Exhibit 99.2
AMERICAN FINANCIAL GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
1. Introductory. American Financial Group, Inc., an Ohio corporation
("Company"), proposes to issue and sell from time to time shares of its common
stock, without par value, ("Common Stock") registered under the registration
statement referred to in Section 2(a) ("Registered Securities"). Particular
offerings of Registered Securities will be sold pursuant to a Terms Agreement
referred to in Section 3, for resale in accordance with terms of offering
determined at the time of sale.
The Registered Securities involved in any such offering are hereinafter
referred to as the "Offered Securities". The firm or firms which agree to
purchase the Offered Securities are hereinafter referred to as the
"Underwriters" of such securities, and the representative or representatives of
the Underwriters, if any, specified in a Terms Agreement referred to in Section
3 are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the Underwriters,
the term "Representatives", as used in this Agreement (other than in Sections
2(b), 5(c) and 6 and the second sentence of Section 3), shall mean the
Underwriters.
2. Representations and Warranties of the Company. The Company, as of
the date of each Terms Agreement referred to in Section 3, represents and
warrants to, and agrees with, each Underwriter that:
(a) A registration statement (No. 333-81903), including a
prospectus, relating to the Registered Securities has been filed with
the Securities and Exchange Commission ("Commission") and has become
effective. Such registration statement, as amended at the time of any
Terms Agreement referred to in Section 3, is hereinafter referred to as
the "Registration Statement", and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 3 to
reflect the terms of the offering of the Offered Securities, as first
filed with the Commission pursuant to and in accordance with Rule
424(b) ("Rule 424(b)") under the Securities Act of 1933 ("Act"),
including all material incorporated by reference therein, is
hereinafter referred to as the "Prospectus". No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(b) On the effective date of the registration statement, and on the
date that any post-effective amendments thereto have become effective,
relating to the Registered Securities, such registration statement
conformed in all respects to the requirements of the Act and the rules
and regulations of the Commission ("Rules and Regulations") and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and on the date of each Terms
Agreement referred to in Section 3, the Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act
and the Rules and Regulations, and neither of such documents will
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing does not
apply to statements in or omissions from any of such documents based
upon written information furnished to the Company by any Underwriter
through the Representatives, if any, specifically for use therein. The
documents incorporated by reference in the Registration Statement and
the Prospectus conformed, at the time
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filed, in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Rules
and Regulations.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Ohio, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification; and the
Company has the power and authority (corporate and otherwise) to enter
into and perform its obligations under the Terms Agreement (including
the provisions of this Agreement), including without limitation issuing
the Offered Securities.
(d) Each Significant Subsidiary (as defined below) of the Company
has been duly incorporated and is an existing corporation in good
standing (or local law equivalent) under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to
own its properties and conduct its business as described in the
Prospectus; and each Significant Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification; all of the
issued and outstanding capital stock of each Significant Subsidiary of
the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and all of the outstanding shares of capital
stock of each Significant Subsidiary, except as set forth on Schedule I
annexed hereto, are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects. None of the
outstanding shares of capital stock of any Significant Subsidiary was
issued in violation of preemptive or other similar rights of any
securityholder of such Significant Subsidiary. As used herein,
"Significant Subsidiary" means a "significant subsidiary" of the
Company as that term is defined in Rule 1-02(w) of Regulation S-X of
the Rules and Regulations.
(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with the
Terms Agreement on the Closing Date, such Offered Securities will have
been, validly issued, fully paid and nonassessable and will conform to
the description thereof contained in the Prospectus; and the
stockholders of the Company have no preemptive or other similar rights
with respect to its outstanding capital stock.
(f) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter
for a brokerage commission, finder's fee or other like payment.
(g) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Act.
(h) The outstanding shares of Common Stock are listed on The New
York Stock Exchange, Inc. (the "Stock Exchange") and the Offered
Securities have been approved for listing on the Stock Exchange,
subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms
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Agreement (including the provisions of this Agreement) in connection
with the issuance and sale of the Offered Securities by the Company,
except such as have been obtained and made under the Act and such as
may be required under state securities laws.
(j) The execution, delivery and performance of the Terms Agreement
(including the provisions of this Agreement) and the issuance and sale
of the Offered Securities will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any Significant Subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company or any
such Significant Subsidiary is a party or by which the Company or any
such Significant Subsidiary is bound or to which any of the properties
of the Company or any such Significant Subsidiary is subject, or the
charter or by-laws of the Company or any such Significant Subsidiary,
and the Company has full power and authority to authorize, issue and
sell the Offered Securities as contemplated by the Terms Agreement
(including the provisions of this Agreement).
(k) The Terms Agreement (including the provisions of this
Agreement) has been duly authorized, executed and delivered by the
Company.
(l) Except as disclosed in the Prospectus, the Company and its
Significant Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each
case free from liens, encumbrances and defects that would, individually
or in the aggregate, materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except
as disclosed in the Prospectus, the Company and its Significant
Subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(m) The Company and its Significant Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them and none of them has received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or any of its
Significant Subsidiaries, would individually or in the aggregate have a
material adverse effect on the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect").
(n) No labor dispute with the employees of the Company or any
Significant Subsidiary exists or, to the knowledge of the Company, is
imminent that might have a Material Adverse Effect.
(o) The Company and its Significant Subsidiaries own, possess or
can acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its Significant
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(p) Except as disclosed in the Prospectus, neither the Company nor
any of its Significant Subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any
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off-site disposal or contamination pursuant to any environmental laws,
or is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(q) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of
its Significant Subsidiaries or any of their respective properties
that, if determined adversely to the Company or any of its Significant
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability of
the Company to perform its obligations under the Terms Agreement
(including the provisions of this Agreement), or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(r) The financial statements included or incorporated by reference
in the Registration Statement and Prospectus, together with the related
schedules and notes thereto, present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown and
their results of operations, cash flows and shareholders' equity for
the periods shown, and such financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis throughout the periods involved;
the summary consolidated financial information prepared by the Company
presents fairly the information reflected therein and has been compiled
on a basis consistent with the preparation of the audited financial
statements of the Company; any schedules included in the Registration
Statement present fairly the information required to be stated therein;
and if pro forma financial statements are included in the Registration
Statement and Prospectus: the assumptions used in preparing the pro
forma financial statements included in the Registration Statement and
the Prospectus provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect
the proper application of those adjustments to the corresponding
historical financial statement amounts.
(s) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(u) Each subsidiary of the Company which is engaged in the business
of insurance or reinsurance (collectively, the "Insurance
Subsidiaries") holds such insurance licenses, certificates and permits
from governmental authorities (including, without limitation, from the
insurance regulatory agencies of the various jurisdictions where it
conducts business (the "Insurance Licenses")) as are necessary to the
conduct of its business as described in the Prospectus; the Company and
each Insurance Subsidiary have fulfilled and performed all obligations
necessary to maintain the Insurance Licenses; except as disclosed in
the Prospectus, there is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or investigation that
could reasonably be expected to result in the revocation, termination
or suspension of any Insurance License which would, individually or in
the aggregate, have a Material Adverse Effect; and except as disclosed
in the Prospectus, no insurance
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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.
(v) Except as disclosed in the Prospectus, the Company and its
Insurance Subsidiaries have made no material change in their insurance
reserving practices since the most recent audited financial statements
included in the Prospectus.
(w) 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, except where such default or inability to perform would
not, individually or in the aggregate, have a Material Adverse Effect.
(x) The statutory financial statements of the Insurance
Subsidiaries, from which certain ratios and other statistical data
included in the Registration Statement and the Prospectus have been
derived, have been prepared for each relevant period 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 in all material respects 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.
(y) The Company has previously delivered to you true and complete
copies of the following for each of Chiquita Brands International, Inc.
("Chiquita"), Great American Financial Resources, Inc. ("GAFR") and
American Financial Corporation ("AFC"): (i) the Annual Report on Form
10-K for the year ended December 31, 1999, as filed with the
Commission, and all amendments thereto; (ii) proxy statements relating
to all meetings of its shareholders (whether annual or special) held or
scheduled to be held since January 1, 2000; and (iii) all other
reports, statements and registration statements (including Current
Reports on Form 8-K) filed by it with the Commission since December 31,
1999 (collectively, the "Designated Filings"). As of their respective
dates, the Designated Filings did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Chiquita, GAFR and AFC included in the Designated Filings
present fairly, in all material respects, the financial condition,
results of operations and changes in financial position of Chiquita,
GAFR and AFC, respectively, as at the dates or for the periods
indicated therein in conformity with generally accepted accounting
principles applied on a consistent basis.
(z) Except as set forth in the Designated Filings or the
Prospectus, since January 1, 2000, Chiquita, GAFR and AFC and each of
their respective subsidiaries have conducted business only in the
ordinary and usual course and there has not occurred any adverse change
in the financial condition, business, results of operations, prospects,
properties or assets of Chiquita, GAFR or AFC or any of their
respective subsidiaries that would have a Material Adverse Effect.
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(aa) Except as set forth in the Prospectus, all of the outstanding
shares of capital stock and other ownership interests of the Company
and any of its subsidiaries in Chiquita have been validly issued and
are fully paid and nonassessable and are beneficially owned by either
the Company or AFC or by one of their direct or indirect subsidiaries
free and clear of all liens, charges, claims or encumbrances except as
set forth on Schedule II annexed hereto.
3. Purchase and Offering of Offered Securities. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at the
time the Company determines to sell the Offered Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the number of shares to be
purchased by each Underwriter and the purchase price to be paid by the
Underwriters. The Terms Agreement will also specify the time and date of
delivery and payment (such time and date, or such other time not later than
seven full business days thereafter as the Underwriter first named in the Terms
Agreement (the "Lead Underwriter") and the Company agree as the time for payment
and delivery, being herein and in the Terms Agreement referred to as the
"Closing Date"), the place of delivery and payment and any details of the terms
of offering that should be reflected in the prospectus supplement relating to
the offering of the Offered Securities. For purposes of Rule 15c6-1 under the
Exchange Act, the Closing Date (if later than the otherwise applicable
settlement date) shall be the date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to the offering. The
obligations of the Underwriters to purchase the Offered Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Offered Securities for sale as set forth in the Prospectus.
The certificates for the Offered Securities delivered to the
Underwriters on the Closing Date will be in definitive form, in such
denominations and registered in such names as the Lead Underwriter requests.
Payment for the Offered Securities shall be made by the Underwriters in
Federal (same day) funds by official check or checks or wire transfer to an
account previously designated by the Company at a bank acceptable to the Lead
Underwriter, in each case drawn to the order of American Financial Group, Inc.
at the place of payment specified in the Terms Agreement on the Closing Date,
against delivery of the Offered Securities to the Underwriters.
4. Certain Agreements of the Company. The Company agrees with the
several Underwriters that it will furnish to counsel for the Underwriters, one
signed copy of the registration statement relating to the Registered Securities,
including all exhibits, in the form it became effective and of all amendments
thereto and that, in connection with each offering of Offered Securities:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b)(2) (or, if applicable
and if consented to by the Lead Underwriter, subparagraph (5)) not
later than the second business day following the execution and delivery
of the Terms Agreement.
(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable
opportunity to comment on any such proposed amendment or supplement;
and the Company will also advise the Lead Underwriter promptly of the
filing of any such amendment or supplement and of the institution by
the Commission of any stop order proceedings in respect of the
Registration Statement or of any part thereof and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) The Company will comply with the provisions of the Act, the
Exchange Act and the rules and regulations thereunder so as to permit
completion of the distribution of the Offered Securities as
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contemplated by the applicable Terms Agreement (including the
provisions of this Agreement), the Registration Statement and the
Prospectus. If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company promptly will notify the Lead Underwriter of such event and
will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither the
Lead Underwriter's consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 5 hereof.
(d) As soon as practicable, but not later than 16 months, after the
date of each Terms Agreement, the Company will make generally available
to its securityholders an earnings statement covering a period of at
least 12 months beginning after the later of (i) the effective date of
the registration statement relating to the Registered Securities, (ii)
the effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such
Terms Agreement and (iii) the date of the Company's most recent Annual
Report on Form 10-K filed with the Commission prior to the date of such
Terms Agreement, which will satisfy the provisions of Section 11(a) of
the Act.
(e) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the Lead
Underwriter reasonably requests. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as the Lead
Underwriter designates and will continue such qualifications in effect
so long as required for the distribution.
(g) During the period of five years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to
the Representatives (i) as soon as available, a copy of each report and
any definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as the Lead
Underwriter may reasonably request.
(h) The Company will pay all expenses incident to the performance
of its obligations under the Terms Agreement (including the provisions
of this Agreement), for any filing fees or other expenses (including
fees and disbursements of counsel) in connection with qualification of
the Registered Securities for sale under the laws of such jurisdictions
as the Lead Underwriter may designate and the printing of memoranda
relating thereto, for any applicable filing fee incident to the review
by the National Association of Securities Dealers, Inc. of the
Registered Securities, for any travel expenses of the Company's
officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective
purchasers of Registered Securities and for expenses incurred in
distributing the Prospectus, any preliminary prospectuses, any
preliminary prospectus supplements or any other amendments or
supplements to the Prospectus to the Underwriters.
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(i) The Company will not offer, sell, contract to sell, announce
its intention to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Common Stock or
securities convertible into or exchangeable or exercisable for any
shares of its Common Stock, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of the Lead Underwriter for a period beginning at the
time of execution of the Terms Agreement and ending the number of days
after the Closing Date specified under "Blackout" in the Terms
Agreement, except issuances of Common Stock upon the conversion of
securities or the exercise of warrants, in each case outstanding on the
date of the Terms Agreement, or the issuance and sale of Common Stock
pursuant to any employee stock option plan, directors' stock option
plan, deferred compensation plan, employee stock purchase plan, stock
ownership plan or dividend reinvestment plan in effect on the date of
the Terms Agreement.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Offered Securities will
be subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of
delivery thereof, in form and substance satisfactory to the
Representatives, of Ernst & Young LLP confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to
the effect that:
(i) in their opinion the financial statements and any
schedules and any summary of earnings examined by them and
included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on any unaudited financial statements included in
the Registration Statement;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
consolidated financial statements of the Company, inquiries of
officials of the Company who have responsibility for financial
and accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements, if
any, and any summary of earnings included or
incorporated by reference in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Exchange Act as it applies to Form 10-Q and the
related published Rules and Regulations or any
material modifications should be made to such
unaudited financial statements and summary of
earnings for them to be in conformity with generally
accepted accounting principles;
(B) if any unaudited "capsule" information
is contained in the Prospectus, the unaudited
consolidated revenues, net operating income, net
income and net income per share amounts or other
amounts constituting such "capsule" information and
described in such letter do not agree with the
corresponding
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amounts set forth in the unaudited consolidated
financial statements or were not determined on a
basis substantially consistent with that of the
corresponding amounts in the audited statements of
income;
(C) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of such letter, there
was any change in the capital stock, any increase in
long-term debt or any decreases in shareholders'
equity of the Company and its consolidated
subsidiaries as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of
the latest income statement included in the
Prospectus to a subsequent specified date not more
than three business days prior to the date of such
letter, there were any decreases, as compared with
the corresponding period of the previous year, in
consolidated revenues or in the total or per share
amounts of consolidated earnings before extraordinary
items and accounting change or of consolidated net
earnings;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Prospectus (in each
case to the extent that such dollar amounts, percentages and
other financial information are derived from the general
accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
All financial statements, schedules and information included in
material incorporated by reference into the Prospectus shall be deemed
included in the Prospectus for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission
in accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been issued
and no proceedings for that purpose shall have been instituted or, to
the knowledge of the Company or any Underwriter, shall be contemplated
by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a
majority in interest of the Underwriters including any Representatives,
is material and adverse and makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and
payment for the Offered Securities; (ii) any downgrading in the rating
of any debt securities or claims paying ability (or similar) rating of
the Company or any Significant Subsidiary by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act) or by A.M. Best Company of its rating of any
Insurance Subsidiary that is a Significant Subsidiary, or any public
announcement that any such organization has under surveillance or
review its rating of any debt securities or claims paying ability
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(or similar) rating of the Company or any Significant Subsidiary or
insurance rating of any Insurance Subsidiary that is a Significant
Subsidiary (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of
such rating); (iii) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (iv) any banking moratorium declared
by U.S. Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved,
any declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Underwriters including any Representatives, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities.
(d) The Representatives shall have received an opinion, dated
the Closing Date, of Keating, Muething & Klekamp, P.L.L., counsel for
the Company, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Ohio, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a
foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification; and
the Company has the power and authority (corporate and
otherwise) to enter into and perform its obligations under the
Terms Agreement (including the provisions of this Agreement),
including without limitation issuing the Offered Securities;
(ii) The Offered Securities and all other outstanding
shares of the Common Stock of the Company have been duly
authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained
in the Prospectus; the stockholders of the Company have no
preemptive rights with respect to the Offered Securities; the
Offered Securities have been approved for listing on the Stock
Exchange, subject to notice of issuance;
(iii) There are no contracts, agreements or
understandings known to such counsel between the Company and
any person granting such person the right to require the
Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Act;
(iv) Each Significant Subsidiary of the Company has
been incorporated and is an existing corporation in good
standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Prospectus; and each Significant Subsidiary of the Company
is duly qualified to do business as a foreign corporation in
good standing (or local law equivalent) in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification except
where the failure to so qualify or be in good standing would
not have a Material Adverse Effect; all of the issued and
outstanding capital stock of AFC Holding Company, American
Financial Corporation, American Premier Underwriters, Inc.,
Great American Financial Resources, Inc., Great American
Insurance Company and Great American Life Insurance Company
and, to the
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best knowledge of such counsel (after reasonable
investigation), each other Significant Subsidiary of the
Company has been duly authorized and validly issued and is
fully paid and nonassessable, and all of the outstanding
shares of capital stock of each Significant Subsidiary are
owned by the Company, directly or through subsidiaries, free
from liens, encumbrances and defects, except as set forth on
Schedule I annexed hereto.
(v) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court
is required for the consummation of the transactions
contemplated by the Terms Agreement (including the provisions
of this Agreement) in connection with the issuance or sale of
the Offered Securities by the Company, except such as have
been obtained and made under the Act and such as may be
required under state securities laws;
(vi) The execution, delivery and performance of the
Terms Agreement (including the provisions of this Agreement)
and the issuance and sale of the Offered Securities will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body
or any court having jurisdiction over the Company or any
Significant Subsidiary of the Company or any of their
properties, or any agreement or instrument to which the
Company or any such Significant Subsidiary is a party or by
which the Company or any such Significant Subsidiary is bound
or to which any of the properties of the Company or any such
Significant Subsidiary is subject, or the charter or by-laws
of the Company or any such Significant Subsidiary, and the
Company has full power and authority to authorize, issue and
sell the Offered Securities as contemplated by the Terms
Agreement (including the provisions of this Agreement);
(vii) The Registration Statement has become effective
under the Act, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such
opinion on the date specified therein, and, to the best of the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the
Act, and the registration statement relating to the Registered
Securities, as of its effective date, the Registration
Statement and the Prospectus, as of the date of the Terms
Agreement, and any amendment or supplement thereto, as of its
date, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; all
documents incorporated by reference in the Registration
Statement conformed, at the time filed, and, to the best
knowledge of such counsel, the Designated Filings conformed,
as of their respective dates, in all respects to the
requirements of the Exchange Act and the Rules and
Regulations; such counsel has not prepared or reviewed all of
the Designated Filings but participated in conferences with
representatives of the Company and its Significant
Subsidiaries (at which conferences the business, affairs and
properties of the Company and its Significant Subsidiaries
were discussed) and with representatives of Ernst & Young LLP
in connection with the preparation of the Prospectus and on
that basis has no reason to believe that such registration
statement, as of its effective date, the Registration
Statement, as of the date of the Terms Agreement or as of the
Closing Date, or any amendment thereto, as of its date or as
of the Closing Date, or the Designated Filings, as of their
respective dates, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of the date of the Terms
Agreement or as of such Closing Date, or any amendment or
supplement thereto, as of its date or as of the Closing Date,
contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the
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statements therein, in the light of the circumstances under
which they were made, not misleading; the descriptions in the
Registration Statement and Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be
shown; and such counsel do not know of any legal or
governmental proceedings required to be described in the
Prospectus which are not described as required or of any
contracts or documents of a character required to be described
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not described
and filed as required; it being understood that such counsel
need express no opinion as to the financial statements or
other financial data contained in the Registration Statement
or the Prospectus;
(viii) The Terms Agreement (including the provisions
of this Agreement) has been duly authorized, executed and
delivered by the Company;
(ix) The Company is not and, after giving effect to
the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940;
(x) To the best knowledge of such counsel (after
reasonable investigation), each Insurance Subsidiary holds
such insurance licenses, certificates and permits from
governmental authorities (including, without limitation,
Insurance Licenses) as 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 which would have a
Material Adverse Effect; 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;
(xi) 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 such
counsel is not aware of any violation of, or default in the
performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein by any
Insurance Subsidiary; and
(xii) To the best of such counsel's knowledge after
due inquiry, except as set forth in the Prospectus or as
listed in Schedule II annexed hereto, all of the outstanding
shares of capital stock and other ownership interests of the
Company and any of its subsidiaries in Chiquita have been
validly issued and are fully paid and nonassessable and are
beneficially owned by either the Company or AFC or by one of
their directly or indirectly wholly-owned subsidiaries free
and clear of all liens, charges, claims or encumbrances.
In rendering such opinion, such counsel may state that its
opinion is limited, except as set forth in the immediately following
sentence, to matters governed by the Federal laws of the United States
of America and the laws of the State of Ohio and has relied on a
certificate of James C. Kennedy, Esq., Vice President, Deputy General
Counsel and Secretary of the Company, as to certain factual matters
attached to such opinion. In addition, with respect solely to the
opinion set forth in paragraph (d)(iv) above, such counsel's opinion
shall, with respect to each individual Significant Subsidiary, be
based on the jurisdiction of organization of such Significant
Subsidiary.
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(e) The Representatives shall have received from Dewey
Ballantine LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities, the Registration
Statement, the Prospectus and other related matters as the
Representatives may require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling
them to pass upon such matters. In rendering such opinion, Dewey
Ballantine LLP may rely as to the incorporation of the Company and all
other matters governed by Ohio law upon the opinion of Keating,
Muething & Klekamp, P.L.L. referred to above.
(f) The Representatives shall have received a certificate,
dated the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of
the Company in this Agreement are true and correct with the same force
and effect as though expressly made on the Closing Date, that the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to the
Closing Date, that no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission and that, subsequent to the date of the most recent
financial statements included or incorporated by reference in the
Prospectus, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as
described in such certificate.
(g) The Representatives shall have received a letter, dated
the Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
the Closing Date for the purposes of this subsection.
(h) The Representatives shall have received the executed
letters referred to under "Lockup" in the Terms Agreement.
(i) The Offered Securities shall have been listed on the Stock
Exchange, subject to notice of issuance.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Lead Underwriter may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters under this Agreement and the Terms Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating,
preparing or defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company will not be liable in
any such case to the extent that any such
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loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives, if any, specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in the Terms Agreement.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives, if any, specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating, preparing or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement (i) includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or behalf of an
indemnified party.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the
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offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered 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 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 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities under the Terms Agreement
and the aggregate number of shares of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total number of shares of Offered Securities, the Lead Underwriter may make
arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments under the
Terms Agreement (including the provisions of this Agreement), to purchase the
Offered Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate number
of shares of Offered Securities with respect to which such default or defaults
occur exceeds 10% of the total number of shares of Offered Securities and
arrangements satisfactory to the Lead Underwriter and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, the Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other
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than solely because of the termination of the Terms Agreement pursuant to
Section 7 or the occurrence of any event specified in clause (iii), (iv) or (v)
of Section 5(c), the Company will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
9. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to them at their address furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at One East Fourth Street, Cincinnati, Ohio
45202, Attention: James C. Kennedy, Esq., Vice President, Deputy General Counsel
and Secretary.
10. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified in the Terms Agreement and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. Any Representatives will act for
the several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to the Terms Agreement
(including the provisions of this Agreement) or the transactions contemplated
thereby.
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