or other regulatory authority of any order suspending the
qualification or the exemption from qualification of the Preferred Securities
under state securities or Blue Sky laws or the initiation or threatening of any
proceeding for such purpose. The Offerors will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) The Offerors will give the Representatives notice of their
intention to file or prepare (i) any amendment to the Registration Statement
(including any post-effective amendment) or (ii) any amendment or supplement to
the Prospectus (including any revised prospectus which the Offerors propose for
use by the Underwriters in connection with the offering of the Preferred
Securities which differs from the prospectus on file at the
- 14 -
15
Commission at the time the Registration Statement became effective, whether or
not such revised prospectus is required to be filed pursuant to Rule 424(b) of
the 1933 Act Regulations); will furnish the Representatives with copies of any
such amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be; and will not file any such amendment or
supplement or use any such prospectus to which the Representatives or counsel
for the Underwriters shall reasonably object.
(c) The Offerors will deliver to each of the Representatives one
signed copy of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and will also deliver to the Representatives, without
charge, as many conformed copies of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) as the Representatives
may reasonably request. If applicable, the copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) The Offerors will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Offerors hereby consent to the use of such copies for purposes
permitted by the 1933 Act. The Offerors will furnish to each Underwriter, from
time to time during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. If
applicable, the Prospectus and any amendments or supplements thereto furnished
to the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Securities, any event shall occur
as a result of which it is necessary, in the opinion of counsel for the
Underwriters, to amend or supplement the Prospectus or to file under the 1934
Act any document incorporated by reference in the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, the Offerors will forthwith amend or
supplement the Prospectus or file such document (in form and substance
satisfactory to counsel for the Underwriters) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the
- 15 -
16
light of the circumstances existing at the time it is delivered to a purchaser,
not misleading, and the Company will furnish to the Underwriters a reasonable
number of copies of such amendment or supplement.
(f) The Offerors will endeavor, in cooperation with the Underwriters,
to qualify the Preferred Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Underwriters may designate; provided, however, that the Offerors shall not
be obligated to qualify as a foreign corporation in any jurisdiction in which
they are not so qualified. In each jurisdiction in which the Preferred
Securities have been so qualified, the Offerors will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with
distribution of the Preferred Securities.
(g) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
An Act Relating to Disclosure of Doing Business with Cuba, and the Company
further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported in the Prospectus, if
any, concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company will provide
the Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
(h) The Company will make generally available to the holders of
Preferred Securities as soon as practicable, but not later than 45 days (or 90
days, in the case of a period that is also the Company's fiscal year) after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a
twelve-month period beginning not later than the first day of the Trust's
fiscal quarter next following the "effective date" (as defined in said Rule 158
of the Registration Statement.
(i) The Trust will use the proceeds received by it from the sale of
the Preferred Securities, and AAG Holding and the Company will use the proceeds
received by it from the sale of the Subordinated Debentures, in the manners
specified in the Prospectus under "Use of Proceeds".
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A of the 1933 Act
Regulations, then immediately
- 16 -
17
following the execution of the Pricing Agreement, the Offerors will prepare,
and file or transmit for filing with the Commission in accordance with such
Rule 430A and Rule 424(b) of the 1933 Act Regulations, copies of an amended
Prospectus or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended Prospectus), containing all
information so omitted.
(k) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the
time periods required by the Exchange Act and the 1934 Act Regulations.
(l) The Company will use its best efforts to effect the listing of
the Designated Securities (including the Preferred Securities Guarantee with
respect thereto) on the New York Stock Exchange and to cause the Designated
Securities to be registered under the 1934 Act. If the Preferred Securities
are exchanged for Subordinated Debentures, the Company will use its best
efforts to effect the listing of the Subordinated Debentures on the exchange on
which the Designated Securities were then listed and to cause the Subordinated
Debentures to be registered under the ▇▇▇▇ ▇▇▇.
(m) During a period of 90 days from the date of the Pricing
Agreement, neither the Trust nor the Company will, without the prior written
consent of the Underwriters, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, or enter into any
agreement to sell, any Preferred Securities, any security convertible into or
exchangeable or exercisable for Preferred Securities, or the Subordinated
Debentures or any debt securities substantially similar to the Subordinated
Debentures or any equity securities substantially similar to the Preferred
Securities (except for the Subordinated Debentures and the Preferred Securities
issued pursuant to this Agreement).
(n) During a period of two years from the Closing Time, the Company
will make generally available to the Underwriters copies of all reports and
other communications (financial or other) mailed to shareholders, and deliver
to the Underwriters promptly after they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed; and shall furnish such additional information concerning the business
and financial condition of the Company as the Underwriters may from time to
time reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally or to the
Commission).
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18
SECTION 4. Payment of Expenses. The Company agrees with the several
Underwriters to pay all expenses incident to the performance of each Offeror's
obligations under this Agreement and the Pricing Agreement, including, without
limitation, expenses related to the following, if incurred (i) the preparation,
delivery, printing and filing of the Registration Statement and Prospectus as
originally filed (including financial statements and exhibits) and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the Pricing Agreement, any Agreement among Underwriters and such
other documents as may be required in connection with offering, purchase, sale
and delivery of the Securities; (iii) the preparation, issuance and delivery of
the certificates for the Preferred Securities; (iv) the fees and disbursements
of the Company's counsel, accountants and other advisors or agents (including
the transfer agents and registrars); (v) the qualification of the Preferred
Securities under securities laws in accordance with the provisions of Section
3(f), including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any Legal Investment Survey; (vi) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each
preliminary prospectus and of the Prospectus and any amendments thereto; (vii)
the printing and delivery to the Underwriters of copies of the Blue Sky Survey
and any Legal Investment Survey; (viii) any fees payable in connection with the
rating of the Preferred Securities by nationally recognized statistical rating
organizations; (ix) the filing fees incident to, and the fees and disbursements
of counsel to the Underwriters in connection with, the review, if any, by the
National Association of Securities Dealers, Inc. (the "NASD") of the terms of
the sale of the Designated Securities; (x) any fees payable to the Commission;
(xi) the fees and expenses incurred in connection with the listing of the
Designated Securities (and the related Preferred Securities Guarantee) and, if
applicable, the Subordinated Debentures on the New York Stock Exchange; (xii)
the fees and expenses of the Debt Trustee, the Property Trustee and the
Guarantee Trustee, including fees and disbursements of counsel for such
trustees, in connection with the Indenture and the Subordinated Debentures, the
Declaration, the Certificate of Trust and the Guarantee; and (xiii) the cost of
qualifying the Designated Securities with the Depository Trust Company.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ and
Skadden, Arps, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for the Underwriters.
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19
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Offerors herein contained, to the
performance by the Offerors of their obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m., New York City time, on the date hereof, and on the date hereof
and at the Closing Time, no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the satisfaction of counsel to the Underwriters. A
prospectus, if required, shall have been filed with the Commission in
accordance with Rule 424(b), as applicable (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, PLL, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) Each of the Company and the Designated
Subsidiaries has been duly incorporated and is validly existing under
the laws of the state of its incorporation, in each case with
corporate power and authority to carry on the business in which it is
engaged and to own, lease and operate its properties and conduct its
business as described in the Prospectus, and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one
enterprise.
(ii) The Preferred Securities conform in all
material respects to the description thereof in the Prospectus.
(iii) The Trust is not required to be qualified and
in good standing as a foreign company in Ohio, and if it were required
to be so qualified the failure to so qualify or be in good standing
would not have a material adverse effect on the Trust; and the Trust
is not a party to or
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20
otherwise bound by any material agreement other than those described
in the Prospectus.
(iv) The Declaration has been duly authorized,
executed and delivered by the Company and the Trustees and is a valid
and binding obligation of the Company, enforceable against the Company
and each of the Regular Trustees in accordance with its terms, except
as enforcement thereof may be limited by the Bankruptcy Exceptions;
and the Declaration has been duly qualified under the 1939 Act.
(v) All legally required proceedings in connection
with the authorization, issuance and validity of the Securities and
the sale of the Securities in accordance with this Agreement (other
than the filing of post-issuance reports, the non-filing of which
would not render the Securities invalid) have been taken and all
legally required orders, consents or other authorizations or approvals
of any other public boards or bodies in connection with the
authorization, issuance and validity of the Securities and the sale of
the Securities in accordance with this Agreement (other than in
connection with or in compliance with the provisions of the securities
or Blue Sky laws of any jurisdictions, as to which no opinion need be
expressed) have been obtained and are in full force and effect.
(vi) The Registration Statement is effective under
the 1933 Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act, and no proceedings therefor have been
initiated or threatened by the Commission.
(vii) The Registration Statement as of its effective
date and the Prospectus and each amendment thereto as of its issue
date (in each case, other than the operating statistics, the financial
statements and the notes thereto, the financial schedules, and any
other financial data included or incorporated by reference therein, as
to which such counsel need express no belief), complied as to form in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations; and the Declaration, the Indenture, the
Preferred Securities Guarantee Agreement and the Statements of
Eligibility on Forms T-1 with respect to each of the Property Trustee,
the Debt Trustee, and the Guarantee Trustee filed with the Commission
as part of the Registration Statement complied as to form in all
material respects with the requirements of the 1939 Act and the 1939
Act Regulations.
(viii) Each of the documents incorporated by
reference in the Registration Statement or the Prospectus at the time
they were filed or last amended (other than the
- 20 -
21
financial statements and the notes thereto, the financial schedules,
and any other financial or statistical data included or incorporated
by reference therein, as to which such counsel need express no belief)
complied as to form in all material respects with the requirements of
the 1934 Act, and the 1934 Act Regulations, as applicable.
(ix) Each of the Offerors meets the registrant
requirements for use of Form S-3 under the 1933 Act.
(x) The Common Securities, the Preferred Securities,
the Subordinated Debentures, each of the Guarantees, the Declaration,
the Indenture and each of the Guarantee Agreements conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(xi) The descriptions in the Registration Statement
and the Prospectus and each amendment or supplement thereto of
regulations, statutes, legal and governmental proceedings and
contracts and other documents are accurate in all material respects
and fairly present the information required to be shown and such
counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement or the
Prospectus or any amendment or supplement thereto that are not so
described (or the descriptions of which are not incorporated by
reference) or of any contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or any
amendment or supplement thereto or to be filed as exhibits to the
Registration Statement or any amendment thereto that are not so
described (or the descriptions of which are not incorporated by
reference) or so filed.
(xii) All of the issued and outstanding Common
Securities of the Trust are directly owned by AAG Holding free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equitable right.
(xiii) This Agreement and the Pricing Agreement have
been duly authorized, executed and delivered by each of the Trust and
the Company.
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming it is duly authorized,
executed, and delivered by the Guarantee Trustee, and the Debt
Guarantee constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by Bankruptcy Exceptions; and the
Preferred Securities Guarantee Agreement has been duly qualified under
the ▇▇▇▇ ▇▇▇.
- 21 -
22
(xv) The Debt Guarantee has been duly authorized by
the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xvi) The Indenture has been duly executed and
delivered by each of AAG Holding and the Company and, assuming due
authorization, execution, and delivery thereof by the Debt Trustee, is
a valid and binding obligation of each of AAG Holding and the Company,
enforceable against each of AAG Holding and the Company in accordance
with its terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; and the Indenture has been duly
qualified under the 1939 Act.
(xvii) The Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by AAG Holding and, when authenticated by the Debt Trustee
in the manner provided for in the Indenture and delivered against
payment therefor as provided in this Agreement, will constitute valid
and binding obligations of AAG Holding, enforceable against the
Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(xviii) Neither the Company, AAG Holding nor the
Trust is an "investment company" or a company "controlled" by an
"investment company" which is required to be registered under the
▇▇▇▇ ▇▇▇.
(xix) The execution, delivery and performance of
this Agreement, the Pricing Agreement, the Declaration, the Preferred
Securities, the Common Securities, the Indenture, the Subordinated
Debentures, the Guarantee Agreements, and the Guarantees; the
consummation of the transactions contemplated herein and therein; and
the compliance by each of the Offerors with their respective
obligations hereunder and thereunder do not and will not conflict
with, result in a breach of, or constitute a default under the
Certificate of Incorporation or the By-laws of the Company or the
governing documents or any of its Subsidiaries or the terms of any
indenture or other agreement or instrument known to such counsel and
to which the Company or any of its Subsidiaries is a party or bound,
or result in a violation of any statute or regulation, or any order or
decree known to such counsel to be applicable to the Company or any of
its Subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its Subsidiaries;
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23
(xx) Each Insurance Subsidiary holds such insurance
licenses, certificates and permits from governmental authorities
(including, without limitation, Insurance Licenses) which are
necessary to the conduct of its business as described in the
Prospectus; to the best knowledge of such counsel, there is no pending
or threatened action, suit, proceeding or investigation that could
reasonably be expected to result in the revocation, termination or
suspension of any Insurance License; and, except as disclosed in the
Prospectus, to the knowledge of such counsel, no insurance regulatory
agency or body has issued, or commenced any proceeding for the
issuance of, any order or decree impairing, restricting or prohibiting
the payment of dividends by any Insurance Subsidiary to its parent;
and
(xxi) To the best knowledge of such counsel, all
reinsurance treaties and arrangements to which any Insurance
Subsidiary is a party are in full force and effect and no Insurance
Subsidiary is in violation of or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained therein.
Moreover, such counsel shall confirm that nothing has come to
such counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to Rule
430A (except for financial statements and related schedules and other financial
data included or incorporated by reference therein or in the related Forms T-1,
as to which counsel need express no opinion), at the time it became effective
or at the Representation Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus (except
for financial statements and related schedules and other financial data
included or incorporated by reference therein or in the related Forms T-1, as
to which counsel need express no opinion), at the Representation Date (unless
the term "Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of the
Securities which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the time it
is first provided to the Underwriters for such use) or at the Closing Time,
included (or includes) an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of Delaware, Ohio
and the federal law of the United States, to the extent they deem proper and
specified in such opinion, upon
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24
the opinion of other counsel of good standing whom they believe to be reliable
and who are satisfactory to counsel for the Underwriters and (B) as to matters
of Delaware Law, upon the opinion of Morris, Nichols, Arsht & ▇▇▇▇▇▇▇, special
Delaware counsel to the Offerors, in which case the opinion shall state that
such counsel believes that you and such counsel are entitled to so rely.
Further, in rendering the foregoing opinion, such counsel may rely, to the
extent they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel, including counsel employed by the Company,
as to matters governed by the laws of jurisdictions other than the United
States, the State of Ohio or the General Corporation Law of the State of
Delaware, and as to matters of fact, upon certificates of officers of the
Company and of government officials; provided that such counsel shall state
that the opinion of any other counsel is in form satisfactory to such counsel
and, in such counsel's opinion, such counsel and the Underwriters are justified
in relying on such opinions of other counsel. Copies of all such opinions and
certificates shall be furnished to counsel to the Underwriters on each Closing
Date. Such counsel may state that they are not passing on matters relating to
patents and trademarks.
(2) The favorable opinion, dated as of Closing Time, of
Morris, Nichols, Arsht & ▇▇▇▇▇▇▇, special Delaware counsel to the Offerors, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made.
(ii) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to own property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and
binding obligation of the Company and the Trustees and is enforceable
against the Company and the Trustees in accordance with its terms,
subject, as to enforcement, to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii)
considerations of public policy or the effect of applicable law
relating to fiduciary duties.
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25
(iv) Under the Delaware Act and the Declaration, the
Trust has the business trust power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and the
Pricing Agreement and (ii) issue, and perform its obligations under,
the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement and the Pricing
Agreement, and the performance by the Trust of its obligations
hereunder and under the Pricing Agreement, have been duly authorized
by all necessary action on the part of the Trust.
(vi) The certificates for the Preferred Securities
are in due and proper form; the Preferred Securities have been duly
authorized by the Declaration and are duly and validly issued and,
subject to qualifications hereinafter expressed in this paragraph
(vi), fully paid and nonassessable undivided beneficial interests in
the assets of the Trust; the holders of the Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to shareholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware; said counsel may note that the holders of the
Preferred Securities may be obligated to make payments as set forth in
the Declaration.
(vii) The Common Securities have been duly
authorized by the Declaration and are duly and validly issued and
represent undivided beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration,
the issuance of the Trust Securities is not subject to Preemptive
rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debentures,
the execution, delivery and performance by the Trust of this Agreement
and the Pricing Agreement, the consummation by the Trust of the
transactions contemplated hereby and by the Pricing Agreement and
compliance by the Trust with its obligations hereunder and thereunder
will not violate (i) any of the provisions of the Certificate of Trust
or the Declaration or (ii) any applicable Delaware law or
administrative regulation.
(3) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇, LLP, counsel of The Bank of New York, as Property Trustee under the
Declaration, and Guarantee Trustee under the Preferred Securities Guarantee
Agreements, in form and substance satisfactory to counsel for the Underwriters,
to the effect that:
- ▇▇ -
▇▇
(▇) ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ is a national banking
association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States with all necessary
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of the Declaration and the
Preferred Securities Guarantee Agreement.
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Preferred Securities
Guarantee Agreement have been duly authorized by all necessary
corporation action on the part of the Property Trustee and the
Guarantee Trustee, respectively. The Declaration and the Preferred
Securities Guarantee Agreement have been duly executed and delivered
by the Property Trustee and the Guarantee Trustee, respectively, and
constitute the legal, valid and binding obligations of the Property
Trustee and the Guarantee Trustee, respectively, enforceable against
the Property Trustee and the Guarantee Trustee, respectively, in
accordance with their terms, except to the extent the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Preferred Securities Guarantee Agreement by the
Property Trustee and the Guarantee Trustee, respectively, do not
conflict with or constitute a breach of the Articles of Organization
or Bylaws of the Property Trustee and the Guarantee Trustee,
respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any state or federal banking authority
is required for the execution, delivery or performance by the Property
Trustee and the Guarantee Trustee of the Declaration and the Preferred
Securities Guarantee Agreement.
(4) The opinion of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.,
special tax counsel to the Offerors, on the status of the Subordinated
Debentures as indebtedness for United States federal income tax purposes, on
the status of the Trust as a grantor trust for United States federal income tax
purposes, and on the status of the Subordinated Debentures as instruments that
are not OID instruments prior to an election by the Company to defer payments
of interest thereon. Such opinion may be conditioned on, among other things,
the initial and continuing accuracy of the facts, financial and other
information, covenants and representations set forth in certificates of
officers of the Company and the Trust and other documents deemed necessary for
such opinion. With regard to the balance of the discussion set forth in the
Prospectus under the heading "United States Federal
- 26 -
27
Income Taxation," special tax counsel shall have reviewed such discussion and
shall have concluded, subject to the qualifications set forth in the preceding
sentence hereof, that such discussion accurately summarizes the specific tax
matters addressed therein.
(5) The favorable opinion, dated as of Closing Time, of ▇▇▇▇,
Stettinius & Hollister, counsel for the Underwriters, in form and substance
satisfactory to the Underwriters with respect to the incorporation and legal
existence of the Company, the Preferred Securities, the Indenture, the
Preferred Securities Guarantee Agreement, this Agreement, the Pricing
Agreement, the Registration Statement, the Prospectus and other related matters
as the Representative may require. In giving its opinion, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ may rely upon the opinions of ▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, PLL and
Morris, Nichols, Arsht & ▇▇▇▇▇▇▇, counsel for the Offerors, which shall be
delivered in accordance with Section 5(b)(1) and 5(b)(2) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its Subsidiaries considered as one enterprise, whether
or not in the ordinary course of business.
(d) At Closing Time, the Representatives shall have received a
certificate of an executive officer of each of the Company and AAG Holding and
a certificate of a Regular Trustee of the Trust, and dated as of Closing Time,
to the effect that to the best of such person's knowledge, information and
belief (i) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Trust or the Company and its Subsidiaries considered as one
enterprise, whether or not in the ordinary course of business, (ii) the
representations and warranties in Section 1 hereof are true and correct as
though expressly made at and as of Closing Time, (iii) the Trust, the Company
and AAG Holding have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(e) At the time of the execution of this Agreement and at the Closing
Time, Ernst & Young LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the date of this Agreement and as of the
Closing Time, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the applicable published rules and regulations
thereunder and stating in effect that:
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28
(i) in their opinion the audited financial
statements and financial statement schedules incorporated in the
Registration Statement and the Prospectus and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial information; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
shareholders, directors and executive and audit committees of the
Company; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and
its subsidiaries as to transactions and events subsequent to the date
of the most recent audited financial statements included or
incorporated into the Registration Statement, nothing came to their
attention which caused them to believe that:
(1) the unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do not
comply in form in all material respects with applicable accounting
requirements of the Act and the Exchange Act and with the published
rules and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form 10-Q
under the Exchange Act; or any material modifications should be made
to said unaudited financial statements for them to be in conformity
with generally accepted accounting principles; or
(2) with respect to the period subsequent to the
date of the most recent financial statements, audited or unaudited, in
or incorporated in the Registration Statement and the Prospectus,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, or any net increases in
the long-term debt or short-term debt (defined for this purpose as
amounts payable within twelve months to banks, factors or other
financial institutions and holders of commercial paper) of the Company
and its subsidiaries or capital stock of the Company or decreases in
the shareholders' equity of the Company as compared with the amounts
shown on the most recent consolidated balance sheet incorporated in
the Registration Statement and the Prospectus, or for the period from
the
- 28 -
29
date of the most recent financial statements incorporated in the
Prospectus to such specified date there were any decreases, as
compared with the corresponding period in the preceding year, in net
investment income, total revenues, income before income taxes or net
income of the Company and its subsidiaries, except in all instances
for changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary
by the Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement and the
Prospectus, including, without limitation, the information set forth
under the caption "Ratio of Earnings to Fixed Charges" and such other
materials set forth under such other captions as the Representatives
may reasonably request in the Prospectus, the Registration Statement
and the documents incorporated by reference therein, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
(f) At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Preferred Securities as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions herein contained; and all proceedings
taken by the Offerors in connection with the issuance and sale of the Preferred
Securities as herein contemplated shall be satisfactory in form and substance
to the Underwriters and counsel for the Underwriters.
(g) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Offerors contained herein
and the statements in any certificates furnished by the Offerors hereunder
shall be true and correct as of each Date of Delivery and, at the relevant Date
of Delivery, the Representative shall have received:
(1) The certificates, each dated such Date of Delivery,
of the relevant officer of the respective Offeror confirming that the
respective certificates delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.
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30
(2) The favorable opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
PLL, counsel for the Offerors, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, related to the Option
Securities to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Sections 5(b)(1).
(3) The favorable opinion of Morris, Nichols, Arsht &
▇▇▇▇▇▇▇, Special Delaware counsel for the Offerors, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Sections 5(b)(2).
(4) The favorable opinion of the Law Department of The
Bank of New York, counsel for The Bank of New York, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Sections 5(b)(3).
(5) The favorable opinion of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P., special tax counsel to the Offerors, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Sections 5(b)(4).
(6) The favorable opinion of ▇▇▇▇, Stettinius &
Hollister, counsel for the Underwriters, dated such Date of Delivery, relating
to the Option Securities to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Sections 5(b)(5).
(7) A letter from Ernst & Young LLP, in form and
substance satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished to the
Representatives pursuant to Section 5(e) hereof, except that the "specified
date" in the letter furnished pursuant to this Section 5(g)(7) shall be a date
not more than five days prior to such Date of Delivery.
(h) At Closing Time, and at the relevant Date of Delivery, as the
case may be, the Preferred Securities shall be rated "BBB-" or higher by
Standard & Poor's Corporation ("S&P") and "ba1" or higher by ▇▇▇▇▇'▇ Investors
Services ("Moody's") and the Trust shall have delivered to the Representatives
a letter, dated the Closing Time, and at the relevant Date of Delivery, as the
case may be, from S&P or Moody's, or other evidence satisfactory to the
Representatives, confirming that the Preferred Securities have such ratings;
and there shall not have occurred any decrease in the ratings of any of the
debt securities of the Company or of the Preferred Securities by either S&P or
Moody's and neither S&P
- 30 -
31
nor Moody's shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities of the Company or of the Preferred Securities.
(i) At Closing Time, and at the relevant Date of Delivery, as the
case may be, the Preferred Securities shall have been approved for listing on
the New York Stock Exchange upon notice of issuance.
(j) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Offerors at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4.
SECTION 6. Indemnification.
(a) The Offerors agree to jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto) or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, provided that (subject to Section 6(d) below)
any such settlement is effected with the written consent of the
Offerors; and
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32
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by
▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Offerors by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430(A)
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto). The
foregoing indemnity with respect to any untrue statement contained in or
omission from a preliminary prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities that are the subject thereof if such person was not sent or
given a copy of the Prospectus (or the Prospectus as amended or supplemented)
(in each case exclusive of the documents from which information is incorporated
by reference) at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, the Trust and each of its Trustees who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430(A) Information
deemed to be a part thereof, if applicable, or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Offerors by such
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
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33
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In the case
of parties indemnified pursuant to Section 6(a) above, counsel to the
indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, provided, however, that
such counsel shall be reasonably satisfactory to the Offerors. In the case of
parties indemnified pursuant to Section 6(b) above, counsel to the indemnified
parties shall be selected by the Offerors, provided, however, such counsel
shall be reasonably satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
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34
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Offerors on the one hand and the Underwriters on the other hand from offering
of the Designated Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Offerors on the one
hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the
Designated Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Designated Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the Designated Securities as set
forth on such cover.
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or
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35
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company or trustees of the Trust submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of
the Trust or the Company, and shall survive delivery of the Designated
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to
the Offerors at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
or any development which could reasonably be expected to result in a
prospective material adverse change in the business or the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Trust or Company and its
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36
Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or escalation of hostilities or other calamity or crisis, or any
change or development involving a prospective change in national or
international political, financial or economic conditions the effect of which
is such as to make it, in the judgment of the Underwriters, impracticable to
market the Preferred Securities or to enforce contracts for the sale of the
Preferred Securities, or (iii) if trading in the Preferred Securities or any
securities of the Company has been suspended or limited by the Commission, NASD
or the New York Stock Exchange, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or by
order of the Commission or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal, New York or Ohio
authorities.
(b) If this Agreement and the Pricing Agreement are terminated
pursuant to this Section, such termination shall be without liability of any
party to any other party except as provided in Section 4, and provided,
further, that Sections 1, 6 and 7 shall survive such termination and remain in
full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time to purchase the
Securities which it or they are obligated to enter into under this Agreement
and the Pricing Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of such Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Securities, the non-defaulting Underwriters shall be obligated
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
- 36 -
37
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to c/o Merrill ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director, with a copy to ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 1800 Star Bank Center, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.; notices to the Offerors shall
be directed to American Annuity Group, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Senior Vice President,
General Counsel and Secretary, with a copy to ▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, ▇▇▇,
▇▇▇▇ Provident Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention
of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Offerors and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Offerors and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Offerors and their respective
successors and legal representatives, and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time unless otherwise
indicated.
- 37 -
38
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Offerors in accordance with its terms.
Very truly yours,
AMERICAN ANNUITY GROUP, INC.
By: ______________________________
Name:
Title:
AAG HOLDING COMPANY, INC.
By: ______________________________
Name:
Title:
AMERICAN ANNUITY GROUP CAPITAL TRUST I
By: _____________________________
Title: Regular Trustee
By: _____________________________
Title: Regular Trustee
- 38 -
39
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇ BROTHERS
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _____________________________________
Authorized Signatory
For themselves and as the Representatives of the several Underwriters
named in Schedule A hereto.
- 39 -
40
SCHEDULE A
Name of Underwriter Number of Shares
------------------- ----------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated . . . . . . . . . . . . . . . . . . . . . .
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.. . . . . . .
▇▇▇▇▇▇ ▇▇▇▇ LLC. . . . . . . . . . . . . . . . . . . . . . . . . .
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . .
Prudential Securities Incorporated . . . . . . . . . . . . . . . .
▇▇▇▇▇▇ Brothers. . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
- 40 -
41
SCHEDULE B
Percentage of
State of Common Equity
Name of Company Incorporation Ownership
--------------- ------------- ---------
AAG HOLDING COMPANY, INC. Delaware 100%
AAG Securities, Inc. [100%]
Annuity Investors Life Insurance
Company [100%]
CSW Management Services, Inc. [100%]
International Funeral Associates [100%]
Laurentian Investment Services, Inc. [100%]
Lifestyle Financial Investments, Inc. [100%]
Retirement Resources Group, Inc. [100%]
- 41 -
42
EXHIBIT A
3,000,000 Preferred Securities
AMERICAN ANNUITY GROUP CAPITAL TRUST I
(a Delaware business trust)
____% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Security)(SM)
PRICING AGREEMENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO. ___________, 1996
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇ BROTHERS
as Representative of the several
Underwriters named in the
within-mentioned Underwriting
Agreement
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
___________________, 1996 (the "Underwriting Agreement"), relating to the
purchase by the several Underwriters named in Schedule A thereto, for whom
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇ ▇▇▇▇ LLC, PaineWebber Incorporated, Prudential
Securities Incorporated, and ▇▇▇▇▇▇ Brothers are acting as representatives (the
"Representatives"), of the above ___% Trust Originated Preferred Securities
(the "Preferred Securities"), of American Annuity Group Capital Trust I, a
Delaware business trust (the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust,
American Annuity Group, Inc. (the "Company"), a Delaware corporation, and AAG
Holding Company, Inc. ("AAG Holding"), an Ohio corporation, and American
Annuity Group Capital Trust I agree with each Underwriter as follows:
1. The initial public offering price per security for the Preferred
Securities, determined as provided in said Section 2, shall be $_____.
2. The purchase price per security for the Preferred Securities to be
paid by the several Underwriters shall be $_____, being an amount equal to the
initial public offering price set forth above; provided that the purchase price
per Preferred Security for any Option
43
Securities (as defined in the Purchase Agreement) purchased upon exercise of
the over-allotment option described in Section 2(b) of the Purchase Agreement
shall be reduced by an amount per share equal to any distribution declared by
the Trust and payable on the Initial Securities (as defined in the Purchase
Agreement) but not payable on the Option Securities.
3. The compensation per Preferred Security to be paid by the Company
to the several Underwriters in respect of their commitments hereunder shall be
$______; provided, however, that the compensation per Preferred Security for
sales of 10,000 or more Preferred Securities to a single purchaser shall be
$_______.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Trust, AAG Holding and the Company
in accordance with its terms.
Very truly yours,
AMERICAN ANNUITY GROUP, INC.
By: ______________________________
Name:
Title:
AAG HOLDING COMPANY, INC.
By: _____________________________
Name:
Title:
AMERICAN ANNUITY GROUP CAPITAL TRUST I
By: _____________________________
Title: Regular Trustee
By: _____________________________
Title: Regular Trustee
__________________________
A-2
44
(SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc.
45
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇ LLC
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇ BROTHERS
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _____________________________________
Authorized Signatory
For themselves and as the Representatives of the several Underwriters
named in Schedule A to the Underwriting Agreement.
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